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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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SCHEDULE 14A

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Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No. )

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Payment of Filing Fee (Check the appropriate box):

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Notice of Annual Meeting of Shareholders

Bank of Marin Bancorp

Tuesday, May 10, 2022 – 6:00 p.m. Pacific Time

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To Our Shareholders:

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Notice is hereby given of the Annual Meeting of Shareholders of Bank of Marin Bancorp.  The meeting will be held at 6:00 p.m. on Tuesday, May 10, 2022 at the Bill and Adele Jonas Center, College of Marin, Indian Valley Campus, 1800 Ignacio Boulevard, Novato, California and live via webcast over the internet at www.meetnow.global/MKP2DL7.  To support the health and well-being of our shareholders, this year’s Annual Meeting will again include a virtual meeting format live via webcast in addition to the in person meeting.  We have designed our virtual format to enhance, rather than constrain, shareholder access, participation and communication.  We believe that hosting a virtual meeting along with the regular in person meeting will enable greater shareholder attendance and participation from any location around the world.  For more information, see “Participation in the Virtual Annual Meeting” in our Proxy Statement.

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Your vote is important to us.  Whether or not you expect to attend the Annual Meeting  in person or live via webcast, please submit a proxy as soon as possible to instruct how your shares are to be voted at the Annual Meeting.  If you participate in and vote your shares at the Annual Meeting, your proxy will not be used.

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If you would like to attend the Annual Meeting in person, you must pre-register at www.bankofmarin.com/annualmeeting by May 5, 2022.  For questions, email events @bankofmarin.com.

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Our bylaws provide that nominations for election to the board of directors of the Company may be made by the board of directors or by any shareholder of the Company’s stock entitled to vote for the election of directors. Nominations, other than those made by or on behalf of the existing management of the Company, must be made in writing and delivered or mailed to the Chairman of the Board or the Chief Executive Officer not less than 14 days nor more than 50 days prior to any meeting of shareholders called for the election of directors. The notification of nomination should contain the following information to the extent known by the notifying shareholder: (a) name and address of the proposed nominee(s); (b) principal occupation of the proposed nominee(s); (c) total number of shares that will be voted for the proposed nominee(s); (d) name and residence address of the notifying shareholder; and (e) number of shares owned by the notifying shareholder.

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Nominations not made in accordance with this section may be disregarded by the Chairman of the meeting, and upon instruction, the Inspector of Election shall disregard all votes cast for each such nominee.

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One copy of the Annual Report on Form 10-K and Proxy Statement is being delivered to multiple shareholders sharing an address unless the Company has received contrary instructions from one or more of the shareholders. The Company will deliver promptly upon written or oral request a separate copy of the Annual Report and Proxy Statement to a shareholder at a shared address to which a single copy of the document was delivered. If a shareholder wishes to receive a separate copy or has received multiple copies at one address and would like to receive a single copy in the future, please contact Computershare by phone at (800) 368-5948 or by written request to Bank of Marin Bancorp c/o Computershare, P.O. Box 505000, Louisville, KY 40233-5000.  Overnight correspondence should be mailed to Bank of Marin Bancorp c/o Computershare, 462 South 4^th Street, Suite 1600, Louisville, KY 40202.  The shareholder website is www.computershare.com/investor.  

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE

MEETING OF SHAREHOLDERS TO BE HELD ON MAY 10, 2022

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Copies of the Annual Meeting Proxy Material, including the Proxy Statement and the Annual Report on Form 10- K, are also available at: www.edocumentview.com/BMRC.

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By order of the Board of Directors,

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Nancy Rinaldi Boatright

Secretary

April 5, 2022

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PROXY STATEMENT OF
BANK OF MARIN BANCORP

VOTING

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GENERAL PROXY STATEMENT INFORMATION

Bank of Marin Bancorp, a corporation existing and organized under the laws of the State of California, is authorized to issue up to 30,000,000 shares of common stock and 5,000,000 shares of preferred stock. All of the outstanding shares are voting common shares and are entitled to vote at the Annual Meeting. Only those common shareholders of record as of March 21, 2022 (the “Record Date”) will be entitled to notice of, and to vote at, the meeting. On that date,16,001,278 shares of common stock were outstanding. The determination of shareholders entitled to vote at the meeting and the number of votes to which they are entitled was made on the basis of the Company’s records as of the Record Date.  The presence in person or by proxy (including internet and telephone voting) of a majority of the outstanding shares of stock entitled to vote at the Annual Meeting will constitute a quorum for the purpose of transacting business at the meeting. Abstentions, shares as to which voting authority has been withheld from any nominee and "broker non-votes" (as defined below), will be counted for purposes of determining the presence or absence of a quorum.

A broker or nominee holding shares for beneficial owners may vote on certain matters at the meeting pursuant to discretionary authority or instructions from the beneficial owners, but with respect to other matters for which the broker or nominee may not have received instructions from the beneficial owners and may not have discretionary voting power under the applicable rule of the New York Stock Exchange or other self-regulatory organizations to which the broker or nominee is a member, the shares held by the broker or nominee may not be voted. Such un-voted shares are called "broker non-votes." The rules of the New York Stock Exchange and other self-regulatory organizations generally permit a broker or nominee, in the absence of instructions, to deliver a proxy to vote for routine items, such as the ratification of independent auditors. Consequently, shares held by a broker or nominee will constitute "broker non-votes" regarding non-routine items, such as the election of directors and the advisory vote on executive compensation.  It is important that you provide voting instructions to your broker or nominee.

If your shares of common stock are held in a brokerage account or by a bank, trustee or other nominee (i.e., your shares are held in “street name”), you will receive a Voting Instruction Form from that nominee.  You must provide voting instructions by completing the Voting Instruction Form and returning it to your broker, bank, trustee or other nominee for your shares to be voted.  We recommend that you instruct your broker, bank, trustee or other nominee to vote your shares on the Voting Instruction Form provided.  The proxy is revocable and will not affect your right to vote in person if you attend the 2022 Annual Meeting.

Anyone acting as proxy agent for a shareholder must present a proxy card that has been properly executed by the shareholder, that authorizes the agent to so act, and that is in form and substance satisfactory to the Inspector of Election and consistent with the Bylaws.

Participation in the Virtual Annual Meeting

The Annual Meeting will also be available in a virtual meeting format by live webcast over the internet.  You are entitled to participate in the Annual Meeting only if you were a shareholder of record of Bank of Marin Bancorp as of the close of business on the Record Date (“Registered Holder”), or if you hold a valid legal proxy for the Annual Meeting and you are a beneficial holder and hold your shares through an intermediary, such as a bank or broker (“Beneficial Holder”).  

As a Registered Holder, you will be able to attend the Annual Meeting online, ask a question and vote by visiting www.meetnow.global/MKP2DL7 and following the instructions on your notice, proxy card, or in the instructions that accompanied your proxy materials.  

If you are a Beneficial Holder and wish to attend the Annual Meeting online via webcast (with the ability to ask a question and/or vote), you may do so by using one of the following options:

Submit proof of your proxy power (“Legal Proxy”) from your broker or bank reflecting your Bank of Marin Bancorp holdings, along with your name and e-mail address to Computershare (see below for instructions).

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General Proxy Information

Requests for registration as set forth in (1) above must be labeled as “Legal Proxy” and be received no later than 2:00 p.m. Pacific Time, on May 5, 2022.  You will receive a confirmation of your registration by e-mail after Computershare receives your registration materials.

Requests for registration should be directed to Computershare at the following:

By e-mail: Forward the e-mail from your broker granting you a Legal Proxy, or attach an image of your Legal Proxy, to legalproxy@computershare.com.

By mail: Computershare

Bank of Marin Bancorp Legal Proxy

P.O. Box 43001

Providence, RI 02940-3001

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Beneficial Holder Access to Virtual Meetings: 2022 Proxy Season

For the 2022 proxy season, an industry solution has been agreed upon to allow Beneficial Holders to register online at the Annual Meeting to attend, ask questions and vote.  We expect that the vast majority of Beneficial Holders will be able to fully participate using the control number received with their Voting Instruction Form.  Please note, however, that this option is intended  to be provided as a convenience to Beneficial Holders only, and here is no guarantee this option will be available for every type of Beneficial Holder voting control number.  The inability to provide this option to any or all Beneficial Holders shall in no way impact the validity of the Annual Meeting.  Beneficial Holders may choose the Register in Advance of the Annual Meeting option above, if they prefer to use this traditional, paper-based option.

Please go to www.meetnow.global/MKP2DL7 for more information on the available options and registration instructions.

The meeting, both in person and online, will begin promptly at 6:00 p.m. Pacific Time.  We encourage you to access the online meeting prior to the start time, leaving ample time for registration.  Please follow the registration instructions as outlined in this proxy statement.

Revocability of Proxies

A proxy for use at the meeting is enclosed. Any shareholder who executes and delivers such proxy has the right to revoke it at any time before it is exercised by filing with the Corporate Secretary of the Company an instrument revoking it or by filing a duly executed proxy bearing a later date. In addition, the powers of the proxy holder will be revoked if the person executing the proxy is present at the meeting, revokes such proxy and elects to vote in person. Subject to such revocation, all shares represented by a properly executed proxy received in time for the meeting will be voted by the proxy holders in accordance with the instructions on the proxy.

IF NO INSTRUCTION IS SPECIFIED WITH REGARD TO A MATTER TO BE ACTED UPON, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR LISTED HEREIN, “FOR” THE APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION, AND "FOR" RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITOR.

Person Making the Solicitation

This solicitation of proxies is being made by the Board of Directors of the Company. The expense of preparing, assembling, printing, and mailing this proxy statement and the material used in the solicitation of proxies for the meeting will be borne by the Company. It is contemplated that proxies will be solicited principally through the use of the mail, but officers, directors, and employees of the Company and Bank of Marin may solicit proxies personally or by telephone, without receiving special compensation therefor.  Although there is no formal agreement to do so, the Company may reimburse banks, brokerage houses, and other custodians, nominees, and fiduciaries for their reasonable expense in forwarding these proxy materials to their principals.

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General Proxy Information

Voting Rights

In connection with the election of directors, in accordance with California law, each shareholder entitled to vote may vote the shares owned by such shareholder as of the Record Date cumulatively if a shareholder present at the meeting has given notice at the meeting, prior to the voting, of his or her intention to vote cumulatively. If any shareholder has given such notice, then all shareholders entitled to vote for the election of directors may cumulate their votes for candidates properly nominated. Under cumulative voting, each share carries as many votes as the number of directors to be elected, and the shareholder may cast all of such votes for a single nominee or may distribute them in any manner among as many nominees as desired. In the election of directors, the twelve nominees receiving the highest number of votes will be elected.

On all other matters submitted to the vote of the shareholders, each shareholder is entitled to one vote for each share of common stock owned on the books of the Company as of the Record Date.

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The persons named below are nominated by the Board of Directors and, unless the shareholder marks the proxy to withhold the vote, the enclosed proxy, if returned and not subsequently revoked, will be voted in favor of their election as directors. If for any reason any such nominee becomes unavailable for election, the proxy holders will vote for such substitute nominee as may be designated by the Board of Directors. The proxy holders reserve the right to cumulate votes for the election of directors and to cast all of such votes for any one or more of the nominees, to the exclusion of the others, and in such order of preference as the proxy holders may determine in their discretion if cumulative voting is involved as described above under "Voting Rights.”

The following table sets forth the names of the persons nominated by the Board of Directors for election as directors and certain additional information as of March 21, 2022, including biographical information, qualifications, business experience and directorships with other public companies of each nominee covering at least the last five years.

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Proposal Number 1: Election of Directors

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Proposal Number 1: Election of Directors

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Proposal Number 1: Election of Directors

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Proposal Number 1: Election of Directors

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Proposal Number 1: Election of Directors

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Proposal Number 1: Election of Directors

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Proposal Number 1: Election of Directors

Arrangements or Understandings Regarding Service as a Director

On May 10, 2021, the Company entered into an agreement (the “Kelly Trust Agreement”) with the Jon S. Kelly Administrative Trust and certain beneficiaries of the Kelly Trust (collectively, the “Kelly Trust Parties”), pursuant to which the Kelly Trust Parties agreed to withdraw their nomination notice, and the Company agreed to increase the size of the Board to twelve members and to appoint one new independent director (the “Kelly Trust Nominee”) effective May 10, 2021.  It was further agreed that the Kelly Trust Nominee would be Sanjiv Sanghvi, and the Company appointed him as a director effective May 10, 2021.  Mr. Sanghvi was also added as a member of the Nominating and Governance Committee and the Compensation Committee.  The Company reviewed Mr. Sanghvi through its customary director candidate review process, and determined he was qualified.  The Company also nominated Mr. Sanghvi for election at the Annual Meeting.

The Kelly Trust Agreement contains customary standstill provisions and voting commitments.  If during the standstill period the Kelly Trust Nominee becomes unavailable to serve as a director, the Kelly Trust Parties retain the right to identify a successor, who must be reasonably satisfactory to the Board of Directors.  The Kelly Trust Agreement is more fully described in the Company’s Current Report on Form 8-K filed with the SEC on May 11, 2021.

The Company anticipates entering into an amendment to the Kelly Trust Agreement to extend its term by a year, confirm Mr. Sanghvi as the continuing Kelly Trust Nominee, appoint Mr. Sanghvi to the Bank of Marin Board of Directors, and additionally seat Mr. Sanghvi on the Bank of Marin Asset/Liability Management Committee, among other things.

None of our other directors or nominees have any agreements or arrangements with any other person or entity in connection with the director’s or nominee’s candidacy or service on our Board.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS

A VOTE “FOR” EACH OF THE DIRECTORS NOMINATED FOR RE-ELECTION

IN PROPOSAL ONE.

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Proposal Number 1: Election of Directors

Director Compensation

The following table sets forth certain information regarding the compensation earned by or awarded to each non-employee director who served on the Board of Directors in 2021.

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CORPORATE GOVERNANCE

Director Independence

As of the Record Date (March 21, 2022), each of the persons nominated for election as a director, except for Russell A. Colombo (the former CEO of the Company) and Timothy D. Myers (the CEO of the Company) was “independent” within the meaning of NASDAQ’s listing rules.

Board Meetings and Committees

There were six (6) regular meetings and seven (7) special meetings of the Board of Directors of the Company during 2021. Each director standing for re-election to the Board attended at least 75% of the aggregate number of meetings of the Board of Directors and meetings held by all committees of the Board on which he/she served.

The Board of Directors is responsible for the overall affairs of the Company. To assist it in carrying out this responsibility, the Board has delegated certain authority to several Company committees, the duties of which and membership at March 21, 2022 were as follows:

● = Committee Member

The Executive Committee, subject to the provisions of law and certain limits imposed by the Board of Directors, may exercise any of the powers and perform any of the duties of the Board of Directors between Board meetings. The Committee met five (5) times in 2021.

The Nominating and Governance Committee assists the Board in carrying out its duties and functions regarding corporate governance oversight and Board membership nominations.  Subject to the standards required by applicable NASDAQ listing rules, the Committee is composed of no less than a majority of independent directors of the Board.  The Committee will consider suggestions or recommendations for Board membership received from shareholders. Shareholders who wish to make such suggestions or recommendations should forward their written suggestions to the Chairman of the Nominating & Governance Committee addressed to Bank of Marin Bancorp, Attn: Corporate Secretary, 504 Redwood Boulevard, Suite 100, Novato, CA  94947. Whether a person is recommended for Board membership by a shareholder or by a director of the Company, the standards and qualifications to be considered for Board membership include local community involvement, sound reputation, and business or educational experience that will be beneficial to the Company. The Committee also considers each candidate’s contribution to the diversity of the Board, including personal characteristics, education, experience and skills. The Committee carefully considers diversity when evaluating director candidates, and, in 2020, it recommended and the Board approved, a formal Board Diversity Policy, which is discussed more fully below.  All of the nominees approved by the Committee for election at the 2022 Annual Meeting were recommended by the Board. The Committee met five (5) times in 2021.

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Corporate Governance

The Compensation Committee, consisting solely of independent directors as defined in the NASDAQ listing rules and Section 10C of the Securities Exchange Act of 1934, has primary responsibility for ensuring that compensation and benefits policies and programs for executive officers and the Board of Directors comply with applicable law and stock listing requirements, and are devised and maintained to provide and retain a high level of executive management and corporate governance competence.  The Committee met nine (9) times in 2021.

The Audit Committee, consisting solely of independent members as defined in the NASDAQ listing rules and Section 10A of the Securities Exchange Act of 1934, selects and recommends the appointment of independent auditors, reviews and approves professional services performed by the independent auditors and reviews the reports of their work together with regulatory agency examination reports. The Committee also reviews and approves the programs, work plan and reports of the Bank's Audit Manager and internal auditor. Director James C. Hale has been determined to be the Audit Committee Financial Expert. The Committee met eight (8) times in 2021.

The Executive, Compensation, Audit, and Nominating and Governance Committee charters are available on the Company’s website at www.bankofmarin.com under the “Investor Relations” tab.

Each current and nominated Board member is encouraged to attend the Annual Meeting of Shareholders. All members of the Board attended the 2021 Annual Meeting except those members appointed after the 2021 Annual Meeting.

Indebtedness and Other Transactions with Directors and Executive Officers

In accordance with the Nominating and Governance Committee Charter, the Nominating and Governance Committee is responsible for reviewing and acting upon all related party transactions required to be disclosed by Item 404 of Regulation S-K for potential conflicts of interest.  Additionally, the Company’s Code of Ethical Conduct provides rules that restrict transactions with affiliated persons.

Prior to engaging in any related party transaction, a completed questionnaire describing the nature and structure of the transaction, along with any necessary supporting documentation, is submitted to the Nominating and Governance Committee. In determining whether to approve a related party transaction, the Nominating and Governance Committee will consider, among other things, the following:

The Company will only enter into a related party transaction if the Nominating and Governance Committee determines that any interested director has abstained from voting on the matter and that the transaction is beneficial to the Company, and the terms of the transaction are fair to the Company.

The Company is not currently engaged in any related party transactions.

The Company’s subsidiary, Bank of Marin, has had and expects to have banking transactions in the ordinary course of business with some of the directors and executive officers of the Bank (and their associates), on substantially the same terms (including interest rates, collateral and repayment terms) as those prevailing at the time for comparable loans with persons not related to the Company. During 2020 no loan to any director or executive officer of the Company (or their associates) has involved more than normal risk of collectability or presented other unfavorable features. All loans to directors or executive officers would be subject to the limitations prescribed by California Financial Code Section 1360, et seq. and applicable federal law and regulations.

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Corporate Governance

Board Leadership Structure

It is the role of the Nominating and Governance Committee to annually review, and when appropriate make recommendations to the Board of Directors concerning board composition, structure, and functions. The Board has deemed it appropriate to have two separate individuals serve as Chairman of the Board and Chief Executive Officer. According to the Company’s bylaws, the Chairman of the Board shall preside at meetings of the Board of Directors and shareholders and exercise and perform such other powers and duties as may be from time to time assigned to him/her by the Board of Directors. The bylaws further provide that the President of the Company shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and the officers of the Company. As the oversight responsibilities of the Board of Directors grows, the Board believes it is beneficial to have an independent Chairman with the sole job of leading the Board, while allowing the President to focus his efforts on the day-to-day management of the Company and the Bank. The Board does believe that it is important to have the President as a director.  The Company aims to foster an appropriate level of separation between these two distinct levels of leadership of the Company.  In addition to the Chairman, leadership is also provided through the respective chairs of the Board’s various committees.

Board’s Role in Risk Oversight

It is a fundamental part of the Board’s responsibility to understand the risks the Company faces and what steps management is taking to manage those risks. It is also important that the Board understands what level of risk is appropriate for the Company. While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. In particular, the Audit Committee focuses on risk assessment and risk management as they relate to financial reporting, including appropriate guidelines and policies to govern the process, as well as the Company’s major financial reporting risks and the steps management has taken to monitor and control them, and the Committee receives an annual risk assessment report from the Company’s outside auditor. The Executive Committee fulfills its oversight responsibility with respect to compliance and operational risk, by working with the Company’s Compliance Manager to understand regulatory and legislative issues and the Company’s projects and systems. In setting compensation, the Compensation Committee strives to create incentives that do not encourage excessive risk-taking beyond the Company’s ability to effectively identify and manage risk. The Bank’s Asset Liability Management Committee functions as a directors’ loan committee, oversees the Bank’s balance sheet, liquidity and capital management, as well as the management of credit, interest rate, and market risk within the context of the risk tolerance established by the Board of Directors, and receives monthly reports from the Chief Credit Officer and Chief Financial Officer. Additionally, on a quarterly basis, the Board of Directors and various committees (Executive Committee, Compensation Committee, the Bank’s Wealth Management and Trust Services Committee and the Bank’s Asset Liability Management Committee) receive and review reports from the Company’s consolidated enterprise risk management program.  In general, that program is designed to ensure the adequacy of policies, procedures, tolerance levels, risk measurement systems, monitoring processes, management information systems and internal controls.  Board and committee review of quarterly reporting is an important component of the overall enterprise risk management system.  The Executive Committee of the Board of Directors is also provided physical and information security risk assessments by management on an annual basis.

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Corporate Governance

Shareholder Outreach

Shareholder outreach and feedback is a critical component of our investor relations philosophy, and, in 2019 and beyond, we continue to maintain a regular dialogue with our shareholders. Throughout the year, we engaged in conversations and meetings, including sell-side conferences, non-deal road shows and in-person or telephonic one-on-one meetings with our shareholder base. In response to the 2018 say-on-pay advisory vote on executive compensation, the Compensation Committee, along with members of senior management initiated a targeted investor outreach program. The purpose of the program is to solicit feedback from shareholders who voted against the proposal and understand the factors that informed their vote.

In early 2022 we continued our outreach efforts by reaching out to thirteen of our top institutional investors, representing 33.58% of our outstanding shares. We received two accepted invitations. During the month of March we conducted calls with the two respondents representing 5.83% of our outstanding shares.

Areas included in our outreach discussion:

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Corporate Governance

Board Diversity

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EXECUTIVE COMPENSATION

Executive Officers

The Board has designated the following officers as executive officers of the Company and/or Bank of Marin:  President and Chief Executive Officer, Chief Financial Officer, Chief Credit Officer, Chief Information Officer, Head of Commercial Banking, Head of Retail Banking and Director of Human Resources. At December 31, 2021, the incumbents to those offices were: Timothy D. Myers, Tani Girton, Misako Stewart, Richard Lewis, Nicolette Sloan, Brandi Campbell and Robert Gotelli, respectively.  Following is information regarding the executive officers excluding Mr. Myers, who is a director nominee and whose information has been previously presented.

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Executive Compensation

Compensation Discussion and Analysis

This section addresses the compensation programs, philosophy and objectives, of the Bank of Marin Bancorp and its banking subsidiary, Bank of Marin (collectively in this section, the “Company”), including the process for making compensation decisions, the roles of the Board of Directors, the Compensation Committee (in this section, the “Committee”), and management in the design of such programs, and its 2021 executive compensation components. This section also addresses the factors most relevant to understanding the Company’s compensation programs and what they are designed to reward, including the essential elements of compensation, the reasons for determining payment of each element of compensation, and how each compensation element fits into the Company’s overall compensation objectives and affects decisions regarding other compensation elements.

Executive Summary

The Committee of the Board of Directors establishes and administers the compensation and benefit programs for Named Executive Officers, the persons identified in the Summary Compensation Table which follows. In addition, the Committee is responsible for administering other companywide compensation and benefits plans for all employees. The Committee consists entirely of independent directors.  The Committee carefully considers the components of the executive compensation programs to attract and retain high quality Named Executive Officers and to incent the behavior of Named Executive Officers to create shareholder value and accomplish the Company’s strategic goals. The Committee engages independent consultants from time to time and considers the compensation programs of peer financial institutions to ensure that the Company’s compensation programs are competitive with market practices.

The Committee’s philosophy, practices and policies have been developed over a number of years and have not historically been subject to sweeping, material changes. At the 2021 annual meeting of shareholders, the Company included an advisory vote to approve executive compensation, providing shareholders with an opportunity to communicate their views on the Company’s executive compensation program. The Company’s executive compensation was approved by 83% of the shares voted. The Committee considered the results of this vote in setting executive compensation for 2022 and concluded that the strong support of the Company’s compensation program indicates that shareholders generally concur with the Company’s alignment of compensation and performance.  At the 2018 Annual Meeting of Shareholders, the shareholders held, by majority vote, for a one-year frequency of the non-binding, advisory vote on executive compensation.  While the frequency vote was non-binding, the Board of Directors has made the decision to continue to include the advisory vote to approve executive compensation annually.

Shareholder outreach and feedback is a critical component of our investor relations philosophy, and, in 2021, we continued to maintain a regular dialogue with our shareholders.  Throughout the year, we engaged in conversations and meetings, including sell-side conferences, non-deal road shows and in-person or telephonic one-on-one meetings with our shareholder base.  For additional details on our shareholder outreach, please see the discussion, Shareholder Outreach, above.

Philosophy

The Company’s executive compensation programs are designed to attract and retain high quality officers that are critical to its long-term success. The Company’s Board of Directors and management believe that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals, which aligns Named Executive Officers’ interests with those of the shareholders by rewarding performance above established goals, with the ultimate goal of improving shareholder value without rewarding undue short-term risk-taking. This is achieved by utilizing a combination of short-term cash incentives, paid annually, and long-term equity incentives, which vest over a three-year period and include performance based vesting metrics. The Committee engages independent national human resources consulting firms to periodically conduct a review of the Company's total compensation programs. During these periodic reviews, each component of total compensation is compared against a regional peer group that is similar to the Company in asset size, geography and performance. (For details, see “Compensation Consultants” and “Peer Group Review” herein.)  In 2020, the Committee adopted a new peer group to be used in 2020 and 2021.  It is used in the charts below.  The 2020 peer group is made up of major exchange publicly traded banks in the Western states, including Hawaii, with total assets between $1 billion and $6.5 billion.

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Executive Compensation

The Committee's compensation philosophy is to target base salaries at or near the median (50th percentile) and to pay total compensation (including annual cash incentives, long-term equity incentives, and benefits) at the 50^th percentile of the regional peer group, with variation based on individual experience and individual and Company performance. The Company believes paying total compensation between the 50th and 75th percentile for above-average performance is critical for attracting and retaining the qualified executives it needs to achieve its business objectives. Overall, compensation paid to Company executives is believed to be competitive with market practices.

Base compensation levels for Named Executive Officers are established based on market data and are adjusted based on individual performance and experience. Annual incentives, including performance-based bonuses and long term equity awards, are based on both Company and/or individual performance objectives, which include asset and revenue growth targets, deposit growth targets, profitability targets, credit quality metrics, identification and execution of strategic opportunities, and core earnings performance.  It is the Committee’s desire to remove as much discretion as possible from the incentive based compensation in favor of a metrics based program.

Business Highlights

In 2021, Bank of Marin acquired American River Bank, extending its footprint into Amador, Placer and Sacramento counties. This is the third acquisition in the past nine years that strengthens the Bank’s presence in northern California and has allowed for average deposit growth of 12% annually.

Source: S&P Global Market Intelligence as of March 10, 2022

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Executive Compensation

Source: S&P Global Market Intelligence as of March 10, 2022

Source: S&P Global Market Intelligence as of March 10, 2022

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Executive Compensation

As designed, our compensation program is instrumental in motivating and rewarding our executive officers for achieving financial performance which compares favorably with our peer banks.

Source: S&P Global Market Intelligence as of March 10, 2022

Source: S&P Global Market Intelligence as of March 10, 2022

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Executive Compensation

As of December 31, 2021, Bank of Marin maintained $173.1 million in deposits temporarily sold to deposit networks as part of our balance sheet management efforts.  Those balances are not reflected on the balance sheet or included in the calculations above.  Bank of Marin’s $1.91 billion of non-interest bearing deposits (50% of total deposits) as of December 31, 2021 represented one of the leading deposit franchises in the country for financial institutions of our size.

Process for Making Compensation Decisions

Role of the Chief Executive Officer

Shortly following the conclusion of each calendar year, the Company’s Chief Executive Officer (the “CEO”), assisted by the Director of Human Resources, conducts an annual performance evaluation process for all Named Executive Officers, other than for himself, as well as for other members of senior management who are not Named Executive Officers. As part of each annual performance evaluation, the CEO considers, among other key factors, i) the executive’s performance of job responsibilities and achievement of individual and/or

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departmental objectives and ii) management and leadership skills, such as effective communication, problem solving, business development and community involvement. In addition, the executive’s contributions to the Company’s overall financial goals are indirectly considered.  Based on this evaluation, the CEO determines, for each of the Named Executive Officers (other than himself), recommendations for salary adjustments, including merit increases, and annual performance-based bonus amounts to be made to the Committee for its approval. The Named Executive Officer’s performance-based bonus is determined by the Company’s financial performance relative to that year’s financial performance goals and individual performance goals.

In addition, recommendations by the CEO and the Director of Human Resources for the grant of equity awards to Named Executive Officers under the Company’s equity compensation plan are submitted to the Committee for approval and are based on Named Executives Incentive Equity opportunity and the Company’s financial performance relative to that year’s financial performance goals.

Role of the Compensation Committee

The Committee periodically reviews the compensation levels of the Board of Directors. In its review, the Committee looks to ensure that the compensation is fair, reasonably competitive and commensurate to the responsibilities of both the individual directors as well as the Board in the aggregate.  Additionally, the Committee specifically takes into consideration the Directors’ adherence to the Company’s Director Stock Ownership Guidelines when reviewing compensation.  

The Committee has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The Committee ensures that the total compensation paid to Named Executive Officers is fair, reasonable and competitive and that the types of compensation and benefits provided to the Named Executive Officers are similar to comparable executives within an established peer group. The Committee is also responsible for the review and approval of Company goals and objectives relevant to the compensation, including the incentive awards, of the Company’s CEO, to evaluate the performance of the CEO in light of the goals and objectives and to determine and approve the CEO’s compensation levels based on this evaluation. The Committee reviews compensation levels for the other Named Executive Officers, including the CEO’s recommendations on annual bonus and salary increases for Named Executive Officers and makes final determinations and approvals. Additionally, the Committee reviews and approves the grant of equity awards to assure that the Committee considers all elements of proposed compensation.

To achieve these goals and objectives, the Committee expects to maintain compensation plans that create an executive compensation program that is set at competitive levels of comparable public financial services institutions with comparable performance.  The Committee has followed certain fundamental objectives to ensure the effectiveness of the Company’s compensation strategy. These objectives include the following:

Internal and external fairness. The Committee recognizes the importance of perceived fairness both internally and externally of compensation practices. The Committee has evaluated the overall economic impact of the Company’s compensation practices and, when deemed necessary, has consulted with independent outside advisors in the evaluation of contractual obligations and compensation levels.

Performance-based incentives. The Company has established financial incentives for executives who meet certain objectives, which thereby assist the Company in meeting its long-term growth and financial goals.

Shareholder value and long-term incentives. The Committee believes that the long-term success of the Company and its ability to consistently increase shareholder value is dependent on its ability to attract and retain skilled executives. The Company’s compensation strategy encourages equity-based compensation to align the interests of management and shareholders.

Full disclosure. The Committee seeks to provide full disclosure to the members of the Board of Directors of the Company of the compensation practices and issues to ensure that all directors understand the implications of the Committee’s decisions.

The Committee has reviewed the compensation practices of peers and considered management’s individual efforts for the benefit of the Company, and has reviewed various subjective measures in determining the adequacy and appropriateness of the compensation of Named Executive Officers. The Committee takes into

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account the performance of the Named Executive Officers and recognizes that the competition among financial institutions for attracting and retaining executives has become more intense in the past few years. The Committee takes such market considerations into account to ensure that the Company is providing appropriate long-term equity incentives to enable it to continue to attract new executives and to retain the ones it already employs. General economic conditions and the past practice of the Company are also factors that are considered by the Committee.  Further, the Committee specifically takes into consideration:

The Committee has established various processes to assist in ensuring that the Company’s compensation program is achieving its objectives. Among these are:

Assessment of Company Performance. In establishing total compensation ranges, the Committee uses company performance measures, including net income, asset growth, earnings per share, return on assets, asset quality, and efficiency ratio in two ways: to gauge generally the overall Company performance relative to peer companies and to gauge generally the overall Company performance against the Company’s own strategic objectives. These specific performance targets provide guidance for a view of general Company performance, which is then utilized as one element in determining overall compensation ranges.

Assessment of Individual Performance. Individual performance has a strong impact on the compensation of all employees, including the CEO and the other Named Executive Officers. For the Named Executive Officers, the Committee receives a performance assessment and compensation recommendation from the CEO, other than for himself, and also exercises its judgment based on the Board’s interactions with its Named Executive Officers. As with the CEO, the performance evaluation of these Named Executive Officers is based on his or her contribution to the Company’s performance, and other leadership accomplishments.

Total Compensation Review. The Committee reviews each Named Executive Officer’s base pay, bonus, and equity award compensation annually. In addition to these primary compensation elements, the Committee reviews the perquisites and other compensation and payments that would be required under various severance and change-in-control scenarios. Following the 2021 review, the Committee determined that these elements of compensation were reasonable in the aggregate.

Compensation Consultants

Pearl Meyer & Partners (“Pearl Meyer”), a large independent compensation consulting firm, was first engaged by the Committee in April 2012 to conduct a formal, comprehensive review of the Company’s executive and director compensation.  Pearl Meyer was also engaged in 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020 to provide supplemental reviews and support for the Committee. After the Committee’s review of applicable rules for independence, the Committee determined that there are no known conflicts of interest between Pearl Meyer and its affiliates and the Company and its affiliates.  Pearl Meyer reports directly to the Committee and does not provide services to, or on behalf of, any other part of the Company’s business.

The major services provided by Pearl Meyer for 2020 and 2021 included: 1) review of the Company’s then current peer group, 2) recommendations to the Committee to refine the peer group based on the Company’s and peers’ size, 3) comprehensive review of the Company’s executive compensation programs, 4) comprehensive review of the Company’s non-employee director compensation program, and 5) review of the Company’s 2021 target total direct compensation levels provided to the Company’s Named Executive Officers and non-employee directors, as well as the Company’s financial performance relative to the selected peer group to make recommendations to the Committee. The analysis and review performed by Pearl Meyer in 2020 were used in 2020 and 2021 in setting executive compensation programs.

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During 2021, Pearl Meyer provided minor, additional consulting activities, including reviewing the Company’s performance relative to peers, review of executive compensation related to the acquisition of American River Bankshares and review of the Compensation Discussion and Analysis.

Peer Group Review and Market Study

When reviewing each compensation component for the Named Executive Officers, the Committee considers the compensation practices of specific peer companies whose asset size, geography and performance are comparable to the Company. As discussed above, the Committee first engaged Pearl Meyer in 2012 to review the Company’s peer group and make recommendations to the Committee.  In 2020, the Committee adopted an updated peer group to be used in 2020 and 2021.  The 2020 peer group is made up of major exchange publicly traded banks in the Western states, including Hawaii, with total assets between $1 billion and $6.5 billion.

Following is the specific peer group of seventeen publicly-traded financial institutions approved by the Committee for use in 2020 and 2021 (the “2020 Peer Banks”):

The median assets at 2019 fiscal year end for the peer group was $2.6 billion as compared to Bank of Marin’s $2.7 billion.  Comparisons to the Peer Banks in this discussion are based on the 2020 Peer Banks.

The Committee evaluated executive compensation to like positions in the 2020 Peer Banks in setting 2021 compensation. Based on this evaluation and Pearl Meyer’s analysis of the Company’s compensation programs relative to the peer group, the Committee approved the following executive compensation structure:

Executive Compensation Components

For the fiscal year ended December 31, 2021, the principal components of compensation for Named Executive Officers were i) base salary, ii) performance-based bonuses, iii) equity awards and iv) perquisites and other plans and benefits. The Company’s policies and practices for each of the principal compensation components are explained in the following paragraphs.

Base Salary

Base salary is established based on market data and is adjusted based on individual performance and experience.  In 2021 base salaries for Named Executive Officers were adjusted mid-year due to a change in asset size as a result of the acquisition of American River Bankshares.

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Performance-Based Incentives

The Company provides annual cash incentive award opportunities for eligible employees, through the use of the Annual Individual Incentive Compensation Plan (the “Incentive Plan”). The Incentive Plan allows for performance-based bonuses for Named Executive Officers that are based on the overall performance of the Company and on goals specific to the executive's area of responsibility.  The following table shows the bonus potential expressed as a percentage of base salary that may be earned in the Incentive Plan under three scenarios, Threshold Performance, Target Performance and Maximum Performance, and then shows the relative split between Bankwide performance goals versus individual performance metrics by Named Executive Officer that must be met under the Incentive Plan.

Named Executive Officers Cash Incentive Opportunity:

*Mr. Myers’ and Ms. Stewart’s opportunities are blended based on their two different roles during 2021. Ms. Sloan received a guaranteed bonus for 2021.

Overall Company performance comprises at least 75% of the CEO’s and at least 50% of the other Named Executive Officers’ cash incentive potential, with the remaining percentage based on achievement of individual goals.  As Ms. Stewart was in a Named Executive Officer role for only one quarter of the year, her opportunity was blended for the two roles she held, resulting in less than a 50% company performance metric.

Individual Named Executive Officer goals are either independent from the five Company metrics or may be used to give greater weighting to one of the five Company goals within the executive’s specific area of responsibility. The allocation between company goals and individual goals varies from year to year. For 2021 the weights of each metric as a percent of the total incentive compensation opportunity for the Named Executive Officers were:

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The specific goal for each of these metrics is revised each year, and each metric is given its own specific weighting in the determination of the overall performance-based bonus opportunity. The metrics are derived from the Company’s annual budgeting process and are weighted based on the Company’s particular focus and relative importance for that year.  For 2021 the specific Company goals and relative weights of each metric were:

The plan gate provides that for the Incentive Plan to be funded and “activated” for a Plan Year, the Company must achieve a threshold performance level calculated as a percentage of the Company’s budgeted net income.

In line with the Company’s pay for performance philosophy, over the past five years the Committee has awarded the Named Executive Officers 119.21% of their target incentive, on average, which is consistent with the Company’s favorable performance relative to peers.  Further, the Committee has awarded the maximum incentive payout under the Plan in only one of the past eleven years, reflecting the difficulty in achieving the maximum payout of incentives under our Incentive Plan. Incentive payouts are calculated based on the individual goal result and weight. This format allows for higher payouts for exceptional results in one or more categories even if there is low or below minimum results for one or more categories.

Clawback Provision for Performance-Based Incentives

The clawback provision provides that if financial results are significantly restated due to negligence, fraud or intentional misconduct, there may be recoupment of the amounts paid in excess of amounts otherwise earned.

Equity Awards

The purposes of equity awards are to allow executives to share in the growth and prosperity of the Company, to retain executives over the long term and to maintain competitive levels of total compensation.

At the 2017 annual meeting, by majority shareholder vote, the Bank of Marin Bancorp 2017 Equity Plan was adopted.  The 2017 Plan replaced the Company’s 2007 Equity Plan which expired in 2017.  The Board of Directors wanted to continue with the flexibility and material features of the 2007 Plan and, therefore, the terms

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and conditions of the 2017 Plan are substantially similar to the terms and conditions of the 2007 Plan.  In 2018, our shareholders approved the allocation of additional shares to the 2017 Equity Plan.

The 2017 Equity Plan allows the Company to offer multiple equity vehicles as incentives, including stock options, unrestricted stock, restricted stock, and stock appreciation rights.  Executives may be awarded a blend of equity awards. The Committee considers the attributes of each form of equity award when determining equity compensation; including the ability to align management with the long-term interests of shareholders, the immediate value versus appreciation opportunity of each form, as well as the tax consequences of each type of award.

Award levels are based upon market and the executive's level of responsibility and influence on the performance of the Company. Executives are granted stock options and/or restricted stock annually, based on overall Company performance. The option exercise price is based on the fair market value on the effective date of the grant. Grants are approved at regularly scheduled Committee meetings.  Award agreements allow for accelerated vesting, and extended retention when plan participants meet eligible retirement criteria including minimum age and service and a minimum number of years in the plan.

In 2015 Performance Equity was added as a form of equity compensation. Performance shares were granted on March 1, 2015, March 1, 2016, March 1, 2017, March 1, 2018, March 1, 2019, March 2, 2020 and March 1, 2021 and cliff vest after three years based on achievement of established performance metrics relative to peers. Three-year performance metrics include earnings per share growth, efficiency ratio, return on assets, as well as loan quality metrics, to provide incentive for balanced growth and quality.

For 2021, Named Executive Officers were granted a blend of 20% Incentive Stock Options (“ISO”), 35% Restricted Stock, and 45% Performance Restricted Stock.

Named Executive Target Equity Opportunity:

*Mr. Myers’ and Ms. Stewart’s opportunities are blended based on their two different roles during 2021.

2021 ISO and Restricted Shares Metrics for 2022 Grant:

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For the 2021 equity grant, Company goal metrics were achieved and paid out at 142.25% of the target amount.

For the 2021 performance equity award, all of the metrics are based on a comparison of relative performance to peers, based on the ending percentile ranking of the Company.  For 2021, each measure required at or above median performance to earn the target number of shares.  Achievement at maximum performance results in 200% of target shares earned for each metric after application of the metric weighting, and achievement at threshold performance results in 50% of target shares earned for each metric.

March 2021 Performance Share Metrics (three-year performance period 2021 through 2023, vesting in 2024):

For the 2018 equity award, all of the metrics were based on a comparison of relative performance to peers, based on the ending percentile ranking of the Company.

The 2018 performance equity award vested in 2021 at 151.85% of Target.

The 2018 – 2020 performance period metrics were:

In 2021 the Committee approved additional options and restricted shares to Named Executive Officers related to the acquisition of American River Bankshares.

Perquisites and Other Plans and Benefits

Consistent with the Company’s compensation objectives, Named Executive Officers are provided perquisites and other benefits that management believes are reasonable and consistent with the Company’s overall compensation program and which keep the Company competitive in the marketplace. The Company periodically reviews the level of perquisites and other benefits provided to the Named Executive Officers for suitability with the program objectives.

The Company is competitive with market practices by providing medical, dental, vision and life insurance, a 401(k) employer matching contribution up to $5,000 annually, and an Employee Stock Purchase Plan (the “ESPP”). The Company also offers key management, including the Named Executive Officers, a monthly auto allowance that is based on position and his/her contact with clients.

Employee Stock Ownership Plan

The Company also provides an Employee Stock Ownership Plan (the “ESOP”). Annually, the Company may make discretionary contributions of shares of common stock to the ESOP.  The decision normally is based on the Company's financial performance and condition. The purposes of the ESOP are to include all eligible employees in the ownership of the Company, to provide them with compensation that is free from current income tax and to accumulate benefits for retirement. Stock is awarded as a percentage of eligible cash compensation. Executives receive the same percentage as all other employees, up to the IRS limits.

Deferred Compensation Plan

The Company sponsors an unsecured, non-qualified plan known as the Deferred Compensation Plan, which allows Named Executive Officers and certain other highly compensated employees to defer all or a portion of

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their base salary and/or bonus.  Balances in the plan receive earnings, all of which are described in the “Nonqualified Deferred Compensation” table of this Proxy Statement.  Other than earnings accruals, all credits to the Deferred Compensation Plan represent a Named Executive Officer’s compensation previously earned and deferred; the Company does not provide any matching or similar credits.  The plan was designed to allow Named Executive Officers to defer some of their current income to help them with tax planning, and to assist the Company in attracting and retaining top executives by providing retirement benefits that are competitive within the Company’s peer group.

Supplemental Executive Retirement Plan

The Company also sponsors the Bank of Marin Supplemental Executive Retirement Plan. This plan allows named executives with the title of Executive Vice President and above who contribute materially to the continued growth, development and future business success of the Company, to receive a supplemental income at retirement.  As this type of plan is commonly offered among the Company’s peers, the inclusion of this benefit enhances the Company’s compensation program allowing the Company to recruit, retain and reward key decision makers of the Company. See “Supplemental Retirement Plan for Named Executive Officers” herein for more information on this plan.

Change in Control Agreements

The Company provides Named Executive Officers and other senior officers with agreements that provide for certain specified benefits upon a change in control of the Company.  These agreements are very useful tools that help the Company retain its key employees, including the Named Executive Officers, by providing those executives some certainty in compensation in the event the Company were to be sold, and also helps to ensure that the Company will have the benefit of their services through the pendency of any merger.  Such agreements are particularly necessary in an industry such as ours, where there has been considerable consolidation over the last ten years. See “Potential Payments upon Termination or Change in Control” herein for detailed information about these agreements, including a description of payout amounts under a hypothetical change in control of the Company as of the last business day of 2021.

Compensation Risk Assessment

In determining the level of risk arising from the Company’s compensation policies and practices, a thorough review and risk assessment evaluation of the Company’s compensation plans for all employees, as well as the overall compensation philosophy was conducted. The Committee evaluated the form and mix of compensation, controls and process, and the Company’s business strategies. The Committee has concluded that the Company’s compensation arrangements do not encourage employees to take unnecessary and excessive risks.

Compensation Committee Interlocks and Insider Participation

At March 21, 2022 the Compensation Committee was comprised of Dr. Sklar (chair) and Messrs. Fite, Heller, McDevitt, Jr., Sanghvi and Sobel.  Each member of the committee is considered independent and none of the members are or have been officers of the Company, nor does any member have any relationship with the Company that would require disclosure under Item 404 of Regulations S-K concerning related party transactions.

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Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement.  Based on our Committee review of and the discussions with management with respect to the Compensation Discussion and Analysis, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Submitted by the Compensation Committee of the Board:

Joel Sklar, Chair

Charles D. Fite

Robert Heller

William H. McDevitt, Jr.

Sanjiv S. Sanghvi

Brian M. Sobel

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Summary Compensation Table

The following table sets forth summary compensation information for the President and Chief Executive Officer, Chief Financial Officer and each of the other three most highly compensated Named Executive Officers as of the end of the last fiscal year.  

Bonus amounts were earned in the year shown and paid in the first quarter of the following year.