Karen R. Saunders
About Karen R. Saunders
Karen R. Saunders, age 60, is an independent director nominee of Heritage Financial Corporation (HFWA) since 2025. She is a retired audit partner from KPMG LLP, most recently serving as the lead banking partner for KPMG’s banking practice in Los Angeles, and is a Certified Public Accountant in California and Washington. She holds a BA in Business from the University of Washington’s Foster School of Business and is designated by HFWA’s Board as the audit committee financial expert. Her initial term, if elected, runs to the 2026 annual meeting.
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| KPMG LLP | Audit partner; lead banking partner (Los Angeles banking practice) | Not disclosed | Deep financial reporting, banking industry oversight; audit leadership |
| Washington State Accountancy Board | Board member | Formerly served | State regulatory/accountancy governance |
| KPMG Partnership Audit Committee | Committee member | Formerly served | Partnership audit oversight |
| KPMG Board Nomination Committee | Committee member | Formerly served | Partner nomination and governance |
| U.S.A. Bobsled and Skeleton | Advisory director | Formerly served | Advisory governance role |
External Roles
| Organization | Role | Tenure | Notes |
|---|---|---|---|
| Big Brothers & Big Sisters of Puget Sound | Ambassador Board Member | Current | Community engagement and social impact |
Board Governance
- Committee assignments: Audit and Finance (member) and Risk and Technology (member); she is the Board’s designated financial expert. The Audit & Finance Committee met 9 times in 2024; Risk & Technology met 5 times.
- Independence: All nine director nominees, including Saunders, are independent; HFWA separates the Board Chair and CEO roles and has a Lead Independent Director.
- Board engagement: The Board held 10 regular meetings in 2024; independent directors met in executive session after each meeting and held three sessions without the Board Chair. No director attended fewer than 75% of Board and committee meetings in 2024; Saunders is a 2025 nominee (2024 attendance not applicable).
- Committee independence: Audit & Finance, Compensation, and Corporate Governance & Nominating committees are composed entirely of independent directors.
| Committee | Role | Designation | 2024 Meetings |
|---|---|---|---|
| Audit & Finance | Member | Audit committee financial expert | 9 |
| Risk & Technology | Member | — | 5 |
Fixed Compensation
| Component | Amount | Notes |
|---|---|---|
| Annual non-employee director cash retainer | $50,000 | Standard director retainer |
| Board Chair additional retainer | $60,000 | Paid to Board Chair (currently Brian Vance) |
| Lead Independent Director additional retainer | $20,000 | Paid to Lead Independent Director (currently Brian Charneski) |
| Audit & Finance Committee Chair retainer | $15,000 | Committee chair premium |
| Compensation Committee Chair retainer | $10,000 | Committee chair premium |
| Corporate Governance & Nominating Chair retainer | $10,000 | Committee chair premium |
| Risk & Technology Committee Chair retainer | $12,500 | Committee chair premium |
| Additional retainer (serving on >2 committees) | $5,000 | Paid to director serving on >2 committees (Ann Watson) |
| Per-meeting fees | $0 | No additional attendance fees |
| Dividend equivalents on vested RSUs | $2,025 | Cash dividend equivalents earned in 2024 per vested RSUs |
Director-specific 2025 compensation for Saunders is not disclosed; structure above reflects 2024 program terms.
Performance Compensation
| Grant Date | Units per non-employee director | Grant date fair value per share | Total target grant value | Vesting |
|---|---|---|---|---|
| June 18, 2024 | 2,928 RSUs | $17.08 | $50,010 | Vest May 1, 2025 |
Directors receive time-based RSUs; no options or performance metrics apply to director equity awards. As of December 31, 2024, directors held unvested RSUs from the June 18, 2024 grant; no outstanding stock options.
Other Directorships & Interlocks
| Category | Detail |
|---|---|
| Other public company boards | None of the nominees serve on other public company boards; no public-company interlocks disclosed for Saunders |
| Auditor relationship | HFWA’s auditor for 2025 is Crowe LLP; Saunders is a retired KPMG partner (no current auditor interlock) |
Expertise & Qualifications
- CPA (CA and WA) with extensive audit leadership and deep banking industry experience; designated audit committee financial expert.
- BA in Business (University of Washington, Foster School).
- Risk oversight experience via Risk & Technology Committee membership, including cybersecurity and ERM.
- Strong governance credentials through prior service on accountancy and nomination committees.
Equity Ownership
| Metric (as of March 10, 2025 record date) | Value |
|---|---|
| Common shares beneficially owned | None reported |
| RSUs vesting within 60 days | None reported |
| Total beneficial ownership | None reported |
| Ownership guidelines | Directors must own stock equal to 3× annual cash retainer; must retain ≥50% of net shares until compliant; three years to achieve compliance (directors generally in compliance as of 12/31/2024; Saunders not a director in 2024) |
| Hedging/pledging | Hedging prohibited; to HFWA’s knowledge no directors or NEOs have pledged company stock |
Governance Assessment
- Strengths:
- Independent director with deep audit and banking expertise; designated financial expert—strengthens Audit & Finance oversight.
- Risk & Technology committee membership adds scrutiny over ERM, information security, and technology strategy.
- No other public company boards—lower risk of interlocks and overboarding concerns.
- Robust governance framework: independent committees, separated Chair/CEO roles, rigorous board evaluations, executive sessions each meeting.
- Shareholder-aligned policies: stock ownership guidelines, anti-hedging/pledging, enhanced clawback (Nov 7, 2023).
- Potential RED FLAGS / watch items:
- New director showing no reported ownership as of record date—short-term alignment gap until guidelines compliance achieved (3-year compliance window).
- Prior KPMG partnership could be perceived as an auditor interlock risk if KPMG were auditor; current auditor is Crowe LLP—mitigated.
- Related-party lending exists to directors/executives ($6.5M outstanding as of 12/31/2024), albeit on market terms under Reg O with formal approvals—monitor for individual exposures (no specific loans to Saunders disclosed).
Investor takeaway: Saunders’ audit depth, CPA credentials, and designation as financial expert are positives for board effectiveness and confidence in financial reporting. Her roles on Audit & Finance and Risk & Technology bolster oversight of key bank risk areas. Ownership will need to build toward guideline compliance to strengthen alignment optics over the next three years.