Hills Bank Online





Online Investments Login

Corporate Governance

HILLS BANCORPORATION & HILLS BANK AND TRUST COMPANY

March 22, 2004

Employee, Officer, Director, and/or Shareholder

Complaint Procedure for Accounting and Auditing Matters

Any employee, officer, director, and/or shareholder of the Company may submit a good faith complaint regarding accounting or auditing matters to the management of the Company without fear of dismissal or retaliation of any kind. The Company is committed to achieving compliance with all applicable securities laws and regulations, accounting standards, accounting controls, and audit practices. The Company's Audit Committee (comprised of three independent members of the Board of Directors) will oversee treatment of any employee, officer, director, and/or shareholder concern in this area.

In order to facilitate the reporting of any employee, officer, director, and/or shareholder complaint, the Company's Audit Committee has established the following procedures for (1) the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls, or auditing matters ("accounting matters") and (2) the confidential, anonymous submission by any employee, officer, director, and/or shareholder with a concern regarding questionable accounting or auditing matters.

Receipt of Complaints

  • Employees, officers, directors, and/or shareholders with concerns regarding accounting matters may report their complaints or concerns on a confidential or anonymous basis to the Audit Committee of the Company through TeleSentry, an independent third party, using a 24-hour hotline:

Toll Free: 1-888-883-1499

Scope of Matters Covered by These Procedures

  • These procedures relate to any employee, officer, director and/or shareholder complaint relating to any questionable accounting or auditing matters.

Treatment of Complaints

  • Upon receipt of a complaint, the independent third party will provide the Audit Committee with the complaint information.
  • Complaints relating to accounting matters will be reviewed under Audit Committee direction and oversight by the Counsel, Internal Audit, or such other persons as the Audit Committee determines to be appropriate. Confidentiality will be maintained to the fullest extent possible, consistent with the need to conduct an adequate review.
  • Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee.
  • The Company will not discharge, demote, suspend, threaten, harass, or in any manner discriminate against any employee, officer, director, and/or shareholder in the terms and conditions of employment, responsibilities, or services, based upon any lawful actions of such employee, officer, director, and/or shareholder with respect to good faith reporting of complaints regarding accounting matters or otherwise as specified in Section 806 of the Sarbanes-Oxley Act of 2002.

Reporting and Retention of Complaints and Investigation

  • The Internal Auditor will maintain a log of all complaints, tracking their receipt, investigation, and resolution and shall prepare a periodic summary report thereof for the Audit Committee.   

 

 

CHARTER OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS OF HILLS BANCORPORATION

Amended and Restated as of February 11, 2014

I.          Purpose of the Committee

The purpose of the Audit Committee (the “Committee”) is to oversee the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company.

II.        Composition of the Committee

The Audit Committee shall be comprised of three or more directors, each of whom shall be independent directors, as defined under Rule 10A-3 of the Securities Exchange Act of 1934.  All members of the Committee shall be financially literate.

III.       Meetings and Procedures 

The Committee shall fix its own rules of procedure, which shall be consistent with the Bylaws of the Company and this Charter.  The Committee shall meet as provided by its rules, which shall be at least four times annually or more frequently as circumstances require.  The Board shall designate one member of the Committee as its Chairperson.  A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting and action of the Committee shall be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present.

Following each of its meetings, the Committee shall deliver a report on the meeting to the Board, including a description of all actions taken by the Committee at the meeting.  The Committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of the Board.

IV.       Committee Responsibilities

The Committee has the following responsibilities:

Document and Financial Reporting Review 

1. Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.

2. Review the Company’s annual audited financial statements prior to filing. Discuss with management and the independent auditors significant issues regarding accounting principles, critical accounting policies, accounting practices, and related judgments.

3. Be available (or designate the Chairman of the Audit Committee to be available) at the request of the independent auditors, management, or the Board, to discuss the Company’s quarterly financial results before filing.

4. Assure preparation of the Committee Report required to be included in the Company’s annual proxy statement.

5. Review significant findings reported by the independent auditors and the internal auditors and any response to such findings by management.

6. Assure procedures are developed and in place for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

7. Review the certifications by the Chief Executive Officer and Chief Financial Officer required under Sections 302 and 906 of the Sarbanes Oxley Act regarding internal control and fraud.

Independent Auditor

8. Appoint the Company’s independent auditor.

9. Receive and review the appropriate annual engagement letter and approve the fees and compensation to be paid to the independent auditor for the annual audit and quarterly reviews.

10. Review with the independent auditor the audit plan and pre-approve all audit and non-audit services to be provided by the independent auditor thereunder.

11. Consider any reports or communications, and responses by management thereto, submitted to the Committee by independent auditors that are required or referred to in PCAOB Auditing Standard No. 16- Communications with Audit Committees relating to the audit or other professional standards. 

12. Attempt to resolve all disagreements between the Company’s independent auditors and management regarding financial reporting.

13. On an annual basis (or prior to engagement of a new independent accounting firm), receive from the independent auditor the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board concerning independence, and discuss with the independent auditor the potential effects of the relationships that may reasonably be thought to bear on independence.

14. Evaluate the performance of the independent auditor and, if so determined by the Audit Committee, replace the independent auditor.

15. Discuss with management the timing and process for implementing rotation of the lead audit partner, the concurring partner and any other active audit engagement team partner.

16. Establish hiring policies governing employment by the Company or its subsidiary of employees of, or persons who have recently been employees of, the independent auditor.

Internal Audit

17. Approve the appointment, replacement, or dismissal of the internal auditor, and annually review the performance and independence of the internal auditor.

18. Review the annual audit plan for internal audit.

19. Annually review the internal audit charter.

Ethical compliance, legal compliance, and risk management

20. Participate, to the extent appropriate as determined by the Committee, in meetings with management, the internal auditor and the independent auditors, to review the Company’s major financial risk exposures (meaningthe financial reporting process and the safeguarding of assets) and the steps management has taken to monitor and control such exposures.

21. Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Sarbanes-Oxley Code of Ethics as reported to the Committee by regulatory agencies, external and internal auditors and legal counsel.

22. To the extent appropriate as determined by the Committee, review with the Company’s legal counsel legal matters that may have a material impact on the financial statements, the Company’s compliance policies and any material reports or inquiries received from regulators or governmental agencies.

23. Meet as needed with the Chief Executive Officer, Chief Financial Officer, the internal auditor and/or the independent auditor in executive sessions.

24. Conduct investigations to address disagreements, if any, between management and the independent auditor or to address compliance with laws and regulations and the Company’s Sarbanes-Oxley Code of Ethics.

V.        Evaluation of the Committee

The Committee shall, on an annual basis, evaluate its performance under this Charter.  In conducting this review, the Committee shall evaluate whether this Charter appropriately addresses the matters that are or should be within its scope.  The Committee shall address all matters that the Committee considers relevant to its performance.

The Committee shall deliver to the Board a report setting forth the results of its evaluation, including any recommended amendments to this Charter and any recommended changes to the Company's or the Board's policies or procedures.

VI.       Investigations and Studies:  Outside Advisers

The Audit Committee shall have the authority, to conduct any investigation appropriate to fulfilling its responsibilities and to retain, without need of approval of the engagement by the Board or management and at Company expense, special legal, accounting or other consultants to advise the Committee.  The Committee may request any officer or employee of the Company, the Company's outside counsel, the internal auditor, or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.

VII.      Adoption of Charter

This charter was adopted by the Board of Directors on March 9, 2004, and most recently amended and restated as of February 11, 2014.

 

 

CHARTER OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF HILLS BANCORPORATION

March 10, 2015

I. Purpose of the Committee

The Compensation Committee (the “Committee”) (a), oversees the administration of employee qualified benefit plans and other employee benefit programs, (b) oversees the administration of Named Executive, Executive and non-Executive officer compensation and compensation programs, (c) oversees the administration of incentive and equity-based compensation plans (d) oversees and produces such other certifications or disclosures with respect to compensation programs as may be required under applicable law, rules or regulations, and (e) employee culture issues.

II. Composition of the Committee

The Committee shall be comprised of every director of the Board who satisfies the criteria for independence under the corporate governance requirements of The Nasdaq Stock Market. In addition, the members of the Committee shall be “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code, and each member of the Compensation Committee shall also be a “non-employee director” as the term is defined by Rule 16b-3 of the Securities and Exchange Commission..

III. Meetings and Procedures

The Chairperson of the Board shall preside at each Committee meeting. In the event the Committee chair is not present at a Committee meeting, the Vice-chair of the Board shall preside at the meeting. A majority of the number of Committee members shall constitute a quorum for the transaction of business, and the action of a majority of those present at a meeting at which a quorum is present shall constitute an act of the Committee.

The Committee shall fix its own rules of procedure, which shall be consistent with the Bylaws of the Company and this Charter. The Committee shall meet at least annually and additionally as it deems necessary in order to fulfill its functions and keep written minutes of its meetings, which shall be recorded and filed with the books and records of the Company.

The Committee shall be provided with the resources and vested with the authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems appropriate, without seeking approval of management. The Committee may ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary. With respect to compensation consultants, if any, retained to assist in the evaluation of Chief Executive Officer or executive officer compensation, this authority shall be vested solely in the Committee.

IV. Committee Responsibilities

The responsibilities of the Committee, on behalf of the Board, shall be to:

1. Review all compensation policies, practices, and plans of the Company to determine whether they encourage excessive risk-taking or pose any other threat to the safety and soundness of the Company or its subsidiaries or are otherwise inconsistent with the shareholders’ long term best interests.

2. Review, monitor and approve the Company’s overall compensation policies, practices and plans and assess whether the compensation structure establishes appropriate incentives for the Company’s executive officers and other employees and aligns with the Company’s corporate goals and objectives.

3. Review any proposed new compensation arrangement for the Company’s executive officers which deviates materially from established compensation programs.

4. Review, develop and approve corporate goals and objectives related to the compensation of the Company’s named executive officers, evaluate the executive officers’ performance in light of those goals and objectives, and establish the form and amount of executive officer compensation based on those evaluations. Compensation for the executive officers shall be determined by a majority vote of the Committee members. The Chief Executive Officer shall not be present during any vote or deliberations related to his or her compensation. In determining the compensation level of the Chief Executive Officer and other executive officers of the Company, the Committee should consider:

a. the Company’s overall compensation program;

b. the individual’s performance, substantial experience, expertise and length of service with the Company;

c. progress toward the Company’s performance objectives;

d. rewards for performance of those having a significant impact on the Company’s profitability;

e. the overall financial performance of the Company;

f. the compensation levels of the Chief Executive Officer, and other executive officers of the Company in previous years;

g. the compensation levels of the Chief Executive Officer and other executive officers at businesses comparable to the Company;

h. the result of the most recent stockholder advisory vote on executive compensation (“Say on Pay Vote”); and

i. any additional factors that the Committee deems reasonable and appropriate.

5. Make recommendations to the Board of Directors regarding incentive compensation plans and equity-based plans for the Company. The Committee shall adopt and approve awards under incentive compensation plans and equity-based plans created by the Board of Directors, and shall review and monitor awards under such plans. The Committee shall ensure that such awards are administered in a manner consistent with the Company’s compensation strategy and the terms of the plans with respect to participation in the plans, vesting requirements and corporate financial goals. Additionally, the Committee shall approve the submission to stockholders of all new equity-based incentive plans of the Company and shall administer such plans.

6. Review with the Company’s Chief Executive Officer the management succession plans of the

7. Ensure that the Company includes in its annual proxy statement a nonbinding shareholder vote on executive compensation (“Say on Pay Vote”); each in accordance with, and do often as required by, the Rules and Regulations.

8. Review all compensation decisions of the Company considering the provisions of Section 162(m) of the Internal Revenue Code relating to the deductibility of compensation of executive officers of the Company.

9. Review and discuss with the Company’s management the Compensation Discussion & Analysis to be included in the Company’s proxy statement and determine whether to recommend to the Board that the Compensation Discussion & Analysis be included in the Company’s proxy statement and Annual Report filed on Form 10-K to be filed with the SEC.

10. Consider and approve the Report of the Compensation Committee for inclusion in the Company’s proxy statement.

11. Make recommendations regarding director compensation to the Board of Directors.

12. Review stock ownership by directors and executive officers.

13. Perform any other duties or responsibilities expressly delegated to the Committee by the Board.

14. Report the matters considered and actions taken by the Committee to the Board of Directors.

V. Evaluation of the Committee

The Committee shall, on an annual basis, evaluate its performance under this Charter. In conducting this review, the Committee shall evaluate whether this Charter appropriately addresses the matters that are or should be within its scope. The Committee shall address all matters that the Committee considers relevant to its performance.

VI. Adoption of Charter

This charter was adopted by the Board of Directors on March 10, 2015.

 

 

CHARTER OF THE GOVERNANCE AND NOMINATING COMMITTEE OF THE
BOARD OF DIRECTORS OF HILLS BANCORPORATION

March 10, 2015

I. Purpose of the Committee

The Governance and Nominating Committee (the “Committee”) shall be comprised of the independent directors of the Board to (1) assist in identifying individuals qualified to become Board members, and to recommend nominees for director (including evaluating candidates recommended by shareholders); (2) recommend the corporate governance guidelines applicable to the Company; (3) oversee an annual review of the Board’s performance; (4) recommend director nominees for each committee; (5) recommend a determination of each outside director’s “independence” under applicable rules and guidelines; (6) oversee the Company’s engagement with stockholders and other interested parties concerning governance and other related matters; (7) oversee reputation risk related to Committee’s responsibilities described in this Charter; and (8) perform such other duties and responsibilities consistent with this Charter.

II. Composition of the Committee

The Committee shall be comprised of every director of the Board who satisfies the criteria for independence under the corporate governance requirements of The Nasdaq Stock Market.

III. Meetings and Procedures

The Chairperson of the Board shall preside at each Committee meeting. In the event the Committee chair is not present at a Committee meeting, the Vice-chair of the Board shall preside at the meeting. A majority of the number of Committee members shall constitute a quorum for the transaction of business, and the action of a majority of those present at a meeting at which a quorum is present shall constitute an act of the Committee.

The Committee shall fix its own rules of procedure, which shall be consistent with the Bylaws of the Company and this Charter. The Committee shall meet at least annually and additionally as it deems necessary in order to fulfill its functions, and keep written minutes of its meetings, which shall be recorded and filed with the books and records of the Company.

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems appropriate, without seeking approval of management. The Committee may ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary.

IV. Committee Responsibilities

The responsibilities of the Committee, on behalf of the Board, shall be to:

1. Identify individuals believed to be qualified as candidates to serve on the Board, consistent with criteria approved by the Board, and recommend to the Board the selection of candidates for all directorships to be filled by the Board or by the stockholders at an annual or special meeting. In identifying candidates or nominees for director, or evaluating individuals recommended by stockholders, the Committee shall determine, in its sole discretion, whether an individual meets the minimum qualifications approved by the Board as set forth in section VI. and will consider the current composition of the Board in light of the communities and geographies served by the Company and interplay of the candidate’s or nominee’s experience, education, skills, background, gender, race, ethnicity and other qualities and attributes with those of the other Board members, as well as such other factors as the Committee deems appropriate.

2. Review and make recommendations, as deemed appropriate, regarding the size of the Board of Directors and matters relating to the retirement of Board members.

3. Consider any offer to resign from a member of the Board and, after considering any factor or other information as the Committee considers appropriate and relevant, recommend to the Board the action to be taken on tendered resignation.

4. Recommend members of the Board to serve on the committees of the Board, giving consideration to the criteria for service on each committee as set forth in the charter for such committee, as well as to any other factors the Committee deems relevant, recommend members of the Board to serve as the Chair of the committees of the Board, and recommend changes to the Board’s committee structure and responsibilities, including recommending changes to committee charters, as it deems advisable.

5. Annually review and assess the adequacy of the corporate governance guidelines of the Company and recommend any proposed changes to the Board for approval.

6. Oversee the Company’s reputation risk and engagement with stockholders and other interested parties concerning governance and other related matters, and shall work with the Board’s other committees on such engagement regarding matters subject to the oversight of such other committees.

7. Review stockholder proposals related to governance matters overseen by the Committee and recommend a response.

8. Direct members of the Company’s senior management to report any violations of or non-compliance with the Code of Ethics to the Committee Chair.

9. Be available to members of the Company’s senior management team to consult with and to resolve reported employee violations or instances of non-compliance with the Code of Ethics.

10. Determine an appropriate response to material violations of or non-compliance with the Code of Ethics including reporting any material violation of or non-compliance with the Code of Ethics to regulatory authorities.

11. Review requests for any waiver or exception to the Company’s Code of Ethics and recommend whether a waiver or exception should be granted.

12. Resolve actual and potential conflicts of interest a Board member may have and advise any such Board member on how to conduct him or herself in matters which may pertain to the conflict.

13. Delegate responsibility to subcommittees and individual members of the Committee as necessary or appropriate.

V. Board-Approved Criteria for Membership on the Board of Directors

In evaluating possible candidates for membership on the Board of Directors, the Board seeks to achieve a balance of knowledge, experience, and capability on the Board and will consider the qualifications of possible candidates based on the criteria described below. Members of the Board should have the highest professional and personal ethics and values, excellent personal and professional reputations, and must satisfy any necessary regulatory requirements to serve as Directors. They should have broad experience at the policy-making level in business, government, education, technology, or public interest. They should be committed to furthering the long-term as well as short-term interest of the Company and its shareholders, and in doing so they should be willing to consider the effect of any action on the Company’s shareholders, employees, suppliers, creditors and customers, and on the communities in which the Company and its subsidiary operate. They should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all Directors’ duties for the Company. The Board of Directors deems it a requirement that members of the Board reside within the trade area of the Bank and the Company. The Board also directs the Committee to take into consideration Board diversity when evaluating candidates, including experience, gender and ethnicity.

VI. Consideration of Nominees Recommended by Shareholders

The Committee will consider nominees for Board membership recommended by shareholders. In order to be considered for nomination by the Committee in connection with an Annual Meeting of Shareholders, advance notice of the recommendation must be received by the Company no later than 150 days prior to the anniversary of the prior year’s Annual Meeting of Shareholders. A shareholder’s recommendation should set forth: (i) as to each person whom the shareholder proposes the Committee nominate for election as a Director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director, if elected); and (ii) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the recommendation is made, (A) the name and address of such shareholder, as they appear on the Company’s books, and of such beneficial owner, (B) the number of shares of Common Stock that are owned (beneficially or of record) by such shareholder and such beneficial owner, (C) a description of all arrangements or understandings between such shareholder and such beneficial owner and any other person or persons (including their names) in connection with the nomination, and (D) a representation that such shareholder150 or its agent or designee intends to appear in person or by proxy at the annual meeting to place such candidate in nomination for election as a Director. Nominees recommended by shareholders will be evaluated in the same manner as other nominees. The Committee retains absolute discretion to either approve for nomination or reject any candidate recommended for consideration by a shareholder.

VII. Evaluation of the Committee

The Committee shall, on an annual basis, evaluate its performance under this Charter. In conducting this review, the Committee shall evaluate whether this Charter appropriately addresses the matters that are or should be within its scope. The Committee shall address all matters that the Committee considers relevant to its performance.

VIII. Adoption of Charter

This charter was adopted by the Board of Directors on March 10, 2015.


Spacer Image