HERITAGE FINANCIAL CORP (HFWA)
Sector: Financials
2026 Annual Meeting Analysis
HERITAGE FINANCIAL CORP · Meeting: May 7, 2026
Directors FOR
11
Directors AGAINST
0
Say on Pay
FOR
Auditor
FOR
Director Elections
Election of eleven directors to each serve for a one-year term
Allan joined the board on January 1, 2026, well within the 24-month new-director exemption from the TSR trigger, and brings relevant executive leadership and business experience with no overboarding, attendance, or independence concerns.
HFWA's 3-year return of 18.8% trails the compensation peer group median by only 14.3 percentage points, well below the 35-point threshold required to trigger a vote against for a low-positive-TSR company, and Charneski has no overboarding, attendance, or independence concerns.
Dryer joined in 2022 and his tenure overlaps less than the full 3-year measurement period; the peer-group TSR gap of 14.3 percentage points does not meet the 35-point trigger threshold, and he has no overboarding, attendance, or independence concerns.
The 3-year peer TSR gap of 14.3 percentage points falls well short of the 35-point trigger threshold, and Ellwanger has no overboarding, attendance, or independence concerns; she serves only on independent committees.
Giacobbe joined in 2022 and the peer-group TSR gap of 14.3 percentage points does not meet the 35-point trigger threshold, and she has no overboarding, attendance, or independence concerns.
The 3-year peer TSR gap of 14.3 percentage points falls well short of the 35-point trigger threshold for a low-positive-TSR company, and Lyon has no overboarding, attendance, or independence concerns.
McDonald became a director in May 2025, well within the 24-month new-director exemption from the TSR trigger, and as the current CEO he brings direct operational relevance to the board.
Rivera has served since 2020 and the peer-group TSR gap of 14.3 percentage points does not meet the 35-point trigger threshold, and he has no overboarding, attendance, or independence concerns.
Saunders joined in 2025, well within the 24-month new-director exemption from the TSR trigger, and brings highly relevant banking audit expertise as a former KPMG banking audit partner and the board's designated financial expert.
The 3-year peer TSR gap of 14.3 percentage points falls well short of the 35-point trigger threshold for a low-positive-TSR company, and Vance has no overboarding, attendance, or independence concerns; as a former CEO serving as independent Board Chair, his experience is directly relevant.
The 3-year peer TSR gap of 14.3 percentage points falls well short of the 35-point trigger threshold, and Watson has no overboarding, attendance, or independence concerns, bringing relevant financial services and CFO-level expertise.
All eleven director nominees receive a FOR vote. HFWA's 3-year price return of 18.8% trails the compensation peer group median by 14.3 percentage points, which is well below the 35-percentage-point threshold required to trigger votes against directors for a company with a low-positive absolute TSR. Three nominees (Allan, McDonald, Saunders) joined within the past 24 months and are exempt from the TSR trigger entirely. No director has overboarding, attendance, independence, or qualification concerns. The board is 91% independent, has a designated financial expert on the audit committee, and discloses a comprehensive skills matrix.
Say on Pay
✓ FORCEO
Bryan D. McDonald
Total Comp
$1,345,480
Prior Support
97%%
CEO Bryan McDonald's total compensation of approximately $1.35 million is reasonable for a community bank CEO at a $1 billion market-cap institution, and the program is well-structured with 57% of target pay performance-based for the CEO and 50% for other executives — comfortably meeting the 50-60% variable pay standard. The incentive metrics (earnings per share, overhead ratio, net charge-offs, return on tangible equity, and 3-year total shareholder return relative to peers) are objective and multi-dimensional, and the 2023 performance stock award paid out at only 8% of target because the company ranked at the 9th percentile on TSR and 29th percentile on return on tangible equity — demonstrating that the pay-for-performance mechanism actually works. The prior Say on Pay vote received 97% shareholder support, the company has a Nasdaq-compliant clawback policy, and there are no concerns about excessive fixed pay, dilution, or pay-for-performance misalignment.
Auditor Ratification
✓ FORAuditor
Crowe LLP
Tenure
N/A
Audit Fees
$942,700
Non-Audit Fees
$0
Crowe LLP performed only audit and audit-related services in 2025, with zero non-audit fees reported, so the non-audit fee ratio is 0% — far below the 50% threshold that would raise independence concerns. Auditor tenure is not disclosed in the proxy, so the tenure trigger cannot fire and the default FOR vote applies. Crowe LLP is a large national firm appropriate for a $1 billion community bank.
Overall Assessment
Heritage Financial's 2026 annual meeting presents a clean ballot with no significant governance concerns: all eleven director nominees receive FOR votes as the company's 3-year TSR underperformance versus peers (14.3 percentage points) is well below the 35-point policy trigger, the CEO compensation program is appropriately performance-weighted and modestly sized for a $1 billion community bank, and the auditor charged zero non-audit fees in 2025. There are no stockholder proposals on the ballot, so shareholders face only the three standard routine proposals, each of which merits support.
Compensation Peer Group
20 companies disclosed in 2026 proxy filing