Matthew T. Ray
About Matthew T. Ray
Executive Vice President and Chief Lending Officer (CLO) of Heritage Bank since 2023; age 53. Ray has been with Heritage since 2010 in leadership roles including Commercial Banking Team Leader, Regional Manager, and Market President, before promotion to CLO . Education not disclosed in HFWA’s proxy statements. Company performance metrics used for long-term incentives include relative three-year total shareholder return (TSR) and return on average tangible common equity (ROATCE); a prior cycle measured ROA and TSR vs peers (2021 grant paid at 40% based on ROA at 45th percentile and TSR at 17th percentile), illustrating the framework used to tie equity payouts to relative performance .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Heritage Bank | Commercial Banking Team Leader; Regional Manager; Market President | 2010–2022 | Led commercial lending teams and regional growth; foundation for promotion to CLO |
| Heritage Bank | Executive Vice President & Chief Lending Officer | 2023–present | Oversees company-wide lending strategy, credit growth and production |
External Roles
No external board or public company directorships disclosed for Ray in HFWA proxies.
Fixed Compensation
| Year | Base Salary ($) | Target Bonus (%) | Actual Bonus Paid ($) |
|---|---|---|---|
| 2023 | 301,515 | 35% | 86,535 |
Notes:
- Ray’s employment agreement effective Jan 1, 2023 sets his target annual cash incentive at 35% of base salary .
Performance Compensation
Annual Incentive Plan – Corporate Metrics
| Performance Period | Metric | Weighting | Threshold | Target | Maximum | Actual | Payout Reference |
|---|---|---|---|---|---|---|---|
| 2023 | Diluted EPS | 50% | $2.42 | $2.69 | $3.09 | $1.75 | Plan outcome framework shown; corporate contribution 87.5% of target for related plan |
| 2023 | Net Charge-Offs / Avg Loans | 50% | 0.12% | 0.07% | 0.02% | (0.01)% | Plan outcome framework shown; corporate contribution 87.5% of target for related plan |
Notes:
- HFWA highlights diluted EPS and credit quality (net charge-offs) as key annual metrics; these metrics anchor payout determinations across incentive programs .
Equity Awards – Grants and Vesting
| Grant Date | Instrument | Units/Value | Vesting Schedule | Key Performance Metrics |
|---|---|---|---|---|
| 02/22/2023 | RSUs | 7,291 units; $206,189 grant-date fair value | Mix of RSUs: one-time promotion RSUs $150,025 vest ratably over 10 years; prior 2022 performance RSUs $56,164 vest ratably over 3 years | 2022 RSUs tied to operational metrics: 33% New Loan Production; 10% Loan Fees; 17% New Deposit Accounts; 10% Credit Quality; 10% Overhead Ratio; 10% Diluted EPS; 10% Loan Growth |
| 2023 program | Performance Stock Units (PSUs) | Not applicable to Ray in 2023 | — | Program for other NEOs: ROATCE and 3-year TSR vs peer group; payout scale 0–150% of target |
Policy and instruments:
- No stock options currently granted by HFWA; none outstanding as of 12/31/2024, reducing option-related selling pressure .
Equity Ownership & Alignment
| As of Record Date | Direct/Indirect Shares Owned | RSUs/PSUs Vesting within 60 Days | Total Beneficial Ownership | % of Shares Outstanding | Ownership Guideline Status | Hedging/Pledging |
|---|---|---|---|---|---|---|
| March 11, 2024 | 13,926 | 3,360 | 17,286 | <1% | NEOs must hold ≥1.5x base salary; all NEOs compliant as of 12/31/2024 | Hedging prohibited; none of NEOs/directors have hedged or pledged company stock |
Stock ownership guidelines:
- NEOs required to retain ≥50% of net shares until guideline met; failure triggers 25% of annual cash bonus paid in shares; five-year compliance window .
Employment Terms
| Provision | Key Terms |
|---|---|
| Agreement term | Initial term through June 30, 2023; auto-renews annually each July 1 thereafter unless 90-day prior notice is given |
| Target bonus | 35% of base salary |
| Severance – no CIC | 100% of “Base Compensation” (base salary + 3-year average bonus) paid over 24 months; 12 months medical/dental at active rates; accelerated vesting of equity subject to service conditions; performance awards vest based on actual Company performance through period end (no proration) |
| Severance – with CIC (double trigger) | 200% of Base Compensation payable in lump sum; 18 months medical/dental at active rates; performance/equity vest at target upon qualifying termination in connection with a CIC (no proration). No single-trigger acceleration for service-based awards (HFWA best practice) |
| Clawback & 280G | Enhanced clawback policy adopted per SEC/Nasdaq standards; automatic cutback to avoid excise tax under IRC 280G/4999 if net-after-tax is better |
| Restrictive covenants | Non-competition, non-solicitation, and confidentiality restrictions post-employment |
Illustrative potential payments (as of 12/31/2023):
- Termination without cause/good reason total: $543,184 (includes $376,385 cash severance; $157,088 equity acceleration; $9,711 medical/dental) .
- Qualifying termination with change-in-control total: $924,423 (includes $752,769 cash severance; $157,088 equity acceleration; $14,566 medical/dental) .
- Disability/Death totals shown for completeness: $243,623 and $545,138, respectively .
Investment Implications
- Alignment: Strong long-term alignment via ownership guidelines (≥1.5x salary) and anti-hedging/anti-pledging policy; all NEOs in compliance as of YE 2024, lowering misalignment risk .
- Retention: Ten-year ratable vesting on promotion RSUs is a powerful retention device; combined with double-trigger CIC severance at 2x base comp creates moderate protection without excessive golden parachutes .
- Pay-for-performance: Annual incentives tied to EPS and credit quality, while long-term equity for NEOs generally uses ROATCE and TSR vs peers; Ray did not participate in PSUs for 2023 but his 2022 RSUs were tied to lending/deposit production and efficiency—directly aligned with his CLO mandate .
- Selling pressure: Absence of options and restrictions on hedging/pledging reduce mechanical selling risk; vesting is primarily time-based for his grants, with staggered schedules (3-year and 10-year), smoothing potential sell windows .
- Governance: Enhanced clawback and no single-trigger acceleration for service-based awards are investor-friendly; severance cutbacks to mitigate 280G tax indicate prudent design .
Overall, Ray’s incentives emphasize stable credit performance and disciplined growth in his remit. The structure supports retention and operational execution, with measured CIC protection and limited shareholder-unfriendly features.