Thomas J. Henning
About Thomas J. Henning
Thomas J. Henning is Executive Vice President and Chief Risk Officer (CRO) of Heritage Bank (subsidiary of Heritage Financial Corporation) and has held this role since joining in 2016; age 63 as of the 2025 proxy . As CRO, he reports into the Board’s Risk & Technology Committee framework; the CRO reports directly to that Committee’s Chair under the Board’s risk oversight model . Company performance in 2024 included Net Income of $43.3M and Diluted EPS of $1.24, with total loans up 10.7% YoY; the year reflected balance sheet restructuring and disciplined credit with net charge-offs at 0.06% . Over 2020–2024, HFWA’s cumulative TSR (value of $100) tracked $105.05 in 2024 vs $85.94 in 2020, while the selected peer index tracked $132.44 in 2024 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Heritage Bank | EVP & Chief Risk Officer | 2016–present | Leads enterprise risk management; CRO reports directly to the Board’s Risk & Technology Committee Chair |
Fixed Compensation
No individual compensation figures were disclosed for Henning in 2024; he was not a named executive officer (NEO) in the proxy’s compensation tables .
Performance Compensation
Heritage’s Management Incentive Plan (MIP) ties NEO annual cash incentives to objective corporate metrics. While Henning’s individual incentive metrics are not disclosed, the 2024 corporate framework and outcomes (used for NEOs) reflect the company’s pay-for-performance design.
- Annual cash incentive metrics and outcomes (2024)
| Metric | Weight | Threshold | Target | Maximum | Actual 2024 | % of Target Achieved |
|---|---|---|---|---|---|---|
| Diluted EPS | 40% (35% for CCO) | $1.50 | $2.00 | $2.50 | $1.24 (adjusted to $1.80 for plan) | 80% |
| Net Charge-offs/Average Loans | 20% (30% for CCO) | 0.11% | 0.06% | 0.01% | 0.06% | 100% |
| Overhead Ratio | 40% (35% for CCO) | 2.39% | 2.24% | 2.04% | 2.22% | 105% |
- Long-term equity program (policy-level design used for NEOs)
- 50% PSUs (3-year performance) and 50% time-based RSUs (3-year ratable vesting) for 2024 grants, with PSUs split across ROATCE percentile and 3-year TSR percentile vs a defined peer group; payout range 50%–150% of target .
- RSU vesting schedules: typically ratable over 3 years for annual grants; PSUs cliff-vest at 3 years based on performance; prior awards disclose similar schedules (with legacy grants having different schedules) .
- 2022 PSU cycle (measured through 12/31/2024) paid at 80% of target: ROATCE at the 34th percentile (36% of target) and 3-year TSR at the 62nd percentile (124% of target) .
Equity Ownership & Alignment
- Executive officers and directors as a group (21 persons) beneficially owned 644,518 shares (≈1.90% of outstanding) as of the record date; the table enumerates group-level ownership even though Henning is not individually listed among NEOs or directors in the table .
- Anti-hedging and pledging: The insider trading policy prohibits hedging; the company cautions against pledging and states that, to its knowledge, none of its executive officers or directors had pledged HFWA stock as of the policy disclosure .
- Voting & support agreement: Henning executed the acquiror-side voting and support agreement as a “Principal Shareholder” of Heritage Financial in connection with the September 25, 2025 announced Kitsap/Olympic merger, underscoring share ownership and alignment with corporate actions .
- Stock ownership guidelines: Company guidelines require 3x base salary for CEO and 1.5x for other NEOs; these thresholds explicitly apply to NEOs (not necessarily to all executive officers). All NEOs were in compliance as of 12/31/2024 .
Employment Terms
- Individual contract: No employment agreement or severance terms for Henning are disclosed in the 2025 proxy; employment agreements and severance terms are provided for specified NEOs (CEO, CFO, COO, CCO) .
- Equity plan change-in-control: The 2023 Omnibus Equity Plan features double-trigger vesting on change-in-control if awards are not assumed or upon qualifying termination within 24 months; performance awards vest at target under those plan-level CIC conditions .
- Clawback: Heritage adopted an enhanced clawback policy effective in 2023 in accordance with SEC/Nasdaq requirements .
- Governance reporting: The CRO reports to the Board’s Risk & Technology Committee Chair within the ERM oversight structure .
Company Performance Context (for alignment assessment)
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Total Assets | $7.17B | $7.11B |
| Net Income | $61.8M | $43.3M |
| Diluted EPS | $1.75 | $1.24 |
| Total Loans, Net | $4.29B | $4.75B |
| Total Deposits | $5.60B | $5.68B |
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Risk outcomes and incentive linkage: 2024 net charge-offs/average loans were 0.06%, meeting the MIP’s target level for that component .
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Pay vs Performance time series (select SEC “Pay vs Performance” table data)
| Year | Company TSR ($100 base) | Peer TSR ($100 base) | Net Income ($000s) | Diluted EPS |
|---|---|---|---|---|
| 2020 | $85.94 | $90.82 | $46,570 | $1.29 |
| 2021 | $92.71 | $126.43 | $98,035 | $2.73 |
| 2022 | $119.90 | $111.47 | $81,875 | $2.31 |
| 2023 | $87.68 | $107.99 | $61,755 | $1.75 |
| 2024 | $105.05 | $132.44 | $43,258 | $1.24 |
Compensation Committee & Peer Group (program calibration)
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Independent Compensation Committee; uses independent consultant Pearl Meyer; regularly reviews risk and shareholder feedback; 2024 say-on-pay exceeded 98% approval (2024 meeting) and 2025 say-on-pay passed by shareholder vote (see counts below) .
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2025 say-on-pay vote (counts)
| For | Against | Abstain | Broker Non-Votes |
|---|---|---|---|
| 25,108,341 | 517,307 | 147,291 | 2,374,383 |
- Compensation benchmarking peer group (20 banks) includes: Amerant Bancorp; Banc of California; Bank of Marin Bancorp; Byline Bancorp; Enterprise Financial Services; First Mid Bancshares; Heritage Commerce; Lakeland Financial; Mercantile Bank; Old Second Bancorp; Origin Bancorp; Premier Financial; S&T Bancorp; Seacoast Banking; Southside Bancshares; Stock Yards Bancorp; TriCo Bancshares; Univest Financial; Veritex Holdings; 1st Source .
Risk Indicators & Policies (relevant to alignment)
- Anti-hedging and pledging policy; none of the executive officers or directors have pledged HFWA stock per the proxy disclosure .
- Clawback policy adopted per SEC/Nasdaq; plan-level double-trigger change-in-control for equity awards .
- Related party transactions adhere to Reg O and Sections 23A/23B; $6.5M in loans outstanding to directors/executive officers as of 12/31/2024, all performing on agreed terms .
Investment Implications
- Alignment: Policy-level features (objective EPS/credit/efficiency metrics in annual incentives, 50/50 PSUs/RSUs with ROATCE and 3-year TSR for long-term, clawback, anti-hedging/pledging, and double-trigger CIC equity) suggest strong pay-performance alignment and downside protection against misaligned risk-taking .
- Retention/overhang: Henning’s individual contract terms, base/bonus targets, and equity holdings are not disclosed—reducing visibility into his personal retention risk and potential insider selling pressure. However, his execution of the September 2025 acquiror voting and support agreement as a principal shareholder indicates a meaningful equity stake and alignment with the announced Kitsap/Olympic transaction, though share counts are not disclosed there .
- Execution risk context: Company-level 2024 results reflect net charge-offs at target levels and ongoing restructuring to improve profitability; the MIP outcomes (EPS adjusted for restructuring, overhead ratio above target, credit at target) reinforce that incentives factored restructuring and credit discipline—important context for assessing CRO-era risk outcomes, without attributing causality to any one executive .
- Governance: CRO’s direct reporting to the Board Risk & Technology Committee Chair, combined with committee independence and annual compensation risk assessments, supports robust risk governance .