Toggle SGML Header (+)


Section 1: DEF 14A (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:

       

 

April 21, 2020

It is my distinct pleasure to invite you to attend the 2020 annual meeting of shareholders of HomeStreet, Inc. (including any adjournments or postponements thereof, the “Annual Meeting”). Because of the presence of COVID-19 in our community, this will be a virtual meeting conducted online via a live webcast. You will be able to attend the meeting, submit your questions and comments during the meeting, and vote your shares at the meeting by visiting www.virtualshareholdermeeting.com/HMST2020. You will also be able to access, through the website during the meeting, a list of shareholders entitled to vote.

With this letter, we are including the notice for the Annual Meeting, the proxy statement, a proxy card and our annual report for the fiscal year ended December 31, 2019. 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 two directors, (2) the approval on an advisory (non-binding) basis of the compensation of HomeStreet’s named executive officers, and (3) the ratification on an advisory (non-binding) basis of the appointment of our independent auditors for 2020. 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 proxy card.

YOUR VOTE IS VERY IMPORTANT.    Whether or not you plan to attend the Annual Meeting through the virtual meeting website, we hope you will vote as soon as possible so that your shares are represented. Please vote by completing, signing and dating the enclosed proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed proxy card to vote by the Internet or telephone. Returning your proxy card will not prevent you from voting on the website during the meeting, 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, Inc.

Sincerely,

 

   

Mark K. Mason

   

Chairman of the Board, President and
Chief Executive Officer

 

____________________________________________________________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

to be held on May 21, 2020

____________________________________________________________

The 2020 annual meeting of shareholders (including any adjournments or postponements thereof, the “Annual Meeting”) of HomeStreet, Inc., a Washington corporation (the “Company”), will be held as a virtual only meeting at 11:00 a.m., Pacific Time, on May 21, 2020, at www.virtualshareholdermeeting.com/HMST2020. We have made this a virtual-only meeting for 2020 due to the presence of COVID-19 in our community. The purpose of this meeting is to consider and vote upon the following matters:

1.      The election of two directors to serve until the 2021 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; and

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, 2020.

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 April 17, 2020, are entitled to notice of, and to vote at, the Annual Meeting, and at any adjournment or postponement thereof. You will need to use the control number provided on your proxy card to access the meeting, which will also allow you to vote your shares associated with that control number online during 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 our virtual meeting through the website. We ask you to submit your vote by completing, signing and dating the enclosed proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed 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 the questions and answers section commencing on page 5 of the attached Proxy Statement and the instructions on the proxy card.

 

Godfrey B. Evans

   

   

Executive Vice President, General Counsel,
Chief Administrative Officer and Corporate Secretary

April 21, 2020

   

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON MAY 21, 2020: THE PROXY STATEMENT FOR THE ANNUAL MEETING AND THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 ARE AVAILABLE FREE OF CHARGE ON OUR WEBSITE AT WWW.HOMESTREET.COM.

The notice of annual meeting of shareholders and the attached proxy statement are first being made available to shareholders on or about April 21, 2020.

 

____________________________

PROXY STATEMENT

____________________________

 

Page

PROXY STATEMENT SUMMARY

 

1

INFORMATION ABOUT THE ANNUAL MEETING

 

5

PROPOSAL 1 ELECTION OF DIRECTORS

 

10

Introduction

 

10

The Board of Directors

 

10

Nominees for Election as Directors at the Annual Meeting

 

11

Directors Continuing in Office

 

12

SHAREHOLDER ENGAGEMENT

 

15

2019 Shareholder Outreach

 

15

Ongoing Shareholder Engagement

 

16

CORPORATE GOVERNANCE

 

17

Code of Ethics

 

17

Whistleblower Policy

 

17

Principles of Corporate Governance

 

18

Director Independence

 

18

Board Diversity

 

18

Board Assessment and Refreshment

 

18

Board Leadership Structure

 

19

Board Role in Risk Oversight

 

20

Employee Compensation Risks

 

21

Board Meetings and Committees

 

21

Executive Committee

 

21

Audit Committee

 

22

Enterprise Risk Management Committee

 

22

Human Resources and Corporate Governance Committee

 

23

Attendance at Annual Meetings of Shareholders by the Board of Directors

 

26

Insider Trading Policy and Rule 10b5-1 Trading Plans

 

26

Contacting the Board of Directors

 

26

Director Compensation

 

26

EXECUTIVE OFFICERS

 

29

EXECUTIVE COMPENSATION

 

32

Introduction

 

32

Executive Summary

 

32

Summary of Executive Compensation Practices

 

35

Compensation Philosophy and Practices

 

36

Elements of the Executive Compensation Program

 

36

Total Direct Compensation

 

37

The Decision-Making Process

 

38

i

 

Page

2019 EXECUTIVE COMPENSATION PROGRAM

 

41

Base Salary

 

41

Commissioned NEOs Incentive Plan Arrangements

 

45

Long-Term Incentives

 

46

OTHER PRACTICES, POLICIES AND GUIDELINES

 

49

Clawback Provisions

 

49

Hedging Policy

 

49

Health and Welfare Benefits

 

49

401(k) Savings Plan

 

49

Perquisites and Other Personal Benefits

 

49

Risk Assessment

 

49

Tax Considerations

 

50

Executive Employment Agreements

 

50

HUMAN RESOURCES AND CORPORATE GOVERNANCE COMMITTEE REPORT

 

53

2019 Summary Compensation Table

 

54

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

58

Employment Agreements

 

58

Severance and Change in Control Agreement

 

59

2014 Plan

 

59

2014 Plan Award Agreements

 

59

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

 

63

Overview

 

63

Vote Required and Board Recommendation

 

63

AUDIT COMMITTEE REPORT

 

64

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

 

65

Overview

 

65

Fees of Independent Registered Public Accounting Firm

 

65

Pre-Approval of Audit and Non-Audit Services

 

65

Vote Required and Board Recommendation

 

66

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

67

Loans

 

67

Indemnification Agreements

 

67

Procedures for Approval of Related Party Transactions

 

67

PRINCIPAL SHAREHOLDERS

 

68

Delinquent Section 16(a) Reports

 

69

OTHER MATTERS

 

70

Participants in the Solicitation

 

70

Costs of Solicitation

 

70

Shareholders Sharing the Same Address

 

70

Appraisal Rights

 

70

Shareholder List

 

70

Shareholders Proposals and Director Nominations for the 2020 Annual Meeting

 

71

Availability of the Form 10-K and Other Filings

 

71

Forward-Looking Statements

 

72

ii

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

 

May 21, 2020

Time

 

11:00 a.m. Pacific Time

Place

 

Due to the presence of COVID-19 in our community, the Annual Meeting will be held as a virtual-only meeting, which can be accessed at www.virtualshareholdermeeting.com/HMST2020 by holders of our stock who have received a control number on their proxy card.

Record Date

 

April 17, 2020

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, 23,395,047.6 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 virtual-only Annual Meeting through the website, we hope you will vote as soon as possible so that your shares are represented. We invite you to vote by completing, signing and dating the enclosed proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed proxy card to vote by the Internet or telephone. Returning your proxy card will not prevent you from voting in person through the website using the control number provided on your proxy card, 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 two directors

 

FOR
the Board’s nominees

 

10

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

 

FOR

 

63

Proposal 3: Ratification on an advisory (non-binding) basis of the appointment of our independent registered public accounting firm for 2020

 

FOR

 

65

1

DIRECTOR NOMINEES

Our Board is currently comprised of eleven directors, and beginning with the Annual Meeting, we are phasing out our director classes, meaning that the nominees this year will be elected for a one-year term, while the remaining directors in office will continue to fill their current three-year terms. Directors elected at the 2018 annual meeting have terms that will end at the annual meeting of shareholders to be held in 2021, and directors elected at the 2019 annual meeting have terms that will end at the annual meeting of shareholders to be held in 2022. You are being asked to elect two directors to serve on the Board until the 2021 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 10 of this Proxy Statement. The Board’s nominees are:

Name

 

Age

 

Tenure

 

Committees

James R. Mitchell, Jr.

 

70

 

<1 year

 

Human Resources and Corporate Governance, Audit

Nancy D. Pellegrino

 

63

 

<1 year

 

Human Resources and Corporate Governance

CORPORATE GOVERNANCE HIGHLIGHTS

P      Lead Independent Director with clearly defined responsibilities

P      Ten of eleven 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 continuing directors is 66

P      Board diversity policy

P      Two new directors appointed since 2019 annual shareholders meeting

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      No supermajority shareholder vote requirements in the Articles of Incorporation

P      Phased-out declassification of the Board is underway, providing for the annual election of directors

P      Shareholder approved 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 2019

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 2019 we contacted shareholders holding 48% 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 has informed 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 ir.homestreet.com to learn more about the Company and to reach out directly to the Board at [email protected] to share your thoughts on the Company.

How We’ve Responded to Shareholder Feedback

What We Heard

     

What We Did

Improve disclosure related to peer selection to include additional categorical description and comparative metrics

 

 

We have provided additional disclosure around our peer group; please see page 39

Include the goal setting process that the HRCG committee goes through when establishing individual performance goals

 

 

We have provided additional disclosure about goal setting for the CEO and other executives; please see pages 41 to 48

Include subjective appraisals for individual performance during periods of significant strategic changes, particularly if company performance hurdles are not met

 

 

Improved disclosure around qualitative appraisal of individual performance during periods of significant strategic change, where the hard work of our team may not be reflected in the stock price and other metrics important to shareholders

Include discussion of how new additions to the Board are integrated quickly during periods of refreshment

 

 

We have added disclosure about our Board’s assessment process, refreshment and integration programs; please see page 18 of this proxy statement

Declassify the Board and provide for the annual election of directors

 

 

The Board agreed with the recommendation and put the issue to shareholders, which supported the amendment

Eliminate the supermajority shareholder vote requirement to approve major corporate changes

 

 

The Board agreed with the recommendation and put the issue to shareholders, which supported the amendment

Asked if shareholders were supportive of requiring a separation of the role of Chairman and Chief Executive Officer

 

 

Shareholders rejected this proposal, leaving discretion with the Board on this subject, given the clearly defined roles and responsibilities of the lead independent director

3

EXECUTIVE COMPENSATION HIGHLIGHTS

2019 Executive Compensation

•        Average increase for the top five NEOs who served all of 2019 was 1.2%. Two of the five NEOs who served all of 2019 did not receive an increase.

•        Corporate component of the Annual Incentive Plan attained 87.97% of target performance, which resulted in a reduced payout for that component of the incentive plan.

•        Performance Share Units for the performance period 2017-2019 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

ü

 

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

 

û

 

No contracts containing multi-year guarantees for salary increases, non-performance-based bonuses, or equity compensation

ü

 

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

 

û

 

No short-selling, hedging or pledging of Company’s securities permitted by our insider trading policy, which applies to directors, officers, employees and consultants

ü

 

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

 

û

 

No supplemental executive retirement plans

ü

 

Substantial portion of compensation opportunity is variable and at risk

 

û

 

No “golden parachute” excise tax gross ups

ü

 

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

 

û

 

No repricing, buyout or exchange of underwater stock options

ü

 

Retain an independent, external compensation consultant

 

û

 

No excessive perquisites

ü

 

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

 

û

 

No single trigger vesting of equity awards in the event of a change of control

ü

 

Use of multiple performance measures and caps on potential incentive payments

 

û

 

No excessive severance arrangements providing for payments exceeding 3 times base salary plus target/average/most recent bonus

ü

 

Minimum one-year vesting period for 95% of share-based awards granted under our Amended and Restated 2014 Equity Incentive Plan (the “2014 Plan”)

 

û

 

No liberal change in control provisions in the 2014 Plan and executive employment agreements

ü

 

Annual risk assessment of incentive compensation programs

 

û

 

No dividends paid on unvested performance shares or units; dividend equivalents accrued on outstanding awards paid only at vesting, without interest

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 2020 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 proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 are first being mailed to our shareholders of record on or about April 21, 2020. References in this Proxy Statement to “HomeStreet,” the “Company,” “we,” “us,” “our” and similar terms refer to HomeStreet, Inc.

4

INFORMATION ABOUT THE ANNUAL MEETING

1.      Why am I receiving these materials?

         Our Board has sent you this Proxy Statement and the accompanying proxy card to ask for your vote, as a shareholder of HomeStreet, on certain matters that will be voted on at the virtual-only Annual Meeting. As a shareholder, you are invited to attend through the website 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 70 of this Proxy Statement.

2.      Who is entitled to vote?

         All shareholders of record of HomeStreet common stock at the close of business on April 17, 2020 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting.

3.      How many shares are entitled to vote at the meeting?

         As of the Record Date, 23,395,047.6 shares of our common stock were issued, outstanding and entitled to vote at the Annual Meeting.

4.      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 on the Record Date.

5.      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 through the website using the control number provided on your proxy card or voting instructions. Your bank, broker or other nominee has enclosed a voting instruction form for you to use in directing how to vote your shares.

         Under certain circumstances banks, brokers and other nominees are prohibited from exercising discretionary authority for beneficial owners who have not provided voting instructions to the bank, broker or other nominee, which is referred to as a “broker non-vote”. In these cases, those shares will be counted for the purpose of determining whether a quorum is present. Pursuant to applicable regulations, if you do not give instructions to your broker or other nominee, your broker or other nominee will not be permitted to vote your shares with respect to Proposal 1, Election of Directors, or Proposal 2, Approval on an Advisory (Non-Binding) Basis of the Compensation of the Company’s Named Executive Officers.

6.      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 Godfrey B. Evans, our Corporate Secretary, General Counsel and Chief Administrative Officer, and Mark K. Mason, our Chairman, President and Chief Executive Officer, as the Company’s proxies for the Annual Meeting.

5

7.      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.proxyvote.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 enclosed 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 enclosed proxy card and mailing it in the enclosed, postage pre-paid envelope.

•        At the Annual Meeting:    If you attend the virtual Annual Meeting through the website provided using the control number provided on your proxy card or voting instructions, you may vote your shares online during the Annual Meeting. However, you are encouraged to complete, sign and date the enclosed proxy card and mail it in the enclosed postage pre-paid envelope regardless of whether you plan to attend the Annual Meeting to ensure your vote is counted.

Beneficial Shareholders:    If you are a “beneficial shareholder,” then you will receive voting instructions from your bank, broker or other nominee on how you may vote your shares, which will include a control number that you can use to access the Annual Meeting on the website www.virtualshareholdermeeting.com/HSMT2020.

For more information, please see “Information about the Annual Meeting — How do I attend the Annual Meeting” on page 8 of this Proxy Statement.

8.      What should I do if I receive more than one 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 proxy cards or follow the instructions for any alternative voting procedure on each of the proxy cards that you receive.

         Please note that if you have more than one account through which you hold shares, you will receive more than one control number. The control number is used to vote your shares, and is also used to log on to the virtual meeting website to attend the meeting, which will allow you to vote the shares held in the account associated with that control number at the meeting. However, you will not be able to vote shares held in other accounts not associated with the control number you are using to log in to the virtual shareholder meeting. Therefore it is important that you return your proxy cards for all of your accounts prior to the Annual Meeting so that all of your shares may be counted.

9.      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 online during the Annual Meeting at www.virtualshareholdermeeting.com/HMST2020.

         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. You can use your control number to log into the virtual Annual Meeting and change your vote during the meeting.

6

10.    How will my shares be voted if I return the 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 proxy card with respect to the proposals, the shares represented by the 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 the 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 proxy card.

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

         If you return a validly executed 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 two director nominees of the Board set forth on the proxy card (Proposal 1); “FOR” the approval on an advisory (non-binding) basis of the compensation of the Company’s named executive officers as described in the Proxy Statement under “Executive Compensation” (Proposal 2); and “FOR” the ratification on an advisory (non-binding) basis of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020 (Proposal 3).

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

         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 online during the Annual Meeting. If your shares are held in “street name” (that is, held for your account by a broker, bank or other nominee) and you do not instruct your bank, broker or other nominee how to vote your shares, your bank, broker or other nominee may not have discretionary authority to vote your shares on with respect to the election of directors (Proposal 1) or the approval on an advisory (non-binding) basis of the compensation of the Company’s named executive officers (Proposal 2). If you do not instruct your broker or other nominee as to how to vote your shares and your broker or other nominee does not have discretionary voting authority, these unvoted shares will be “broker non-votes”. Brokers generally may only exercise discretionary voting authority to vote “routine” proposals. The ratification on an advisory (non-binding basis) of the appointment of our independent registered public accounting firm (Proposal 3) is the only routine proposal to be presented at the Annual Meeting. If nominees exercise this discretionary voting authority on Proposal 3, such shares will be considered present at the Annual Meeting for determining whether a quorum is present.

         YOUR VOTE IS VERY IMPORTANT.    To assure that your shares are represented at the Annual Meeting, we ask you to vote by completing, signing and dating the enclosed 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 proxy card, whether or not you plan to attend the Annual Meeting through the website. 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. Your broker is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker or other nominee, your broker or other nominee may not be able to vote your shares with respect to the election of directors (Proposal 1) or the approval on an advisory (non-binding) basis of the compensation of the Company’s named executive officers (Proposal 2).

13.    Why is the Company making the Annual Meeting a virtual-only shareholder meeting?

         Due to the global outbreak of COVID-19 and the impact that outbreak is having on Washington State, where we are headquartered and which is the jurisdiction of incorporation of our Company, we do not believe it would be prudent to schedule an in-person annual shareholder meeting this year. Therefore, to protect the health and safety of our employees, directors and shareholders, we have elected to have a virtual-only shareholder meeting. Our Chairman and CEO is expected to lead the meeting, and members of our Board of Directors, including the Lead Independent Director, are expected to be present and available during the virtual meeting. Shareholders will

7

be able to ask questions to the Board and management through a Q&A text box provided on the website where the meeting is hosted. Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. We expect to be able to return to in-person meetings in the future years, circumstances permitting.

14.    How do I attend the Annual Meeting?

         HomeStreet shareholders or their duly authorized and constituted proxies may attend the virtual-only Annual Meeting. The control number printed on your proxy card is required to access the meeting through the website at www.virtualshareholdermeeting.com/HMST2020 regardless of whether you are a registered shareholder or a beneficial shareholder.

15.    What constitutes a “quorum”?

         A majority of the outstanding shares of common stock entitled to vote at the Annual Meeting, present in person as a logged-in participant of the virtual shareholder meeting or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. Votes withheld, abstentions and broker non-votes will be counted as present or represented for purposes of determining the presence or absence of a quorum for 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.

16.    What is the effect of abstentions and broker non-votes?

         If you specify that you wish to “abstain” from voting on an item (or “withhold” your vote for a director), then your shares will not be voted on that particular item. Abstentions and broker non-votes are not considered “votes cast” and so are not counted either “for” or “against” any proposal that requires a majority of votes cast in order to pass, which includes all of the proposals being presented at the annual meeting (including the non-contested election of directors).

17.    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 two directors

 

Majority 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 on an advisory (non-binding) basis of the appointment of our independent auditors for 2020

 

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

 

Yes

____________

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

18.    What vote is required to elect directors?

         Our Bylaws provide that, in any election of directors that is not a “contested election” (as defined in our Bylaws and described below), the candidates elected are those receiving a majority of the votes cast. Therefore, to be elected, the number of votes cast “FOR” a nominee must exceed the number of votes cast “AGAINST” that nominee.

         The term of any director nominee who is a director at the time of election and who does not receive a majority of votes cast in the election held under the majority voting standard described above terminates on the earliest to occur of: (i) 90 days after the date on which the voting results of the election are determined; (ii) the date the director’s resignation is accepted by the Board; or (iii) the date the Board fills the position. The following will not be votes cast and will have no effect on the election of any director nominee: (i) a share whose ballot

8

is marked as “withheld”; (ii) a share otherwise present at the meeting but for which there is an abstention; and (iii) a share otherwise present at the 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). Broker non-votes will have no effect on the outcome of this proposal. Shareholders may not cumulate their votes in the election of directors.

         Our Bylaws provide that an election is considered “contested,” and will be held under a plurality standard, if (a) 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 Section 1.13 of our Bylaws who are not withdrawn by the advance notice deadline set forth in that section and (b) the Board has not determined before the notice of meeting is given that the shareholder’s nominee(s) do not create a bona fide election contest. No such shareholder notice was received by the Company in advance of this year’s annual meeting.

19.    What vote is required to approve on an advisory (non-binding) basis 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 and broker non-votes will have no effect on the outcome of the proposal.

20.    What vote is required to approve on an advisory (non-binding) basis 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, 2020 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 and broker non-votes will have no effect on the outcome of the proposal.

21.    Who will count the votes?

         Broadridge Financial Solutions, Inc. will serve as the independent inspector of election and, in such capacity, will count and tabulate the votes.

22.    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.

23.    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:

HomeStreet, Inc.

Attn: Investor Relations

601 Union Street, Suite 2000

Seattle, WA 98101

9

PROPOSAL 1
ELECTION OF DIRECTORS

Introduction

HomeStreet’s Board currently consists of 11 members. At the 2019 annual meeting, our shareholders approved an amendment to our charter documents that will phase out the classification of our Board over the next three years. In prior years, our Board was divided into three classes and approximately one-third of our directors were 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. Beginning with this Annual Meeting, directors will now be elected to one-year terms, such that approximately 1/3 of the continuing Board will be elected at this Annual Meeting, approximately 2/3 of the Board will be elected at the 2021 annual meeting and all directors will stand for election at the 2022 annual meeting. 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 serving the following terms:

•        David A. Ederer, Thomas E. King and George “Judd” Kirk were elected in 2017 and their current three-year terms will expire at this Annual Meeting, and they will not stand for re-election at the Annual Meeting.

•        James R. Mitchell, Jr. and Nancy D. Pellegrino were appointed to fill vacancies in the Board of Directors created by an expansion of the Board of Directors since the last annual meeting of the shareholders and are serving a term that will expire at the Annual Meeting.

•        Scott M. Boggs, Mark R. Patterson and Douglas I. Smith were elected in 2018 and are serving a three-year term that will expire at the annual meeting of the shareholders to be held in 2021.

•        Sandra A. Cavanaugh, Mark K. Mason and Donald R. Voss were elected in 2019 and are serving a three-year term that will expire at the annual meeting of the shareholders to be held in 2022.

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 17, 2020.

Director

 

Age

 

Director Since

 

Term
Expiration

Mark K. Mason, Chairman

 

60

 

2010

 

2022 Annual Meeting

David A. Ederer, Chairman Emeritus(1)

 

77

 

2005

 

2020 Annual Meeting

Donald R. Voss, Lead Independent Director

 

69

 

2015

 

2022 Annual Meeting

Scott M. Boggs

 

65

 

2012

 

2021 Annual Meeting

Sandra A. Cavanaugh

 

65

 

2018

 

2022 Annual Meeting

Thomas E. King(1)

 

76

 

2012

 

2020 Annual Meeting

George “Judd” Kirk(1)

 

74

 

2012

 

2020 Annual Meeting

James R. Mitchell, Jr.(2)

 

70

 

2020

 

2020 Annual Meeting

Mark R. Patterson

 

53

 

2018

 

2021 Annual Meeting

Nancy D. Pellegrino(2)

 

63

 

2019

 

2020 Annual Meeting

Douglas I. Smith

 

56

 

2012

 

2021 Annual Meeting

____________

(1)      Mr. Ederer, Mr. King and Mr. Kirk will not stand for re-election at the Annual Meeting.

(2)      Mr. Mitchell was appointed to fill a newly created vacancy on the Board in January 2020 and Ms. Pellegrino was appointed to fill a newly created vacancy on the Board in October 2019. Pursuant to the Bylaws, the term of any director appointed to fill a newly created position runs until the next annual meeting of shareholders.

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 Washington State Department of Financial Institutions or any other regulatory entity having jurisdiction over the Company.

10

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 Nasdaq.

Key Qualifications

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

 

Thomas
King

 

George
“Judd”
Kirk

 

James R.
Mitchell Jr.

 

Mark
Patterson

 

Nancy
Pellegrino

 

Doug
Smith

Technology/Cybersecurity

 

ü

         

ü

             

ü

           

Audit

 

ü

 

ü

     

ü

 

ü

             

ü

       

Regulatory/Risk Management

 

ü

             

ü

 

ü

     

ü

 

ü

       

Capital Management

 

ü

 

ü

         

ü

 

ü

     

ü

 

ü

 

ü

   

Marketing

 

ü

 

ü

         

ü

 

ü

 

ü

 

ü

         

ü

Industry Experience

 

ü

     

ü

     

ü

 

ü

     

ü

 

ü

 

ü

   

Public Company Executive Experience

 

ü

 

ü

 

ü

 

ü

 

ü

 

ü

     

ü

     

ü

   

Accounting

 

ü

 

ü

 

ü

 

ü

     

ü

     

ü

 

ü

     

ü

Financial Expertise/Literacy

 

ü

 

ü

 

ü

 

ü

 

ü

 

ü

         

ü

 

ü

 

ü

Business Operations

 

ü

 

ü

     

ü

 

ü

 

ü

 

ü

 

ü

 

ü

     

ü

Corporate Governance

 

ü

 

ü

 

ü

 

ü

 

ü

         

ü

 

ü

 

ü

 

ü

Public Company Board Experience

 

ü

 

ü

 

ü

 

ü

 

ü

 

ü

     

ü

 

ü

 

ü

 

ü

Strategic Planning

 

ü

 

ü

 

ü

 

ü

 

ü

 

ü

 

ü

 

ü

 

ü

 

ü

 

ü

Nominees for Election as Directors at the Annual Meeting

Ms. Pellegrino was appointed to the Board of Directors to fill a vacancy created by a resolution of the Board to expand to 10 members in October 2019, and Mr. Mitchell was appointed by our Board of Directors to fill a vacancy created by a resolution of the Board to expand to 11 members in January 2020. Our amended and restated 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 seven and thirteen directors. Our Board is currently composed of eleven members, however, Mr. Ederer, Mr. King and Mr. Kirk will not stand for re-election at the Annual Meeting, so the Board has taken action to reduce the size of the Board to eight directors effective as of the Annual Meeting.

Upon recommendation of the HRCG Committee, the Board has nominated James R. Mitchell, Jr. and Nancy D. Pellegrino for re-election to the Board with a one-year term set to expire at the Company’s next annual meeting of shareholders, to be held in 2021. 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 she or he should continue to serve as a director appears following each of the director and nominee biographies.

11

James R. Mitchell, Director

Mr. Mitchell was appointed as a member of the Board in January 2020 to fill a vacancy on the Board. Mr. Mitchell has worked in commercial banking for more than 40 years, including founding Puget Sound Bank in 2004, where he served as president and chief executive officer from inception until the merger of that bank with Heritage Bank in January 2018. He was also a member of the Board of Directors of Puget Sound Bank from 2004 through January 2018, serving as chairman of the board from 2004 through 2008. After the merger of Puget Sound Bank and Heritage Bank, Mr. Mitchell served as the market president for King County for Heritage Bank for the next year, until January 2019, and then as a consultant to Heritage Bank until January 16, 2020. Prior to founding Puget Sound Bank, Mr. Mitchell served as a Senior Vice President at Sterling Bank, where he opened and grew the Seattle corporate banking office, from 2002 to 2004, and a Senior Vice President and team leader for the Seattle corporate banking team of US Bank from 1990 through 2002. Mr. Mitchell served on the Board of Directors of the Washington Bankers Association from 2011 to 2018, the Board of Directors of the Western Bankers Association from 2015 to 2018, and the board of Bellevue LifeSpring, a nonprofit organization, from 2009 to 2017. Mr. Mitchell received his bachelor’s degree from Seattle University, a Masters of Business Administration from the University of Washington and his juris doctorate from Southwestern University School of Law.

The HRCG recommended that the Board appoint Mr. Mitchell as a director following a thorough assessment of his background and qualifications. Mr. Mitchell’s knowledge of the banking industry, experience as a chief executive officer and director of a bank, and expertise in commercial banking were considered important by the HRCG in its evaluation.

Nancy D. Pellegrino, Director

Ms. Pellegrino was appointed as a member of the Board in October 2019 to fill a vacancy created by an expansion of the Board. Ms. Pellegrino has more than 30 years of experience in the financial services, private banking, and wealth management industries. She served as a Managing Director and Regional CEO for Citi Private Bank from July 2010 through October 2013, and was at BNY Mellon Wealth Management from August 2000 through July 2010 where she served as President and Regional Director. She was also at Banc One Corp from June 1990 through June 2000, rising to the position of Senior Vice President and Regional Sales Director, prior to which she was a Vice President at Texas Commerce Bank Trust Company, which she joined in 1982. She also served on the Board of Directors of Puget Sound Bank from September 2014 until January 2018. Since her retirement from Citi Private Bank, Ms. Pellegrino has been providing consulting services to individuals, teams and organizations in the private banking, wealth management, social enterprise and family business industries, drawing on her expertise in those fields. She also serves on the boards of several nonprofit organizations, including the Fred Hutch Cancer Research Center Board of Ambassadors and the Seattle World Trade Center Board of Governors. Ms. Pellegrino received her bachelor’s degree from Vanderbilt University in Fine Arts, and is a graduate of the Northwestern University Graduate Trust School.

The HRCG initially identified Ms. Pellegrino through its 2018 search for qualified candidates that meet the Company’s diversity goals, as stated in its Principles of Corporate Governance. Ms. Pellegrino is also an expert in the financial services industry, which was also considered important by the HRCG in its evaluation. The HRCG recommended Ms. Pellegrino’s appointment as part of its ongoing assessment of its board composition and refreshment, following a thorough assessment of her background and qualifications.

THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF JAMES R. MITCHELL, JR. AND NANCY D. PELLEGRINO.

Directors Continuing in Office

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

12

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 the 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. 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.

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.

13

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 and was elected to the Board by our shareholders at the 2019 annual meeting. 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 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.

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.

14

SHAREHOLDER ENGAGEMENT

2019 Shareholder Outreach

Prior to our 2019 annual meeting of shareholders, we heard concerns from several shareholders about our classified board structure, certain supermajority voting provisions included in our Second Amended and Restated Articles of Incorporation (our “Articles of Incorporation”), and the importance of giving our shareholders a voice in terms of approving a bylaw that we adopted in 2018 providing that Washington state be the exclusive forum for shareholder actions against the Company, a move we had taken to reduce the risk of litigation costs that would be incurred in any such lawsuit brought in a jurisdiction other than the jurisdiction of our incorporation and our corporate headquarters. As a result, at the 2019 annual meeting, in addition to electing three directors, ratifying on an advisory basis our executive compensation for 2018 (the “say-on-pay” vote) and ratifying our independent auditors for the fiscal year ending December 31, 2019, we also asked shareholders to approve resolutions to (a) phase out our classified board over a period of three years, allowing current directors to serve the remainder of their terms but requiring all future elections to be for one-year terms, (b) remove certain supermajority voting requirements from our Amended and Restated Articles of Incorporation, and (c) ratify an amendment to our Bylaws that provides Washington state as the exclusive forum for shareholder actions brought against the Company. The votes to amend our articles required approval from holders of more than 50% of the outstanding shares rather than a majority of votes cast in order to pass, while the vote to ratify an amendment to our Bylaws required more votes to be cast for the proposal than against.

At our 2019 annual meeting of shareholders, directors Mark K. Mason, Don R. Voss and Sandra A. Cavanaugh received support from 99.6%, 99.6% and 99.7% of votes cast, respectively. In addition, the amendment to our Articles of Incorporation to phase out our classified board was approved by holders of 80.6% of the shares outstanding, the amendment to our Articles of Incorporation to remove supermajority voting requirements by holders of 80.8% of the shares outstanding and the ratification of the exclusive forum jurisdiction in our Bylaws was approved by 51.4% of the votes cast on this matter (for and against). We believe that the proposals we submitted on amendments to the Articles of Incorporation and ratification of our exclusive forum bylaw are the outcome of a robust and productive shareholder engagement program during 2018 and the first half of 2019. For the “say-on-pay” vote approving our executive compensation, we received approval from 79.7% of votes cast (for and against).

In the fall of 2019 we continued our practice of inviting institutional shareholders to connect with our management team and certain of our independent directors. During this engagement process, shareholders representing 48% of the Company’s outstanding shares as of June 30, 2019, were invited to discuss company performance, company strategy, corporate governance and other matters important to those shareholders. Ultimately, shareholders representing 33% of our outstanding shares met at length 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, and board diversity. We also noted in our conversations with shareholders that in 2019 we revised our practices with respect to performance measures for our long-term performance awards, which are granted as Performance Share Units, to move to total shareholder return as the basis for measurement.

During 2019, members of management also 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.

Based on our conversations with shareholders regarding our executive compensation practices, we believe the number of votes cast against was in part due to a campaign by an activist shareholder and that there is no significant concern among our shareholder base regarding our compensation practices. Moreover, both Institutional Shareholder Services (ISS) and Glass Lewis, two prominent advisory firms for institutional investors, recommended a vote “FOR” our say-on-pay proposal in 2019. Based on the overall feedback received from investors in these discussions, we have provided additional disclosure around our peer group and about goal setting for the CEO and other executives and have improved our disclosure around subjective appraisal of individual performance during periods of significant strategic change, where the hard work of our team may not be reflected in the stock price and other metrics important to shareholders, but did not otherwise change our compensation structure.

15

In addition, as a result of deliberations, advice from our consultants, and feedback based on our discussions with shareholders, we have implemented a formal program to onboard new directors, improved our disclosure about our board refreshment plans on page 18 of this proxy statement. In addition, in response to continuing shareholder interest in board diversity, and in keeping with our commitment to diversity as stated in our Principles of Corporate Governance, our Board of Directors appointed Nancy D. Pellegrino to our Board of Directors in late 2019, and our nominating committee will continue to consider diversity as an important goal in board refreshment going forward.

Ongoing Shareholder Engagement

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 ir.homestreet.com, and shareholders can reach our investor relations department by email at [email protected]; by phone at (206) 389-6303; 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.

16

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 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. 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.

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 Chief Ethics Compliance 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.

At each regular meeting the Audit Committee discusses all current whistleblower reports with the Chief Ethics Compliance Officer, including all new reports received since the last meeting, any ongoing whistleblower investigations and the resolution of any closed investigation.

17

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

Our Principles of Corporate Governance include a commitment to diversity as a guideline for our director nomination process. In particular, the guideline provides 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. In October 2019, Nancy Pellegrino was also unanimously appointed to the Board to strengthen the diversity commitment. 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 continue to hear from our shareholders in our engagement process.

Board Assessment and Refreshment

Each year, our Board undertakes a formal self-evaluation process during which all members are asked to identify their areas of strength and expertise. The HRCG, working with its compensation consultant, then aggregates this information into a report on the strength of the Board which includes, among other things, the skills matrix that we include in our proxy statement. This assessment process, and especially the skills matrix, allows the HRCG to identify where there may be gaps in the overall skill set of the Board as a whole so that we can, if necessary, undertake a search for qualified candidates who not only have senior-management level experience in public companies, financial institutions and banking and fit the stated goals for diversity in our Principles of Corporate Governance, but can also help to broaden or deepen the skillset that we have on our Board. Based on the most recent self-assessment, the HRCG has identified expertise in cybersecurity as a desired skill set, and has also determined that the Board would benefit from having additional members who qualify as a financial expert for purposes of the Audit Committee.

In 2018, the HRCG identified a need to provide diversity to the Board of Directors, and after consideration and discussion hired an outside recruiting firm to identify well qualified candidates who could bring diversity to the Board. Once a pool of candidates was identified, extensive due diligence was performed on each candidate and the Directors were given the opportunity to meet with and interview the finalists. This process identified Sandra Cavanaugh, who was added to the Board in May 2018, as well as Nancy Pellegrino, who was added to the Board in October 2019 after an existing noncompetition agreement that had otherwise prevented her from joining the Board expired. In January 2020, after diligence and extensive interviews by directors, James R. Mitchell, Jr. was also asked to join the Board to provide additional depth of experience in community banking and commercial credit in advance of the departure of Tom King from the Board at the upcoming Annual Meeting.

In addition, our Principles of Corporate Governance provide that directors cannot stand for election to the Board after the age of 74. This age limit is intended to encourage board refreshment. Our Board believes it is in the best interests of our shareholders to refresh our board membership on a regular basis by considering new director

18

candidates who can bring a fresh or different perspective to the Board. We have heard from our shareholders that they also value regular board refreshment measures. Since January 2018, we have added four new directors to the Board, Mr. Patterson, Ms. Cavanaugh, Ms. Pellegrino and Mr. Mitchell, and two directors have left the Board. In addition, three of our current directors, Mr. Ederer, Mr. King and Mr. Kirk, will be leaving the Board at the Annual Meeting.

While board refreshment is important to bring new perspectives, our Board has also implemented a formal onboarding process for new directors in order to maintain continuity and bring new directors up to speed with the Company’s operations, corporate governance practices and overall strategy. The orientation is designed to help new directors contribute fully to their governance work on the Board as early in their tenure as possible. As a result of the process directors are expected to understand (a) their roles and responsibilities and time commitment to their governance work; (b) current goals, opportunities and challenges facing the organization; (c) major lines of business and the key leaders; (d) key initiatives and overall business strategy; (e) stakeholders; (f) how their own background, knowledge and skillsets can contribute to the Board’s work and the Company’s goals; (g) the background, knowledge skillsets of each of the other directors and key leaders of the company; (h) how Board decisions are made; and (i) the formal governing policies and practices of the Company. The process involves several meetings with the CEO, the Lead Independent Director, standing committee chairpersons, a Board mentor, key executives and staff. These meetings cover a broad array of topics including the strategic plan and planning process; the Company’s vision, values, goals and culture; the Company’s recent successes and challenges; charters of the company, its principal subsidiaries and various committees; Board and executive compensation details and philosophies; recent CEO performance reviews; executive leadership and succession planning; organization charts; biographies; Board development and training to name a few. Copies of key Board documents are scheduled and provided in hard copy or by electronic access to each new member.

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, and the majority of our shareholders have supported this approach, voting against a proposal to require the separation of those roles at our 2019 annual shareholder meeting. 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.

The Board maintains 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 periods.

The Company’s bylaws and Principles of Corporate Governance provide a clear description of the role of the Lead Independent Director: 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 presiding over shareholder meetings and Board meetings; serves as the liaison between the Chairman and the independent directors; meets with the Chairman prior to all Board Meetings to review and discuss the agenda; and has the right to approve meeting agendas, meeting schedules and other information sent to the Board. The Lead Independent Director also serves as the primary point of contact (through the Corporate Secretary) for shareholders wishing to engage with the Board.

19

The following table illustrates how responsibilities are delegated between Mr. Mason and Mr. Voss:

 

Chairman/Chief Executive Officer

 

Lead Independent Director

Board Meeting

 

•   Authority to call full meetings of the Board

•   Presides over meetings of the full Board

 

•   Attends full meetings of the Board

•   Presides over meetings of independent directors and non-management directors

•   Briefs Chairman on issues arising from executive sessions

•   Presides over meetings of the Board in the absence of the Chairman

Agenda

 

•   Primary responsibility for shaping Board agendas, consulting with the lead independent director

 

•   Collaborates with Chairman to set Board agenda and provide Board with information

•   Approves agenda and meeting schedules to be sent to the Board

Board Communications

 

•   Communicates with all directors on key issues and concerns outside Board meetings

 

•   Facilitates discussion among independent directors on key issues and concerns outside Board meetings, including contributing to the oversight of the Chairman and management succession planning

Shareholder Communications

 

•   Primary spokesperson for the Company in communications to shareholders

 

•   Serves as liaison for shareholders who wish to communicate with the Board (such communications to be sent through the Corporate Secretary)

Board Role in Risk Oversight

The Board, together with its committees and senior management, has oversight for our risk management framework and is responsible for helping to ensure that our risks are managed in a sound manner. The Board’s principal responsibility in this area is to oversee an enterprise-wide approach to risk management and ensure that sufficient resources, with appropriate technical and managerial skills, are provided throughout the Company to identify, assess and facilitate processes and practices to address material risks. We believe that the current leadership structure enhances the Board’s ability to fulfill this oversight responsibility, as the Chairman, in his role as CEO, is able to focus the Board’s attention on the key risks we face.

In addition, the Board has delegated oversight of certain categories of risk to the Audit Committee, the Enterprise Risk Management Committee, and the HRCG Committee. The Audit Committee reviews and discusses with management significant financial and non-financial risk exposures and the steps management has taken to monitor, control and report such exposures. The Enterprise Risk Management Committee oversees and assesses the adequacy of the Company’s risk management framework, monitors compliance with the Board-approved risk appetite measures and other key risk measures and oversees management of key risks not overseen by other committees of the Board, including compliance and operational risks, information technology, information security and cybersecurity risks. The HRCG Committee oversees management of risks relating to the Company’s governance, compensation plans and programs. The Audit Committee, the Enterprise Risk Management Committee and the HRCG Committee report to the Board as appropriate on matters that involve specific areas of risk that each committee oversees, and with the Board, each committee periodically discusses with management the Company’s policies with respect to risk assessment and risk management. The board of directors of our primary subsidiary, HomeStreet Bank, also oversees certain risks specific to HomeStreet Bank, including credit, liquidity, interest rate and price risk, through various committees of the HomeStreet Bank board.

20

In connection with the recent COVID-19 outbreak, the Board together with the Audit Committee, the Enterprise Risk Management Committee, the HRCG Committee and management has overseen our efforts to mitigate financial and human capital management risk exposures associated with the outbreak.

Employee Compensation Risks

HomeStreet’s management and the HRCG Committee have assessed the risks associated with our compensation policies and practices for all employees, including non-executive officers. Based on the results of this assessment, we do not believe that our compensation policies and practices for all employees, including non-executive officers, create excessive risks or risks that are reasonably likely to have a material adverse effect on HomeStreet.

Board Meetings and Committees

During the year ended December 31, 2019, the Board held 16 meetings. Each of our directors attended or participated in 75% or more of the aggregate of the total number of meetings of the Board and the total number of meetings held by all committees of the Board on which that director served during the past fiscal year.

The Board has four standing committees: an Executive Committee, an Audit Committee, an Enterprise Risk Management Committee and an HRCG Committee.

2019 Committee Memberships of Directors of HomeStreet, Inc.

Director

 

Executive
Committee

 

Audit
Committee

 

HRCG
Committee

 

Enterprise Risk
Management
Committee

David A. Ederer, Chairman Emeritus

 

ü

 

ü

       

Mark K. Mason, Chairman

 

Chair

           

Scott M. Boggs

 

ü

 

Chair

     

ü

Sandra A. Cavanaugh

         

ü

 

Chair

Victor H. Indiek(1)

         

ü

   

Thomas E. King

     

ü

 

ü

   

George “Judd” Kirk

         

ü

 

ü

Mark R. Patterson

 

ü

         

ü

Nancy D. Pellegrino(2)

         

ü

   

Douglas I. Smith

     

ü

 

Chair

   

Donald R. Voss

 

ü

 

ü

     

ü

____________

(1)      Mr. Indiek served as a member of the HRCG Committee through the end of his term as director on June 20, 2019.

(2)      Ms. Pellegrino joined the Board in October 2019 and was appointed to the HRCG Committee at that time

James R. Mitchell, Jr. was also appointed to the HRCG and the Audit Committee on his appointment to the Board in January 2020.

Executive Committee

The Executive Committee is composed of at least three members of the Board, a majority of whom are required to be and are independent directors as determined by the Board. The Chairman of the Board serves as the Chair of the committee. The Executive Committee is delegated authority to act on behalf of the Board on certain matters that are not otherwise delegated to another committee of the Board in between regularly scheduled Board meetings. The Executive Committee is not authorized to take any action that cannot be delegated by the Board under Washington law and is also expressly not authorized to adopt any agreement for merger or consolidation, recommend to shareholders the sale, lease or exchange of all or substantially all of the Company’s assets, recommend a dissolution of the Company (or the revocation of a dissolution) to the shareholders, amend the Bylaws, elect officers, fill vacancies on the Board, declare a dividend, or authorize the issuance of stock (other than pursuant to specific delegation from the Board where the Board has already approved the issuance and the Executive Committee is approving certain details of the issuance), all of which are expressly reserved to the full Board.

21

Audit Committee

Our Audit Committee is composed solely of independent directors as required by the Nasdaq corporate governance standards, and each of Messrs. Boggs, Ederer, King, Mitchell, Smith and Voss meets the independence requirements set forth in all applicable Nasdaq corporate governance standards, including independence requirements for audit committee members, and Rule 10A-3 under the Exchange Act. The Board has determined that Mr. Boggs is qualified as an “audit committee financial expert.”

Our Board has adopted a written Audit Committee charter that meets the requirements of the applicable Exchange Act rules and the applicable Nasdaq corporate governance standards. A copy of this charter is available on our website at http://ir.homestreet.com. Among other things, the Audit Committee charter requires the Audit Committee to:

•        oversee the financial reporting process on behalf of our board of directors, review and discuss the audited financial statements, including significant financial reporting judgments, with management and the Company’s auditors and report the results of its activities to the board;

•        be responsible for the appointment, retention, compensation, oversight, evaluation and termination of our auditors and review the engagement and independence of our auditors;

•        review and approve non-audit services, including a reconciliation of fees actually paid for non-audit services as compared to fees previously approved for such services;

•        review the adequacy of our internal accounting controls and financial reporting processes;

•        approve and monitor our internal audit plans and policies;

•        review the performance compensation and independence of our Chief Audit Officer; and

•        annually evaluate the performance of the Audit Committee and assess the adequacy of the Audit Committee charter.

The Audit Committee held 8 meetings during the last fiscal year.

Enterprise Risk Management Committee

The membership of the Enterprise Risk Management Committee is limited to persons who meet the independence standards established by Nasdaq corporate governance rules and is currently comprised solely of independent directors as defined by such rules. The Enterprise Risk Management Committee of the Company meets jointly with the Enterprise Risk Management Committee of HomeStreet Bank, and together they oversee and assess the adequacy of the Company’s tolerance and management of key enterprise-wide risks, including credit, interest rate, liquidity, price, operational, compliance/legal, strategic and reputational risks. The Enterprise Risk Management Committee is also responsible for monitoring the Company’s risk profile and exposure to various types of risks, as well as reviewing management’s adherence to the Company’s established risk management policies and benchmarks. The Enterprise Risk Management Committee is required to meet at least quarterly.

The Board has adopted a written Enterprise Risk Management Committee charter, a current copy of which is available on our website at http://ir.homestreet.com. Among other things, this charter requires the Enterprise Risk Management Committee to:

•        recommend risk appetite and tolerances for risk for the Company and its subsidiaries to be approved by the Board;

•        review and approve the Company’s enterprise risk assessments prepared in connection with the Company’s strategic plan including the capital plan;

•        monitor the Company’s risk profile and ongoing and potential exposure to material risks of various types, including monitoring the Company’s overall capital adequacy and capacity within the context of the approved risk limits and actual results;

•        provide a forum for evaluating and integrating risk issues, processes and events arising within the Company and its subsidiaries;

22

•        coordinate with various Board committees a discussion of the Company’s significant processes for risk assessment, risk management and actions taken by management to monitor, control and remediate risk exposures;

•        oversee compliance and fair lending practices, including:

•        review regulatory examinations and reports;

•        monitor the implementation of any corrective action agreed to under regulatory examination reports;

•        review and approve the Company’s Compliance Management System, Fair Lending Policy and Bank Secrecy Act (“BSA”) Policy;

•        appoint the Chief Compliance Officer, Fair Lending Officer and BSA Officer; and

•        monitor the implementation of changes in significant regulations and the impact of such changes upon the Company’s significant risks;

•        oversee information technology, information security and physical security practices, including:

•        reviewing reports from management on technology and security risks, including cyber risks; and

•        appointing the Chief Security Officer and Chief Information Security Officer;

•        review and approve, at least annually, risk related policies; and

•        review the performance, compensation and independence of the Chief Risk Officer.

The Enterprise Risk Management Committee held 6 meetings during the last fiscal year.

Human Resources and Corporate Governance Committee

The HRCG Committee acts as both our nominating and corporate governance committee and our compensation committee. The HRCG Committee has the authority to establish and implement our corporate governance practices, nominate individuals for election to the Board and evaluate and set compensation with respect to our directors and executive officers, among other things. Although the HRCG Committee receives input from the CEO, executive leadership and the HRCG Committee’s independent compensation advisor, the HRCG Committee makes its own independent determinations regarding executive officer compensation. The HRCG Committee is composed solely of independent directors under Nasdaq corporate governance rules, each of whom has also been determined to be independent pursuant to Rule 10C-1(b)(1) of the Exchange Act describing independence standards relating to members of the compensation committee.

Our Board has adopted a written charter for the HRCG Committee that satisfies the applicable standards of Nasdaq Corporate Governance rules as to both compensation and nominating committee requirements. A copy of this charter is available on our website at http://ir.homestreet.com. Among other things, this charter calls upon HRCG Committee to:

•        develop and recommend to the Board criteria for identifying and evaluating candidates to become Board and committee members;

•        identify, review the qualifications of, and recruit candidates for election to the Board;

•        assess the contributions and independence of incumbent directors in determining whether to recommend them for re-election to the Board and appointment to one or more committees of the Board;

•        function as a compensation committee for the purpose of Nasdaq Listing Rule 5605(d);

•        select and recommend to the Board director nominees for election or re-election to the Board at each annual meeting of shareholders;

•        develop and recommend to the Board a set of corporate governance principles applicable to the corporation, including periodic review and reassessment of such principles;

23

•        make recommendations to the Board concerning the structure, composition and functioning of the Board and its committees;

•        review and assess the channels through which the Board receives information, and the quality and timeliness of the information received;

•        oversee the evaluation of the Board and its committees;

•        review and recommend changes as appropriate to the Board in the Code of Ethics, and biannually review this code;

•        review and oversee the Company’s overall compensation structure, philosophy, policies, benefit plans and programs (including for directors and management) and assess whether the Company’s compensation structure establishes appropriate incentives for management and employees;

•        review and approve the corporate goals and objectives relevant to the compensation of the CEO, evaluate the CEO’s performance in light of those goals and objectives, and recommend to the independent directors the CEO’s compensation level based on this evaluation. The CEO cannot be present during any voting or deliberations by the HRCG on his or her compensation;

•        oversee the evaluation of Bank executive officers and set the compensation of such officers;

•        review, approve and recommend to the Board employment agreements and severance agreements for executive officers, including change-in-control provisions, plans or agreements; and

•        review succession plans relating to positions held by executive officers and make recommendations to the Board regarding the selection of individuals to fill these positions.

The HRCG Committee charter allows the committee to delegate its duties and responsibilities related to compensation, nomination and corporate governance to a subcommittee of the HRCG Committee that consists of not less than two members of the HRCG Committee.

The HRCG Committee held eight meetings during the last fiscal year. The HRCG Committee Report is included in this Proxy Statement.

Interaction with Consultants

Pursuant to its charter, the HRCG Committee has the sole authority to retain, terminate, obtain advice from, oversee and compensate its outside advisors, including its compensation consultant. The Company has provided appropriate funding authority to the HRCG Committee to do so.

The HRCG Committee has retained Pearl Meyer & Partners (“Pearl Meyer”) as its independent executive compensation consultant. None of the Company’s management participated in the HRCG Committee’s decision to retain Pearl Meyer. Pearl Meyer reports directly to the HRCG Committee and the HRCG Committee may replace Pearl Meyer or hire additional consultants at any time. Pearl Meyer attends meetings of the HRCG Committee, as requested, and communicates with the Chair of the HRCG Committee between meetings; however, the HRCG Committee makes all decisions regarding the compensation of the Company’s executive officers.

Pearl Meyer provides various executive compensation services to the HRCG Committee with respect to HomeStreet’s executive officers and other key employees pursuant to a written consulting agreement with the HRCG Committee. The services Pearl Meyer provides under the agreement include advising the HRCG Committee on the principal aspects of HomeStreet’s executive compensation program and evolving best practices given the Company’s particular circumstances, and providing market information and analysis regarding the competitiveness of HomeStreet’s program design and HomeStreet’s award values in relationship to its performance.

The HRCG Committee regularly reviews the services provided by its outside consultants and believes that Pearl Meyer is independent in providing executive compensation consulting services. With regard to, among other things, the requirements of Nasdaq rules related to the selection and assessment of conflicts of interest pertaining to compensation consultants, the HRCG Committee believes that Pearl Meyer’s work for the HRCG Committee is independent and does not raise any conflicts of interest.

24

The HRCG Committee continues to monitor the independence of its compensation consultant on a periodic basis.

Human Resources and Corporate Governance Committee Interlocks and Insider Participation

None of the members of the HRCG Committee served as an officer or employee of the Company during fiscal year 2019 or any of the three previous years or has had any relationships or participated in any related party transactions that are required to be disclosed under the rules of the SEC. During fiscal year 2019, none of our executive officers served on the board of directors or compensation committee of any company where one of that company’s executive officers served as one of our directors.

Process for Recommending Candidates for Election to the Board of Directors

The HRCG Committee is responsible for, among other things, determining the criteria for membership to the Board and recommending candidates for election to the Board. It is the policy of the HRCG Committee to consider recommendations for candidates to the Board from shareholders. Shareholder recommendations for candidates to the Board must be directed in writing to HomeStreet, Inc., 601 Union Street, Suite 2000, Seattle, Washington 98101, Attention: General Counsel and Corporate Secretary, and must include the candidate’s name, home and business contact information, detailed biographical data and qualifications, information regarding any relationships between the candidate and the Company within the last three years and evidence of the nominating person’s ownership of the Company’s common stock. Such recommendations must also include a statement from the recommending shareholder in support of the candidate, particularly within the context of the criteria for Board membership, including issues of character, judgment, diversity, age, independence, background, skills, expertise, corporate experience, length of service, other commitments and the like, personal references, and an indication of the candidate’s willingness to serve. Nominees for our Board of Director must also meet any approval requirements set forth by our regulators.

The HRCG Committee regularly reviews the current composition and size of the Board. The HRCG Committee’s criteria and process for evaluating and identifying the candidates that it recommends to the full Board, for selection as director nominees are as follows:

•        In its evaluation of director candidates, including the members of the Board eligible for re-election, the HRCG Committee seeks to achieve a balance of knowledge, experience and capability on the Board and considers (1) the current size and composition of the Board and the needs of the Board and the respective committees of the Board, (2) such factors as issues of character, integrity, judgment, diversity of experience, independence, area of expertise, corporate experience, length of service, potential conflicts of interest, other commitments and the like, and (3) such other factors as the HRCG Committee may consider appropriate.

•        In addition to the criteria listed above, the Board and HRCG Committee have made a commitment to diversity on the Board a priority. The Principles of Corporate Governance include a mandate that the HRCG Committee 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 to give extra weight to the diversity of the candidates.

•        While we have not established specific minimum qualifications for director candidates, we believe that candidates and nominees must reflect a Board of Directors that is comprised of directors who: (1) are predominantly independent, (2) are of high integrity, (3) have broad, business-related knowledge and experience at the policy-making level in business or technology, including their understanding of the Company’s business in particular, (4) have qualifications that will increase the overall effectiveness of the Board and (5) meet other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to audit committee members.

•        With regard to candidates who are properly recommended by shareholders or by other means, the HRCG Committee will review the qualifications of any such candidate, which review may, in the HRCG Committee’s discretion, include interviewing references for the candidate, direct interviews with the candidate, requesting additional information to be shared with our regulators or other actions that the HRCG Committee deems necessary or proper.

25

•        In evaluating and identifying candidates, the HRCG Committee has the authority to retain and terminate any third-party search firm that is used to identify director candidates and has the authority to approve the fees and retention terms of any search firm.

•        The HRCG Committee will apply these same principles when evaluating Board candidates who may be elected initially by the full Board to fill vacancies or add additional directors prior to the annual meeting of shareholders at which directors are elected.

•        After completing its review and evaluation of director candidates, the HRCG Committee recommends the director nominees to the full Board.

Attendance at Annual Meetings of Shareholders by the Board of Directors

HomeStreet does not have a formal policy regarding attendance by members of the Board at our annual meeting of shareholders. However, we encourage directors to attend. All of our directors then serving on our Board attended our 2019 annual meeting of shareholders.

Insider Trading Policy and Rule 10b5-1 Trading Plans

HomeStreet has an insider trading policy that prohibits, among other things, short sales, hedging of stock ownership positions and transactions involving derivative securities relating to our common stock. The Company does not undertake any obligation to report Rule 10b5-1 trading plans that may be adopted by any of its officers and directors in the future, or to report any modifications or terminations of any publicly announced plan, except to the extent required by law.

Contacting the Board of Directors

In 2018, our Board of Directors adopted the HomeStreet, Inc. Shareholder Engagement Practices and Procedures, a copy of which can be found on our investor relations website: http://ir.homestreet.com. Shareholders who desire to contact our non-employee directors may do so by writing HomeStreet’s Corporate Secretary at HomeStreet, Inc., 601 Union Street, Suite 2000, Seattle, Washington 98101 or by sending an email to [email protected] Our Corporate Secretary receives these communications unfiltered by HomeStreet, forwards communications to the appropriate committee of the Board or non-employee director and facilitates an appropriate response. The Board will generally respond, or cause the Company to respond, in writing to bona fide communications from shareholders addressed to one or more directors. The Corporate Secretary will not forward spam, junk mail, mass mailings, customer complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate materials to the Board or any directors. Correspondence relating to certain of these matters such as customer issues may be distributed internally for review and possible response.

Please note that requests for investor relations materials should be sent to [email protected].

Director Compensation

Non-Employee Director Compensation

All directors of the Company also serve as directors of HomeStreet Bank. We believe that our overall non-employee director compensation program is reasonable and appropriate based on our review of peer financial institution data and the data provided by Pearl Meyer, the HRCG Committee’s outside compensation consultant.

Non-employee directors are paid an annual retainer of $64,000 per year, with a minimum of $30,000 of that fee being paid in fully vested stock (subject to any individual director’s election to receive more of the fees in fully vested stock, up to 100% of all fees). Committee chairs each earn an additional annual retainer of $10,000 for each committee of the Board that they chair, and the lead independent director also earns an additional $20,000 annual retainer. Each non-employee director also earns a fee of $500 per committee meeting attended for all committees other than the Executive Committee (other than for short committee meetings for which the fee is $250 per meeting). Members of the Executive Committee are paid an additional annual retainer of $10,000 for their service on that committee in lieu of per-meeting fees. Annual retainer fees (including the retainer for membership on the Executive Committee)

26

are paid one-half in cash and one-half in fully vested stock, subject to any individual director’s election to receive more than 50% of such fees in stock (up to 100%). Meeting fees are paid in cash, subject to any individual director’s election to receive any portion of such fees in fully vested stock (up to 100%). Directors are also able to elect to receive some or all of their stock compensation in the form of fully vested deferred stock unit awards that are settled upon the termination of their service on the Board or at another future date of the director’s choosing. All fees are paid on a quarterly basis, and fees that are paid in fully vested stock or deferred stock awards are granted under the 2014 Plan, with the number of shares or deferred stock awards granted determined based on dividing the amount of fees to be paid by the per-share closing price of Company common stock on the first business day following the end of the quarter in which the fees were earned, rounding down to the nearest whole number and paying any fractional share amount in cash.

Director Stock Ownership Guidelines

Our Principles of Corporate Governance contain stock ownership guidelines pursuant to which each non-executive director is expected to own at least three (3) times the annual retainer fee, valued at the closing price of the common stock on the date of acquisition, (the “Minimum Ownership Level”) at all times from and after the third anniversary of such director’s appointment or election to the Board until the end of such director’s service to the Company as a director. Directors are not required to acquire additional stock to increase their holdings to the Minimum Ownership Level in the event of a decline in the stock value. However, if a sale or other transfer from a director’s account results in the director owning less than the Minimum Ownership Level in shares of the Company’s common stock, the director is then required to re-establish his or her Minimum Ownership Level. Stock received by non-executive directors as part of their director compensation may be counted toward the accumulation of the Minimum Ownership Level, including shares to be issued under fully vested deferred stock awards. As of April 17, 2020, all directors who have been on the Board for three years or more are in compliance with our stock ownership guidelines.

Directors’ Deferred Compensation Plan

In 1999, we adopted a plan to permit directors to defer all or a portion of their fees received for services as a director that would otherwise be payable in cash (with a minimum $2,500 deferral in a plan year for those who elect to make such deferrals). Interest earned on participant deferrals is equal to the average five-year daily treasury rate for the quarter. A participant or his or her beneficiary will begin receiving a distribution of his or her deferrals for a particular plan year upon the earliest of (1) a future date specified by the participant, (2) the participant’s death or (3) the date the participant ceases to be a director. The form of payment includes either a single lump sum payment or annual installment payments over a period of up to ten years. The participant has a limited ability to change these elections. None of our directors participated in the plan during 2019, and there are no current account balances from prior deferrals. Due to the non-use of this plan, the Board elected to terminate the plan in April 2019.

Compensation for Employee Directors

Employee directors do not receive compensation for serving on our Board. Accordingly, Mark Mason, who serves as Chairman and is an executive of the Company, is not paid any additional retainer or compensation for his services as a director and Chairman.

2019 Director Compensation Table

The following table shows the compensation earned by our non-employee directors for 2019, including Victor H. Indiek whose term on the Board expired in June 2019. This table includes all compensation earned by all directors who were on our Board during any portion of 2019.

27

Name

 

Fees
Earned
or Paid
in Cash
($)
(5)

 

Stock
Awards
($)
(6),(7)

 

Option
Awards
($)

 

Non-Equity
Incentive Plan
Compensation
($)

 

Changes in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings

 

All Other
Compensation
($)

 

Total
($)

Scott M. Boggs

 

53,064

 

39,891

 

 

 

 

 

92,955

Sandra A. Cavanaugh

 

48,040

 

34,920

 

 

 

 

 

82,960

David A. Ederer(1)

 

62

 

81,845

 

 

 

 

 

81,907

Victor H. Indiek(2)

 

20,518

 

14,958

 

 

 

 

 

35,476

Thomas E. King

 

46.017

 

29,935

 

 

 

 

 

75,952

George “Judd” Kirk(3)

 

11,007

 

62,887

 

 

 

 

 

73,909

Mark R. Patterson

 

53,007

 

39,933

 

 

 

 

 

92,940

Nancy D. Pellegrino(4)

 

9,507

 

7,493

 

 

 

 

 

17,000

Douglas I. Smith

 

41

 

82,861

 

 

 

 

 

82,902

Donald R. Voss(1)

 

64,525

 

49,918

 

 

 

 

 

114,443

____________

(1)      Amounts listed in Stock Awards column consists of deferred stock awards as RSUs that will be settled in shares of common stock upon termination of service as a director.

(2)      Mr. Indiek received $7,483 in deferred stock awards as RSUs that vested upon termination of his service as a director in 2019, and $7,465 in fully vested stock grants. Mr. Indiek’s term on the Board ended on June 20, 2019.

(3)      Consists of deferred stock awards as RSUs that were settled in shares of common stock on January 1, 2010.

(4)      Ms. Pellegrino joined the Board in October 2019.

(5)      Mr. Ederer and Mr. Smith have elected to receive all of their cash fees in stock (either fully vested stock grants or deferred stock awards granted as fully vested stock units); Mr. Kirk elected to receive all of his cash fees in stock through the third quarter of 2019, after which he elected to receive the standard allocation between cash and stock described above.

(6)      The amounts shown represent the aggregate grant date fair value for the stock awards granted in fiscal 2019, as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). For details of all assumptions made in such calculations, see Note 18 to our financial statements filed with our Annual Report on Form 10-K for the year ended December 31, 2019.

(7)      Stock awards granted to non-employee directors in fiscal 2019 consist of (a) shares of common stock granted quarterly to our non-employee directors as part of their individual annual retainer or (b) fully vested deferred stock unit awards that will settle in shares of common stock on the earlier of a date chosen by the director electing to receive such deferred stock awards or the date such director ceases service on the Board.

28