Washington Banking Company and Subsidiaries Corporate Governance and Nominating Committee Charter

This Corporate Governance and Nominating Committee Charter ("Charter") has been adopted by the Board of Directors ("Board") of Washington Banking Company and its subsidiaries, (collectively the "Company").


PURPOSE OF COMMITTEE
COMPOSITION
COMMITTEE RESPONSIBILITIES
OUTSIDE ADVISORS
TERM
MEETINGS; QUORUM AND NOTICE


PURPOSE OF COMMITTEE

The primary functions of the Corporate Governance and Nominating Committee of the Board ("Committee") are to assist the Board in fulfilling its responsibilities in providing for qualified board succession and for promoting the integrity of the Company through the establishment of appropriate corporate governance principles.

The Committee's primary duties and responsibilities are to:
  • Identify individuals who qualify as potential board candidates, consistent with criteria established by the Board

  • Objectively consider all potential candidates, regardless of whether the candidate was recommended by the Board, a shareholder or other source and to recommend candidates to the Board for election at the next annual shareholders meeting

  • Develop and recommend corporate governance principles to the Board

  • Oversee and evaluate the effectiveness of the Company's corporate governance principles

The Committee may also have such other duties as may from time to time be assigned by the Board.
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COMPOSITION

The Committee shall be comprised of three (3) or more directors appointed by the Board based on the recommendation by the Chair of the Board. All members of the Committee shall be free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a Committee member. Each Committee member shall meet the definition of "independence" under the applicable rules and regulations of the Securities and Exchange Commission (the "SEC") promulgated under the Sarbanes-Oxley Act of 2002 (the "SOX Act") and shall also meet the requirements of applicable rules and regulations of The Nasdaq Stock Market or any other exchange on which the Company's securities are traded.
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COMMITTEE RESPONSIBILITIES

The general activities of the Committee are described below. In carrying out its responsibilities, the Committee believes that its policies and procedures should remain flexible enough to react to changing conditions while ensuring that the practices of the Company reflect its ethical principles and are in accordance with all legal and regulatory requirements.

Director Nominations and Qualifications

In identifying individuals who qualify as potential board candidates, the Committee's responsibility is to seek to ensure that the Board is comprised of directors who possess individual skills and knowledge that contribute to the effectiveness of the Board as a whole in fulfilling its fiduciary duties and in achieving its objectives.

The Committee may, from time to time, solicit ideas for potential director candidates through a variety of sources. These sources include, among others: other board members, Company executives, personal acquaintances of the individual Committee members, shareholders and research firms and/or database searches.

The Company considers director nominations from shareholders. In accordance with the Company's Bylaws, shareholder nominations must be made in writing not less than fourteen (14) nor more than fifty (50) days prior to the annual meeting of shareholders, and must be delivered or mailed to the Chairman of the Company. However, if less than twenty-one (21) days' notice of the annual meeting is given to shareholders, the notification must be mailed or delivered to the Chairman not later than the close of business on the seventh day following the day on which notice of the annual meeting was mailed. Such notification should contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of stock of WBCO that will be voted for each proposed nominee; (d) the name and address of the notifying shareholder; (e) the number of shares of stock of WBCO owned by the notifying shareholder; and (f) whether the nominee has agreed to serve if elected. Nominations not made in accordance with the above requirements may be disregarded by the Chairman of the annual meeting, in his discretion, and upon the Chairman's instruction, the vote teller may disregard all votes cast for such a nominee.

At a minimum, director candidates must meet the following qualifications: (1) agree to accept the nomination, acknowledging that he or she has sufficient time to devote to the activities of the Board, (2) be independent of management within the meaning of currently applicable rules of the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Securities and Exchange Commission ("SEC") and the Nasdaq National Market listing requirements, and (3) meet all other applicable laws, rules, and regulations related to service as a director of the Company.

Candidate Evaluation

It is the responsibility of the Committee to objectively evaluate potential candidates. Board candidates, including directors up for reelection, are evaluated based on the same criteria. In evaluating candidates, the Committee considers various factors such as: broad-based business and professional skills and experiences, banking experience and financial acumen, concern for long-term interests of the shareholders, personal integrity, freedom from conflicts of interest, sound business judgment, community involvement and diversity of viewpoint.

The Board desires to have at least one director who possesses the requisite experience and expertise to qualify as an "audit committee financial expert" as defined by applicable rules of the SEC.

Candidates are evaluated on a case-by-case basis, keeping in mind that the Committee's responsibility is to utilize the qualities and talents of the individual members to strengthen the board in the aggregate.

As the Committee identifies qualified candidates through the initial evaluation process, the Committee may choose to form subcommittees, consisting of one or more members, to interview the candidate and communicate that evaluation back to the full Committee. If deemed appropriate, follow-up interviews may be scheduled with other Board members and or Company executives. Prior to recommending a candidate to the Board, background and reference checks will be conducted on the candidate.

Corporate Governance

The culture of a corporation is created through the actions of its leaders. The Board established guiding principles for the Company using Mission, Vision and Values Statements. Those statements are reviewed annually and revised as necessary by the full Board.

Directors and officers of banks have duties of loyalty and care, as stated in the FDIC Statements of Policy: "The duty of loyalty requires directors and officers to administer the affairs of the bank with candor, personal honesty and integrity. The duty of care requires directors and officers to act as prudent and diligent business persons in conducting the affairs of the bank."

The Committee uses the above statements as the basis for establishing and overseeing effectiveness of the Company's corporate governance practices. Specific responsibilities of the Committee include:
  • Establishing effective methods and practices by which the management team will operate and ensuring that procedures are in place for monitoring and evaluating the competency of management. This process could include obtaining information through Board meeting reports, open communication with management, and having access to third party reviews, in addition to other methods.
  • Ensure adherence to Director independence standards and establish appropriate separations of interest.
  • Perform any other activities consistent with this Charter, the Company's Bylaws and governing law as the Board or the Committee deems necessary or appropriate.
  • Review and update this Charter periodically, at least annually, as conditions dictate.
  • Report through the Committee Chair to the Board following the meetings of the Committee.
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OUTSIDE ADVISORS

The Committee shall have sole authority to retain, at the Company's expense, and to terminate at its discretion, any firm or advisor the Committee may deem necessary or appropriate, including without limitation any firm to identify director candidates, and any legal, accounting, investment banking or other advisor that it deems necessary for the fulfillment of its responsibilities, including the sole authority to approve fees and other retention terms. The Committee may, to the fullest extent not prohibited by applicable law, rely upon the advice, guidance and input of such advisors.
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TERM

The members of the Committee shall be appointed at the annual organizational meeting of the Board and shall serve a term of one (1) year or until their respective successors shall be duly elected and qualified. No Committee member shall be removed except by majority vote of the independent directors of the full Board then in office, excluding for such purpose the presence and vote of the Committee member whose removal is in question. Notwithstanding the foregoing, the term of any member's service on the Committee shall terminate immediately upon such person's resignation, withdrawal or removal from the Board.
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MEETINGS; QUORUM AND NOTICE

The Committee members shall meet as needed or appropriate in their respective judgments with meetings scheduled as called by the Chair of the Committee or any two (2) members, but not less frequently than two times annually, either in person or telephonically, and at such times and places as they shall determine. A simple majority of the members of the Committee shall constitute a quorum for the taking of any action by the Committee. Notice of any meeting shall be deemed given and received if transmitted at a time and in the manner set forth in the Company's Bylaws for a notice of meetings of directors generally, and if so transmitted shall be deemed effective as set forth in such Bylaws. Members of management and/ or consultants or advisors may be invited by the Committee to participate in meetings to provide information and expertise and to facilitate discussion, when appropriate.
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