Corporate Governance

Compensation Committee.

PURPOSE

The Compensation Committee (“Committee”) shall discharge the responsibilities of the First Interstate BancSystem, Inc. (“Company”) Board of Directors (“Board”) relating to compensation of the Company’s executive officers and shall produce an annual report on executive compensation and a compensation discussion and analysis for inclusion in the Company’s proxy statement and provide such other information and perform such other functions, responsibilities, and duties in accordance with applicable laws, rules and regulations.

The Committee’s responsibilities and powers, as delegated by the Board of Directors, are set forth in this Charter. The Committee relies to a significant extent on information and advice provided by management and independent advisors. Whenever the Committee takes an action, it exercises its independent judgment on an informed basis that the action is in the best interests of the Company and its shareholders.

MEMBERSHIP

The Committee shall consist of three (3) members of the Board, as the Board shall from time to time determine. All three (3) members of the Committee must meet the independence requirements of the Marketplace Rules of The NASDAQ Stock Market LLC (“NASDAQ”).

At such time as the Company qualifies as a “controlled company” within the meaning of the NASDAQ Marketplace Rules, the Committee shall consist of at least three (3) members of the Board, as the Board shall from time to time determine, and at least three (3) members of the Committee must meet the independence requirements of the NASDAQ Marketplace Rules.

At all times, of the three (3) members of the Committee who meet the independence requirements of the NASDAQ Marketplace Rules, at least two (2) members must qualify as (1) a “non-employee director” as that term is defined for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and (2) an “outside director” as that term is defined for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended. The Committee members who meet the foregoing qualifications are referred to in this Charter as "Outside Members."

APPOINTMENT AND REMOVAL

The Board shall elect the members of the Committee at its first meeting following the annual meeting of shareholders.

Unless the Board elects a Chairman, the members of the Committee shall designate a Chairman by a majority vote of the full Committee membership.

A Committee member may resign by delivering his or her written resignation to the Chairman of the Board, or may be removed by majority vote of the Board by delivery to such member of written notice of removal, to take effect at a date specified therein, or upon delivery of such written notice to such member if no date is specified.

DUTIES AND RESPONSIBILITIES

The Committee shall have the following duties and responsibilities:

To review and approve corporate goals and objectives relevant to compensation for executive officers, including with respect to the vision, values, and strategic objectives of the Company and compensation practices of any relevant peer group of competitive companies, and to evaluate the effectiveness of the Company's compensation practices in achieving its strategic objectives, in encouraging behaviors consistent with the Company's values, and in aligning performance objectives consistent with the Company's vision. The Committee evaluates the performance of the chief executive officer based upon stated goals and objectives and determines and approves, subject to the provisions of this Charter as they relate to the approval solely by the Outside Members, the compensation of the chief executive officer. The Committee also evaluates and approves, subject to the provisions of this Charter as they relate to the approval solely by the Outside Members, the compensation of other executive officers utilizing input and non-binding recommendations from the chief executive officer;
To define the scope of the responsibilities of Board Officers, including the Board Chairman and the Board Vice Chairman;
To evaluate the Board Chairman and Board Vice Chairman in relation to their respective responsibilities;
To oversee succession planning for the chief executive officer and other executive officers, as directed by the Board;
To administer, solely through the Outside Members, the incentive-compensation plans, equity-based plans and all other employee benefit plans or programs established or maintained by the Company from time to time (collectively, the “Benefit Plans”), except those Benefit Plans that are subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (the “ERISA Plans”);
To evaluate the Benefit Plans and specifically to consider whether the Benefit Plans appropriately reward and provide incentive to participants commensurate with their cost to the Company;
To make recommendations to the Board with respect to the amendment, termination or replacement of the Benefit Plans;
To recommend to the Board the compensation for Board members, such as retainer, committee chairman fees, and other similar items as appropriate, and pursuant to the Company’s corporate governance guidelines; provided, however, any stock options or other awards available to Board members under the Benefit Plans, other than the ERISA Plans (the “Other Benefit Programs”) shall be administered solely through the Outside Members; and
To recommend to the Board adjustments to director and officer insurance.

POWERS AND AUTHORITY

The Board delegates to the Committee all powers and authority that are necessary or appropriate to fulfill its duties and obligations hereunder and to act independently without further approval, including, without limitation:

To retain professionals (such as attorneys and compensation professionals) to assist in the evaluation of director and executive officer compensation, including sole authority to retain and terminate any such professional and to approve the professional’s fees and other retention terms;
To make all required and appropriate communications to shareholders and regulators concerning compensation issues;
To establish subcommittees for the purpose of evaluating special or unique matters; and
To solicit information from individuals involved with administration and operation of all Benefit Plans (including the Benefits Committee) where such information is relevant to the Committee's responsibility for evaluating the role of the Benefit Plans as part of the Company's compensation practices.

Without limiting any of the foregoing, the Board delegates to the Outside Members all powers and authority that are necessary or appropriate to fulfill their duties and obligations hereunder and to act independently without further approval, including, without limitation:

To grant or to approve or disapprove participation of individual employees in the Other Benefit Programs;
To interpret the provisions of the Other Benefit Programs;
To establish such rules as such directors find necessary or appropriate for implementing or conducting the Other Benefit Programs;
To direct the Benefits Committee to perform administrative functions (such as processing enrollment, beneficiary and distribution forms) with respect to the Other Benefit Programs, except that the Outside Members may not delegate the authority to select individuals for participation, to award any discretionary benefits, or to perform any responsibilities or duties deemed necessary or appropriate under applicable securities or tax laws, rules and regulations (including Internal Revenue Code Section 162(m)) to be performed by the Committee.

MEETINGS

The Committee shall meet as often as may be deemed necessary or appropriate in its reasonable judgment and, in any event, no fewer than two times per year, either in person or telephonically, and at such times and places as the Committee shall determine.

The Committee shall report its minutes from each meeting to the Board.

COMMITTEE ACTION

A majority of the Committee, but not fewer than two Outside Members, shall constitute a quorum for the transaction of business.

A majority of the members present shall decide any question brought before the Committee.

A majority of the Outside Members is required to decide any question brought before the Outside Members.

Unless the Committee by resolution determines otherwise, any action required or permitted to be taken by the Committee or the Outside Members, as the case may be, may be taken without a meeting if all members of the Committee or all Outside Members, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Committee.

PROCEDURES

The Chairman of the Committee shall establish such rules as may from time to time be necessary or appropriate for the conduct of the business of the Committee.

The Chairman shall appoint as secretary a person who may, but need not, be a member of the Committee or be eligible for benefits under one or more of the Benefit Plans.

In all matters brought before the Committee that relate to any action deemed necessary or appropriate solely for the Outside Members to consider and act upon, the non-Outside Members of the Committee shall be entitled to submit non-binding recommendations but shall either abstain or recuse themselves from all such action.

A certificate of the secretary of the Committee setting forth the names of the members of the Committee or actions taken by the Committee shall be sufficient evidence at all times as to the persons constituting the Committee or such actions taken.

PERFORMANCE REVIEW

The Committee shall conduct an annual performance evaluation of itself, including a review of the compliance of the Committee with this Charter.

The Committee shall annually review and reassess the adequacy of this Charter and recommend any proposed changes to the Board of Directors for approval.

REPORTING

The Committee shall prepare a statement each year concerning its compliance with this Charter for submission to the Board of Directors.

First Interstate Bank

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