Our complete set of processes, customs, policies, laws and institutions affecting the way Commerce Bank is directed, administered or controlled.
In addition to the By-laws, various resolutions and the Charters of its various committees, the Board of Directors (the “Board”) of the Company has adopted guidelines on significant corporate governance matters. Following is a description of those various elements that together create the corporate governance standards for the Company.
The Board believes that these Guidelines should be made available to the Company’s shareholders and investors. Management is authorized to make these Guidelines and the Committee charters available on the Company website and in other published material.
(1) the internal control over financial reporting of Commerce Bancshares, Inc. (the "Company") and the audits of its financial statements;
(2) the independent auditor's qualifications and independence;
(3) the performance of the Company’s internal audit function and independent auditors;
(4) the performance of the Company’s internal loan review function;
(5) compliance by the Company with legal and regulatory requirements;
(6) the performance of the Company’s enterprise risk management function.
The Audit Committee shall prepare the report required by the rules of the Securities and Exchange Commission (the "Commission") to be included in the Company's annual proxy statements.
The Audit Committee shall consist of no fewer than three members. The members of the Audit Committee shall meet the independence and experience requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), Nasdaq and the rules and regulations of the Commission. Audit Committee members must be able to read and understand financial statements at the time of their appointment. At least one member of the Audit Committee shall be an "audit committee financial expert" as defined by the Commission. The members of the Audit Committee shall be appointed by the Board on the recommendation of the Committee on Governance/Directors. Audit Committee members may be replaced by the Board.
The Audit Committee shall meet as often as it determines, but not less frequently than quarterly. The Audit Committee shall meet periodically with management, the internal auditors and the independent auditor in separate executive sessions. The Audit Committee may request any officer or employee of the Company or the Company's outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
The Audit Committee shall have the sole authority to appoint or replace the independent auditor. The Audit Committee shall be directly responsible for the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent auditor shall report directly to the Audit Committee.
The Audit Committee shall pre-approve all auditing services and permitted non-audit services, as outlined in its established policy, (including the fees and terms thereof) to be performed for the Company by its independent auditor, subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act, which are approved by the Audit Committee prior to the completion of the audit.
The Audit Committee shall have the authority, to the extent it deems necessary or appropriate, to retain independent legal, accounting or other advisors. The Company shall provide for appropriate funding, as determined by the Audit Committee, for payment of compensation to the independent auditor for the purpose of rendering or issuing an audit report and to any advisors employed by the Audit Committee.
The Audit Committee shall make regular reports to the Board. The Audit Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
The Audit Committee, to the extent it deems necessary or appropriate, shall:
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company's internal control over financial reporting is effective or that its financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditor.
The Committee on Governance/Directors (“Committee”) is appointed by the Board of Directors of the Company (“Board”), in consultation with the Chairman/CEO, to (i) assist the Board in meetings its duties and responsibilities to the stockholders; (ii) make recommendations to the Board on governance matters; (iii) review and recommend the re-nomination of incumbent directors; (iv) identify and make recommendations to the Board on individuals qualified to serve as Board members of the Company; (v) review and recommend committee appointments; (vi) consult on agenda items for Board meetings and make recommendations for agenda items for the Annual Meeting of Shareholders; (v) lead the Board in its annual review of the Board's performance; (vi) monitor the activities and performance of the Company on its relations with the public, its shareholders and government bodies; (vii) monitor the Company's performance and practices with respect to diversity in employment and products; and (viii) perform other related tasks as the Committee or Board shall, from time to time, determine.
The membership of the Committee shall consist of the Chairman of the Audit Committee and Chairman of the Compensation and Benefit Committee and such other members as the Board shall determine. All members shall meet the “independence” requirements imposed by law, rule or regulation.
The Board shall appoint a Chairman of the Committee. The Chairman shall (i) chair all meetings of the Committee; (ii) consult with the Chairman of the Board on agenda matters for Committee meetings; and (iii) perform such other activities as requested by the Committee, the Board or as circumstances indicate.
The Committee shall establish the Board's criteria for director service and shall be responsible for the recommendation on new or incumbent directors. The Committee shall provide oversight on the evaluation of the Board and management and provide to the Board an annual evaluation of the Committee's performance. In order to meet this responsibility, the Committee may solicit comments form all directors and make recommendations for improvement in Board activities.
The Committee shall periodically review and make recommendations on the Corporate Governance Guidelines established by the Board.
In order to assist the Board with its obligation to be informed on Company matters, the Committee, conjunction with the Chairman of the Board/CEO, shall consider the subjects that the Board or Committee would like to address. The Committee shall evaluate the quality of information and analysis presented to the Board or any Committee and the effectiveness of Board or Committee discussions. The Committee shall make its recommendations to the Board.
The Committee shall consider the matters to be presented at the Annual Meeting of Shareholders and make its agenda recommendations to the Board.
The Committee shall lead the Board in its annual review of Board performance. Such review may include the skills and characteristics of individual Board members as well as the composition of the Board as a whole. The Committee shall assess the independence of non-management directors. The Committee shall develop a procedure to survey the Board members that may include a self-evaluation on the role, participation and contribution of key directors.
The Committee shall consider the Company's relationship with its shareholders and, if appropriate, recommend enhancements to improve communications.
The Committee shall meet at such times and places as the Committee may choose. The Chairman of the Committee may also call for meetings at such times as the Chairman shall determine. Meetings may be held in person, by video-conference, or by teleconference.
The Committee may delegate its authority to a subcommittee.
It is anticipated that members of management will be in attendance at meetings of the Committee. In addition, the Committee may request the attendance of specific members of the Company's management. The Committee may meet in executive session without the attendance of any management personnel present.
The Committee shall report to the Board on its meetings and actions no later than the next Board meeting.
The Committee shall have the exclusive authority, at the expense of the Company, to retain independent consulting, legal and other advisors that it deems appropriate.
The Committee shall have access to the resources of the Company and may also request the assistance, counsel or advice of any management official of the Company.
This Charter will be made available to all interested persons. It may be published in the reports of the Company or on the official website of the Company.
The Compensation and Human Resources Committee (the "Committee") of the Board of Directors (the "Board") of Commerce Bancshares, Inc. (the "Company") is charged with oversight responsibility for executive and senior management performance and pay, adequacy and effectiveness of compensation plans, benefit plans, stock option plans and succession planning. The Committee is also responsible for reviewing the Company's Compensation Discussion and Analysis and for producing the annual report on executive compensation for inclusion in the Company's proxy statement, in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC").
The Committee shall consist solely of two or more members of the Board each of whom the Board has determined has no material relationship with the Company and each of whom (1) is an "Independent Director" as defined in the NASDAQ listing standards; (2) meets the independence requirements for service on a compensation committee set forth in Rule 10C-1(b)(1) under the Securities Exchange Act of 1934 (the "Exchange Act") and the NASDAQ listing standards; (3) is an "Outside Director" within the meaning of Section 162(m) of the Internal Revenue Code and its implementing regulations; and (4) is a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act.
Members of the Committee shall be appointed by the Board and shall serve at the pleasure of the Board and for such term or terms as the Board may determine.
The Board shall designate one member of the Committee as its chairperson. Whenever there are four or more members of the Committee, in the event of a tie vote on any issue, the chairperson's vote shall decide the issue. The Committee shall meet in person or telephonically at least once a year at a time and place determined by the Committee chairperson, with further meetings to occur, or actions to be taken by unanimous written consent, when deemed necessary or desirable by the Committee or its chairperson. The Committee may invite such members of management to its meetings, as it may deem desirable or appropriate. The Company's Chief Executive Officer ("CEO") shall not be present during voting or deliberations on his or her compensation.
The Committee shall have the following authority and responsibilities:
1.) Establish the Company's general compensation philosophy, and oversee the development and implementation of executive and senior management compensation programs.
2.) Review and approve annually corporate goals and objectives relevant to the compensation of the CEO, evaluate at least annually the performance of the CEO in light of those goals and objectives, and determine and approve the CEO's compensation level based on this evaluation. The Committee will provide an annual review of such matters to the full Board.
3.) Review and approve compensation for all other "executive officers" of the Company, which shall include all officers covered in Rule 16a-1(f) under the Exchange Act. The Committee will provide an annual review of such matters to the full Board.
4.) Review, approve and implement the Company's recoupment policy, and any other policy for recovery or "clawback" of erroneously awarded compensation that may be required by applicable rules and regulations of the SEC and NASDAQ.
5.) Review and approve compensation programs applicable to the executive officers of the Company, including, the material terms of the following, as applicable to executive officers of the Company: (a) incentive awards and opportunities; (b) any employment agreements and severance agreements, (c) any change-in-control agreements; and (d) any special or supplemental compensation and benefits for executive officers of the Company and former executive officers of the Company that are not available to a broad group of employees and are not in the nature of reimbursement of approved expenses, including supplemental retirement benefits and perquisites.
6.) Review and approve and, when appropriate, recommend to the Board for approval, the Company's incentive compensation plans and equity-based plans, including all stock-based plans, and where appropriate or required, recommend for approval by the shareholders of the Company. The Committee shall also have the authority to oversee and administer the Company's incentive compensation plans and equity-based plans, including designation of the employees to whom the awards are to be granted, the amount of the award or equity to be granted and the terms and conditions applicable to each award or grant, subject to the provisions of each plan. The Committee shall oversee the activities of the individuals and committees responsible for administering these plans, including the Corporate Director of Human Resources and the Retirement Committee, and discharge any responsibilities imposed on the Committee by any of these plans.
7.) To review the Company's incentive compensation arrangements to determine whether they encourage excessive risk-taking, to review and discuss at least annually the relationship between risk management policies and practices and compensation, and to evaluate compensation policies and practices that could mitigate any such risk.
8.) In consultation with senior management, oversee regulatory compliance with respect to compensation matters, including overseeing the Company's policies on structuring compensation programs to preserve tax deductibility. When determined appropriate by the Committee, establish performance goals and certify that those performance goals have been attained for purposes of Section 162(m) of the Internal Revenue Code.
9.) To review and discuss with management the Company's Compensation Discussion and Analysis ("CD&A") and the related compensation information, recommend that the CD&A and related executive compensation information be included in the Company's annual report on Form 10-K and proxy statement and produce the compensation committee report on executive officer compensation required to be included in the Company's proxy statement or annual report on Form 10-K.
10.) In conjunction with the full Board, advise and consult with management on succession planning and other significant human resources matters, as appropriate.
11.) Any other duties or responsibilities expressly delegated to the Committee by the Board from time to time.
The Committee shall have the authority, in its sole discretion, to select, retain and obtain the advice of a compensation consultant as necessary to assist with the execution of its duties and responsibilities as set forth in this Charter. The Committee shall have the authority, in its sole discretion, to retain and obtain the advice and assistance of outside legal counsel and such other advisers as it deems necessary to fulfill its duties and responsibilities under this Charter.
1.) The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the Committee.
2.) The Company shall provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the Committee.
3.) Notwithstanding the foregoing, the Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the compensation committee, other than in-house legal counsel, only after taking into consideration the factors set forth in NASDAQ Listing Rule 5605(d)(3). The Committee is not required to conduct an independence assessment for a compensation adviser that acts in a role limited to the following activities for which no disclosure is required under Item 407(e)(3)(iii) of Regulation S-K: (a) consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company, and that is available generally to all salaried employees; and/or (b) providing information that either is not customized for a particular issuer or that is customized based on parameters that are not developed by the adviser, and about which the adviser does not provide advice.
4.) Prior to the engagement of any compensation consultant, and at least annually thereafter, the Committee shall evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with Item 407(e)(3)(iv) of Regulation S-K.
The Committee will review and assess the adequacy of this charter on an annual basis and report the results thereof to the full Board.
The Committee Chairperson, or designee, shall make reports to the Board at each regularly scheduled meeting. The Committee shall confer with Company management and employees to the extent it may deem necessary or appropriate to fulfill its duties.
Commerce Bancshares and its affiliates are judged by the performance and conduct of their directors, officers, and employees. We recognize that our first duty to our customers, to our stockholders, and to the public in general, is to conduct all matters in a manner that merits public trust and confidence.
The following Code of Ethics (the “Code”) represents policies long followed by Commerce and is a restatement with amendments of the Code initially adopted in 1977. This Code is not all-inclusive and is not intended to be a substitute for good judgment concerning the basic principles of banking. The Code was revised in 1987, 2001, 2004 and has been again revised and approved by the Board of Directors of Commerce Bancshares, Inc. in April 2006. This Code of Ethics applies to all officers, employees and directors of Commerce Bancshares, Inc. and all its subsidiaries. An Ethics Committee, appointed by the Chief Executive Officer of Commerce Bancshares, Inc. is responsible for enforcement of the Code of Ethics.
Advisory Directors are neither employees, officers nor elected directors of Commerce but advise, consult and meet periodically with local Commerce market managers on economic and business matters of interest to Commerce and provide business contacts within their respective communities to enhance the local presence of Commerce. Advisory Directors are expected to be familiar with this Code and to comply with the spirit and intent of all provisions that affect their activities related to Commerce to support the objective that public trusts and confidence in Commerce is maintained.
Any individual violating this Code of Ethics is subject to appropriate disciplinary action, up to and including dismissal from employment with Commerce and, if appropriate, prosecution by Commerce.
The Ethics Committee promptly reports all violations of the Code and any significant events to the Auditor and General Counsel for presentation to the Audit Committee of the Commerce Board of Directors.
A conflict of interest may be defined as any situation in which someone’s private interests conflict or are otherwise incompatible with the official responsibilities of that person to Commerce or any of its subsidiaries. Therefore, a conflict of interest would arise where any employee, officer or director or a relative has a personal interest, financial or other, in a customer, borrower, supplier, or other person or company dealing with Commerce. Expectations regarding managing personal finances and banking matters are provided in the Financial Responsibility policy adopted by Commerce. Each employee, officer or director must manage his or her personal and business affairs so as to avoid situations that might lead to a conflict, or even the appearance of a conflict, between the employee's, officer's or director's self-interest and his or her duty to Commerce, its customers and its shareholders. In any such situation, the person must disqualify himself from any activities concerning the conflicting interests.
No employee, officer or director will commit funds of Commerce to a borrower or other entity when any part of those funds will be to the personal benefit, directly or indirectly, of the employee, officer or director committing the funds.
Investing by an officer or employee in securities of a publicly traded corporation is permissible without prior disclosure provided that the total ownership will not exceed 5% of any class or type of issued and outstanding stock or debt obligation of any corporation. If any officer or employee or member of his or her immediate family invests, directly or indirectly, in a business in excess of 5% of any class of issued or outstanding securities of a corporation or any percentage of ownership in a partnership, limited liability company or operates a sole proprietorship doing business with Commerce, that investment must be reported to the Ethics Committee. Further, any Commerce officer or employee is not to service the account of such corporation or business as a loan officer or relationship manager or be in a purchasing position if it is a supplier to Commerce. It should be noted that the rules relative to investment for certain Commerce Trust Company personnel are more restrictive than the rules set forth in this policy.
Directors, officers and employees or members of their immediate family shall not purchase any real or personal property which Commerce owns or in which it has a security interest without prior approval obtained through the Ethics Committee, with full value being paid and the transaction properly documented on the books of Commerce. The property must also have been available to the general public.
No director, officer or employee or member of such person's immediate family shall purchase or sell any assets from or to or borrow funds from any fiduciary account being administered by Commerce, unless the purchase has been approved by appropriate court order.
No director, officer or employee shall engage in any self-dealing or otherwise trade on his/her position with Commerce. Neither can a director, officer or employee accept a business opportunity not generally available to the public from anyone doing, or seeking to do, business with Commerce.
Except for a member of the officer's or employee's immediate family, prior approval obtained through the Ethics Committee is required before acceptance by an officer or employee of an appointment as a fiduciary or co-fiduciary (executor, administrator, guardian, trustee or conservator) either with any of the Commerce Banks or with another person, firm, or corporation. In accordance with industry standards, no officer or employee of a commercial bank may receive a fee for acting as co-fiduciary with the bank unless specific approval is made by its Board of Directors.
Prior approval obtained through the Ethics Committee is required before an officer or employee may accept a position as officer or director of a corporation or become a member of a partnership, limited liability company, sole proprietorship or other business entity doing business with Commerce.
While there may be exceptions under certain circumstances, directors, officers, or employees of a commercial bank are prohibited by statute from dual service in the following areas:
Officers and employees are encouraged to take part in professional organizations, church, charitable, educational, fraternal or other civic activities so long as such activities do not impair the performance of or conflict with company duties. It is also expected that such activity will reflect favorably upon Commerce.
No corporate funds are to be used for political contributions without the prior approval of the Chairman of the Board or the President of Commerce Bancshares, Inc. Any officer, employee or director participating in political activities does so as an individual and not as a representative of Commerce. To avoid any possible inference of corporate or affiliate company sponsorship or endorsement, the corporate name or address should not be used in mailed material or fund collection, nor should Commerce be identified in any advertisement or literature.
No director, officer, or employee is to engage in providing special favors or unusual gifts to elected officials or act in any manner that could be construed as a "pay-off" upon behalf of Commerce.
Any officer or employee desiring to become a candidate for an elective political office or to accept appointment to a national, state or local government office, board, commission committee, or similar entity must have such activity approved through the Ethics Committee. If such approval is granted and the officer or employee is subsequently elected or accepts an appointment, he or she must abstain from participating in discussions or voting on matters in which the interests of Commerce are affected.
Officers or employees may not borrow either directly or indirectly, from a customer of the bank or any trust, corporation, partnership, limited liability company, or other entity owned or controlled by a customer or suppliers of Commerce, other than recognized lending institutions. Any borrowings from other lending institutions should be made on the same terms and conditions, including rates of interest and security, as such institution would charge or require from its regular borrowing customers. The term "borrow" does not include a purchase from a customer or supplier resulting in an extension of credit in the normal course of business, nor does this preclude borrowing from a relative who is a customer.
No officer, employee or director shall sign on customer's accounts, have access to customer's safe deposit boxes or otherwise represent or act for a customer whether at Commerce or another financial institution. This includes being designated as “payable on death” or having power of attorney for a customer as well as being a signer on an account for a charitable organization, church or professional organization with which associated. However, these restrictions do not apply to a director who is a licensed attorney and who is acting in such capacity with respect to a client who is a Commerce customer. In addition, these restrictions do not prohibit such acts where there is an ownership capacity or a close family relationship. Exceptions may be made, after review by the Ethics Committee, when a Commerce officer, employee or director is designated as treasurer (or similar position) for a professional, church, charitable, educational, fraternal organization or other civic affairs with accounts at Commerce.
Exceptions to the foregoing general prohibitions are:
In the event any employee, officer or director is offered, receives or anticipates receiving anything of value from a customer, vendor, supplier or consultant of Commerce beyond what is expressly authorized in the Code of Ethics, written disclosure of that fact shall be made promptly to the Ethics Committee. Likewise, if an employee, officer or director learns that another employee, officer or director will or may receive anything of value from a customer, vendor, supplier or consultant beyond what is expressly authorized herein, that information must be provided to the Ethics Committee for its investigation and review. In such instances, the disclosure will be reported by the Ethics Committee for review by senior management of Commerce Bancshares, Inc. For example, an employee cannot allow a customer to provide for that employee in his/her will or estate. If an employee becomes aware that a customer intends to do so, the employee must contact his/her manager immediately. Should such a bequest occur, the employee is obligated to refuse it.
"Whoever knowing that an offense (breach of federal criminal law) has been committed receives, relieves, comforts or assists the offender in order to hinder or prevent his apprehension, trial or punishment is an accessory after the fact." An accessory after the fact is subject to fine and imprisonment as provided in the law.
A waiver of any provision of the Code of Ethics for an executive officer or director may only be granted by the Board of Directors. Any such waiver and the reasons for the waiver must be promptly reported by the Board of Directors to the shareholders in the format and within the timeframe required by regulatory authority.
All directors, officers and employees are expected to read and understand this statement of policy and to review it periodically in order to be alert to situations that might involve, appear to involve, or have the potential to result in a violation of this Code. Any questions regarding the guidelines should be directed to the Ethics Committee, or the Chief Executive Officer. This Code will be provided as a supplement to the Employee Handbook as well as the Human Resources Policy Manual, and is expected to be understood and complied with by all Commerce employees.
As part of this policy, each officer will be expected to annually certify to the Auditor of Commerce Bancshares, Inc. that he or she is familiar with and in compliance with this Code.
"All directors, officers, and employees in the banking industry automatically assume responsibility for seeking the confidence and trust of their customers and stockholders. It is the goal of Commerce Bancshares to assure the community that all corporation transactions are handled with propriety, confidentiality, and the honesty required to further gain and retain public trust. We in Commerce Bancshares seek your support of this goal. You must constantly analyze your duties as a bank employee in order to avoid any actions that could be interpreted as a conflict of interest or breach of public faith. It is also your duty to report to your superiors or to the management of Commerce Bancshares or to any member of its Audit Committee any known or suspected activities of others which conflict with this policy. Any employee acting in any manner which discredits the corporation through a dishonest or fraudulent act will be subject to termination. With your understanding and support of this and our other goals, Commerce Bancshares will continue to be a leader in the banking community by maintaining the highest standards of ethics."
Commerce Bancshares, Inc. (“Commerce”) requires compliance with its Code of Ethics (“Commerce Code of Ethics”) by all its officers, employees and directors and the officers, employees and directors of all of its subsidiaries. In addition to that Code of Ethics, the Board of Directors has adopted the following Code of Ethics (“Code”) relating to conduct in the financial and accounting areas of the company. The Code shall apply to:
You will conduct your duties in accordance with all applicable laws and regulations. You will encourage all those responsible to you to also comply with those laws and regulations. You will stay informed on those laws and regulations applicable to the Company and your duties and ensure that those reporting to you are also informed.
You must avoid any personal activity or association that could appear to influence your judgment or affect the best interests of the Company. You will refer to the Commerce Code of Ethics for guidance on those activities that create or give the impression of creating a conflict of interest. You will seek the guidance of the company's Ethics Committee on any questions you may have on conflicts of interest.
You recognize that Senior Financial Officers have the primary responsibility for the accurate and timely reporting of the financial condition and performance of the Company. You will work, and encourage those who are responsible to you, to provide full, fair, accurate, complete, objective and timely financial disclosures to the Board of directors, stockholders, the Securities and Exchange Commission and all banking regulators. You will maintain all books and records and reflect all transactions accurately and completely.
You will respect the confidentiality of information acquired in the course of my work except when authorized or otherwise legally obligated to disclose. Confidential information acquired in the course of your work is not to be used for personal advantage.
You will promptly report any violations of this Code or the Commerce Code of Ethics observed by you to such persons as appropriate. Those persons might include your immediate supervisor, the Chief Executive Officer, the Auditor, the General Counsel or the Chairman of the Ethics Committee. You may also use the Complaint Procedures that have been established by the Audit Committee of the Board of Directors. You understand that any such reporting is confidential and that you are fully protected from retaliation.
No waivers of any provision of this Code may be made except by the Ethics Committee or the Board of Directors. Only the Board of Directors may amend this Code. Any waiver or amendment shall be reported as required by law or regulation. You understand that any violation of this Code can lead to disciplinary action including termination.
The purpose of the Related Party Transaction Policy ("Policy") is to establish a procedure for the identification and approval of transactions by Commerce Bancshares, Inc. ("Company") with those persons deemed "related parties," as defined herein, that are material or not in the ordinary course of business.