UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to §240.14a-12
| ASSOCIATED BANC-CORP | ||
| (Name of Registrant as Specified in its Charter) | ||
| (Name of Person(s) Filing Proxy Statement if other than the Registrant) | ||
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
[x] No fee required.required
[ ] Fee paid previously with preliminary materials
[ ] Fee computed on table belowin exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.0-11
Notice of Annual Meeting of Shareholders
To Be Held on April 28, 202026, 2022
March 13, 202011, 2022
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of Associated Banc-Corp scheduled for 11:00 a.m. (CDT) on Tuesday, April 28, 2020, at26, 2022, which will be conducted solely online via a live webcast. You will be able to attend the KI Convention Center, 333 Main Street, Green Bay, Wisconsin. We will present an economic/investment update beginning at 10:00 a.m., with Associated’s investment professionals providing an update onAnnual Meeting of Shareholders of Associated Banc-Corp online, vote your shares electronically, and submit questions prior to and during the equity market and interest rate environment.meeting by visiting www.virtualshareholdermeeting.com/ASB2022.
On or about March 13, 2020,11, 2022, we began mailing a Notice of Internet Availability of Proxy Materials (Notice) to our shareholders informing them that our Proxy Statement, the 20192021 Summary Annual Report to Shareholders and our 20192021 Form 10‑K, along with voting instructions, are available online. As more fully described in the Notice, shareholders may choose to access our proxy materials on the Internet or may request paper copies. This allows us to conserve natural resources and reduces the cost of printing and distributing the proxy materials, while providing our shareholders with access to the proxy materials in a fast, easily accessible and efficient manner.
The matters expected to be acted upon at the meeting are described in detail in the attached Notice of Annual Meeting of Shareholders and Proxy Statement.
Your Board of Directors and management look forward to personally greeting those shareholders who are able to attend.the Annual Meeting of Shareholders of Associated Banc-Corp. We always appreciate your input and interest in Associated Banc-Corp.
Sincerely,
Chairman of the Board
President and CEO
433 Main Street
Green Bay, Wisconsin 54301
________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Tuesday, April 28, 202026, 2022
Virtual Meeting at 11:00 a.m.
Items of Business:
1.The election of 10 individuals recommended by the Board of Directors to serve as directors.
2.Advisory approval of Associated Banc-Corp’s named executive officer compensation.
3.The ratification of the selection of KPMG LLP as the independent registered public accounting firm for Associated Banc- Corp for the year ending December 31, 2022.
4.Such other business as may properly come before the meeting and all adjournments thereof.
Who May Vote:
You may vote if you were a shareholder of record on March 2, 2020.1, 2022.
How to Attend the Annual Meeting of Shareholders:
The Annual Meeting of Shareholders will be a completely virtual meeting, with no physical location. To be admitted to the Annual Meeting of Shareholders at www.virtualshareholdermeeting.com/ASB2022, you must enter the control number on your proxy card, voting instruction form or Notice of Internet Availability you previously received. Regardless of whether you plan to attend the Annual Meeting of Shareholders, we encourage you to vote and submit your proxy in advance of the meeting by one of the methods described below. You also may vote online during the Annual Meeting of Shareholders by following the instructions provided on the meeting website during the meeting. For more information, please see page 3 of the accompanying Proxy Statement.
YOUR VOTE IS IMPORTANT.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON APRIL 28, 2020:26, 2022:
Associated Banc-Corp’s Proxy Statement, 20192021 Summary Annual Report to Shareholders and 20192021 Form 10-K are available online at http://materials.proxyvote.com/045487.
YOU CANARE ENCOURAGED TO USE ONE OF THE FOLLOWING METHODS TO VOTE IN ADVANCE OF THE ANNUAL MEETING OF SHAREHOLDERS, NO LATER THAN 11:59 P.M. ET ON APRIL 25, 2022:
BY INTERNET - www.proxyvote.com.
IF YOU DO NOT VOTE BY INTERNET OR TELEPHONE, YOU ARE URGED TO SIGN, DATE, AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND TO HELP ENSURE THE PRESENCE OF A QUORUM AT THE MEETING. REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, THE PROMPT RETURN OF YOUR SIGNED PROXY OR YOUR PROMPT VOTE BY INTERNET OR TELEPHONE REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL AID ASSOCIATED BANC-CORP BY REDUCING THE EXPENSE
OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF YOUR PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.MEETING VIRTUALLY.
Randall J. Erickson
Executive Vice President,
General Counsel &
Corporate Secretary
Green Bay, Wisconsin
March 13, 2020
11, 2022
TABLE OF CONTENTS
| GENERAL INFORMATION | ||||||
| PROPOSAL 1: ELECTION OF DIRECTORS | ||||||
| NOMINEES FOR ELECTION TO OUR BOARD | ||||||
| DIRECTOR QUALIFICATIONS | ||||||
| BOARD DIVERSITY | ||||||
| DIRECTOR SKILLS AND EXPERIENCE MATRIX | ||||||
| RECOMMENDATION OF THE BOARD OF DIRECTORS | ||||||
| AFFIRMATIVE DETERMINATIONS REGARDING DIRECTOR INDEPENDENCE | ||||||
| INFORMATION ABOUT THE BOARD OF DIRECTORS | ||||||
| BOARD COMMITTEES AND MEETING ATTENDANCE | ||||||
| SEPARATION OF BOARD CHAIRMAN AND CEO | ||||||
| DIRECTOR NOMINEE RECOMMENDATIONS | ||||||
| COMMUNICATIONS BETWEEN SHAREHOLDERS, INTERESTED PARTIES AND THE BOARD | ||||||
| COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | ||||||
| STOCK OWNERSHIP | ||||||
| SECURITY OWNERSHIP OF BENEFICIAL OWNERS | ||||||
| STOCK OWNERSHIP GUIDELINES FOR EXECUTIVE OFFICERS AND DIRECTORS | ||||||
| SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT | ||||||
| COMMON STOCK | ||||||
| RESTRICTED STOCK UNITS | ||||||
| DEPOSITARY SHARES OF PREFERRED STOCK | ||||||
| OWNERSHIP IN DIRECTORS’ DEFERRED COMPENSATION PLAN | ||||||
| PROPOSAL 2: | ||||||
| RECOMMENDATION OF THE BOARD OF DIRECTORS | ||||||
| 2021 ENVIRONMENTAL, SOCIAL & GOVERNANCE HIGHLIGHTS | ||||||
| LETTER TO SHAREHOLDERS | ||||||
| COMPENSATION DISCUSSION AND ANALYSIS | ||||||
| COMPENSATION AND BENEFITS COMMITTEE REPORT | ||||||
| DIRECTOR COMPENSATION | ||||||
| DIRECTORS’ DEFERRED COMPENSATION PLAN | ||||||
| DIRECTOR COMPENSATION IN | ||||||
| DELINQUENT SECTION 16(a) REPORTS | ||||||
| RELATED PARTY TRANSACTIONS | ||||||
| RELATED PARTY TRANSACTION POLICIES AND PROCEDURES | ||||||
| PROPOSAL | ||||||
| FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||||
| RECOMMENDATION OF THE BOARD OF DIRECTORS | ||||||
| REPORT OF THE AUDIT COMMITTEE | ||||||
| OTHER MATTERS THAT MAY COME BEFORE THE MEETING | ||||||
| SHAREHOLDER PROPOSALS | ||||||
PROXY STATEMENT
GENERAL INFORMATION
| PURPOSE | ||
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Associated Banc-Corp (“Associated”) to be voted at the Annual Meeting of Shareholders at 11:00 a.m. (CDT) on Tuesday, April 28, 2020,26, 2022, (the “Annual Meeting”), which will be held virtually at the KI Convention Center, 333 Main Street, Green Bay, Wisconsin,www.virtualshareholdermeeting.com/ASB2022, and at any and all adjournments of the Annual Meeting.
The cost of solicitation of proxies will be borne by Associated. In addition to solicitation by mail, some of Associated’s directors, officers, and employeescolleagues may, without extra
compensation, solicit proxies by telephone or personal
interview. Associated has retained D.F. King & Co., Inc.Innisfree M&A Incorporated to solicit proxies for the Annual Meeting from brokers, bank nominees and other institutional holders. Associated has agreed to pay D.F. King & Co., Inc. up to $9,500 plus its out-of-pocket expensesInnisfree M&A Incorporated $25,000 for theseproxy solicitation services. Arrangements will be made with brokerage houses, custodians, nominees, and other fiduciaries to send proxy materials to their principals, and they will be reimbursed by Associated for postage and clerical expenses.
| INTERNET AVAILABILITY OF PROXY MATERIALS | ||
Securities and Exchange Commission (“SEC”) rules allow us to make our Proxy Statement and other annual meeting materials available to you on the Internet. On or about March 13, 2020,11, 2022, we began mailing a Notice of Internet Availability of Proxy Materials (the “Notice”), to our shareholders advising them that this Proxy Statement, the 20192021 Summary Annual Report to Shareholders and our 2019 Annual Report on Form 10-K for the year ended December 31, 2021 (the “2019“2021 Form 10-K”), along with voting instructions, may be accessed over the Internet at http://materials.proxyvote.com/045487. You may then access these materials and vote your shares over the Internet, or request that a printed copy of the proxy materials be sent to you. If you want to receive a paper or e-mail copy of these materials,
you must
make the request over the Internet at www.proxyvote.com, by calling toll free 1-800-579-1639, or by sending an e-mail to sendmaterial@proxyvote.com. There is no charge to you for requesting a paper or e-mail copy tofrom sendmaterial@proxyvote.com. If you would like to receive a paper or e-mail copy of the proxy materials, please make your request on or before April 14, 2020,12, 2022, in order to facilitate timely delivery. If you previously elected to receive our proxy materials electronically, these materials will continue to be sent via e-mail unless you change your election.
| WHO CAN VOTE | ||
The Board has fixed the close of business on March 2, 2020,1, 2022, as the record date (the “Record Date”) for the determination of shareholders entitled to receive notice of, and to vote at, the Annual Meeting. Each share of Associated’s common stock, par value $0.01 (the “Common Stock”), is entitled to one vote
on each matter to be voted on at the Annual
Meeting. No other class of securities will be entitled to vote at the Annual Meeting.
| QUORUM AND SHARES OUTSTANDING | ||
The presence, in person or by proxy, of the majority of the outstanding shares entitled to vote at the Annual Meeting is required to constitute a quorum for the transaction of business at the Annual Meeting. The securities of Associated
entitled to
be voted at the meeting consist of shares of its Common Stock, of which 156,243,367149,639,880 shares were issued and outstanding at the close of business on the Record Date.
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| REQUIRED VOTES | ||
The number of affirmative votes required to approve each of the proposals to be considered at the Annual Meeting is as follows:
Proposal 1 - Election of Directors
The 1410 nominees receivingwho receive the largest number of affirmative votes cast at the Annual Meeting will be elected as directors. Under Associated’s Corporate Governance Guidelines, any nominee in an uncontested election who receives a greater number of votes “withheld” from than votes “FOR” his or her election is required to tender his or her resignation following certification of the shareholder vote. The Corporate Governance and Social Responsibility
Other Proposals
The affirmative vote of a majority of the votes cast is required to approve each of the other proposals.
| ABSTENTIONS AND BROKER NON-VOTES | ||
Abstentions will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum but as unvoted for purposes of determining the approval of any matter submitted to shareholders for a vote. However, in accordance with the rules of the New York Stock Exchange (the “NYSE”), abstentions will be counted as “votes cast” for purposes of the approval of the Associated Banc-Corp 2020 Incentive Compensation Plan, giving them the effect of votes against the approval of this proposal. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as
present and entitled to vote with respect to that matter but will be considered as present and entitled to vote for purposes of determining the presence of a quorum for the meeting.
| HOW YOU CAN VOTE | ||
Shareholders are urged to vote as promptly as possible by Internet or telephone, or by signing, dating, and returning the proxy card in the envelope provided. If no specification is made, the shares will be voted “FOR” the election of the Board’s nominees for director, “FOR” the approval of the Associated Banc-Corp 2020 Incentive Compensation Plan, “FOR” the advisory approval of Associated’s named executive officer (“NEO”) compensation and “FOR” the ratification of the selection of KPMG LLP as Associated’s independent registered public accounting firm for 2020.2022.
VOTE BY INTERNET - www.proxyvote.com. Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on April 27, 2020.25, 2022. Have your Notice or proxy card, if you have requested paper copies of the proxy materials, in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. You will be required to enter the unique control number imprinted on your Notice or proxy card in order to vote online.
The Internet voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to provide their voting instructions, and to
confirm that shareholders’ instructions have been recorded properly. You should be aware that there might be costs associated with your electronic access, such as usage charges from Internet access providers and telephone companies. If you vote by Internet, please do not mail your proxy card.
VOTE BY TELEPHONE - 1-800-690-6903. Use any touch-tone telephone to transmit your voting instructions up untilno later than 11:59 p.m. Eastern Time on April 27, 2020.25, 2022. Have your Notice or proxy card, if you have requested paper copies of the proxy materials, in hand when you call and then follow the instructions. If you vote by telephone, please do not mail your proxy card.
| REVOCATION OF PROXY | ||
Proxies may be revoked at any time prior to the time they are exercised by filing with the Corporate Secretary of Associated a written revocation or a duly executed proxy bearing a later date.date, or by voting at the Annual Meeting via the meeting platform. Proxies may not be revoked by
telephone, and may not be revoked via the Internet or by telephone.prior to the Annual Meeting.
The Corporate Secretary of Associated is Randall J. Erickson, 433 Main Street, Green Bay, Wisconsin 54301.
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| VIRTUAL MEETING INFORMATION | ||
Associated has determined to hold a completely virtual meeting due to concerns relating to the ongoing COVID-19 pandemic, and to leverage technology to provide expanded access, improved communication and cost savings for our shareholders and for Associated.
There will not be a physical location for the Annual Meeting.
To participate in the Annual Meeting, please visit www.virtualshareholdermeeting.com/ASB2022 and enter the 16-digit control number included on your proxy card, or on the instructions that accompanied your proxy materials. You may begin to log into the meeting platform beginning at 10:45 a.m. CDT on the meeting date. The Annual Meeting will begin promptly at 11:00 a.m. CDT.
Please allow yourself sufficient time to log into the Annual Meeting and to ensure you can hear the streaming audio before the meeting starts.
You will be able to submit questions during the Annual Meeting by following the instructions provided on the meeting website. We will answer questions relevant to meeting matters that comply with the meeting rules of conduct during the Annual Meeting. You will also be able to examine our shareholder list during the Annual Meeting by following the instructions provided on the meeting website.
If you encounter any technical difficulties with the virtual meeting website on the meeting day, please call the technical support number that will be posted on the virtual meeting log-in page.
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PROPOSAL 1:
ELECTION OF DIRECTORS
Unless otherwise directed, all proxies will be voted “FOR” the election of each of the individuals nominated to serve as directors. The biographical information below for each nominee includes the specific experience, qualifications, attributes or skills that led to the Corporate Governance and Social Responsibility Committee’s conclusion that such nominee should serve as a director. The 1410 nominees receiving the largest number of affirmative votes cast at the Annual Meeting will be elected as directors. Under Associated’s Corporate Governance Guidelines, any nominee in an uncontested election who receives a greater number of votes “withheld” from than votes “FOR” his or her election is required to tender his or her resignation following certification of the shareholder vote. The Corporate Governance and Social Responsibility Committee is required to make a recommendation to the Board with respect to any such letter of resignation, and the Board is required to take action with respect to this recommendation and to disclose its decision and decision-making process.
Each nominee has consented to serve as a director, if elected, and as of the date of this Proxy Statement, Associated has no reason to believe that any of the nominees will be unable to serve. Correspondence may
John F. Bergstrom is retiring and will not be directedstanding for reelection at the Annual Meeting. Associated is grateful to nominees at Associated’s executive offices.Mr. Bergstrom for his dedicated service to Associated and its shareholders.
| NOMINEES FOR ELECTION TO OUR BOARD | ||
 | |
 | |||||
 | |||||
| R. Jay Gerken | |||||
 Director since 2014 Age: | Mr. Gerken is a director of Mr. Gerken’s qualifications to serve as a director of Associated, | ||||
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| Judith P. Greffin | |||||
 Director since 2017 Age: | Ms. Greffin served as Executive Vice President and Chief Investment Officer at the Allstate Corporation (NYSE: ALL), Ms. Greffin’s qualifications to serve as a director of Associated and member of the Enterprise Risk Committee and the Trust Committee include her extensive investment, strategy and risk mitigation background as well as her executive leadership experience at a large publicly traded company. Ms. Greffin is also a Chartered Financial Analyst. | ||||
| Michael J. Haddad | |||||
 Director since 2019 Age: | Mr. Haddad is the Chair of the Board of Directors of Schreiber Foods, Inc., an employee-owned, international dairy company headquartered in Green Bay, Wisconsin, since October 1, 2019. He served as President and Chief Executive Officer of Schreiber Foods, Inc. from 2009 to 2019, having served in a number of positions of increasing responsibility with the company since 1995. Mr. Haddad is also a member of the Board of Directors of Bellin Health Systems, the Board of Directors of the Green Bay Packers, Inc. Mr. Haddad’s qualifications to serve as a director of Associated and a member of the Enterprise Risk Committee and Trust Committee include his extensive experience as a CEO and board member of a large global food company with annual revenues over $5 billion, and his long-standing familiarity with the markets in which Associated is headquartered and serves. From January 1, 2021, through December 31, 2021, Mr. Haddad completed three hours of NACD director educational classes. | ||||
| Andrew J. Harmening | |||||
  Director since Age: | Mr. Mr. institutions. | ||||
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| Robert A. Jeffe | |||||
 Director since 2011 Age: | Mr. Jeffe is a Senior Operating Partner at BlackWatch, which provides strategic and financial advisory services to growth stage companies focused in the technology and entertainment industries. Mr. Jeffe also serves as the vice chairman of the Supervisory Board of Directors and is the Chair of the Audit Committee of Sono Motors GmbH, which is a German company developing electric solar vehicles. He served as Chairman of OAG Analytics, Inc., Mr. Jeffe’s qualifications to serve as a director of Associated and | ||||
| Eileen A. Kamerick | |||||
 Director since 2007 Age: | Ms. Kamerick is an adjunct professor at leading law schools and consults on corporate governance and financial strategy matters. Ms. Kamerick’s qualifications to serve as a director of Associated, Chair of the Corporate Governance and Social Responsibility Committee and member of the Compensation and Benefits Committee and the Corporate Development Committee include her | ||||
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| Gale E. Klappa | |||||
 Director since 2016 Age: | Mr. Klappa is the Executive Chairman of WEC Energy Group (NYSE: WEC) of Milwaukee, Wisconsin, one of the nation’s premier energy companies. Mr. Klappa was Chairman and Chief Executive Officer of WEC Mr. Klappa’s qualifications to serve as a director of Associated and as a member of the Audit Committee and Compensation and Benefits Committee include his 40 years of management experience in large publicly traded companies, including over 25 years at a senior executive level, and his recognized leadership in the economic development of southeastern Wisconsin. Mr. Klappa also meets the requirements of an audit committee financial expert. | ||||
 | |||||
| Cory L. Nettles | |||||
 Director since 2013 Age: | Mr. Nettles is the Founder and Managing Director of Generation Growth Capital, Inc., a private equity fund. He was Of Counsel at Quarles & Brady LLP from 2007 to 2016. He previously served as Secretary for the Wisconsin Department of Commerce from 2002 to 2004. Mr. Nettles serves on the boards of Weyco Group, Inc. (NASDAQ: WEYS), Robert W. Baird’s Baird Funds, Inc. mutual fund complex, and several nonprofit organizations including the Medical College of Wisconsin, the Greater Milwaukee Foundation and the University of Wisconsin Foundation and Lawrence University. He previously served on the board of The Private Bank-Wisconsin. Mr. Nettles’ qualifications to serve as a director of Associated and member of the Corporate Governance and Social Responsibility Committee, Corporate Development Committee and Enterprise Risk Committee include his strong business background and legal experience. | ||||
| Karen T. van Lith | |||||
 Director since 2004 Age: | Ms. van Lith is founder and CEO of APEL Worldwide, LLC, an eCommerce provider leveraging leading edge technologies. Prior to 2019, Ms. van Lith provided consultative interim leadership for technology companies requiring transformative change. From June 2011 until June 2012, she served as Chief Executive Officer and a director of MakeMusic, Inc., a publicly held technology solutions company. Ms. van Lith also served as a director of E.A. Sween, a privately-held company doing business as Deli Express, from August 2012 to December 2019. Until June 2011, she ran an internet-marketing services company through Beckwith Crowe, LLC. Ms. van Lith was President and Chief Executive Officer of Gelco Information Network, a privately held provider of transaction and information processing systems to corporations and government agencies, until its sale to Concur Technologies in October 2007. She held various other positions of increasing authority with Gelco since 1999. Ms. van Lith served as a director of XRS Corporation, a publicly traded provider of fleet operations solutions to the transportation industry from 2010 until its sale to Omnitracs in 2014, and a director of CNS, Inc., a publicly traded consumer goods company from 2003 until its 2006 sale to GlaxoSmithKline. Ms. van Lith’s qualifications to serve as a director of Associated, Chair of the Trust Committee and a member of the Compensation and Benefits Committee include her education in finance and accounting along with her past and present directorship experience in both public and private companies. Ms. van Lith provides the board with a strong understanding of accounting as well as experience in small business start-ups. She was a CPA, has practiced with an international public accounting firm and has served in various executive capacities. She also meets the requirements of an audit committee financial expert. | ||||
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| John (Jay) B. Williams | |||||
 Director since 2011 Age: | Mr. Williams is Chairman of the Board. He joined the Board of Directors in July 2011 following a 37-year career in Mr. Williams is a member of the Corporate Development Committee. Mr. Williams’ qualifications to serve as | ||||
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| DIRECTOR QUALIFICATIONS | ||
Directors are responsible for overseeing Associated’s business consistent with their fiduciary duty to shareholders. This significant responsibility requires highly skilled individuals with variousa variety of qualities, attributes and professional experience. The Board believes that there are certain general requirements for service on Associated’s Board of Directors that are applicable to all directors, and that there are other skills and experience that should be represented on the Board as a whole but not necessarily by every director. The Board and the Corporate Governance and Social Responsibility Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and Associated’s current and future needs.
In its assessment of each nominee for director, including those recommended by shareholders, the Corporate Governance and Social Responsibility Committee considers the nominee’s judgment, integrity, experience, independence, understanding of Associated’s business or other related industries and such other factors that the Corporate Governance and Social Responsibility Committee determines are pertinent in light of the current needs of the Board. The Corporate Governance and Social Responsibility Committee also takes into account the ability of a director to devote the time and effort necessary to fulfill his or her responsibilities to Associated.
The Board and the Corporate Governance and Social Responsibility Committee require that each director be a person of high integrity with a proven record of success in his or her field. Each director must demonstrate innovative thinking, familiarity with and respect for corporate governance requirements and practices, an appreciation of multiple cultures and a commitment to sustainability and to dealing responsibly with social issues. In addition to the qualifications required of all directors, the Board conducts interviews of potential director candidates to assess intangible qualities including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.
The Board believes that the combination of qualifications, skills and experiences of each of the director nominees will contribute to an effective and well-functioning Board. The Board and the Corporate Governance and Social Responsibility Committee believe that, individually and as a whole Board, the directors possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to Associated’s management.
| BOARD DIVERSITY | ||
The Corporate Governance and Social Responsibility Committee considers attributes of diversity as outlined in the Corporate Governance and Social Responsibility Committee Charter when considering director nominees. While these attributes are considered on an ongoing basis, they are particularly considered in the recruitment and deliberation regarding prospective director nominees. The Corporate Governance and Social Responsibility Committee Charter outlines desired diversity characteristics for Board member experience and competencies. The Corporate Governance and Social Responsibility Committee believes that Associated’s best interests are served by maintaining a diverse and active Board membership with members who are willing, able and well-situated to provide insight into current business conditions, opportunities and risks. The “outside” perspectives of the Board members are key factors in contributing to our success. The Corporate Governance and Social Responsibility Committee has adopted the following diversity principles and characteristics for consideration in performing its director nomination duties:
•The number of directors should be maintained at 10 to 14 persons with the flexibility to expand, if required, to support acquisitions or mergers.
•Racial, ethnic, and gender diversity.
•Geographic diversity, as it relates to the markets Associated serves.
•Industry representation, including a mix and balance of manufacturing, service, public and private company experience.
•Multi-disciplinary expertise, including financial/ accounting expertise, sales/marketing expertise, mergers and acquisition expertise, regulatory, manufacturing, and production expertise, educational institutions, and public service expertise.
•Experience with technology, including cyber security, digital marketing and social media.
•A majority of the members of the Board will be “independent” directors as defined by applicable law, including the rules and regulations of the SEC and the rules of the NYSE.
The Corporate Governance and Social Responsibility Committee periodically assesses the effectiveness of these
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diversity principles. In light of the current Board’s representation of diverse industry, background, communities within Associated’s markets, professional expertise and racial and gender diversity, the Corporate Governance and Social
Responsibility Committee believes that Associated has effectively implemented these principles.
| DIRECTOR SKILLS AND EXPERIENCE MATRIX | ||
The following matrix provides information about Associated’s director nominees, including certain types of knowledge, skills, experience and other attributes possessed by one or more of them which the Board believes are relevant to Associated’s business and industry. The matrix does not capture all of the knowledge, skills, experiences or attributes possessed by the director nominees, and the Board believes that each director nominee has the ability to contribute to the decision-making process in every area listed.
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| RECOMMENDATION OF THE BOARD OF DIRECTORS | ||
The Board recommends that shareholders vote “FOR” the election of Mses. Greffin, Kamerick and van Lith and Messrs. Flynn, Bergstrom, Crowley, Gerken, Haddad, Hutchinson,Harmening, Jeffe, Klappa, Lommen, Nettles and Williams to the Board of Directors.
| AFFIRMATIVE DETERMINATIONS REGARDING DIRECTOR INDEPENDENCE | ||
Associated’s Board has considered the independence of the nominees for election at the Annual Meeting and all individuals who served as directors during any portion of 2019,2021, under the corporate governance rules of the NYSE. The Board has determined that all such directors are independent, or were independent at the time they served as directors, under the NYSE corporate governance rules, except for Mr. Flynn,Harmening, President and Chief Executive Officer (“CEO”) of Associated, and Associated’s former President and CEO, of Associated.Philip B. Flynn. Mr. FlynnHarmening is not independent because of his servicehe serves as an executive officer of Associated, and not because of any other transactions or relationships. Likewise, Mr. Flynn, who retired from his role as President and CEO of Associated and from Associated’s Board of Directors effective April 28, 2021, was not an independent director because he served as an executive officer of Associated.
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INFORMATION ABOUT THE BOARD OF DIRECTORS
| BOARD COMMITTEES AND MEETING ATTENDANCE | ||
The Board held sixseven meetings during 2019.2021. During 2019,2021, each director who was a director for all of 20192021 attended at least 75% of the Board meetings held, and each such director attended at least 75% of the meetings of each committee of which he or she was a member.member, except for Mr. Nettles, who attended the four regularly scheduled meetings of the Corporate Governance and Social Responsibility Committee, but was excused from attending two special meetings of the Committee.
The Board convened an executive session of its non-management directors at all of its regular board meetings held in 2019.2021. Executive sessions of Associated’s non-management directors are presided over by the Chairman of the Board.
All of the directors serve on the Boards of two of Associated’s operating subsidiaries, Associated Bank, National Association and Associated Trust Company, National Association. The Board believes that a single governing body to advise and determine strategy for the organization provides the Board with a comprehensive picture of the level and trends in operational and compliance risk exposure for the entire organization and ensures comprehensive oversight of regulatory matters.
The Board has adopted Corporate Governance Guidelines, including a Code of Business Conduct and Ethics, which can
be found on Associated’s website at www.associatedbank.com,
It is Associated’s policy that all directors and nominees for election as directors at the Annual Meeting attend the Annual Meeting, except under extraordinary circumstances. All directors and nominees for director at the time of the 20192021 Annual Meeting of Shareholders attended the meeting.
The Board has adopted written charters for all of its standing committees. The committee charters can be found on Associated’s website at www.associatedbank.com, “Investor Relations,” “Governance Documents.” The following summarizes the responsibilities of the various committees.
The following table lists the members of each of the standing committees as of February 14, 202015, 2022 and the number of meetings held by each committee during 2019.2021.
| Name | Audit | Compensation and Benefits | Corporate Development | Corporate Governance | Enterprise Risk | Trust | Name | Audit | Compensation and Benefits | Corporate Development | Corporate Governance and Social Responsibility | Enterprise Risk | Trust | |||||||||||||
| John F. Bergstrom | √ | √ | John F. Bergstrom | chair | √ | |||||||||||||||||||||
| Michael T. Crowley, Jr. | √ | |||||||||||||||||||||||||
| Philip B. Flynn* | chair | |||||||||||||||||||||||||
R. Jay Gerken(1) | chair | √ | R. Jay Gerken(1) | √ | chair | |||||||||||||||||||||
| Judith P. Greffin | √ | Judith P. Greffin | √ | |||||||||||||||||||||||
| Michael J. Haddad | √ | Michael J. Haddad | √ | |||||||||||||||||||||||
William R. Hutchinson(2) | √ | |||||||||||||||||||||||||
| Andrew J. Harmening* | Andrew J. Harmening* | chair | ||||||||||||||||||||||||
Robert A. Jeffe(1) | √ | √ | √ | Robert A. Jeffe(1) | chair | √ | √ | |||||||||||||||||||
| Eileen A. Kamerick | √ | chair | Eileen A. Kamerick | √ | chair | |||||||||||||||||||||
Gale E. Klappa(1) | √ | Gale E. Klappa(1) | √ | |||||||||||||||||||||||
| Richard T. Lommen | chair | √ | ||||||||||||||||||||||||
| Cory L. Nettles | √ | Cory L. Nettles | √ | |||||||||||||||||||||||
| Karen T. van Lith | √ | chair | Karen T. van Lith | √ | chair | |||||||||||||||||||||
John (Jay) B. Williams(1) | √ | chair | ||||||||||||||||||||||||
John (Jay) B. Williams(2) | John (Jay) B. Williams(2) | √ | ||||||||||||||||||||||||
| Number of Meetings | 10 | 5 | 3 | 4 | 9 | 4 | Number of Meetings | 10 | 7 | 0 | 6 | 10 | 4 | |||||||||||||
* President and Chief Executive Officer of Associated
(1)The Board has determined that this director qualifies as an audit committee financial expert.
(2)As Chairman of the Board, Mr. Williams may attend meetings of any Board committee.
12
Audit Committee
The Audit Committee reviews the adequacy of internal accounting controls, reviews with Associated’s independent registered public accounting firm its audit plan and the results
of the audit engagement, reviews the scope and results of procedures for internal auditing, reviews and approves the general nature of audit services by the independent registered public accounting firm, and reviews quarterly and annual
financial statements issued by Associated. The Audit Committee has the sole authority to appoint or replace the independent registered public accounting firm, subject to ratification by the shareholders at the Annual Meeting. Both the internal auditors and the independent registered accounting firm meet periodically with the Audit Committee and have access to the Audit Committee at any time. In addition, the Audit Committee oversees management’s bank regulatory compliance. The Audit Committee is also responsible for overseeing certain aspects of Associated’s environmental, social and governance (known as “ESG”) program, including the ESG-related aspects of audit and audit risk oversight.
Compensation and Benefits Committee
The functions of the Compensation and Benefits Committee include, among other duties directed by the Board, administration and oversight of Associated’s executive compensation, employee benefit programs and director compensation. The Compensation and Benefits Committee sets the strategic direction of Associated’s executive compensation policies and programs, and oversees management’s execution of and compliance with that strategic direction. The Compensation and Benefits Committee determines the compensation of Associated’s Chief Executive Officer (the “CEO”)CEO and, with input from the CEO, establishes the compensation of Associated’s other NEOs. The Compensation and Benefits Committee also has responsibility for ensuring that Associated’s incentive compensation programs do not encourage unnecessary and excessive risk taking that would threaten the value of Associated or the integrity of its financial reporting. As permitted under its charter, the Compensation and Benefits Committee engages an independent compensation consultant to advise it on the structure and amount of compensation of Associated’s executive officers and Board of Directors, which is described in detail under “Executive Compensation - Compensation Discussion and Analysis,” beginning on page 30.26. Compensation and Benefits Committee duties also include overseeing certain aspects of Associated’s ESG program, including reviewing and evaluating policies and programs, and taking action as necessary, with respect to
human capital management, diversity, equity and inclusion, and workforce practices and policies.
Corporate Development Committee
The functions of the Corporate Development Committee include, among other duties directed by the Board, reviewing and recommending to the Board proposals for acquisition or expansion activities.
Corporate Governance and Social Responsibility Committee
The functions of the Corporate Governance and Social Responsibility Committee include corporate governance oversight, review and recommendation for Board approval of Board and committee charters. The Corporate Governance and Social Responsibility Committee also reviews the structure and composition of the Board, considers qualification requirements for continued Board service, and recruits new director candidates. The Corporate Governance and Social Responsibility Committee also advises the Board with respect to the Code of Business Conduct and Ethics. The Corporate Governance and Social Responsibility Committee is also responsible for overseeing aspects of Associated’s ESG program related to corporate governance, shareholder rights, board and committee structure, ESG framework, and ESG disclosures.
Enterprise Risk Committee
The functions of the Enterprise Risk Committee include oversight of the enterprise-wide risk management framework of Associated, including the strategies, policies and practices established by management to identify, assess, measure and manage significant risks. Enterprise Risk Committee duties also include reviewing and approving enterprise risk-related components of Associated’s ESG program, which may include risk assessment, lending policy, data privacy, fair lending, and community related programs. The Enterprise Risk Committee, through its oversight of the lending policy and risk assessment, is also responsible for the climate change elements of ESG impacting Associated.
Trust Committee
The functions of the Trust Committee include the supervision of the trust and fiduciary activities of Associated Bank, National Association and Associated Trust Company, National Association to ensure the proper exercise of their trust/fiduciary powers.
| SEPARATION OF BOARD CHAIRMAN AND CEO | ||
Associated’s Amended and Restated Bylaws and Corporate Governance Guidelines require the separation of the positions of Chairman of the Board and CEO. Currently, Mr. HutchinsonWilliams serves as Chairman of the Board and Mr. FlynnHarmening serves as CEO. These positions have been separated since Mr. FlynnHarmening’s predecessor joined Associated in December
2009, at which time the Board determined that Mr. Hutchinson, Associated’s former Lead Director, serving as Chairmanseparating these roles would enhance the effectiveness of the Board. The Board also recognized that managing the Board in an increasingly complex economic and regulatory
environment is a particularly time-intensive responsibility. Separating the roles allows Mr. FlynnHarmening to focus solely on his duties as
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the CEO. Separation of these roles also promotes risk management, enhances the independence of the Board from
management and mitigates potential conflicts of interest between the Board and management.
| DIRECTOR NOMINEE RECOMMENDATIONS | ||
The Corporate Governance and Social Responsibility Committee will consider any nominee recommended by a shareholder as described in this section under the same criteria as any other potential nominee. The Corporate Governance and Social Responsibility Committee believes that a nominee recommended for a position on the Board must have an appropriate mix of experience, diverse perspectives, and skills. Qualifications for nomination as a director can be found in the Corporate Governance and Social Responsibility Committee Charter. At a minimum, the core competencies should include accounting or finance experience, market familiarity, business or management experience, industry knowledge, customer-base experience or perspective, crisis response, leadership, and/or strategic planning.
A shareholder who wishes to recommend a person or persons for consideration as a nominee for election to the Board must send a written notice by mail, c/o Corporate Secretary, Associated Banc-Corp, 433 Main Street, Green Bay, Wisconsin 54301, that sets forth (1) the name, age, address (business and residence) and principal occupation or
employment (present and for the past five years) of each proposed nominee; (2) the
number of shares of Associated beneficially owned (as defined by Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and any other ownership interest in the shares of Associated, whether economic or otherwise, including derivatives and hedges, by each proposed nominee; (3) any other information regarding such proposed nominee that would be required to be disclosed in a definitive proxy statement prepared in connection with an election of directors pursuant to Section 14(a) of the Exchange Act; and (4) the name and address (business and residential) of the shareholder making the recommendation; and (5) the number of shares of Associated beneficially owned (as defined by Section 13(d) of the Exchange Act) and any other ownership interest in the shares of Associated, whether economic or otherwise, including derivatives and hedges, by the shareholder making the recommendation. Associated may require any proposed nominee to furnish additional information as may be reasonably required to determine his or her qualifications to serve as a director of Associated.
| COMMUNICATIONS BETWEEN SHAREHOLDERS, INTERESTED PARTIES AND THE BOARD | ||
Associated’s Board provides a process for shareholders and other interested parties to send communications to the Board or any of the directors. Shareholders and other interested parties may send written communications to the Board or any of the individual directors by mail, c/o Corporate Secretary, Associated Banc-Corp, 433 Main Street, Green Bay, Wisconsin 54301. All communications will be compiled by Associated’s Corporate Secretary and submitted to the Board or the individual director, as applicable, on a regular basis
unless such
communications are considered, in the reasonable judgment of the Corporate Secretary, to be improper for submission to the intended recipient(s). Examples of communications that would be considered improper for submission include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to Associated or Associated’s business, or communications that relate to improper or irrelevant topics.
| COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | ||
There are no Compensation and Benefits Committee interlocking relationships, as defined by the rules adopted by
the SEC, and no Associated officer or employee is a member of the Compensation and Benefits Committee.
14
STOCK OWNERSHIP
| SECURITY OWNERSHIP OF BENEFICIAL OWNERS | ||
The following table presents information regarding the beneficial ownership of Common Stock by each person who, to our knowledge, was the beneficial owner of 5% or more of our outstanding Common Stock on February 14, 2020.15, 2022.
The information below is from the most recent Schedule 13G and Schedule 13G/A filings reporting holdings as of December 31, 2019.holdings.
| Name and Address | Amount and Nature of Beneficial Ownership(1) | Percent of Class(2) | ||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | ||||||||
The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 | 15,028,602(4) | 10.02% | ||||||
State Street Corporation State Street Financial Center 1 Lincoln Street Boston, MA 02111 | 9,852,199(5) | 6.57% | ||||||
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746 | ||||||||
FMR LLC 245 Summer Street Boston, MA 02210 | 7,807,879(7) | 5.20% | ||||||
(1)Shares are deemed to be “beneficially owned” by a person if such person, directly or indirectly, has or shares (a) the power to vote or to direct the voting of such shares, or (b) the power to dispose or direct the disposition of such shares. In addition, a person is deemed to beneficially own any shares of which such person has the right to acquire beneficial ownership within 60 days.
(2)Based on 150,035,461 shares of common stock outstanding as of February 15, 2022.
(3)Based on an amended Schedule 13G filed on January 27, 2022, BlackRock, Inc. and certain affiliated entities have sole voting power with respect to 17,042,529 shares and sole dispositive power with respect to 17,540,484 shares.
(4)Based on an amended Schedule 13G filed on February 10, 2022, The Vanguard Group, Inc. has shared voting power with respect to 134,148 shares, sole dispositive power with respect to 14,760,953 shares and shared dispositive power with respect to 267,649 shares.
(5) Based on a Schedule 13G filed on February 10, 2022, State Street Corporation and certain subsidiaries have shared voting power with respect to 9,483,083 shares and shared dispositive power with respect to 9,852,199 shares.
(6)Based on an amended Schedule 13G filed on February 8, 2022, Dimensional Fund Advisors LP (“DFA”) has sole voting power with respect to 9,411,795 shares and sole dispositive power with respect to 9,609,395 shares. DFA is a registered investment adviser to four mutual funds and serves as investment manager or sub-adviser to various other clients (collectively, the “Funds”). In these roles, DFA or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the issuer that are owned by the Funds, and may be deemed to be the beneficial owner of such shares. Dimensional disclaims beneficial ownership of such securities.
(7) Based on a Schedule 13G filed on February 9, 2022, FMR LLC and certain subsidiaries have sole voting power with respect to 2,119,780 shares and sole dispositive power with respect to 7,807,879 shares.
| STOCK OWNERSHIP GUIDELINES FOR EXECUTIVE OFFICERS AND DIRECTORS | ||
Associated’s Compensation and Benefits Committee believes that robust security ownership guidelines are an important means of ensuring that the interests of Associated’s executive officers and directors are fully aligned with long-term shareholder value.
Associated’s executive stock ownership guidelines, which apply to members of the Executive CommitteeLeadership Team (which is composed of colleagues that directly report to the Chief Executive Officer) and other key executives identified by the CEO, include:
•A requirement to hold 50% of vested shares of restricted stock granted for a period of three years after the vesting date of the stock; and
•Additional required holdings calculated as a multiple of the executive officer’s annual base salary - six times
for Mr. Flynnthe CEO and three times for each of the other executive officers subject to the guidelines. For purposes of the guidelines, shares held by an executive officer include shares held directly, held in an executive officer’s 401(k) plan,
15
shares purchased through the Employee Stock Purchase Plan, and unvested shares of restricted stock and 25% of unvested restricted stock units (“RSUs”).stock.
Associated’s director stock ownership guidelines require each independent member of the Board to own shares of Common Stock with a value equal to five times the value of the annual cash retainer payable to a director. Directors are required to attain such stock ownership goal no later than five years from the date on which they first were appointed to the Board. Balances in the Directors’ Deferred Compensation Plan and RSUsrestricted stock units (“RSUs”) count toward satisfying this requirement.
All Associated directors and NEOs are within the expected guidelines of the stock ownership requirements.
Under Associated’s Insider Trading Policy, employees, officers, and directors are prohibited from engaging in hedging transactions with respect to Associated Common Stock and from pledging Associated Common Stock as collateral for
loans, with the exception, for directors only, of pledges already in place when the prohibition on pledging was adopted in 2012. All of the NEOs are in compliance with this policy. Where applicable, shares pledged as collateral will not be counted for purposes of compliance with the stock ownership guidelines.
| SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT | ||
Listed below is information as of February 14, 202015, 2022 concerning beneficial ownership of Common Stock, depositary shares and RSUs by each director, and each NEO, and by directors and executive officers as a group. The information is based in part on information received from the respective persons and in part
from the records of Associated. The RSUs and depositary shares are nonvoting.
16
| COMMON STOCK | ||
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1)(2) | Shares Issuable Within 60 Days(3) | Percent of Class | ||||||||
| Directors | |||||||||||
| Andrew J. Harmening | 298,765 | — | * | ||||||||
| John F. Bergstrom | 100,000 | — | * | ||||||||
| R. Jay Gerken | 2,000 | — | * | ||||||||
| Judith P. Greffin | — | — | — | ||||||||
| Michael J. Haddad | 3,662 | — | * | ||||||||
| Robert A. Jeffe | — | — | — | ||||||||
| Eileen A. Kamerick | 14,381 | — | * | ||||||||
| Gale E. Klappa | — | — | — | ||||||||
| Cory L. Nettles | — | — | — | ||||||||
| Karen T. van Lith | 19,321 | — | * | ||||||||
| John (Jay) B. Williams | 17,671 | — | * | ||||||||
| Named Executive Officers | |||||||||||
Philip B. Flynn(4) | 2,090,233 | 1,289,836 | 1.39% | ||||||||
| Christopher J. Del Moral-Niles | 188,798 | 92,032 | * | ||||||||
| John A. Utz | 303,090 | 217,501 | * | ||||||||
| Randall J. Erickson | 339,331 | 212,126 | * | ||||||||
| David L. Stein | 291,373 | 176,754 | * | ||||||||
| All Directors and Executive Officers as a group (26 persons) | 4,561,420 | 2,538,664 | 3.04% | ||||||||
* Denotes percentage is less than 1%.
(1) Beneficial ownership includes shares with voting and investment power in those persons whose names are listed above or by their spouses or trusts. Some shares may be owned in joint tenancy, by a spouse, by a corporate entity, or in the name of a trust or by minor children. Shares include shares issuable within 60 days of February 15, 2022 and vested and unvested service-based restricted stock.
(2) Excludes RSUs that have been deferred and are vested but not settled.
(3) Shares subject to options exercisable within 60 days of February 15, 2022.
(4) Information is derived from Mr. Flynn’s last Form 4 filed with the SEC on March 17, 2021, and from the Company’s most recent internal information.
17
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Shares Issuable Within 60 Days(2) | Percent of Class | |
| Directors | ||||
| Philip B. Flynn | 1,175,421 | 389,982 | * | |
| John F. Bergstrom | 20,500 | — | * | |
| Michael T. Crowley, Jr. | 963,526 | — | * | |
| R. Jay Gerken | 2,000 | — | * | |
| Judith P. Greffin | — | — | — | |
| Michael J. Haddad | — | — | — | |
| William R. Hutchinson | 52,301 | — | * | |
| Robert A. Jeffe | — | — | — | |
| Eileen A. Kamerick | 5,674 | — | * | |
| Gale E. Klappa | — | — | — | |
| Richard T. Lommen | 163,870 | — | * | |
| Cory L. Nettles | — | — | — | |
| Karen T. van Lith | 10,614 | — | * | |
| John (Jay) B. Williams | 10,314 | — | * | |
| Named Executive Officers | ||||
| Christopher J. Del Moral-Niles | 187,616 | 91,548 | * | |
| John A. Utz | 153,682 | 79,335 | * | |
| Randall J. Erickson | 200,874 | 84,173 | * | |
| David Stein | 159,258 | 61,296 | * | |
All Directors and Executive Officers as a group (28 persons) | 3,731,017 | 998,279 | 2.38% | |
| RESTRICTED STOCK UNITS | ||
| Beneficial Owner | Number of RSUs | |||||
| Directors | ||||||
| Andrew J. Harmening | 437,377 | |||||
| John F. Bergstrom | ||||||
| R. Jay Gerken | ||||||
| Judith P. Greffin | ||||||
| Michael J. Haddad | ||||||
| Robert A. Jeffe | ||||||
| Eileen A. Kamerick | ||||||
| Gale E. Klappa | ||||||
| Cory L. Nettles | ||||||
| Karen T. van Lith | ||||||
| John (Jay) B. Williams | ||||||
| All Non-Employee Directors as a group | ||||||
| Beneficial Owner | Number of RSUs | |||||
| Named Executive Officers | ||||||
Philip B. Flynn(1) | ||||||
| Christopher J. Del Moral-Niles | ||||||
| John A. Utz | ||||||
| Randall J. Erickson | ||||||
| David L. Stein | ||||||
| All Executive Officers as a group | ||||||
Each RSU represents the contingent right to receive one share of Common Stock. For the non-employee directors, the RSUs vest 100% on the fourthfirst anniversary of the grant date. For executive officers, RSUs are subject to performance-based and/or time-based vesting criteria as set forth in the applicable RSU award agreement.
18
| DEPOSITARY SHARES OF PREFERRED STOCK | ||
The following table provides information concerning beneficial ownership of depositary shares. Each depositary share represents a 1/40th ownership interest in a share of Associated’s 6.125% Non-Cumulative Perpetual Preferred Stock, Series C (the “Series C Preferred Stock”), Associated’s 5.375% Non-Cumulative Perpetual Preferred Stock, Series D (the “Series D Preferred Stock”) or 5.875% Non-Cumulative Perpetual Preferred Stock, Series E (the “Series E Preferred Stock”) or 5.625% Non-Cumulative Perpetual Preferred Stock, Series F (the “Series F Preferred Stock”), as indicated in the table. Each of the Series C Preferred Stock, the
has a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). Holders of depositary shares are entitled to all proportional rights and preferences of the Series C Preferred Stock, the Series DE Preferred Stock or the Series EF Preferred Stock, as applicable (including dividend, voting, redemption and liquidation rights).
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class | |||||||||||||||
| Series E Preferred Stock | Series F Preferred Stock | Series E Preferred Stock | Series F Preferred Stock | ||||||||||||||
| Directors | |||||||||||||||||
| Andrew J. Harmening | — | — | — | — | |||||||||||||
| John F. Bergstrom | 20,000 | 20,000 | * | * | |||||||||||||
| R. Jay Gerken | — | 2,000 | — | * | |||||||||||||
| Judith P. Greffin | — | — | — | — | |||||||||||||
| Michael J. Haddad | — | 2,000 | — | * | |||||||||||||
| Robert A. Jeffe | — | — | — | — | |||||||||||||
| Eileen A. Kamerick | — | — | — | — | |||||||||||||
| Gale E. Klappa | 2,000 | 2,000 | * | * | |||||||||||||
| Cory L. Nettles | — | — | — | — | |||||||||||||
| Karen T. van Lith | — | — | — | — | |||||||||||||
| John (Jay) B. Williams | — | — | — | — | |||||||||||||
| Named Executive Officers | |||||||||||||||||
Philip B. Flynn(2) | 190,000 | — | 4.75 | % | — | ||||||||||||
| Christopher J. Del Moral-Niles | — | — | — | — | |||||||||||||
| John A. Utz | — | — | — | — | |||||||||||||
| Randall J. Erickson | — | — | — | — | |||||||||||||
| David L. Stein | 4,000 | — | * | — | |||||||||||||
All Directors and Executive Officers as a group (26 persons) | 216,000 | 27,000 | 5.40 | % | * | ||||||||||||
* Denotes percentage is less than 1%.
(1) Beneficial ownership includes shares with voting and investment power in those persons whose names are listed above or by their spouses or trusts. Some shares may be owned in joint tenancy, by a spouse, or in the name of a trust or by minor children.
(2) Information is derived from Mr. Flynn’s Form 4 filed with the SEC on September 21, 2018.
19
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class | |||||||||||
| Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | ||||||||
| Directors | |||||||||||||
| Philip B. Flynn | 40,000 | — | 190,000 | 1.54% | — | 4.75% | |||||||
| John F. Bergstrom | — | 40,000 | 20,000 | — | 1.01% | * | |||||||
| Michael T. Crowley, Jr. | — | — | 8,000 | — | — | * | |||||||
| R. Jay Gerken | 4,000 | — | — | * | — | — | |||||||
| Judith P. Greffin | — | — | — | — | — | — | |||||||
| Michael J. Haddad | — | — | — | — | — | — | |||||||
| William R. Hutchinson | — | — | 4,000 | — | — | * | |||||||
| Robert A. Jeffe | — | 60,000 | — | — | 1.51% | — | |||||||
| Eileen A. Kamerick | — | — | — | — | — | — | |||||||
| Gale E. Klappa | — | 4,000 | 2,000 | — | * | * | |||||||
| Richard T. Lommen | — | — | 12,000 | — | — | * | |||||||
| Cory L. Nettles | — | — | — | — | — | — | |||||||
| Karen T. van Lith | — | — | — | — | — | — | |||||||
| John (Jay) B. Williams | — | — | — | — | — | — | |||||||
| Named Executive Officers | |||||||||||||
| Christopher J. Del Moral-Niles | — | — | — | — | — | — | |||||||
| John A. Utz | — | — | — | — | — | — | |||||||
| Randall J. Erickson | — | — | — | — | — | — | |||||||
| David Stein | 1,000 | 2,000 | 4,000 | * | * | * | |||||||
All Directors and Executive Officers as a group (28 persons) | 45,000 | 106,000 | 240,000 | 1.73% | 2.66% | 6.00% | |||||||
| OWNERSHIP IN DIRECTORS’ DEFERRED COMPENSATION PLAN | ||
In addition to the beneficial ownership set forth in the Security Ownership of Directors and Management tables above, the non-employee directors have an account in the Directors’ Deferred Compensation Plan with the balances in phantom stock as of February 14, 202015, 2022 set forth below. The dollar balances in these accounts are expressed daily in units of Common Stock based
on its daily closing price. These
balances are included for purposes of the non-employee director holding requirements under the Director Stock Ownership Guidelines. The units are nonvoting. See “Director Compensation - Directors’ Deferred Compensation Plan” on page 53.56.
| Beneficial Owner | Account Balance at February 14, 2020 | Equivalent Number of Shares of Common Stock(1) | ||||
| John F. Bergstrom | $263,533 | 13,001 | ||||
| Michael T. Crowley, Jr. | — | — | ||||
| R. Jay Gerken | 115,012 | 5,674 | ||||
| Judith P. Greffin | 115,012 | 5,674 | ||||
| Michael J. Haddad | 18,466 | 911 | ||||
| William R. Hutchinson | 593,972 | 29,303 | ||||
| Robert A. Jeffe | 422,265 | 20,832 | ||||
| Eileen A. Kamerick | 488,693 | 24,109 | ||||
| Gale E. Klappa | 115,012 | 5,674 | ||||
| Richard T. Lommen | 1,841,044 | 90,826 | ||||
| Cory L. Nettles | 115,012 | 5,674 | ||||
| Karen T. van Lith | 445,272 | 21,967 | ||||
| John (Jay) B. Williams | 80,716 | 3,982 | ||||
| All Directors as a group | $4,614,009 | 227,627 | ||||
| Beneficial Owner | Account Balance at February 15, 2022 | Equivalent Number of Shares of Common Stock(1) | ||||||||||||
| John F. Bergstrom | $701,890 | 27,590 | ||||||||||||
| R. Jay Gerken | 498,853 | 19,609 | ||||||||||||
| Judith P. Greffin | 498,853 | 19,609 | ||||||||||||
| Michael J. Haddad | 597,662 | 23,493 | ||||||||||||
| Robert A. Jeffe | 1,175,023 | 46,188 | ||||||||||||
| Eileen A. Kamerick | 668,055 | 26,260 | ||||||||||||
| Gale E. Klappa | 498,853 | 19,609 | ||||||||||||
| Cory L. Nettles | 508,241 | 19,978 | ||||||||||||
| Karen T. van Lith | 608,703 | 23,927 | ||||||||||||
| John (Jay) B. Williams | 110,334 | 4,337 | ||||||||||||
| All Directors as a group | $5,866,467 | 230,600 | ||||||||||||
| Plan | Shares to be Issued upon Exercise of Outstanding Options(1) | Restricted Stock Awards | Non-Employee Director RSU Awards | Employee RSU Awards | Shares Remaining Available for Future Grant | |||||
Associated Banc-Corp 2017 Incentive Compensation Plan(4) | 2,602,759 | 718,240 | 172,958 | 181,893 | 5,967,893(3) | |||||
Associated Banc-Corp 2013 Incentive Compensation Plan(5) | 2,844,293 | 7,368 | 203,660 | 82,101(2) | — | |||||
Associated Banc-Corp 2010 Incentive Compensation Plan(6) | 655,310 | — | 42,730 | — | — | |||||
| Total | 6,102,362 | 725,608 | 419,348 | 263,994 | 5,967,893 | |||||
20
| Name and Position or Group | 2019 Stock Options | 2019 Restricted Stock Grants | 2019 RSUs | ||||||
| Philip B. Flynn | |||||||||
| President and CEO | 169,857 | 29,816 | 59,631 | ||||||
| Christopher J. Del Moral-Niles | |||||||||
| Executive Vice President, Chief Financial Officer | 39,212 | 6,883 | 13,766 | ||||||
| John A. Utz | |||||||||
| Executive Vice President, Head of Corporate Banking and Milwaukee Market President | 33,777 | 5,930 | 11,858 | ||||||
| Randall J. Erickson | |||||||||
| Executive Vice President, General Counsel, Corporate Secretary | 29,765 | 5,225 | 10,449 | ||||||
| David L. Stein | |||||||||
| Executive Vice President, Head of Consumer & Business Banking | 25,559 | 4,486 | 8,973 | ||||||
| Executive Officers as a Group | 489,911 | 86,060 | 165,974 | ||||||
| Non-Employee Directors as a Group | — | — | 81,965 | ||||||
| Non-Executive Officer Employees as a Group | 487,840 | 345,746 | — | ||||||
| Plan Category | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) | |||||
| Equity compensation plans approved by security holders | 5,542,954 | $20.13 | 7,561,080 | |||||
| Equity compensation plans not approved by security holders | — | — | — | |||||
| Total | 5,542,954 | $20.13 | 7,561,080 | |||||
PROPOSAL 3:2:
ADVISORY APPROVAL OF ASSOCIATED BANC-CORP’S NAMED EXECUTIVE OFFICER COMPENSATION
Associated’s executive compensation program plays a key role in our ability to attract, retain and motivate the highest quality executive team. The principal objectives of Associated’s executive compensation program are to alignto:
•Align executive incentive compensation with long-term shareholder value creation, targetcreation;
•Target executive compensation within competitive market ranges,ranges; and reward
•Reward performance, without incentingincentivizing unnecessary or excessive risk.
As discussed in the Compensation Discussion and Analysis, which begins on page 30,26, the Compensation and Benefits Committee has designed the program to incorporate a number of features and best practices that support these objectives, including, among others:
•Target total compensation for Associated’s Named Executive Officers (the “NEOs”(“NEOs”) at market-competitive levels, while maintaining an overall compensation program that is aligned with and reflects the performance of Associated;
•Grant equity awards in the form of restricted stock awardsunits (“RSAs”RSUs”) and performance-based restricted stock units (“RSUs”PRSUs”), which are directly aligned with shareholder value;
Shareholders are encouraged to carefully review the “Executive Compensation” section of this Proxy Statement in its entirety for a detailed discussion of Associated’s executive compensation program.
As required under the Exchange Act, this proposal seeks a shareholder advisory vote on the approval of compensation of our Named Executive OfficersNEOs as disclosed pursuant tounder Item 402 of Regulation S-K through the following resolution:
“Resolved, that the shareholders approve the compensation of Associated’s Named Executive Officers as disclosed pursuant to the compensation rules of the SEC in the Compensation Discussion and Analysis, the compensation tables and any related materials.”
Because this is an advisory vote, it will not be binding uponon the Board of Directors. However, the Compensation and Benefits Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
| RECOMMENDATION OF THE BOARD OF DIRECTORS | ||
The Board recommends that shareholders vote “FOR” the advisory approval of Associated Banc-Corp’s Named Executive OfficerNEO compensation, as disclosed pursuant to the compensation disclosure rules of the SEC (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and any related material). If a majority of the votes cast are voted “FOR” this Proposal 3,2, it will pass. Unless otherwise directed, all proxies will be voted “FOR” Proposal 3.
2.
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| 2021 ENVIRONMENTAL, SOCIAL & GOVERNANCE HIGHLIGHTS | ||
Associated has a long history of making significant and broad investments in our communities. We enrich these commitments to our communities through a strong focus on responsible and sustainable business practices that align with our business strategies; position us to be more efficient and resilient; improve the health, well-being and engagement of our colleagues; and help keep our communities and our environment vibrant and healthy.
The information below highlights outcomes of some of the many environmental, social and governance (ESG) initiatives in which Associated is engaged, through 2021. The Company’s Environmental, Social & Governance Report, available at investor.associatedbank.com, provides an expanded view of Associated’s ESG activities.
| ECONOMIC AND SOCIAL IMPACT | ||||||||
•$465 million in investments and community development loans to provide additional resources to low- to moderate-income ("LMI") and majority-minority communities | •Increased minimum wage to $17 per hour positively impacting approximately 35% of colleagues on November 21, 2021 | |||||||
•$324 million in small business loans | •More than $807,000 raised for the United Way | |||||||
•6,278 residential mortgages for approximately $1.2billion in loans to support LMI and minority homeownership | •42,000 hours of recorded colleague volunteer time equal to $1.2 million in community service time | |||||||
•$3.1million in grants to support Community Reinvestment Act (CRA) programming at various nonprofit organizations | •Satisfactory CRA Rating for the evaluation period of January 1, 2018, to December 31, 2020 | |||||||
•25% of branches in LMI census tracts | •9% of branches in majority-minority communities | |||||||
| DIVERSITY, EQUITY & INCLUSION | |||||||||||||||||
| 43% of colleagues participate in Colleague Resource Groups (CRGs) | 84% of colleagues feel Associated values diversity and inclusion | HUMAN RIGHTS Adopted Human Rights Statement, focusing on providing a safe, diverse, equitable and inclusive environment for all stakeholders. | |||||||||||||||
More than 99% of colleagues participate in Diversity, Equity & Inclusion training(1) | |||||||||||||||||
63% middle and executive management diversity(2) | 36% board diversity(2) | ||||||||||||||||
(1) All active colleagues not on leave at year end. (2) Defined by gender, race or ethnicity. | |||||||||||||||||
| ENVIRONMENT | ||
*Established an Environmental Sustainability Council to identify, implement and effectuate priorities for environmental sustainability activities. | ||
*Established Environmental Risk Management Policyand Program Statement focused on Environmental Risk Management, Climate Change, Carbon Emissions and Natural Resources; and Environmental and Social Lending. | ||
| GOVERNANCE | ||||||||||||||
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| LETTER TO SHAREHOLDERS | ||
To Our Fellow Shareholders,
On behalf of Associated Banc-Corp’s Board of Directors, the Compensation and Benefits Committee is pleased to describe the Company’s approach to executive compensation, explain how it aligns with company performance, and demonstrate how we continue to incorporate feedback from our shareholders.
2021 Say-on-Pay Vote
After a disappointing say-on-pay vote result in 2020, we looked to 2021 as an opportunity for change and to realign our compensation practices to continue to effectively drive performance and to create greater alignment with shareholders. We believe our efforts were well received, as the 2021 say-on-pay proposal received approval of more than 94% of the votes cast at the 2021 Annual Meeting.
As part of the Committee’s continued commitment to our shareholders, we have maintained our engagement efforts, as described below, in an effort to keep our focus and strategies aligned with the interests and expectations of our shareholders.
Shareholder Engagement
In fall 2021, members of the Compensation and Benefits Committee and management reached out to our top investors to reconfirm that our updated approach to executive compensation continued to be aligned with their interests and to address any new concerns of shareholders. We also shared key items related to our CEO transition.
•Following our 2021 annual meeting, we reached out to 15 investors, who held approximately 51% of our outstanding shares, or approximately 65% of our shares held by institutional shareholders. Members of the Committee and management engaged with the 3 investors who accepted our invite, who held approximately 16% of our outstanding shares, or approximately 21% of our shares held by institutional shareholders.
We will continue to engage with shareholders on an ongoing basis and will listen and respond to shareholder feedback on Company performance, compensation plans, governance matters, and the Company’s strategic direction.
A Year of Transition
We recognized that 2021 would be a critical year as we congratulated Philip B. Flynn on his retirement and welcomed Andrew J. Harmening into the Associated family. Being a transition year meant that we needed to ensure that our compensation plans aligned with what our organization was experiencing and supported what we wanted to achieve in 2021 for shareholder value. We took several actions that realigned our pay programs and engaged our colleagues:
•Retained Mercer, a leading compensation consultant to financial institutions, to evaluate our executive compensation program and assist the Board to better align pay with performance.
•Identified appropriate metrics and performance targets to drive Associated’s business priorities, in particular profitable growth, while maintaining our strong capital position.
•Approved a new incentive compensation framework to be more consistent with market best practices.
•Revised our peer group to enhance assessments of pay competitiveness and improve the calibration of pay-for-performance outcomes.
•Engaged in 100 Days of Listening, gathering input from our colleagues, customers, communities and shareholders on how best to drive our strategic vision.
New Leadership, New Priorities
After an extensive search and close consideration of other candidates, the Board appointed Andrew J. Harmening President and Chief Executive Officer and a member of the Board of Directors, effective April 28, 2021. The Board determined that Mr. Harmening was clearly the most qualified candidate for the position and the best fit for Associated given his significant and relevant small business and commercial banking experience, substantial knowledge of digital transformation, and demonstrated leadership skills in improving customer satisfaction, all of which will be critical to the future success of Associated. Mr.
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Harmening is a highly regarded banking leader with more than 25 years as a consumer, small business and commercial banker and a track record of driving profitable growth and operational excellence, improving customers' experiences and spearheading innovative digital products. In addition to reaching out to our shareholders to understand their concerns, one of his first priorities was to listen to our colleagues and customers, to learn as much as he could about our Company – what’s working well, what we need to improve and what we must do to win more customers and deepen community engagement. The insights Mr. Harmening gained on his listening tour have helped inform several large-scale growth initiatives that he announced during the third quarter of 2021. Mr, Harmening's strategic plans include:
•Expanding our Lending Capabilities into Asset-Based Lending and Equipment Finance;
•Growing our Core Business by expanding our Commercial Middle Market teams, enhancing our Small Business lending team and furthering our Wealth Management strategy; and
•Investing in our Digital Transformation of our retail mobile and web experience, improving digital sales and transitioning to a more modern, cloud-based environment.
In particular, insights from colleagues that Mr. Harmening gleaned during his listening tour helped us understand how to address our internal processes and prioritize our technology advancements to give our colleagues a more productive work environment. Perhaps most importantly, these insights have given us a clear view into what our colleagues – the heartbeat of our organization – desire for the future of our Company to continue helping us grow our business.
Supporting a Smooth CEO Transition
To assist Mr. Harmening in his transition into the role of Associated’s President and CEO, he has relied on the advice and guidance of our former President and CEO, Philip B. Flynn who stepped down from both roles and from the Board of Directors on April 28, 2021 after providing steady leadership for nearly 12 years in these roles. Mr. Flynn then served as a special advisor to Mr. Harmening and the Board through December 31, 2021 to assist in an orderly transition and to serve as an ambassador and representative of Associated with customers and in the community.
During the CEO transition, Mr. Flynn played a critical role in introducing Mr. Harmening to clients and customers in our Wealth Management and Private Banking, Corporate Banking and Correspondent Banking businesses. Mr. Flynn and Mr. Harmening met with over 200 clients and colleagues to ensure Associated was able to maintain existing relationships and build new business. To further establish Mr. Harmening in the community, Mr. Flynn introduced our new CEO to several community business associations and key industry groups, including Wisconsin Manufacturers & Commerce, where Mr. Harmening is now a board member, and Midwest Banking Coalition of America, where he is now an active member. As a result of Mr. Flynn’s significant efforts to support Mr. Harmening in his new role and ensure a smooth CEO transition, we experienced little to no customer or client turnover through the end of the 2021 fiscal year. Mr. Harmening has acknowledged that Mr. Flynn has played an important role in his transition to CEO by laying the groundwork for a strong path forward, including retaining important customers and clients, which is crucial to maintaining shareholder value.
CFO Transition
On January 20, 2022, the Company announced that Christopher J. Del Moral-Niles, our Chief Financial Officer, intends to retire from the Company later this year. He has agreed to continue in his role until a successor is in place to ensure a seamless transition, which includes introductions with key staff and stakeholders, education on major business initiatives and understanding and integrating into Associated’s culture.
We thank Mr. Del Moral-Niles for his contributions to the Company. (See page 54 for details regarding his Retirement Agreement.)
Key 2021 Pay Program Changes
After several meetings with our compensation consultant to assess our compensation program and better understand market best practices, the Committee decided to take these steps to improve our 2021 pay program and to better reflect business priorities and market practices:
•Refined our peer group to better align the median total assets of the peer group with those of the Company
•Set target opportunities for all Named Executive Officers for annual and long-term incentive plans based on a philosophy of paying at market median
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•Established a new management incentive plan (MIP) scorecard to align our annual incentives with current business priorities
–Changed our two key annual incentive plan metrics to “Net Income After Taxes” and “Fully Tax-Equivalent Efficiency Ratio” (Efficiency Ratio) from “Earnings Per Share (EPS)” and “Return on Common Equity Tier 1 (ROCET1)” to incentivize efficient growth of earnings
–Eliminated the MIP funding floor of 25%, so it will not fund if performance is below the threshold level
–Required over 50% of our net income target to trigger funding of the Fully Tax-Equivalent Efficiency Ratio metric
•Increased performance-based pay under our long-term incentive plans
–Increased the weight of the long-term incentive performance plan (LTIPP) performance shares from 50% to 75% and maintained time-based restricted stock units at 25%
–Eliminated the use of stock options which previously were 25% of the LTI award
–Focused LTIPP performance shares on relative three-year total shareholder return (TSR) performance and relative three-year ROCET1
–Limited payouts for the TSR portion of the LTIPP to target if absolute TSR is negative at the end of the three-year performance period
The changes to our MIP reinforce our priorities of income growth and expense efficiency and eliminate the impact of stock repurchases on incentive plan awards. In addition, the changes to the long-term incentive plans align total target opportunity and our pay mix with market practice and assess performance relative to our new peer group. See page 44 for more details on the plan changes.
Downward Adjustment to Annual Incentive Results
As the Committee reflected on the overall financial performance of the Company and the factors that influenced results, we noted that we had a provision release as a result of improving credit quality coming out of the pandemic and the impact of a more positive economic forecast. This release increased the achievement results with respect to the annual incentive compensation under the MIP. Therefore, the Committee exercised discretion and adjusted performance results downward from the calculated 133% achievement to 110%, mitigating some of the impact of the provision release.
*****************
We have heard our shareholders’ concerns and taken significant steps to address them and improve our compensation programs and disclosure. We are committed to continuing to assess and refine our executive compensation program to ensure it is aligned with shareholders’ interests. We look forward to an ongoing dialogue with our shareholders and encourage you to continue to reach out to us with questions or concerns related to our pay programs.
Sincerely,
The Compensation and Benefits Committee
John F. Bergstrom (Chair)
Eileen A. Kamerick
Gale E. Klappa
Karen T. van Lith
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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
| CD&A DIRECTORY | ||
| EXECUTIVE SUMMARY | ||||||
| OVERVIEW OF COMPENSATION METHODOLOGY | ||||||
| COMPONENTS OF TOTAL EXECUTIVE COMPENSATION FOR | ||||||
| ANNUAL TOTAL COMPENSATION | ||||||
| LONG-TERM INCENTIVE COMPENSATION | ||||||
| OTHER BENEFIT PROGRAMS | ||||||
| COMPENSATION DECISIONS FOR | ||||||
| COMPENSATION GOVERNANCE | ||||||
| POLICIES | ||||||
| EXECUTIVE SUMMARY | ||
Associated’s executive compensation program is overseen bydesigned to pay for performance over the long term, as well as annually. Our program is balanced and rewards company, line of business and individual results that support Associated’s mission. Our executive compensation program consists of base salary, annual cash incentives, long-term equity incentives, and benefits. We are committed to continuing to engage with our shareholders and improving our program to ensure our pay-for-performance alignment enhances long-term shareholder value. Our Compensation and Benefits Committee (referred to in this section as the “Committee”) is primarily responsible for approving our compensation strategy, philosophy, and executive compensation program.
This Compensation Discussion and Analysis (“CD&A”) discusses the material elements of compensation for the Company’s Named Executive Officers (“NEOs”) identified in the Summary Compensation Table. For the fiscal year ended December 31, 2021, the NEOs were:
| Named Executive Officer | Title | ||||
| Andrew J. Harmening | President and Chief Executive Officer (“CEO”) | ||||
Philip B. Flynn (1) | Special Advisor and Former President and CEO | ||||
Christopher J. Del Moral-Niles (2) | Executive Vice President, Chief Financial Officer | ||||
| John A. Utz | Executive Vice President, Head of Corporate Banking and Milwaukee Market President | ||||
| Randall J. Erickson | Executive Vice President, General Counsel & Corporate Secretary | ||||
| David L. Stein | Executive Vice President, Head of Consumer & Business Banking and Madison Market President | ||||
(1) Mr. Flynn was the President and CEO until April 28, 2021, and retired as Special Advisor to the CEO on December 31, 2021.
(2) On January 20, 2022, the Company announced that Christopher J. Del Moral-Niles, our Chief Financial Officer, intends to retire from the Company later this year. He has agreed to continue in his role until a successor is intendedin place to ensure a seamless transition.
CEO Transition
Associated has served our customers and communities for 160 years with a dedicated focus on creating solutions to banking needs, cultivating strong relationships with our customers, and understanding the goals of our communities. As we transition our most senior leadership at Associated, we acknowledge that Mr. Flynn has deep knowledge of the relationships that have been developed with customers, communities and regulators during his 12 years as CEO. Recognizing the importance of these connections to Associated and that it is fundamentally a “relationship business,” we have contracted with him to ensure we can continue those relationships as an ambassador for the Company following his retirement. The Directors believe strongly that the Company and its shareholders are deriving significant value from Mr. Flynn's consulting arrangement and will continue to do so in the future. In addition to maintaining his residency in Wisconsin, Mr. Flynn continues to serve on the Board of several
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Wisconsin based organizations including the Medical College of Wisconsin, the Green Bay Packers Inc. and St. Norbert College. He was also a founding member and Chair of the Midsize Bank Coalition of America.
During the CEO transition in 2021, Mr. Flynn played a significant role in introducing Mr. Harmening to key client relationships in Northeast Wisconsin including customers in our Wealth Management and Private Banking, Corporate Banking and Correspondent Banking businesses. Together, Mr. Flynn and Mr. Harmening met with over 200 clients and colleagues through hosted events that provided an opportunity to continue existing and build new relationships. In addition, Mr. Flynn facilitated the introduction of Mr. Harmening to Wisconsin Manufacturers & Commerce, of which Mr. Harmening is now a Board member, connected Mr. Harmening to the Midwest Banking Coalition of America, where he is now an active member, and provided Mr. Harmening introductions into key industry groups. As a result of this effort, all significant customers were retained, and overall, we experienced little to no significant customer turnover through the end of the 2021 fiscal year. Mr. Harmening stated in regards to the transition:
“Phil has been an invaluable resource in integrating me into Associated Bank. His deep knowledge of our customer relationships, our colleagues, and his long-standing, deep ties to our communities have made the transition almost seamless.”
In light of his extensive business relationships in the communities and with the customer base Associated serves, following his retirement from Associated on December 31, 2021, Mr. Flynn has agreed to provide consulting services to Associated through 2024 to continue to share with his Associated colleagues his critical expertise and invaluable relationships. We anticipate these services will be significant and are deemed by the Board to be important to maintain shareholder value. The services will include:
•Providing relationship continuity with important customers;
•Introducing senior management to key customer contacts;
•Assisting senior management in relationships with regulatory and other government officials;
•Providing representation on important community and civic organizations; and,
•Acting as Associated's goodwill ambassador in general.
In addition, Mr. Flynn will be available to answer questions regarding Associated or any of its subsidiaries and provide other services that Associated may request to promote the best interests of Associated and its subsidiaries.
2021 CEO Compensation
After an extensive search and consideration of several other candidates, the Board appointed Andrew J. Harmening President and Chief Executive Officer and a balanced programmember of the Board of Directors, effective April 28, 2021. The Board determined that rewards corporate,Mr. Harmening was the most qualified candidate given his significant experience, substantial knowledge, and critical leadership skills and that he was the best choice for Associated’s next CEO. Mr. Harmening brings to Associated many years of experience as a leader in consumer, small business area, and individual results that support Associated’s mission,commercial banking and a track record of improving customers’ experience, spearheading innovative digital products, and driving profitable growth.
To recruit Mr. Harmening to join Associated as soon as possible, the Board determined it needed to provide him with a focussign-on award that was, in part, an inducement to leave his former employer, given he had accumulated significant equity awards that he would forfeit on his departure. To compensate him for this loss in value, the Board determined to grant him a sign-on award of $7,300,000, which is reflected in the 2021 bar graph below under “Stock Awards.” It is important to note that this is a one-time award and Mr. Harmening will not be receiving a comparable award in 2022. The Committee decided to grant the award using purely time-based restrictions considering that the performance conditions of the forfeited awards were satisfied or were on track to pay out and that to include additional performance conditions on the replacement sign-on award was not viewed as appropriate to replace awards that were virtually certain to pay out should Mr. Harmening have remained with his prior employer. Almost one-half of the value of Mr. Harmening’s forfeited awards were time-based, or were performance-based compensation.awards that would have vested within two months and were on track to pay out at 150% of target (and ultimately did pay out at this level), or were “in the money” stock options that would have vested within two months. Approximately 30% of the value of the forfeited awards were other performance-based awards and were valued based on projected performance. The program’s strongfinal portion of his forfeited awards (approximately 20%) were stock options and were valued using the intrinsic value (based on the degree to which they were “in the money”) since he was on track to receive significant gains due to the positive recent performance of his prior employer. The Committee viewed the grant of time-based awards as necessary to attract Mr. Harmening to join Associated given the significant awards he was leaving behind. To determine the value of this award, the Committee sought the advice of their executive compensation consultant, Mercer, who is a trusted advisor to the board of directors. Mercer has expertise in executive and director compensation and benefits, pay-for-performance alignment, is an important partand corporate governance. See the table below for a more detailed explanation of Associated’s continuing commitment to enhancing long-term shareholder value.how Mercer calculated the value of Mr. Harmening's forfeited awards.
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| CEO Offer Letter | |||||
| ASSESSMENT | Mercer assessed the value of the long-term incentive awards that Mr. Harmening would forfeit when he resigned from his prior employer to join Associated. The awards he received from his prior employer included stock options, time-based restricted stock units (RSUs) and performance share units (PSUs). The Committee assumed a start date of April 1, 2021, to exclude any long-term incentive awards that would vest before April 1, 2021, and a stock price of $16.00 per share (“prior employer assumed stock price”), consistent with the recent trading history of his prior employer’s stock at the time of the negotiations. | ||||
| SHARE REPLACEMENT | Mercer reviewed documentation of Mr. Harmening’s outstanding and unvested long-term incentive awards, including grant amounts and vesting dates, and calculated the estimated value of the awards he would forfeit as follows: | ||||
| Stock Options | The intrinsic value of unvested stock options scheduled to vest in May of 2021, 2022, 2023 and 2024 was calculated at approximately $2.2 million based on the prior employer assumed stock price minus the exercise price of each respective award. No estimates for potential future gain were included. | ||||
| Time-Based RSUs | The number of unvested RSUs (including any accumulated dividends) multiplied by the assumed stock price for awards that were scheduled to vest in May of 2021, 2022, 2023, and 2024 was calculated at a value of approximately $1.7 million. | ||||
| Performance Stock Units | The number of unvested PSUs (including any accumulated dividends) at target multiplied by the assumed stock price, except for the awards to be distributed May 1, 2021, which were valued at 150% of target based on his prior employer’s performance at the time of valuation. (Mr. Harmening’s prior employer subsequently disclosed this award paid out at 150% of target.) This assessment included three cycles of awards: the 2018 – 2020 cycle which was scheduled to be distributed May 1, 2021, the 2019 – 2021 cycle, and the 2020 – 2022 cycle. The value was calculated at approximately $3.4 million. | ||||
| Total Value | Based on the analysis provided by Mercer, the estimated value of the awards Mr. Harmening would forfeit when he resigned from his prior employer to sign with Associated, the Committee determined to provide a “sign-on” award in the form of time-based RSUs with a value of $7,300,000 (based on the prior employer assumed stock price), less the value of any awards in which Mr. Harmening vests in 2021 with his prior employer. The number of Associated's shares subject to the sign-on award was determined by dividing the value of the forfeited awards by the average of the closing prices of our common stock for the 10 trading days ending before his start date. The sign-on award vested 25% after 30 days of employment and will vest 25% on each of the first, second and third anniversaries of his start date. The vesting schedule was tailored to replicate when the values would have been realized (if not forfeited) at his prior employer and to encourage retention. | ||||
| ANNUAL COMPENSATION | 2021 Target Pay (excluding replacement grant): Base Salary: $1.0 million pro-rated to $675,000 given his April 28 hire date Annual Incentive Target: 150% of Base Salary ($1.5 million) pro-rated to $1,125,000 Equity Grant Target: 250% of Base Salary ($2.5 million) pro-rated to $1,875,000 Total Target Compensation: $3,675,000 | ||||
2022 Target Pay: Base Salary: $1.0 million Annual Incentive Target: 150% of Base Salary ($1.5 million) Equity Grant Target: 250% of Base Salary ($2.5 million) Total Target Compensation: $5.0 million | |||||
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2021 Financial Performance
Associated continues to maintain a healthy balance sheet with strong capital and liquidity levels. Associated isWe are committed to making investments to expand services, develop new products and services, and drive new business. The completed acquisition of the Wisconsin branch banking operations of The Huntington National Bank, a subsidiary of Huntington Bancshares Incorporated, and the announcement in the third quarter of 2019 of the acquisition of First Staunton Bancshares, Inc.business, further demonstrate Associated’sdemonstrating our commitment to profitable growth.
| 2021 Financial Highlights | |||||||||||
| Net Income | Net income of $351.0 million, was up compared with $306.8 million in 2020. | ||||||||||
$351.0million | |||||||||||
| Assets | Average assets were up slightly at $34.5 billion, compared with $34.3 billion in 2020. | ||||||||||
$34.5billion | |||||||||||
| Loans | Deposits | Average loans were down 2% at $24.1 billion, compared with $24.5 billion in 2020. Average deposits increased more than 6% year-over-year to $27.7 billion from $26.0 billion. | ||||||||||
$24.1billion in Loans $27.7 billion in Deposits | |||||||||||
EPS | ROCET1(1) | Reported GAAP earnings per common share (“EPS”) of $2.18 and Return on Common Equity Tier 1 (“ROCET1”) of 12.08%, which reflects a year-over-year change of 17% and 8% respectively. | ||||||||||
| $2.18 | 12.08% | |||||||||||
| Dividends per common share | Declared dividends per common share of $0.76 in 2021, consistent with our focus on delivering value and returning capital to shareholders. | ||||||||||
| $0.76 | |||||||||||
| Returned Capital to Shareholders | Repurchased over 6 million shares of Common Stock, returning capital of $133 million to shareholders. | ||||||||||
$133million | |||||||||||
(1) The Federal Reserve establishes regulatory capital requirements, including well-capitalized standards for Associated. Prior to 2015, the regulatory capital requirements effective for theCorporation. The Corporation followed the Capital Accord of the Basel Committee on Banking Supervision. Beginning January 1, 2015, the regulatory capital requirements effective for Associated followedfollows Basel III, subject to certain transactiontransition provisions. Common Equity Tier 1 priorThese regulatory capital measurements are used by management, regulators, investors, and analysts to Basel III requirements was calculated as Tier 1assess, monitor and compare the quality and composition of the Corporation’s capital excluding qualifying perpetual preferred stock and qualifying trust preferred securities.with the capital of other financial services companies. See Table 26 in Part II, Item 7 of the 2019our 2021 Form 10-K for a reconciliation of average Common Equity Tier 1.
(a) The fully tax-equivalent efficiency ratio is committed to reviewing its governance policies and practices and committee charters to ensure alignment with current best practices. Associated is mindfulnoninterest expense (which included the provision for unfunded commitments), excluding other intangible amortization, divided by the sum of its ESG practices as they are fundamental to our success and reflect the strong commitment we have to our customers, colleagues, communities and shareholders. We have, therefore, included relevant information regarding Associated’s voluntary ESG initiatives to provide transparencyfully tax-equivalent net interest income plus noninterest income, excluding investment securities gains/losses, net. See Table 26 in Part II, Item 7 of our actions2021 Form 10-K for a reconciliation to interested parties.the Federal Reserve efficiency ratio.
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Key Elements of Associated’sOur Executive Compensation Program
The key elements of our executive pay program (Salary, Annual Incentive,(salary, annual incentive, and Equity Awards)equity awards) support the Committee’s philosophy of providing a balanced program of short- and long-term compensation that targets market-competitive pay levels in order to attract and retain top talent.
| SALARY | ANNUAL INCENTIVE | EQUITY | ||||||
 |  |  | ||||||
Base pay that is targeted at the midpoint of the market and adjusted to account for individual performance and tenure | A formulaic annual award that is initially based on the achievement of total Company results and adjusted for individual performance | Equity | ||||||
Key Executive Compensation Governance Practices
We believe our pay practices demonstrate our commitment to and alignment with shareholders’ interests and our dedication to maintaining a compensation program supported by strong corporate governance. The Committee meets regularly and in addition to each member’s own business knowledge of best practices, it receives guidance on best practices and market trends from the Committee’s independent compensation consultant, Pay Governance LLC. consultant.
Strong governance is exemplified by the detailed chart below which describes the practices that are included and excluded inpart of our programs.
| We Do | We Don’t | |||||||||||||
 | Pay for performance by having a significant portion of executives’ compensation tied to Company performance and weighted | X | Have excess | |||||||||||
| X | Make tax gross-up payments in connection with excise tax or other tax liabilities except for | ||||||||||||
| Use robust incentive plan governance that is reviewed by internal key experts, by the Committee, and by an independent third party as needed. | X | Pay dividend equivalents until the end of the performance period on unvested performance stock. Dividends are calculated based on the number of shares awarded. | |||||||||||
| Retain an independent compensation consultant selected by the Committee for | X | Allow hedging or pledging of Company securities by executive officers, colleagues or directors. | |||||||||||
| Require a double trigger for vesting of equity awards and severance payments upon a change of control. | X | Have employment agreements with our NEOs. | |||||||||||
| X | Reprice stock options or Stock Appreciation Rights (SARs) without shareholder approval. | ||||||||||||
| Hold an annual say-on-pay vote | |||||||||||||
| Hold proactive shareholder | |||||||||||||
| Require stock ownership for executives based on a salary multiple of stock and retention of a portion of shares after vesting. | |||||||||||||
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2021 Say-on-Pay Results
Shareholder Engagement
Over the past two years, we have increased our shareholder engagement in part in response to shareholder concerns raised by our failed say-on-pay vote in 2020.
| Term | Number of Investors Invited | Percent of Outstanding Shares | Number Accepting Request | ||||||||
| Spring 2020 | 20 | 51% | 6 | ||||||||
| Fall 2020 | 23 | 53% | 11 | ||||||||
| Fall 2021 | 15 | 51% | 3 | ||||||||
We received positive feedback from shareholders about our revised compensation program. Shareholders were pleased that our new compensation program incorporates best practices and 100 institutional investors through regular attendance at industry conferencesagreed that our new plan will effectively align pay with performance. See table below on “Key Changes to Executive Compensation Program for 2021” for pay program details.
Each year, we will continue to engage with our shareholders and investor events. This includes regular, private one-on-one dialogue with most of the Company’s top 20 shareholders, which represents 57% of outstanding shares. In addition, management engages with investors through conference callslisten to their feedback. We will discuss Company results, performance relative to industry trends, peer metrics, compensation plans, environmental, social and governance matters,risks and initiatives, and the Company’s strategic direction. In addition, during 2019, key executive officers and senior leaders engaged in specific outreach with two shareholder advisory firms with respect to its compensation practices to gain an understanding of shareholder views on the Committee’s decisions and to provide clarification on the use of common publicly reported metrics that align the performance plans with shareholder interests. The discussion focused on components of the incentive compensation program, planned shareholder request for additional shares, and the 2020 Incentive Compensation plan document. Other topics discussed included Associated’s Committee’s annual evaluation of the executive compensation program as well as Associated’s executive pay, which is primarily variable, at risk, and tied to long-term shareholder value. (See page 36 for graphic representation.)
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Key Changes to Executive Compensation ProgramsProgram for 2021
As disclosed in 2019
| WHAT WE HEARD | WHAT WE DID TO RESPOND | ||||
| Better align pay for performance | •Established new annual incentive plan scorecard framework for the “MIP” to focus on Associated’s business priorities •Increased proportion of long-term incentive that is performance-based from 50% to 75% for all NEOs •Refined peer group to reflect more appropriate benchmarks for the Company by aligning the median total assets of the revised peer group with those of Associated to enhance assessments of pay competitiveness and the calibration of pay-for-performance outcomes | ||||
| Eliminate guaranteed payouts under annual incentive plan | •Eliminated 25% payment floor for the MIP so plan will not fund if performance is below threshold, consistent with our Long-Term Incentive Performance Plan (“LTIPP”), which also has no payment floor | ||||
| Insufficient rationale provided for increasing the CEO’s annual incentive plan target opportunity | •Set target opportunities for MIP at a consistent percentage of base salary based on the market median for all NEOs and reduced the CEO’s target long-term incentive to better align total compensation with peer group median | ||||
| Simplify and disclose measures in the annual incentive plan to enhance pay-for-performance link | •Replaced matrix with a scorecard with two new metrics: Net Income After Tax (“NIAT”) (weighted 70%) and Efficiency Ratio (weighted 30%) to reinforce priorities of income growth and expense efficiency •Required 50% of NIAT target to trigger funding of Efficiency Ratio metric | ||||
| Consider a cap on total shareholder return (“TSR”) payout | •Limited payouts for TSR portion of the LTIPP to 100% of target if absolute TSR is negative at end of three-year performance period | ||||
| Consider adjusting equity mix to align with sustained / long-term results | •Set target opportunities for all NEOs for long-term incentive plans based on a philosophy of paying at market median to align with market practice •Increased weighting of performance shares to 75% of total long-term incentive opportunity •Eliminated use of stock options to increase the weighting on performance stock | ||||
| Eliminate overlapping EPS metric in annual and long-term incentive plans | •Eliminated overlapping metrics by replacing EPS as a performance metric in both the MIP and LTIPP to focus on our priorities of income growth and expense efficiency and to eliminate the impact of stock repurchases | ||||
| Consider use of Return on Equity or other book value metric in LTIPP | •Focused LTIPP performance shares on two performance metrics relative to the new peer group: three-year TSR and ROCET1, which is calculated based on the definition used by the Federal Reserve of GAAP net income divided by average Common Equity Tier 1 | ||||
| Enhance disclosure on compensation program and shareholder feedback and engagement | •Disclosed range of performance and pay outcomes for MIP and LTIPP ending in 2021 •Scorecards for MIP payouts are disclosed •Disclosed relative performance scale for LTIPP •Enhanced disclosure of shareholder feedback and engagement process | ||||
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| OVERVIEW OF COMPENSATION METHODOLOGY | ||
Philosophy and Objectives
Associated’s executive compensation program is designed to provide each executive officer of Associated with a competitive total compensation package aligned with several objectives, including:
•providing a balanced program that rewards individual actions and behaviors that support Associated’s mission, business strategies and performance-based culture without incentivizing unnecessary and/or excessive risk-taking;
•targeting compensation at market-competitive median levels, while maintaining an overall compensation program that is aligned with and reflects the performance of Associated;
•providing a competitive mix of short-term and long-term variable compensation; and
•attracting and retaining executives whose judgment and leadership abilities result in overall success for Associated and increased value to our shareholders.
The Committee used thethese objectives listed above to drive the methodology for the design of the 20192021 Executive Compensation Program with targetedby targeting total compensation for the NEOs and other executive officers toat approximate median levels for executives with comparable responsibilities at financial institutions of comparable asset size. In addition to compensation levels, the Committee considers Associated’s financial performance relative to its peers as part of the determination of total compensation opportunities. The Committee believes that peer comparison is important to the objectives of the program because Associated competes with a large number of financial institutions across the country for the services of qualified executive officers. Consideration was also given to individual factors based on performance evaluations. Where the Committee deems appropriate, total compensation opportunities may exceed the market median in order to attract currently employed, high-quality executives to join Associated and to retain our experienced, high-performing executive officers. Conversely, Associated may target compensation below median market levels for newly promoted executives. The allocation of the various components of the NEOs’ total compensation package is described below in the “Components of Total Executive Compensation for 2019”2021” section beginning on page 35.
Peer Group
•Banks with asset size between 0.5x to 2.0x Associated’s assets;
•An overall comparison of company structure and services; and
•How frequently the banks were selected as peers by other banks.
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For 2021, based on the advice of our compensation consultant, the Committee refined the peer group to reflect more appropriate benchmarks for the Company by more closely aligning the median total assets of the peer group with those of Associated. Companies that were removed due to their larger size included Comerica and two peers that merged, First Horizon and IBERIABANK. Companies that were added, each with total assets below the median, included Sterling Bancorp, Pinnacle Financial Partners, Inc., and Old National Bancorp. The companies selected for the 2021 peer group ranged in asset size from approximately $23.0 billion to approximately $81.5 billion. The median asset size of the companies in the peer group was approximately $32.7$35.0 billion, compared to Associated’s assets of $33.6$33.4 billion, as of December 31, 2018. 2020.
The 2019 executive compensation2021 peer group companies were:
| 2021 Peer Group | |||||||||
| BankUnited, Inc. | Old National Bancorp | UMB Financial Corporation | |||||||
| BOK Financial Corporation | Umpqua Holdings Corporation | ||||||||
| Commerce Bancshares, Inc. | |||||||||
| Cullen/Frost Bankers, Inc. | |||||||||
| East West Bancorp, Inc. | Synovus Financial Corporation | Wintrust Financial Corporation | |||||||
| F.N.B Corporation | Sterling Bancorp | Zions Bancorporation | |||||||
| Hancock Whitney Corporation | TCF Financial Corporation (*) | ||||||||
| (*) TCF Financial Corporation | |||||||||
While the peer group is a key point of comparison in the total compensation strategy, the Committee also took into account broader retail banking and financial services industry survey data as part of its compensation determinations to provide broaderadditional market context. Pay GovernanceThe compensation consultant analyzed compensation data from the 2019 Willis Towers Watson 2018 Executive Financial Services Survey, of approximately 205 participants, including members of Associated’s peer group, and peer company public filings. In analyzing the data, Pay Governancethe compensation consultant advised that the additional comparisons, beyond the peer group, provided a broader perspective from which to appropriately compare compensation, particularly for staff positions. compensation.
When making compensation-related decisions, the Committee considered information that compared each executive officer’s base salary and total compensation to the 25th, 50th and 75th percentiles of these market reference points.
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| COMPONENTS OF TOTAL EXECUTIVE COMPENSATION FOR | ||
To support Associated’s Pay for Performancepay-for-performance philosophy, the Committee has utilizedused multiple compensation components that are a mix of both short- and long-term pay. The following chart depicts the Committee’s design decisions that create a competitive Executive Pay Program.
executive pay program.
| BASE SALARY | ANNUAL INCENTIVE | PERFORMANCE STOCK | ||||||||||||
| Performance Type | Short-Term | Long-Term | ||||||||||||
| Award Type | Cash | Equity | ||||||||||||
| Description | Salary based on peer and market comparison and individual performance | Annual cash incentive opportunity based on overall Company and individual performance | ||||||||||||
| Performance Period | Ongoing | 1-year | 4-year | 3-year | ||||||||||
| Measurement | • Responsibilities• Market data• Performance | • • | • Market data• | • • TSR performance relative to | ||||||||||
| Pay Determination | Formulaic: Target x Company Performance + Individual Performance Payout range from 0% to 175% Limited positive discretion of up to 20% for individual performance and no cap on negative adjustments | Formulaic: Salary x Target | Formulaic: Two independent, equally weighted metrics 50% Payout range from 0% - 150% | |||||||||||
| Objectives | Attract and retain qualified high caliber | Incentive compensation that reflects Associated’s annual performance | Align executive interests and compensation with long-term shareholder results | Provide equity incentive for achieving certain specified long-term business goals | ||||||||||
| Evaluation | Reviewed | |||||||||||||
Composition of Total Compensation
The Committee continually monitors the total compensation of the CEO and other NEOs against Associated’s pay philosophy and leverages research by Pay Governancethe compensation consultant in determining appropriate levels of compensation. The Committee focuses on determining the appropriate total compensation levels foruses input from the CEO in setting the compensation of the other NEOs and each NEO. The Committee utilizes input from Mr. Flynn (CEO) in decisions regarding NEO compensation and utilizes Mr. Flynn’shis assessment of NEO performance against financial and budgetary goal achievement, significant business line project and objective success, and other individual performance objectives.objectives in determining pay outcomes.
Total compensation packages for the CEO and NEOs are composed of both fixed and variable (performance-based) elementscomponents and include annual and long-term compensation. The Committee’s objective is to deliver the majority of executive compensation through variable pay opportunities that are based on Associated’s performance.
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For 2019,2021, variable elements continued to constitute the majority of the CEO and each NEO’s total compensation, with long-term, equity-based incentives representing the majority of the variable component of compensation. With input from Pay Governance, the Committee assessed the competitiveness of Associated’s executive compensation levels using multiple market references, including peer groups and industry data. In reviewing CEO and NEO compensation, the Committee determined, with input from Pay Governance, the following with respect to Associated’s competitive positioning:
| Base Salary | % Change | Short-Term Incentive Target | % Change | Long-Term Incentive Target | % Change | |||||||||||||||
Mr. Harmening (1) | $ | 1,000,000 | N/A | $ | 1,500,000 | N/A | $ | 2,500,000 | N/A | |||||||||||
| Mr. Flynn | $ | 1,250,000 | 0% | $ | 1,062,500 | 9% | $ | 678,125 | -74% | |||||||||||
| Mr. Del Moral-Niles | $ | 505,000 | 0% | $ | 378,750 | -17% | $ | 606,000 | 0% | |||||||||||
| Mr. Utz | $ | 445,000 | 0% | $ | 333,750 | -25% | $ | 534,000 | 0% | |||||||||||
| Mr. Erickson | $ | 460,000 | 0% | $ | 299,000 | -13% | $ | 460,000 | 0% | |||||||||||
| Mr. Stein | $ | 410,000 | 0% | $ | 307,500 | 3% | $ | 492,000 | 0% | |||||||||||
(1) Table indicates full-year targets and are not prorated based on Mr. Harmening's effective date of April 28, 2021.
Further illustrating the mix of variable (Annual Incentives, Equity Awards and Option Awards) and fixed (Salary)each NEO’s target compensation for 2021, the chart below emphasizes the at-risk components of our executive compensation plan, with each component expressed as a percentage of the 2019target total direct compensation awarded to the CEOfor Mr. Harmening (CEO), non-prorated, and the average oftarget mix for the mix of variable and fixed components of the total compensation awarded to all other NEOs, each as presented in the Summary Compensation Table on page 46.NEOs.
| ANNUAL TOTAL COMPENSATION | ||
Base Salary
The Committee’s intention is to pay NEOs base salaries that are competitive and approximate the midpoint of the market, data provided by Pay Governance, with adjustments as the Committee deems necessary to account for individual performance and tenure, or other specific circumstances that may arise in a given year.
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Annual Incentive Award
Associated’s core philosophy is that it takes all colleagues working together to serve our customers for the Company to be successful. That is why we designed our annual incentive program to pay all incentives,incentive compensation, other than commissions, from a single pool that is funded solely based on the success of the Company as a whole. Associated’s annual incentive program is referred to as the Management Incentive Plan (“MIP”). All Participants are paid from a single corporate pool that includesMIP. The NEOs, the Executive Committee,Leadership Team and all other incentive eligible colleagues. Participantsincentive-eligible colleagues are provided the opportunity to earn an annual incentive payment from aunder the MIP for 2021.
On an annual basis, the Committee establishes performance criteria and target performance levels to determine the targeted corporate pool available under the MIP. The total pool amount of which is determined based uponon Associated’s achievement of objective financial criteria selected by the Committee, but is limited by the annual individual maximum as set forth under the terms of the shareholder approved 20172020 Incentive Compensation Plan.
The EPSNIAT and ROCET1Efficiency Ratio metrics were newly selected for 2021 because they are both critical to the long-term success of the Company and are aligned with creating value for shareholders.shareholders, reinforcing the priorities of income growth and efficient use of assets and management of expenses. Both metrics are transparent and are publicly available. When combined we believe these metrics create a balance between profitability and the quality of earnings and reflect the financial success of the Company while protecting the safety and soundness of the Company.
| With respect to the choice of MIP metrics, for 2021 the Committee chose NIAT to incentivize actual income growth, exclusive of share buyback activity and Efficiency Ratio to motivate our executive officers to emphasize efficient growth in driving shareholder value. More than 50% achievement for NIAT performance is required for funding of Efficiency Ratio achievement. Additionally, the minimum floor was eliminated, resulting in a range of funding from 0% to 175%. | ||
For 2019,2021, the target corporate pool funding of 100% was based on a combination of two performance criteria: (1) EPSNIAT with a target of $2.05, which represented an 8.5% increase from 2018’s actual results,$280 million, and (2) ROCET1Efficiency Ratio with a 200 basis point increase in targeted rangetarget of 13.0% to 14.0%63%. The following matrix sets forthtable provides the scale used for funding determinations underschedule of metrics, goals and achievements toward goals, as determined by the MIP outlining the possible combinations of EPS and ROCET1 performance results,Committee, as well as actual 20192021 results.
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Return on Common Equity Tier 1 (ROCET1) Interpolate each 10 Basis Points outside target range | Final Interpolated Results | |||||||||||
| 2019 EPS | < 9.99% | 10.00%- 10.99% | 11.00%- 11.99% | 12.00%- 12.99% | 13.00%- 14.00% | 14.01%- 15.00% | 15.01%- 16.00% | 16.01%- 17.00% | > 17.01% | ROCET1 12.59% | ||
| $2.08 | 25% | 26% - 63% | 64% - 88% | 89% - 101% | 102% | 103% - 136% | 137% - 160% | 161% - 174% | 175% | 92% | ||
| $2.07 | 25% | 26% - 63% | 64% - 88% | 89% - 100% | 101% | 102% - 136% | 137% - 160% | 161% - 174% | 175% | 91% | ||
| $2.06 | 25% | 26% - 63% | 64% - 87% | 88% - 100% | 101% | 102% - 136% | 137% - 160% | 161% - 174% | 175% | 91% | ||
| Target | $2.05 | 25% | 26% - 63% | 64% - 87% | 88% - 99% | 100% | 101% - 135% | 136% - 159% | 160% - 174% | 175% | 90% | |
| $2.04 | 25% | 26% - 63% | 64% - 86% | 87% - 99% | 100% | 101% - 135% | 136% - 159% | 160% - 174% | 175% | 90% | ||
| $2.03 | 25% | 26% - 63% | 64% - 86% | 87% - 98% | 99% | 100% - 135% | 136% - 159% | 160% - 174% | 175% | 90% | ||
| $1.93 | 25% | 26% - 63% | 64% - 82% | 83% - 93% | 94% | 95% - 132% | 133% - 158% | 159% - 174% | 175% | 85% | ||
| $1.92 | 25% | 26% - 63% | 64% - 81% | 82% - 93% | 94% | 95% - 132% | 133% - 158% | 159% - 174% | 175% | 85% | ||
| Actual | $1.91 | 25% | 26% - 63% | 64% - 81% | 82% - 92% | 93% | 94% - 132% | 133% - 158% | 159% - 174% | 175% | 84% | |
| $1.90 | 25% | 26% - 63% | 64% - 81% | 82% - 92% | 93% | 94% - 131% | 132% - 158% | 159% - 174% | 175% | 84% | ||
The graphic below demonstrates the corporate pool funding and distribution methodology.
Once the amount of the corporate pool is determined, the funds are divided into business line sub-pools, including an executive incentive pool, out of which individual awards are paid. Sub-pools are determined for individual revenue-producing business lines based on actual financial results. The amount of each individual award is determined by the accountable Executive CommitteeLeadership Team members or, in the case of the members of the Executive Committee,Leadership Team, by the Committee based uponon the recommendations of the CEO. The Committee decided to modify the MIP beginning in 2021 to set target amountopportunities for eachall NEOs at a consistent percentage of the NEOs issalary based on the previous year’s actual incentive payment. This strategy ensures further alignmentmarket median to align with Company goals and objectives as the target mimics the rise and fall of corporate performance achievement.market practice.
The Committee has the ability to modify the payment based on a number of factors as outlined in the 20172020 Incentive Compensation Plan, such as mergers and acquisitions, and tax law changes, but determined the calculated incentive awardand other performance measures.
Downward Adjustment to be appropriate for 2019 without making such adjustments.Annual Incentive
The Committee utilizingapproved NIAT of$351 million and Efficiency Ratio of 64.5% as the matrix as set forth above, approved EPS of $1.91 and ROCET1 of 12.59%2021 actual results, resulting in the corporate pool funding of 84.2%133% of the targeted funding level. As the Committee reflected on the overall financial performance of the Company and the factors that influenced results, it noted a significant provision release which increased the achievement results. The CEOCommittee, taking into account true operating earnings which reflect the significant provision release, decided to adjust performance results downward to approve funding at 110%. The CEO’s and other NEOs’ annual incentive opportunityopportunities are linked directly to Corporate EPSNIAT and ROCET1 performance. TheEfficiency Ratio performance and the incentive amounts earned will rise and fall year to yearare based on these objective financial results within the MIP Matrix.metric achievements as well as achievement of strategic goals, business line and individual performance, and other qualitative and quantitative factors for each NEO.
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The Committee approved these performance results for purposes of determining the aggregate amount available in the MIP pool for annual incentive payments to all eligible colleagues.payments. The Committee then determined the amount of the MIP payments to each NEO based on the performance incentive formula which multiplies the incentive target by Company performance achievement. The Committee further madedoes have limited adjustments based on recommendations by Mr. Flynn based on his evaluationpositive discretion of achievement of strategic goals, business line and20% for individual performance and a number ofno cap on negative adjustment, but chose not to utilize such discretion, either positive or negative on any individual performance and other qualitative and quantitative factors for each NEO, including, among others;award.
| Achieved Incentive Performance Results as a Percent of Target | |||||||||||
| Named Executive Officer | Target | Actual | Percent of Target | ||||||||
| Company Achievement | 133% | ||||||||||
Andrew J. Harmening (1) | $1,125,000 | $1,237,500 | 110% | ||||||||
Philip B. Flynn (2) | $1,062,500 | $1,168,750 | 110% | ||||||||
| Christopher J. Del Moral-Niles | $378,750 | $416,600 | 110% | ||||||||
| John A. Utz | $333,750 | $367,100 | 110% | ||||||||
| Randall J. Erickson | $299,000 | $328,900 | 110% | ||||||||
| David L. Stein | $307,500 | $338,300 | 110% | ||||||||
| (1) Target is prorated for 2021 per offer letter. (2) Target per retirement agreement. | |||||||||||
 | |
 | |
 | |
 |
| Incentive as a Percent of Target | |||
| Named Executive Officer | Target | Actual | Percent of Target |
| Company Achievement | 84.2% | ||
| Philip B. Flynn | $1,161,170 | $977,705 | 84.2% |
| Christopher J. Del Moral-Niles | $540,000 | $455,000 | 84.3% |
| John A. Utz | $530,000 | $445,000 | 84.0% |
| Randall J. Erickson | $410,000 | $345,000 | 84.1% |
| David L. Stein | $340,000 | $300,000 | 88.2% |
| LONG-TERM INCENTIVE COMPENSATION | ||
The Committee believes that a significant portion of an executive officer’s total pay should be represented by and tied directly to the performance of the Company to ensure that the interests of the executive officer and the shareholders are in close alignment. TheAlso, the Committee also believeshas designed our long-term incentive plan so that the performance of Associated’s stock has a strong correlation to the actual total compensation an executive receives over time. To align theseexecutives' interests with those of shareholders, the Committee has designed Associated’s 2021 long-term incentive program to include threetwo key long-term elements: stock options,time-based restricted stock awardsunits (“RSUs”) and performance-based restricted stock units (“RSUs”PRSUs”), which. PRSUs are granted under the Long-Term Incentive Performance Plan (“LTIPP”)LTIPP described below. For 2019, stock options and restricted stock each represent2021, time-based RSUs were decreased from 50% to 25% of the long-term component of the overall program;program and PRSUs were increased to 75% as noted in the charts below. Beginning with performance-based RSUs representing 50%the 2021 LTIPP, the Committee eliminated the use of total long-term incentive.stock options and increased the amount of PRSU awards to further align pay and performance. Individual grants, as a percent of base salary, are listed in the table below.
| Long-Term Incentive Grants as a Percent of Base Salary | ||||
| Named Executive Officer | Stock Options | Restricted Stock Units | LTIPP | Total Long-Term Incentive |
| Philip B. Flynn | 52.5% | 52.5% | 105% | 210% |
| Christopher J. Del Moral-Niles | 30% | 30% | 60% | 120% |
| John A. Utz | 30% | 30% | 60% | 120% |
| Randall J. Erickson | 25% | 25% | 50% | 100% |
| David L. Stein | 25% | 25% | 50% | 100% |
| Long-Term Incentive Grants as a Percent of Non-Pro Rated Base Salary | |||||||||||
| Named Executive Officer | RSUs | PRSUs | Total Long-Term Incentive | ||||||||
| Andrew J. Harmening | 62.5% | 187.5% | 250.0% | ||||||||
Philip B. Flynn (1) | 13.6% | 40.7% | 54.3% | ||||||||
| Christopher J. Del Moral-Niles | 30.0% | 90.0% | 120.0% | ||||||||
| John A. Utz | 30.0% | 90.0% | 120.0% | ||||||||
| Randall J. Erickson | 25.0% | 75.0% | 100.0% | ||||||||
| David L. Stein | 30.0% | 90.0% | 120.0% | ||||||||
| (1) Reflects terms of Mr. Flynn's Retirement Agreement | |||||||||||
Restricted Stock ComponentUnits
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The RSAsRSUs granted in 20192021 generally vest over a four-year period, with one-fourth of the grant vesting each year. The grants are subject to the terms of the 20172020 Incentive Compensation Plan. When calculating the value of a restricted stock awardRSUs for the purpose of making these grants, the Committee used the grant date value of the restricted stock determined onRSUs.
PRSUs Under the same basis described on page 46 in the notes to the Summary Compensation Table for such awards.
Long-Term Incentive Performance Plan
Under the LTIPP, participants receive awards of RSUs,PRSUs, calculated as a percentage of each participant’s base salary at the inception of the performance period. Actual payouts from the LTIP planLTIPP will be based uponon Associated’s results during the specified measurement period relative to goals approved by the Committee with respect to the particular LTIPP performance measurement period. Grants under the 2019 LTIPP are subject to the terms of the 2017 Plan. GrantsIncentive Compensation Plan and the grants under the 20172021 LTIPP are subject to the terms of the Associated Banc-Corp 20132020 Incentive Compensation Plan.
The 20192021 LTIPP is based on a three-year performance period that began on January 1, 2019,2021, and will end on December 31, 2021.2023. Based on the Company’s performance during the period, the number of actual shares that vest can range from a minimum of 0% to a maximum of 150% of the target award.
The performance criteria established by the Committee to determine the vesting of RSUsPRSUs are equally weighted, additive measures and are based on Associated’s cumulative EPSrelative TSR and Associated’s relative TSRROCET1 versus its peer group, over the 2019-20212021-2023 performance period. The Committee determined thatFor the 2021 LTIPP, relative ROCET1 replaced cumulative EPS is an appropriate metric in the LTIPP as Associated’s goal is to sustain growth year-over-year (cumulative three-year EPS growth as provided in the LTIPP).Earnings Per Share. The Committee believes that having these relatedrelative ROCET1 is an important indicator of prudent capital stewardship and measures profitability by showing how much profit is generated (reported net income) with the capital our shareholders have invested (equity) and how efficiently we have deployed those funds, compared to our peers. Relative ROCET1 performance below the 30th percentile of peers, results in both the MIP and LTIPP (one-year measurementno payout for the MIP and three-year measurement under the LTIPP for the 2019-2021 cycle) ensures focus on both short and long-term strategies that are in the best interests of our shareholders. ROCET1 metric.
The Committee believes relative TSR, which includes the net change in stock price plus dividends paid during the applicable period, is a valuable measure because it is directly alignedaligns with shareholder interests and encourages management to outperform peers in the creation of shareholder value. Additionally,Relative TSR performance below the Committee determined an expansion in the number30th percentile of peers was appropriate to ensureresults in no payout for the TSR metric. Based on common market practice, relative TSR is calculated using a larger number of measurement points, provide protection against having too few peers due to mergers and acquisitions, and align more effectively with the new Long-Term Incentive Performance Plan design. The 2019 LTIPP performance peer group companies are:30-day share price average.
Payouts for each portion of the | ||||
The 20172019 LTIPP was based on a three-year performance period that began on January 1, 2017,2019, and ended on December 31, 2019,2021, with the vesting opportunities ranging from a minimum of 25%0% to a maximum of 150% of the target award. The target three-year cumulative EPS growth rate was set based on a combination of budget and the publicly available 20-year BKX Bank Index which takes into account business cycles.
The performance criteria established by the Committee to determine the vesting of RSUs wasPRSUs are equally weighted and were based on Associated’s cumulative adjusted EPS for the performance period and Associated’s TSR relative to the peer group, measured on the basis of reported TSR for the performance period.group. TCF Financial Corporation's relative TSR was excluded from the 20172019 LTIPP performance calculation due to the 2019 merger with Chemical Bank, where Chemical Bank was the surviving company. IBERIABANK Corporation was also excluded from the 2019 LTIPP performance calculations due to the 2020 merger with First Horizon, where First Horizon was the surviving company.
| Vesting of the 2017-2019 Long-Term Incentive Performance Plan | |||||||||||||||
| 3 Yr EPS | Total Shareholder Return (Q4 2019 vs Q4 2016 TSR Relative Ranking) | ||||||||||||||
| 0% | 7% | 13% | 20% | 27% | 33% | 40% | TARGET RANGE 40.1-60% | 67% | 73% | 80% | 87% | 93% | 100% | ||
| 5.00 | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.95 | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.90 | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| Actual | 4.86 | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% |
| 4.85 | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.80 | 146% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.75 | 136% | 144% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.70 | 126% | 134% | 142% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.65 | 116% | 124% | 132% | 141% | 149% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.60 | 106% | 114% | 122% | 131% | 139% | 144% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.55 | 96% | 104% | 112% | 121% | 129% | 136% | 142% | 150% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.50 | 86% | 94% | 102% | 111% | 119% | 127% | 136% | 148% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.45 | 76% | 84% | 92% | 101% | 109% | 117% | 126% | 138% | 150% | 150% | 150% | 150% | 150% | 150% | |
| 4.40 | 66% | 74% | 82% | 91% | 99% | 107% | 116% | 128% | 149% | 150% | 150% | 150% | 150% | 150% | |
| 4.35 | 56% | 64% | 72% | 81% | 89% | 97% | 106% | 118% | 139% | 147% | 150% | 150% | 150% | 150% | |
| 4.30 | 46% | 54% | 62% | 71% | 79% | 87% | 96% | 108% | 129% | 137% | 146% | 150% | 150% | 150% | |
| Target | 4.26 | 38% | 46% | 54% | 63% | 71% | 79% | 88% | 100% | 121% | 129% | 138% | 146% | 150% | 150% |
| 4.25 | 36% | 44% | 52% | 61% | 69% | 77% | 86% | 98% | 119% | 127% | 136% | 144% | 150% | 150% | |
| 4.20 | 26% | 34% | 42% | 51% | 59% | 67% | 76% | 88% | 109% | 117% | 126% | 134% | 142% | 150% | |
| 4.15 | 25% | 25% | 32% | 41% | 49% | 57% | 66% | 78% | 99% | 107% | 116% | 124% | 132% | 141% | |
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EPS of $1.67$2.18 to be used with previously approved 2018 adjusted2020 EPS of $1.67$1.19 and 2017 adjusted2019 EPS of $1.52.$1.91. Combined with Associated’sAssociated's relative TSR ranking at the 7%6th percentile of the peer group, the RSU awardPRSU grant applicable to the 2017-20192019-2021 performance period vested at 150.0%33.7% of target. The target payouts for the 2019-2021 LTIPP were below target and demonstrate the rigor of the long-term incentive program and the alignment of executive pay with company performance and the alignment of executives’ interests with those of shareholders over the long term.
Risk Assessment
The Committee, along with members of Associated’s Executive Risk Committee, the Incentive Compensation Risk Assessment Committee (ICRA), the Chief Human Resources Officer and business executives responsible for the design and implementation of Associated’s incentive compensation arrangements, conducted a full annual risk assessment as part of an incentive and sales practice review. Under the governance of the Executive Risk Committee, ICRA was established to define and govern the annual incentive plan risk assessment process which evaluates the effectiveness of Associated’s incentive compensation programs and ensures they are in alignmentaligned with the Company’s safety and soundness principals.principles. Following the reviews with members of Associated’s Executive Risk Committee, ICRA, and business executives responsible for the design and implementation of incentive plans, the Committee determined that Associated’s compensation plans do not encourage its senior executive officers or colleagues to take unnecessary or excessive risks that threaten the value of Associated, nor do suchthe plans encourage behavior focused on short-term results to the detriment of long-term value creation. The Committee has determined that these plans do not encourage unnecessary risk taking and are consistent with preserving and enhancing the long-term health of Associated.
| OTHER BENEFIT PROGRAMS | ||
Deferred Compensation Plan
Associated maintains a non-qualified deferred compensation plan to allow certain colleagues who are deemed to be highly compensated under IRC Section 414(q)(1)(B) to defer current compensation to accumulate additional funds for retirement. All NEOs were eligible to participate in the deferred compensation plan in 2019; however, none elected to participate in 2019.
Participants are offered the opportunity to defer from $10,000 up to 50% of base salary and up to 75% of cash incentive compensation. Participants havecan choose from various investment options to select from.options. The participant can elect to receive payment of deferred amounts either in a lump sum, or five or ten equal annual installments; payments may be received while in service or six months following separation from Associated. (Distributions during employment are possible in the event of an unforeseeable emergency.) The participant retains all rights to amounts in his or her account if employment terminates for any reason. All NEOs were eligible to participate in the deferred compensation plan in 2021; however, none elected to participate in 2021.
Deferred Stock Election
Executive Leadership Team members may elect to defer receipt of up to 100% of their RSUs under our Deferred Stock Election program. This program provides further personal financial management tools for executive officers and enhances the alignment with shareholders by focusing on the long-term goal of increasing capital gains. All NEOs were eligible to elect to defer receipt of shares in 2021 and Mr. Utz elected to defer.
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Retirement Plans
Retirement Account Plan
The Associated Banc-Corp Retirement Account Plan (“RAP”) is a qualified defined benefit plan with cash balance features designed to provide participants with a monthly income stream in the form of an annuity at retirement. A colleague becomes eligible to participate effective the first day of the plan year in which the participant completes twelve12 months of service (service is defined as working a minimum of 1,000 hours within the year). The colleague becomes a “Participant” in the Plan the first January 1 or July 1 after completion of the service eligibility has been met.requirement. Each participant receives an accrual of 3% of eligible compensation. Compensation is subject to the IRS annual limitation, which was $280,000$290,000 in 2019.2021. The RAP provides for an annual earnings credit based on the 30-Year Treasury Rate. All participants become fully vested in their accrued benefit upon completion of three years of credited services,service, attainment of normal retirement (age 65) or upon death or disability while employed by Associated. All NEOs, with the exception of Mr. Harmening, have completed three years of credited service and are 100% vested in their benefits under the RAP. Participants may be eligible to receive an early retirement benefit at age 55. Benefits are subject to an actuarial adjustment for early retirement benefits.retirement.
401(k) Plan
Associated offers the Associated Banc-Corp 401(k) and Employee Stock Ownership Plan to eligible participants.participants, including the NEOs. Participants make contributions to the 401(k) Plan, subject to the limitations established by the IRS. Associated provides a discretionary matching contribution, which in 20192021 was equal to 100% of the first 5% of each participant’s contribution. Participants who work 1,000 hours during the calendar year and are employed with Associated on December 31 qualify for the matching contribution, with the exception of the participant’s retirement, disability, or death. All participants are fully vested in both their own contributions and Associated’s matching contributions. Participants have more than 30 investment fund selections available including the Associated Banc-Corp Common Stock Fund.
Supplemental Executive Retirement Plans
In keeping with its objective of providing a market-competitive executive compensation program designed to attract and retain highly qualified individuals, Associated provides supplemental retirement benefits to a limited number of key colleagues under the Associated Banc-Corp Supplemental Executive Retirement Plan, referred to as the “SERP.” The SERP is a non-qualified plan into which Associated makes a restoration contribution for amounts that are otherwise restricted due to applicable IRS limitations under Associated’s RAP and 401(k) Plan. Participation in the SERP is limited to members of Associated’s Executive Committee,Leadership Team, which includes the NEOs.
Associated’s contribution to the SERP is equal to the excess of the amount that would have been accrued under the RAP and the 401(k) Plan if not for the IRS annual limitation over the amount actually accrued by the participant for the plan year under those plans. Amounts under the SERP are unsecured and accrue at the same rate and time as accruals under the RAP and 401(k) Plan and incur gains and losses based on notional investment preferences specified by participants among various investment options. All participants in the SERP are fully vested in their SERP account. Distributions from the SERP are generally made in accordance with elections made by the participants.
Flynn SERP. The Committee adopted a Supplemental Executive Retirement Plan for Philip B. Flynn effective January 1, 2012. Under Mr. Flynn’s SERP, Mr. Flynn retains any and allretained the accrued benefits under the SERP provisions of his expired employment agreement and receivesreceived accruals to his SERP account in an amount equal to a percentage of his annual cash base salary and cash incentive, less the amount of the IRS annual compensation limit. This percentage is initially set at 12.5%, although the Committee may decrease or increase this percentage at its discretion, subject to a maximum percentage of 20%. For 2019,2021, the accrual percentage was 12.5%. Accruals based on Mr. Flynn’s base salary accrue on the last day of each payroll period, and accruals based on any
Under the Retirement Agreement dated as of January 19, 2021 between the Company and Mr. Flynn’sFlynn, Mr. Flynn received a contribution to the SERP are generally made upon the earlierat a minimum of 12.5% of his death or at various dates specifiedeligible compensation through his retirement date of December 31, 2021. See “Philip Flynn Retirement Agreement,” below.
To comply with the Company's obligations under Mr. Flynn's Retirement Agreement, in January 2022, the Compensation and Benefits Committee approved a waiver to the requirement under the SERP that the participant be employed by the Company on the contribution date in order to accrue a benefit under the SERP. As a result, Mr. Flynn priorreceived a final contribution to the beginninghis SERP in February 2022 and his plan will be discontinued upon completion of any plan year.all distributions.
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Perquisites
Limited perquisites provided to NEOs in 20192021 included executive physical examinations, which the Committee believes are valuable to Associated by helping to ensure the health and well-being of participants;our executives; financial planning services, which are intended to permit the NEOs to focus as much of their time and attention as possible on their responsibilities as executive officers; relocation benefits for new or transferring executives, and the payment of social and similar clubsclub dues to give the NEOs access to social and similar clubs for business purposes. NEOs are required to pay any other costs attributable to their personal use of social and similar clubs. The NEOs participated in certain other company-subsidized benefits that were also available to all eligible and/or participating colleagues.
Employment and Post-Termination Arrangements with Executive OfficersNEOs
Change of Control Agreements
The Retirement Agreements between the Company and Mr. Flynn and Mr. Del Moral-Niles, respectively, effectively supersede their COC Agreements.
| COMPENSATION DECISIONS FOR | ||
The Committee, continuesassisted by its compensation consultant, thoroughly reviewed each element of compensation and approved the restructured program that reflects our new strategic plan to reviewexpand our lending capabilities, grow our core businesses and make changes to the design of Associated’stransform our digital strategy. The revised 2022 executive compensation program includes more appropriate metrics to ensure continued achievementdrive Associated’s business strategy of performance goalsmaximizing profitable growth while maintaining credit quality and objectives ofmanaging expense. The Committee believes the Company2022 executive compensation program supports management's plans to accelerate our business, incorporates best practices and create further value for our shareholders.will properly align pay with performance.
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For 2022, the Committee reviewed and approved changes to make minorboth the short- and long-term incentive plans to support our plans to strategically drive revenue growth across our core business lines while also expanding our portfolio to ultimately deliver higher shareholder returns. These modifications included:
The 2022 MIP metrics were chosen to accelerate our business and support our new strategic plan as follows:
•NIAT: Incentivize actual income growth;
•Revenue before provision for credit losses: Incentivize committed growth; and,
•Operating leverage: Emphasize growing revenue faster than expenses and motivate efficient growth to drive shareholder value.
For the 2020-2022 Long-Term Incentive Performance Plan (LTIPP). Metrics for2022-2024 LTIPP metrics, the 2020-2022 plan, EPSCommittee reviewed and approved relative TSR and relative TSR, remainROATCE as the selected metrics becauseperformance metrics. Performance will be determined based on results against the Committee believes those metrics are the most closely aligned to the creation of shareholder value. Associated will continue to use an additive model for the LTIPP which will provide equal weighting between each metric and aKBW Regional Bank Index Companies. A threshold of 25%30% relative TSR will also remain in place with no payout for that metric below threshold.The EPS maximumROATCE measures profitability by showing how much profit we generate with the capital our shareholders have invested, with the exception of goodwill and minimum range is plus or minus 20%other balance sheet items unable to be influenced, and how efficiently we have deployed those funds. This approach addresses challenges of target. Achievement belowmulti-year relative goal setting in the 20% minimumcurrent environment.Maintaining the three-year performance period reinforces the retentive impact of the opportunities, and will result in no payoutensure that executives are paid for long-term, consistent performance.
| COMPENSATION GOVERNANCE | ||
Role of Independent Compensation Consultant
In 2021, the EPS metric. The payout range for the 2020-2022 LTIPP will range from 0%Committee engaged Mercer (US) Inc. (“Mercer”) to 150%, similaradvise on a variety of matters relating to the 2019-2021 LTIPP. To alignexecutive compensation program and conduct a thorough re-engagement process each year. In 2021, Mercer performed a competitive analysis of Associated’s senior executive compensation levels and incentive practices, worked with more common market practice, relative TSR willthe Committee on plan design changes and performed related assistance, which the Committee affirmed were in-line with expectations and best practices.
The Committee previously established procedures that it considers sufficient to ensure that the advice of the compensation consultant to the Committee remains objective and is not influenced by Associated’s management, including:
•Direct reporting relationship of the compensation consultant to the Committee;
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•Provision in the Committee’s engagement letter with Mercer specifying the nature of the work to be calculated usingconducted and the role that management may play in that work; and
•Annual update to the Committee on the compensation consultant’s financial relationship with Associated, including a 30-day share price averaging as opposed to a quarterly share price averaging used in previous plans.summary of the work performed for Associated during the preceding 12 months.
As part of the deferred stock program was expanded to include time-based restricted stock to provide further personal financial management tools forannual compensation review process, the CEO and the Chief Human Resources Officer interact with the Committee and compensation consultant, providing information about the current compensation structure, details regarding executive compensation, individual performance assessments, and descriptions of the job responsibilities of executive officers. The CEO typically makes recommendations to the Committee feels this modification provides closer alignmentwith respect to actual shareholder value resultsthe compensation of the NEOs, other than himself, and strengthens the overall alignment betweenCommittee determines CEO compensation in executive session without the CEO present.
Role of the Committee
The purpose of the Committee is to assist the Board of Directors in fulfilling its responsibility to oversee Associated’s executive compensation program. Our Committee works closely with the compensation consultant to make decisions about, and shareholder interests.set the framework for, Associated’s executive compensation program. Among other things, the Committee’s responsibilities include:
•Establishing and approving compensation and benefit policies;
•Approving the amount and form of compensation for Associated’s executives and non-management directors; and
•Issuing an annual report on executive and CEO compensation for inclusion in Associated’s annual proxy statement and Form 10-K.
| POLICIES | ||
Accounting and Tax Considerations
Associated desires to maximize the return to its shareholders, as well as meet the objectives of the executive compensation program outlined above. As part of balancing these objectives, management (particularly the CEO and the Chief Human Resources Officer) considers the accounting and tax treatment to Associated and, to a lesser extent, the tax treatment to the executive, when making compensation decisions. FASBFinancial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718, “Compensation-Stock Compensation” requires all share-based payments to colleagues to reflect the fair value on the date of grant and to be expensed over the applicable vesting period.
Clawback of Compensation
Since 2013, the Committee approved and Associated has had in place, a Clawback Policy that requires any members of the Executive CommitteeLeadership Team of Associated, including the NEOs, to repay or return cash incentives and equity awards granted through a performance incentive plan in the event that Associated issues a material restatement of its financial statements due to material noncompliance with securities laws where the restatement was caused by the colleague’s intentional misconduct, or if Associated incorrectly calculated without misconduct the performance results of the applicable plans. Where Associated is required to restate any of its financial statements as defined above, Associatedthe Company shall recover amounts in excess of the cash incentives and equity awards payable under Associated’s restated financial statements from the above identified colleagues who received the excess cash incentives and/or equity awards. The Clawback Policy applies to Associated’s Management Incentive Plan beginning with the 2013 performance period and to performance incentive plan equity awards beginning with grants made in 2013. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, theThe SEC has issued proposed rules relating to specific clawback requirements.requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act. However, the SEC and NYSE have not yet issued final rules relating to clawback requirements. Management will continue to monitor the rule-making process with respect to any revisions that may be required to comply with new regulations.
Anti-Pledging and Anti-Hedging Policy
Associated’s Insider Trading Policy prohibits executive officers, colleagues and directors from engaging in hedging transactions (such as prepaid variable forwards, equity swaps, collars and exchange funds) with respect to Common Stock and from pledging Associated Common Stock as collateral for loans, with the exception, for directors only, of pledges already in place when the prohibition on pledging was adopted in 2012.
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Security Ownership Guidelines for Executive Officers
Associated has adopted stock ownership guidelines which are applicable to the NEOs, other members of the Executive CommitteeLeadership Team and other key executives identified by the CEO. Associated’s executive stock ownership guidelines, which apply to all of the NEOs and other key executives identified by the CEO, include:
•A requirement to hold 50% of vested shares of restricted stock granted for a period of three years after the vesting date of the stock; and
•Additional required holdings calculated as a multiple of the executive officer’s annual base salary: six times for Mr. Harmening and three times for each of the other executive officers subject to the guidelines.
For purposes of the guidelines, shares held by an executive officer include shares held directly, held in an executive officer’s 401(k) plan, shares purchased through the Employee Stock Purchase Plan, and unvested restricted stock awards. All Associated NEOs are within the expected guidelines of the stock ownership requirements. The executive stock ownership guidelines are described under “Stock Ownership - Stock Ownership Guidelines for Executive Officers and Directors” on page 12.15.
COMPENSATION AND BENEFITS COMMITTEE REPORT
The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for filing.
THE COMPENSATION AND BENEFITS COMMITTEE
John F. Bergstrom, Chairman
Eileen A. Kamerick
Gale E. Klappa
Karen T. van Lith
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| SUMMARY COMPENSATION TABLE | ||
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($)(5)(6) | ||||||||||||||||||
Andrew J. Harmening President and CEO | 2021 | $ | 675,000 | $ | 9,174,980 | $ | 1,237,500 | $ | — | $ | 242,612 | $ | 11,330,092 | |||||||||||||
Philip B. Flynn Special Advisor and Former President and CEO | 2021 | $ | 1,250,000 | $ | 678,117 | $ | 1,168,750 | $ | 10,864 | $ | 285,794 | $ | 3,393,524 | |||||||||||||
| 2020 | $ | 1,250,000 | $ | 1,968,724 | $ | 656,249 | $ | — | $ | 11,320 | $ | 274,013 | $ | 4,160,306 | ||||||||||||
| 2019 | $ | 1,250,000 | $ | 1,968,728 | $ | 656,248 | $ | 977,705 | $ | 12,217 | $ | 275,399 | $ | 5,140,297 | ||||||||||||
Christopher J. Del Moral-Niles Executive Vice President, Chief Financial Officer | 2021 | $ | 505,000 | $ | 605,985 | $ | 416,600 | $ | 10,815 | $ | 39,050 | $ | 1,577,450 | |||||||||||||
| 2020 | $ | 505,000 | $ | 454,477 | $ | 151,499 | $ | — | $ | 11,254 | $ | 43,560 | $ | 1,165,791 | ||||||||||||
| 2019 | $ | 505,000 | $ | 454,484 | $ | 151,497 | $ | 455,000 | $ | 12,119 | $ | 39,520 | $ | 1,617,620 | ||||||||||||
John A. Utz Executive Vice President, Head of Corporate Banking and Milwaukee Market President | 2021 | $ | 445,000 | $ | 533,998 | $ | 367,100 | $ | 10,864 | $ | 41,910 | $ | 1,398,872 | |||||||||||||
| 2020 | $ | 444,167 | $ | 400,467 | $ | 133,497 | $ | — | $ | 11,320 | $ | 62,133 | $ | 1,051,584 | ||||||||||||
| 2019 | $ | 434,167 | $ | 391,514 | $ | 130,499 | $ | 445,000 | $ | 12,217 | $ | 61,225 | $ | 1,474,622 | ||||||||||||
Randall J. Erickson Executive Vice President, General Counsel & Corporate Secretary | 2021 | $ | 460,000 | $ | 459,970 | $ | 328,900 | $ | 10,354 | $ | 43,564 | $ | 1,302,789 | |||||||||||||
| 2020 | $ | 460,000 | $ | 344,973 | $ | 114,999 | $ | — | $ | 10,625 | $ | 57,263 | $ | 987,860 | ||||||||||||
| 2019 | $ | 460,000 | $ | 344,985 | $ | 114,998 | $ | 345,000 | $ | 11,191 | $ | 56,518 | $ | 1,332,692 | ||||||||||||
David L. Stein Executive Vice President, Head of Consumer & Business Banking and Madison Market President | 2021 | $ | 410,000 | $ | 491,972 | $ | 338,300 | $ | 14,106 | $ | 38,640 | $ | 1,293,018 | |||||||||||||
| 2020 | $ | 408,750 | $ | 368,991 | $ | 122,998 | $ | — | $ | 14,546 | $ | 52,832 | $ | 968,118 | ||||||||||||
| 2019 | $ | 395,000 | $ | 296,233 | $ | 98,748 | $ | 300,000 | $ | 15,509 | $ | 56,085 | $ | 1,161,575 | ||||||||||||
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($)(5) | ||||||||||||||
Philip B. Flynn President and CEO | 2019 | $ | 1,250,000 | $0 | $ | 1,968,728 | $ | 656,248 | $ | 977,705 | $ | 12,217 | $ | 275,399 | $ | 5,140,297 | |||||||
| 2018 | $ | 1,250,000 | $0 | $ | 1,874,986 | $ | 624,996 | $ | 1,161,170 | $ | 11,218 | $ | 250,472 | $ | 5,172,842 | ||||||||
| 2017 | $ | 1,250,000 | $0 | $ | 1,874,981 | $ | 624,999 | $ | 784,574 | $ | 10,416 | $ | 232,772 | $ | 4,777,742 | ||||||||
Christopher J. Del Moral-Niles Executive Vice President, Chief Financial Officer | 2019 | $ | 505,000 | $0 | $ | 454,484 | $ | 151,497 | $ | 455,000 | $ | 12,119 | $ | 39,520 | $ | 1,617,620 | |||||||
| 2018 | $ | 504,000 | $0 | $ | 454,469 | $ | 151,498 | $ | 540,000 | $ | 11,136 | $ | 36,620 | $ | 1,697,723 | ||||||||
| 2017 | $ | 492,167 | $0 | $ | 443,696 | $ | 147,900 | $ | 375,000 | $ | 10,347 | $ | 35,165 | $ | 1,504,275 | ||||||||
John A. Utz Executive Vice President, Head of Corporate Banking and Milwaukee Market President | 2019 | $ | 434,167 | $0 | $ | 391,514 | $ | 130,499 | $ | 445,000 | $ | 12,217 | $ | 61,225 | $ | 1,474,622 | |||||||
| 2018 | $ | 425,000 | $0 | $ | 382,471 | $ | 127,496 | $ | 530,000 | $ | 11,218 | $ | 56,716 | $ | 1,532,901 | ||||||||
| 2017 | $ | 425,000 | $0 | $ | 382,486 | $ | 127,497 | $ | 350,000 | $ | 10,416 | $ | 48,436 | $ | 1,343,835 | ||||||||
Randall J. Erickson Executive Vice President, General Counsel & Corporate Secretary | 2019 | $ | 460,000 | $0 | $ | 344,985 | $ | 114,998 | $ | 345,000 | $ | 11,191 | $ | 56,518 | $ | 1,332,692 | |||||||
| 2018 | $ | 460,000 | $0 | $ | 413,972 | $ | 137,999 | $ | 410,000 | $ | 10,358 | $ | 57,254 | $ | 1,489,583 | ||||||||
| 2017 | $ | 460,000 | $0 | $ | 413,986 | $ | 137,998 | $ | 275,000 | $ | 9,688 | $ | 53,329 | $ | 1,350,001 | ||||||||
David L. Stein Executive Vice President, Head of Consumer & Business Banking | 2019 | $ | 395,000 | $0 | $ | 296,233 | $ | 98,748 | $ | 300,000 | $ | 15,509 | $ | 56,085 | $ | 1,161,575 | |||||||
| 2018 | $ | 395,000 | $0 | $ | 296,238 | $ | 98,748 | $ | 340,000 | $ | 14,316 | $ | 50,095 | $ | 1,194,397 | ||||||||
| 2017 | $ | 395,000 | $0 | $ | 296,226 | $ | 98,746 | $ | 225,000 | $ | 13,343 | $ | 47,511 | $ | 1,075,826 | ||||||||
(2) Amounts reported in this column reflect incentive awards provided under the “Management Incentive Plan,” described in the “Annual Total Compensation - Annual Incentive Award” section beginning on page 37.
(3) Reflects the change in present value of the Retirement Account Plan (“RAP”). Further details regarding the RAP can be found in the “Retirement Plans” section beginning on page 42 and in the Pension Benefits in 2021 table on page 50.
(4) Amounts in All Other Compensation for 2021 include the following:
•Employer payment of relocation services for Mr. Harmening;
•Employer match on each participating NEO’s 20192021 contributions to the 401(k) Plan;
•Employer payment of financial planning services;
•Employer payment of social and similar club dues for Messrs. Utz, Erickson and Stein and a corporate club membership for which Mr. Erickson is the named member; and
•Employer payment of executive physicals for Mr. FlynnFlynn;
•Employer payment of wellness rewards; and Mr. Stein.
•Employer match on each participating NEOs' 2021 contributions to the Employee Stock Purchase Plan.
(5) The bonus column has been removed from the Summary Compensation Table because NEOs have not received discretionary or other bonus payments in the last three years.
| Name | Relocation | 401(k) Match | SERP Contribution | Financial Planning Services | Social and Similar Club Dues | Executive Physicals | Wellness Rewards | ESPP Stock Match | ||||||||||||||||||
| Andrew J. Harmening | $242,412 | — | — | — | — | — | $200 | — | ||||||||||||||||||
Philip B. Flynn (a) | — | $14,500 | $227,969 | $39,825 | — | $3,500 | — | — | ||||||||||||||||||
| Christopher J. Del Moral-Niles | — | $14,500 | $17,200 | $7,350 | — | — | — | — | ||||||||||||||||||
| John A. Utz | — | $14,500 | $12,400 | $13,275 | — | — | $400 | $1,335 | ||||||||||||||||||
| Randall J. Erickson | — | $14,500 | $13,600 | $13,275 | $2,189 | — | — | — | ||||||||||||||||||
| David L. Stein | — | $14,500 | $9,600 | $12,000 | $2,540 | — | — | — | ||||||||||||||||||
| (a) Reflects Financial Planning Services benefit through 2023. | ||||||||||||||||||||||||||
(6) For a description of the elements of executive compensation and the various factors affecting compensation levels, please see the “Executive Compensation - Compensation Discussion and Analysis” section beginning on page 26.
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| Name | 401(k) Match | SERP Contribution | Financial Planning Services | Social and Similar Club Dues | Executive Physicals |
| Philip B.Flynn | $14,000 | $244,624 | $13,275 | — | $3,500 |
| Christopher J. Del Moral-Niles | $14,000 | $25,520 | — | — | — |
| John A. Utz | $14,000 | $29,140 | $13,275 | $4,810 | — |
| Randall J. Erickson | $14,000 | $26,855 | $13,275 | $2,388 | — |
| David L. Stein | $14,000 | $23,120 | $13,275 | $2,090 | $3,600 |
| GRANTS OF PLAN-BASED AWARDS DURING | ||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(3) | ||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||
Andrew J. Harmening (4) | 4/28/2021 | − | − | − | − | − | − | 360,583 | − | − | $ | 7,768,732 | |||||||||||||||||||||||
| 4/28/2021 | − | − | − | − | 64,566 | 96,849 | − | − | − | 1,406,247 | |||||||||||||||||||||||||
| 750,000 | 1,125,000 | 1,968,750 | − | − | − | − | − | − | − | ||||||||||||||||||||||||||
| Philip B. Flynn | 2/1/2021 | − | − | − | − | − | − | 9,387 | − | − | $ | 169,529 | |||||||||||||||||||||||
| 2/1/2021 | − | − | − | − | 28,161 | 42,241 | − | − | − | 508,588 | |||||||||||||||||||||||||
| − | 1,062,500 | 1,859,375 | − | − | − | − | − | − | − | ||||||||||||||||||||||||||
| Christopher J. Del Moral-Niles | 2/1/2021 | − | − | − | − | − | − | 8,388 | − | − | $ | 151,487 | |||||||||||||||||||||||
| 2/1/2021 | − | − | − | − | 25,166 | 37,749 | − | − | − | 454,498 | |||||||||||||||||||||||||
| − | 378,750 | 662,813 | − | − | − | − | − | − | − | ||||||||||||||||||||||||||
| John A. Utz | 2/1/2021 | − | − | − | − | − | − | 7,392 | − | − | $ | 133,500 | |||||||||||||||||||||||
| 2/1/2021 | − | − | − | − | 22,176 | 33,264 | − | − | − | 400,499 | |||||||||||||||||||||||||
| − | 333,750 | 584,063 | − | − | − | − | − | − | − | ||||||||||||||||||||||||||
| Randall J. Erickson | 2/1/2021 | − | − | − | − | − | − | 6,367 | − | − | $ | 114,988 | |||||||||||||||||||||||
| 2/1/2021 | − | − | − | − | 19,102 | 28,653 | − | − | − | 344,982 | |||||||||||||||||||||||||
| − | 299,000 | 523,250 | − | − | − | − | − | − | − | ||||||||||||||||||||||||||
| David L. Stein | 2/1/2021 | − | − | − | − | − | − | 6,810 | − | − | $ | 122,989 | |||||||||||||||||||||||
| 2/1/2021 | − | − | − | − | 20,431 | 30,646 | − | − | − | 368,984 | |||||||||||||||||||||||||
| − | 307,500 | 538,125 | − | − | − | − | − | − | − | ||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(3) | ||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||
| Philip B. Flynn | 2/5/2019 | — | — | — | — | — | — | — | 169,857 | 22.01 | $ | 656,248 | |
| 2/5/2019 | — | — | — | — | — | — | 29,816 | — | — | 656,250 | |||
| 2/5/2019 | — | — | — | — | 59,631 | 89,446 | — | — | — | 1,312,478 | |||
| — | 1,161,170 | 1,393,404 | — | — | — | — | — | — | — | ||||
Christopher J. Del Moral-Niles | 2/5/2019 | — | — | — | — | — | — | — | 39,212 | 22.01 | $ | 151,497 | |
| 2/5/2019 | — | — | — | — | — | — | 6,883 | — | — | 151,495 | |||
| 2/5/2019 | — | — | — | — | 13,766 | 20,649 | — | — | — | 302,990 | |||
| — | 540,000 | 648,000 | — | — | — | — | — | — | — | ||||
| John A. Utz | 2/5/2019 | — | — | — | — | — | — | — | 33,777 | 22.01 | $ | 130,499 | |
| 2/5/2019 | — | — | — | — | — | — | 5,930 | — | — | 130,519 | |||
| 2/5/2019 | — | — | — | — | 11,858 | 17,787 | — | — | — | 260,995 | |||
| — | 530,000 | 636,000 | — | — | — | — | — | — | — | ||||
| Randall J. Erickson | 2/5/2019 | — | — | — | — | — | — | — | 29,765 | 22.01 | $ | 114,998 | |
| 2/5/2019 | — | — | — | — | — | — | 5,225 | — | — | 115,002 | |||
| 2/5/2019 | — | — | — | — | 10,449 | 15,673 | — | — | — | 229,982 | |||
| — | 410,000 | 492,000 | — | — | — | — | — | — | — | ||||
| David L. Stein | 2/5/2019 | — | — | — | — | — | — | — | 25,559 | 22.01 | $ | 98,748 | |
| 2/5/2019 | — | — | — | — | — | — | 4,486 | — | — | 98,737 | |||
| 2/5/2019 | — | — | — | — | 8,973 | 13,459 | — | — | — | 197,496 | |||
| — | 340,000 | 408,000 | — | — | — | — | — | — | — | ||||
(2) Reflects performance-based RSU grants made to the NEOs under the 2021 LTIPP. The threshold and maximum amounts represent the 0% and 150% limits within the LTIPP. See “Long-Term Incentive Compensation” beginning on page 39 for additional details.
(3) See “Policies - Accounting and Tax Considerations” on page 45. For further discussion and details regarding the accounting treatment and underlying assumptions relative to stock-based compensation, see Note 11, “Stock-Based Compensation,” of the Notes to Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of Associated’s 2021 Form 10-K.
(4) Threshold for Estimated Future Payouts Under Non-Equity Incentive Plan Awards reflective of Mr. Harmening's minimum guarantee per his sign-on agreement.
48
| OUTSTANDING EQUITY AWARDS AT DECEMBER 31, | ||
| Option Awards | Stock Awards | ||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock Held that Have Not Vested (#) | Market Value of Shares or Units of Stock Held That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not ($) Vested | |||||||||||||||||||||
| (1) | (1) | (1) | (2) | (3) | (2) | ||||||||||||||||||||||||
| Andrew J. Harmening | 21,522 (7) | $486,182 | 64,566 | $1,458,546 | |||||||||||||||||||||||||
| 254,295 (8) | $5,744,524 | ||||||||||||||||||||||||||||
| Philip B. Flynn | 119,929 | — | $25.20 | 2/6/2027 | 112,835 | $2,548,943 | |||||||||||||||||||||||
| 141,268 | — | $24.25 | 2/6/2028 | ||||||||||||||||||||||||||
| 169,857 | — | $22.01 | 2/5/2029 | ||||||||||||||||||||||||||
| 248,583 | — | $20.32 | 2/4/2030 | ||||||||||||||||||||||||||
| Christopher J. Del Moral-Niles | 28,380 | — | $25.20 | 2/6/2027 | 1,562 (4) | $35,286 | 44,713 | $1,010,067 | |||||||||||||||||||||
| 25,682 | 8,561 | $24.25 | 2/6/2028 | 5,282 (5) | $119,320 | ||||||||||||||||||||||||
| 19,606 | 19,606 | $22.01 | 2/5/2029 | 5,592 (6) | $126,323 | ||||||||||||||||||||||||
| 14,346 | 43,041 | $20.32 | 2/4/2030 | 8,388 (7) | $189,485 | ||||||||||||||||||||||||
| John A. Utz | 12,659 | — | $14.02 | 1/22/2023 | 1,315 (4) | $29,706 | 39,308 | $887,968 | |||||||||||||||||||||
| 14,755 | — | $17.02 | 1/27/2024 | 4,771 (5) | $107,777 | ||||||||||||||||||||||||
| 8,510 | — | $17.67 | 3/17/2024 | 4,927 (6) | $111,301 | ||||||||||||||||||||||||
| 39,543 | — | $17.24 | 2/2/2025 | 7,392 (7) | $166,985 | ||||||||||||||||||||||||
| 38,135 | — | $17.38 | 2/1/2026 | ||||||||||||||||||||||||||
| 24,465 | — | $25.20 | 2/6/2027 | ||||||||||||||||||||||||||
| 21,613 | 7,205 | $24.25 | 2/6/2028 | ||||||||||||||||||||||||||
| 16,888 | 16,889 | $22.01 | 2/5/2029 | ||||||||||||||||||||||||||
| 12,642 | 37,926 | $20.32 | 2/4/2030 | ||||||||||||||||||||||||||
| Randall J. Erickson | 26,335 | — | $17.02 | 1/27/2024 | 981 (4) | $22,161 | 33,939 | $766,682 | |||||||||||||||||||||
| 8,267 | — | $17.67 | 3/17/2024 | 2,785 (5) | $62,913 | ||||||||||||||||||||||||
| 34,473 | — | $17.24 | 2/2/2025 | 4,245 (6) | $95,895 | ||||||||||||||||||||||||
| 41,276 | — | $17.38 | 2/1/2026 | 6,367 (7) | $143,831 | ||||||||||||||||||||||||
| 26,480 | — | $25.20 | 2/6/2027 | ||||||||||||||||||||||||||
| 23,394 | 7,798 | $24.25 | 2/6/2028 | ||||||||||||||||||||||||||
| 14,882 | 14,883 | $22.01 | 2/5/2029 | ||||||||||||||||||||||||||
| 10,890 | 32,671 | $20.32 | 2/4/2030 | ||||||||||||||||||||||||||
| David L. Stein | 8,030 | — | $14.02 | 1/22/2023 | 4,540 (6) | $102,559 | 35,559 | $803,278 | |||||||||||||||||||||
| 23,882 | — | $17.02 | 1/27/2024 | 6,810 (7) | $153,838 | ||||||||||||||||||||||||
| 7,497 | — | $17.67 | 3/17/2024 | ||||||||||||||||||||||||||
| 32,107 | — | $17.24 | 2/2/2025 | ||||||||||||||||||||||||||
| 29,536 | — | $17.38 | 2/1/2026 | ||||||||||||||||||||||||||
| 18,948 | — | $25.20 | 2/6/2027 | ||||||||||||||||||||||||||
| 16,740 | 5,580 | $24.25 | 2/6/2028 | ||||||||||||||||||||||||||
| 12,779 | 12,780 | $22.01 | 2/5/2029 | ||||||||||||||||||||||||||
| 11,647 | 34,944 | $20.32 | 2/4/2030 | ||||||||||||||||||||||||||
| Option Awards | Stock Awards | ||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock Held that Have Not Vested (#) | Market Value of Shares or Units of Stock Held That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not ($) Vested | |
| (1) | (1) | (1) | (2) | (3) | (2) | ||||
| Philip B. Flynn | 139,747 | — | $14.02 | 1/22/2023 | 8,990 (4) | $198,140 | 241,169 | $5,315,365 | |
| 161,369 | — | $17.02 | 1/27/2024 | 12,401 (5) | $273,318 | — | — | ||
| 50,656 | — | $17.67 | 3/17/2024 | 19,330 (6) | $426,033 | — | — | ||
| 211,236 | — | $17.24 | 2/2/2025 | 37,729 (7) | $831,547 | — | — | ||
| 140,203 | 46,735 | $17.38 | 2/1/2026 | — | — | — | — | ||
| 59,964 | 59,965 | $25.20 | 2/6/2027 | — | — | — | — | ||
| 35,317 | 105,951 | $24.25 | 2/6/2028 | — | — | — | — | ||
| — | 169,857 | $22.01 | 2/5/2029 | — | — | — | — | ||
| Christopher J. | 32,504 | 10,835 | $17.38 | 2/1/2026 | 2,085 (4) | $45,953 | 56,997 | $1,256,214 | |
| Del Moral-Niles | 14,190 | 14,190 | $25.20 | 2/6/2027 | 2,935 (5) | $64,687 | — | — | |
| 8,560 | 25,683 | $24.25 | 2/6/2028 | 4,686 (6) | $103,279 | — | — | ||
| — | 39,212 | $22.01 | 2/5/2029 | 10,563 (7) | $232,809 | — | — | ||
| John A. Utz | 2,000 | — | $12.97 | 1/23/2022 | 1,834 (4) | $40,421 | 48,737 | $1,074,163 | |
| 12,659 | — | $14.02 | 1/22/2023 | 2,530 (5) | $55,761 | — | — | ||
| 14,755 | — | $17.02 | 1/27/2024 | 3,943 (6) | $86,904 | — | — | ||
| 8,510 | — | $17.67 | 3/17/2024 | 9,541 (7) | $210,284 | — | — | ||
| 39,543 | — | $17.24 | 2/2/2025 | — | — | — | — | ||
| 28,601 | 9,534 | $17.38 | 2/1/2026 | — | — | — | — | ||
| 12,232 | 12,233 | $25.20 | 2/6/2027 | — | — | — | — | ||
| 7,204 | 21,614 | $24.25 | 2/6/2028 | — | — | — | — | ||
| — | 33,777 | $22.01 | 2/5/2029 | — | — | — | — | ||
| Randall J. Erickson | 26,335 | — | $17.02 | 1/27/2024 | 1,985 (4) | $43,749 | 49,172 | $1,083,751 | |
| 8,267 | — | $17.67 | 3/17/2024 | 2,738 (5) | $60,346 | — | — | ||
| 34,473 | — | $17.24 | 2/2/2025 | 4,268 (6) | $94,067 | — | — | ||
| 30,957 | 10,319 | $17.38 | 2/1/2026 | 8,019 (7) | $176,739 | — | — | ||
| 13,240 | 13,240 | $25.20 | 2/6/2027 | — | — | — | — | ||
| 7,798 | 23,394 | $24.25 | 2/6/2028 | — | — | — | — | ||
| — | 29,765 | $22.01 | 2/5/2029 | — | — | — | — | ||
| David L. Stein | 15,617 | — | $12.97 | 1/23/2022 | 1,421 (4) | $31,319 | 37,430 | $824,957 | |
| 24,332 | — | $14.02 | 1/22/2023 | 1,960 (5) | $43,198 | — | — | ||
| 23,882 | — | $17.02 | 1/27/2024 | 3,054 (6) | $67,310 | — | — | ||
| 7,497 | — | $17.67 | 3/17/2024 | 6,803 (7) | $149,938 | — | — | ||
| 32,107 | — | $17.24 | 2/2/2025 | — | — | — | — | ||
| 22,152 | 7,384 | $17.38 | 2/1/2026 | — | — | — | — | ||
| 9,474 | 9,474 | $25.20 | 2/6/2027 | — | — | — | — | ||
| 5,580 | 16,740 | $24.25 | 2/6/2028 | — | — | — | — | ||
| — | 25,559 | $22.01 | 2/5/2029 | — | — | — | — | ||
(1)All options expiring after 2023 vest in four equal annual installments beginning on the first anniversary following the grant date. All other options have a three-year stepped vesting schedule (34% of the original award vests on the first anniversary following the date of the grant and 33% vests on each of the second and third anniversaries following the date of the grant).
(2)Market value based on the closing price of the Common Stock of $22.59 on December 31, 2021.
(3)Includes the actual 2019 performance-based grants and targeted portion of 2020, and 2021 performance-based RSU grants.
(4)Restricted stock scheduled to vest fully on February 8, 2022.
(5)Restricted stock scheduled to vest in two equal installments on February 8, 2022 and February 8, 2023.
(6)Restricted stock scheduled to vest in three equal installments on February 8, 2022, February 8, 2023, and February 8, 2024.
(7)Restricted stock scheduled to vest in four equal installments on February 8, 2022, February 8, 2023, February 8, 2024, and February 8, 2025.
(8)Restricted stock scheduled to vest in three equal installments on April 28, 2022, April 28, 2023, and April 28, 2024.
49
OPTION EXERCISES AND STOCK VESTED IN | ||
| Option Awards | Stock Awards | ||||||||||||||||
| Name of Executive Officer | Number of Shares Acquired on Exercise or Vesting (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1)(2) | Value Realized on Vesting ($)(2)(3) | |||||||||||||
| Andrew J. Harmening | — | $0 | 84,766 | $1,964,028 | |||||||||||||
| Philip B. Flynn | 749,946 | $4,632,772 | 59,235 | $1,279,962 | |||||||||||||
| Christopher J. Del Moral-Niles | 43,339 | $231,632 | 10,657 | $207,315 | |||||||||||||
| John A. Utz | 2,000 | $19,100 | 9,726 | $193,059 | |||||||||||||
| Randall J. Erickson | — | $0 | 10,723 | $176,107 | |||||||||||||
| David L. Stein | 31,919 | $234,684 | 7,144 | $145,975 | |||||||||||||
| Option Awards | Stock Awards | |||||
| Name of Executive Officer | Number of Shares Acquired on Exercise or Vesting (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1)(3)(4) | Value Realized on Vesting ($)(2)(3)(4) | ||
| Philip B. Flynn | — | $0 | 142,605 | $3,133,312 | ||
| Christopher J. Del Moral-Niles | 98,128 | $541,679 | 30,506 | $673,678 | ||
| John A. Utz | — | $0 | 27,784 | $611,888 | ||
| Randall J. Erickson | — | $0 | 28,467 | $628,464 | ||
| David L. Stein | 20,000 | $176,166 | 21,581 | $475,304 | ||
(2) The number of shares acquired on vesting and value realized on vesting include deferred stock: for Mr. Flynn - 37,159 ($839,422), Mr. Utz - 1,313 ($29,661) and Mr. Stein - 1,147 ($25,911). Value based on the December 31, 2021 closing price of Associated Common Stock.
(3) Value based on the closing price of Associated Common Stock on the date restrictions lapsed. Vested shares are subject to retention requirements under Associated’s security ownership guidelines.
| PENSION BENEFITS IN | ||
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | |||||||||
| Andrew J. Harmening | Andrew J. Harmening | RAP | — | $0 | ||||||||||||||
| Philip B. Flynn | RAP | 10 | $126,502 | $0 | Philip B. Flynn | RAP | 12 | $148,686 | $0 | |||||||||
| Christopher J. Del Moral-Niles | RAP | 9 | $123,467 | $0 | Christopher J. Del Moral-Niles | RAP | 11 | $145,536 | $0 | |||||||||
| John A. Utz | RAP | 9 | $126,502 | $0 | John A. Utz | RAP | 11 | $148,686 | $0 | |||||||||
| Randall J. Erickson | RAP | 7 | $94,756 | $0 | Randall J. Erickson | RAP | 9 | $115,735 | $0 | |||||||||
| David L. Stein | RAP | 14 | $214,780 | $0 | David L. Stein | RAP | 16 | $243,432 | $0 | |||||||||
Further information regarding the RAP can be found in the “Retirement Plans” section beginning on page 43.
42.
| NONQUALIFIED DEFERRED COMPENSATION IN | ||
| Name | Plan | Executive Contributions in 2021 ($) | Registrant Contributions in 2021 ($)(1) | Aggregate Earnings in 2021 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at December 31, 2021 ($)(2) | ||||||||||||||
| Andrew J. Harmening | SERP | $0 | $0 | $0 | $0 | $0 | ||||||||||||||
| Philip B. Flynn | Flynn SERP | $0 | $227,969 | $566,864 | $0 | $6,001,255 | ||||||||||||||
| Christopher J. Del Moral-Niles | SERP | $0 | $17,200 | $38,336 | $0 | $272,496 | ||||||||||||||
| John A. Utz | SERP | $0 | $12,400 | $62,607 | $0 | $427,453 | ||||||||||||||
| Randall J. Erickson | SERP | $0 | $13,600 | $34,305 | $0 | $347,634 | ||||||||||||||
| David L. Stein | SERP | $0 | $9,600 | $77,373 | $0 | $678,404 | ||||||||||||||
| Name | Plan | Executive Contributions in 2019 ($) | Registrant Contributions in 2019 ($)(1) | Aggregate Earnings in 2019 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at December 31, 2019 ($)(2) |
| Philip B. Flynn | Flynn SERP | $0 | $244,624 | $1,070,705 | $0 | $4,611,617 |
| Christopher J. Del Moral-Niles | SERP | $0 | $25,520 | $24,700 | $0 | $160,475 |
| John A. Utz | SERP | $0 | $29,140 | $48,058 | $0 | $290,896 |
| Randall J. Erickson | SERP | $0 | $26,855 | $28,280 | $0 | $232,545 |
| David L. Stein | SERP | $0 | $23,120 | $97,441 | $0 | $451,481 |
(2) Of the amounts disclosed in this column with respect to the Flynn SERP or the SERP, the following amounts were reported in the Summary Compensation Table in prior years: Mr. Flynn - $2,532,623; Mr. Del Moral-Niles - $234,979; Mr. Utz - $210,117; Mr. Erickson - $215,119; and Mr. Stein - $88,032. The variation between the amounts disclosed in this footnote and the amounts disclosed in the above column for the Flynn SERP and the SERP reflect earnings (and losses) on the SERP contributions and/or any contributions prior to the executive becoming a NEO.
50
Further information regarding the Flynn SERP and the SERP for the other NEOs can be found in the “Retirement Plans - Supplemental Executive Retirement Plans” section beginning on page 43,42, and further information regarding the Deferred Compensation Plan can be found in the “Deferred Compensation Plan” section on page 43.41.
The investment alternatives available to the NEONEOs under the Flynn SERP, the SERP and the Deferred Compensation Plan for the other NEOs are selected by Associated and may be changed from time to time. The executive officers are permitted to change their investment elections at any time on a prospective basis. The table below shows the funds selected for investment by participants under both the SERPsSERP (and the now-discontinued Flynn SERP) and the Deferred Compensation Plan and their annual rate of return for the year ended December 31, 2019.2021.
| Name of Fund | Annual Return (%) | Name of Fund | Annual Return (%) |
| Vanguard Total Bond Market Index Fund Admiral Shares | 8.71% | American Funds New World Fund® Class R-6 | 28.03% |
| Vanguard Institutional Index Fund Institutional Shares | 31.46% | American Funds EuroPacific Growth Fund® Class R-6 | 27.40% |
| American Funds The Growth Fund of America® Class R-6 | 28.54% | Templeton Foreign Fund Class R6 | 13.04% |
| Dodge & Cox Stock Fund | 24.83% | Fidelity® Government Money Market Fund | 1.84% |
| Baird MidCap Fund Institutional Class | 36.31% | Vanguard Target Retirement 2020 Fund Investor Shares | 17.63% |
| Virtus Ceredex Mid-Cap Value Equity Fund Class R6 | 33.31% | Vanguard Target Retirement 2025 Fund Investor Shares | 19.63% |
| Wasatch Small Cap Growth Fund® Investor Class | 40.15% | Vanguard Target Retirement 2030 Fund Investor Shares | 21.07% |
| Janus Henderson Small Cap Value Fund Class I | 26.11% | Vanguard Target Retirement 2035 Fund Investor Shares | 22.44% |
| Vanguard Extended Market Index Fund Admiral Shares | 28.03% | Vanguard Target Retirement 2040 Fund Investor Shares | 23.86% |
| Name of Fund | Annual Return (%) | Name of Fund | Annual Return (%) | ||||||||
| American Funds EuroPacific Growth Fund® Class R-6 | 2.84% | Vanguard Target Retirement 2020 Fund Investor Shares | 8.17% | ||||||||
| American Funds The Growth Fund of America® Class R-6 | 19.69% | Vanguard Target Retirement 2025 Fund Investor Shares | 9.80% | ||||||||
| American Funds New World Fund® Class R-6 | 5.13% | Vanguard Target Retirement 2030 Fund Investor Shares | 11.38% | ||||||||
| Baird MidCap Fund Institutional Class | 22.51% | Vanguard Target Retirement 2035 Fund Investor Shares | 12.96% | ||||||||
| Dodge & Cox Stock Fund | 31.73% | Vanguard Target Retirement 2040 Fund Investor Shares | 14.56% | ||||||||
| Fidelity® Government Money Market Fund | 0.01% | Vanguard Total Bond Market Index Fund Admiral Shares | (1.67)% | ||||||||
| Harbor Small Cap Growth Fund Retirement Class | 9.89% | Vanguard Institutional Index Fund Institutional Shares | 28.67% | ||||||||
| Janus Henderson Small Cap Value Fund Class I | 22.72% | Vanguard International Value Inv | 7.97% | ||||||||
| Vanguard Extended Market Index Fund Admiral Shares | 12.45% | Virtus Ceredex Mid-Cap Value Equity Fund Class R6 | 29.34% | ||||||||
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL | ||
The Change of ControlCOC Agreements (“Agreements”)for our NEOs other than Mr. Flynn and Mr. Del Moral-Niles (see “Philip Flynn Retirement Agreement” and "Christopher Del Moral-Niles Retirement Agreement" below for more information) provide for certain payments and benefits in the event of a termination without cause"Cause" or for good reason"Good Reason" following a change"Change of Control" of the Company (each such term as defined in control.the respective COC Agreements).
The COC Agreements provide that upon a termination without Cause or a resignation with Good Reason generally during a two-year protected period (the “protected period”) following a Change of Control, (each such termination a “Qualifying Termination”), each executive officer would, in addition to any unreimbursed and accrued but unpaid amounts, be entitled to receive the following payments:
•a prorated cash incentive for the year in which the date of termination occurs based on the executive’s then-current target cash incentive (or, if higher, the target cash incentive as in effect immediately prior to the Change of Control) (the “Prorated Cash Incentive”);
•an amount equal to a multiple (36 for24 times (or, in the case of Mr. Flynn and 24 for each other executive) ofHarmening, 36 times) the sum of the monthly COBRA premium for the medical and dental coverage in effect for the executive on the date of termination and the monthly premiums in respect of the life insurance in effect for the executive on the date of termination;
•an amount equal to the maximum employer contributions under the Company’s 401(k) and ESOP and SERP (and, for Mr. Flynn, his individual SERP) and an amount equal to the maximum benefit that the executive would have accrued under the Retirement Account Plan and SERP, (and, for Mr. Flynn, his individual SERP), in each case, assuming that the executive remained employed for a period of 24 months (or, in the case of Mr. Harmening, 36 months) following the date of termination (36 for Mr. Flynn and 24 for each other executive) and certain other assumptions specified in the 2018 COC Agreement;Agreements; and
•outplacement benefits.
If the executive’s employment is terminated during the protected period following a Change of Control due to death or “Disability” (as defined in the Agreements due to death or “Disability”)COC Agreements), the executive would not be entitled to the benefits described in the immediately preceding bullets, except for the Prorated Cash Incentive. Additionally, in the event of the executive’s termination
due to death or Disability during the protected period, the executive (or executive’s estate in the event of executive’s death) is
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also entitled to any death or disability benefits, as applicable, equal to those provided prior to a Change of Control or, if more favorable, those in effect on the date of the executive’s death or Disability.
If an executive’s merger related payments or benefits are subject to the 20% excise tax under Section 4999 of the Code, then the COC Agreements provide that the executive will either receive all such payments and benefits subject to the excise tax and pay his or her own excise tax or such payments and benefits will be reduced so that the excise tax does not apply, whichever approach yields the best after tax outcome for the executive. The COC Agreements do not provide for an excise tax gross up. The COC Agreements also contain restrictive covenants, which provide for (1) a perpetual confidentiality and mutual non-disparagement and (2) restrictions on interfering with customers and colleagues for six months following any termination of employment.
| Name | Total Salary Continuation Benefit(1) | Medical, Dental, Life Insurance Benefits for the Duration of Payments(2) | Accrued Vacation(3) | Retirement Plan Contributions, Including the RAP, 401(k) and SERP | Annual Incentive (MIP) | Outplacement Benefit(4) | Total Value of Shares of Restricted Stock and Restricted Stock Units(5) | Total Value of Options(6) | Total | ||||||||||||||||||||
| Andrew J. Harmening | $3,000,000 | $77,484 | $19,231 | $0 | $3,375,000 | $10,000 | $7,738,322 | $0 | $14,220,037 | ||||||||||||||||||||
Philip B. Flynn (7) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||
Christopher J. Del Moral-Niles (8) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||
| John A. Utz | $890,000 | $43,369 | $8,558 | $71,200 | $667,500 | $10,000 | $1,543,438 | $95,888 | $3,329,952 | ||||||||||||||||||||
| Randall J. Erickson | $920,000 | $52,953 | $8,846 | $73,600 | $598,000 | $10,000 | $1,301,972 | $82,795 | $3,048,167 | ||||||||||||||||||||
| David L. Stein | $820,000 | $43,369 | $7,885 | $65,600 | $615,000 | $10,000 | $1,247,023 | $86,735 | $2,895,612 | ||||||||||||||||||||
| Name | Total Salary Continuation Benefit(1) | Medical, Dental, Life Insurance Benefits for the Duration of Payments(2) | Accrued Vacation(3) | Retirement Plan Contributions, Including the RAP, 401(k) and SERP | Incentive Bonus | Outplacement Benefit(4) | Total Value of Shares of Restricted Stock and Restricted Stock Units(5) | Total Value of Options(6) | Total |
| Philip B. Flynn | $3,750,000 | $3,510 | $24,038 | $801,073 | $3,483,510 | $40,000 | $6,062,585 | $222,881 | $14,387,597 |
| Christopher J. Del Moral-Niles | $1,010,000 | $42,017 | $9,712 | $95,840 | $1,080,000 | $40,000 | $1,471,292 | $51,667 | $3,800,528 |
| John A. Utz | $870,000 | $51,189 | $8,365 | $103,080 | $1,060,000 | $40,000 | $1,270,423 | $45,442 | $3,448,499 |
| Randall J. Erickson | $920,000 | $33,853 | $8,846 | $98,510 | $820,000 | $40,000 | $1,269,960 | $48,979 | $3,240,148 |
| David L. Stein | $790,000 | $42,017 | $7,596 | $91,040 | $680,000 | $40,000 | $966,241 | $35,176 | $2,652,070 |
(2)Based on program costs at December 31, 2021.
(3)Maximum unused vacation accrual is 40 hours at year-end pursuant to Associated’s policy.
(4)The Change of Control Plan provides that outplacement services at the senior management and executive level, commensurate with the eligible colleague’s duties, shall be provided by a mutually agreed outplacement agency. $10,000 is an estimate of the actual cost of these outplacement services.
(5)Value based on closing price of Associated Banc-Corp Common Stock of $22.59 on December 31, 2021. This includes the value of all unvested Restricted Stock and performance-based RSUs (illustrated at target), and any accrued dividend equivalent payments on all RSUs.
(6)Value based on the closing price of the Common Stock of $22.59 on December 31, 2021.
(7)Mr. Flynn’s Retirement Agreement cancels and supersedes his COC Agreement. Accordingly, he would not receive any payments upon a Change of Control after January 19, 2021.
(8)Mr. Del Moral-Niles' Retirement Agreement effectively cancels his COC Agreement. Accordingly, he would not receive any payments upon a Change of Control after January 19, 2022.
In addition to the payments that the NEOs would receive under the COC Agreements, all unvested options, shares of restricted stock and RSUs held by the NEOs vest upon such a separation within the two-year period following a change of control pursuant to the terms of the 2017 Plan.and 2020 Incentive Plans. Additionally, in the event of a termination following attainment of retirement eligibility or the NEO’s death or disability,Disability, all unvested options, shares of restricted stock and RSUs (performance-based RSUs still remain subject to the applicable performance criteria for determining vesting) held by the NEOs would vest upon such an event. Assuming one of the events in the prior two sentences (each a “Vesting Event”) occurred on December 31, 2019,2021, the value (using the closing price of $22.04)$22.59) of the accelerated stock is listed in the table below.
| Name | Stock Options | Restricted Stock | Restricted Stock Units(1)(2) | ||||||||
| Andrew J. Harmening | $0 | $6,230,706 | $1,507,616 | ||||||||
Philip B. Flynn (3) | $0 | $0 | $0 | ||||||||
Christopher J. Del Moral-Niles (4) | $0 | $0 | $0 | ||||||||
| John A. Utz | $95,888 | $415,769 | $1,127,669 | ||||||||
| Randall J. Erickson | $82,795 | $324,799 | $977,173 | ||||||||
| David L. Stein | $86,735 | $256,397 | $990,627 | ||||||||
(1)For performance-based RSUs, the value is assumed at target, including any accumulated dividend equivalents.
(2)Performance Based Restricted Stock Units do not accelerate upon retirement. Distribution is made at the end of the performance period based on results achievement.
(3)Mr. Flynn’s Retirement Agreement cancels and supersedes his COC Agreement. Accordingly, he would not receive any payments upon a Change in Control after January 19, 2021, which is reflected in the table above.
(4)Mr. Del Moral-Niles' Retirement Agreement effectively cancels his COC Agreement. Accordingly, he would not receive any payments upon a Change in Control after January 19, 2022, which is reflected in the table above.
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| Name | Stock Options | Restricted Stock | Restricted Stock Units(1) |
| Philip B. Flynn | $222,881 | $1,729,038 | $4,333,547 |
| Christopher J. Del Moral-Niles | $51,667 | $446,729 | $1,024,563 |
| John A. Utz | $45,442 | $393,370 | $877,053 |
| Randall J. Erickson | $48,979 | $374,900 | $895,060 |
| David L. Stein | $35,176 | $291,766 | $674,475 |
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Christopher Del Moral-Niles Retirement Agreement
On January 19, 2022, the Company entered into a Retirement Agreement with Mr. Del Moral-Niles (the “Niles Retirement Agreement"). The Company will continue to pay him his regular base wages through the last day of his employment with the Company, which will be the first day following the month in which the Company appoints his successor. In addition, Mr. Del Moral-Niles will:
•Retain all vested rights in the Company’s 401(k) plan, SERP and Retirement Account Plan;
•Fully participate in the current MIP awards payable in February 2022, based on the Company’s 2021 performance, consistent with other participating executive officers;
•Fully vest in the ordinary course in all of his equity awards scheduled to vest in February 2022 in accordance with their terms;
•Receive other ordinary course employee benefits and his full financial planning reimbursement for calendar 2022; and
•Have the right to participate, at his expense, in the Company’s group health insurance plan, at his own expense, in accordance with the mandates of COBRA.
Subject to and conditioned upon the terms of the Niles Retirement Agreement, no later than one week after his retirement date, Mr. Del Moral-Niles will receive a lump sum payment of $975,000, which will be paid in lieu of a 2022 long-term incentive grant and in exchange for the forfeiture of any and all of his then-unvested equity and equity-based awards outstanding as of the retirement date.
Philip Flynn Retirement Agreement
On January 19, 2021, Associated entered into a Retirement Agreement with Mr. Flynn (the “Flynn Retirement Agreement”) in which Mr. Flynn agreed to serve as a special advisor to the new CEO and the Board through December 31, 2021, to assist in an orderly transition and serve as an ambassador and representative of Associated with customers and in the community.
Pursuant to the Flynn Retirement Agreement, his total compensation in 2021 was adjusted due to his impending retirement. Mr. Flynn’s base salary remained at $1,250,000, and he remained eligible to receive a MIP payment in 2021 equal to 85% of his base salary, which was based on Company performance. He remained eligible for a contribution at a minimum of 12.5% of his eligible compensation through his retirement date of December 31, 2021. He also continued to be eligible for all other employee benefits and perquisites of the Company.
The amount of Mr. Flynn’s 2021 equity awards were prorated in 2021, and he received a grant with a grant date fair value of $678,125, to reflect only one year of service: 75% in the form of PRSUs, and 25% in the form of time-vested RSUs, which mirrored the mix for other NEOs in 2021 (as noted above).
Any unvested time-based RSUs or Stock Options fully vested at the time of his retirement due to Mr. Flynn's meeting the eligibility criteria for "Normal Retirement" under the 2020 Incentive Compensation Plan. Any unvested PRSUs will continue to remain unvested through the original performance period and will continue to be subject to the performance criteria for that plan. Mr. Flynn's unvested Performance Plans include the 2020-2022 Long-Term Incentive Plan (LTIPP) which will vest in 2023 and the 2021-2023 LTIPP which will vest in 2024.
In addition, for Mr. Flynn’s continued service to the Company after 2021, he will receive cash payments totaling $700,000 per year through 2024 (“Consulting Fees”). In exchange for these Consulting Fees, Mr. Flynn will continue his important work in transitioning his extensive business contacts and customer relationships to Mr. Harmening including: providing relationship continuity with important customers, introducing senior management to key customer contacts, assisting senior management in relationships with regulatory and other government officials, providing representation on important community and civic organizations, and acting as Associated’s goodwill ambassador. These services will be critical to maintain significant customer and client relationships over the next few years and to support Associated’s continued stability and growth during this critical time of transition, which is vital for long-term shareholder value creation.
Pursuant to the Flynn Retirement Agreement, in the event Associated terminates Mr. Flynn without cause or in the event of his death during the term of the agreement, the Company will pay Mr. Flynn any remaining unpaid Consulting Fees.
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CEO Pay Ratio and Median Annual Total Compensation
CEO Pay Ratio with Sign-on Equity Grant
As required by Item 402(u) of Regulation S-K, we are providing the following information:
For fiscal 2019,2021, the annualized total compensation of Mr. Harmening, who became our last completed fiscal year:
| CEO annualized total compensation | $11,655,092 | ||||
| Median Employee annual total compensation | $54,378 | ||||
| Ratio of CEO to Median Employee annual total compensation | 214 : 1 | ||||
CEO Pay Ratio without Sign-on Equity Grant
Because Mr. Harmening’s one-time award of time-based restricted stock was an award intended to 1.replace forgone compensation opportunities at his prior employer, we are presenting below an alternative calculation of the pay ratio to reflect the ratio without the one-time equity award. The alternative calculation excludes the one-time award of $7,299,983 and includes the annualizing of his base salary for 2021. In this case, Mr. Harmening’s compensation would have been estimated to be $4,355,109 and the resulting CEO pay ratio would have been 80 times that of the estimated annual total compensation of the median Associated colleague.
| CEO annualized total compensation | $4,355,109 | ||||
| Median Employee annual total compensation | $54,378 | ||||
| Ratio of CEO to Median Employee annual total compensation | 80 : 1 | ||||
Median Total Annual Compensation Methodology
We completed the following steps to identify the median of the annual total compensation of all colleagues, excluding our colleaguesCEO and to determine the annual total compensation of our median colleague and CEO:
1.As of December 31, 2021, our determination date, our colleague population consisted of approximately 4,000 individuals (with all of these individuals located in the United States), including any full-time, part-time, temporary, or seasonal colleagues employed on that date.
2.To find the median of the annual total compensation of all our colleagues, we used wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for the 2021 tax year. In making this determination, we annualized the compensation of full-time and part-time permanent colleagues who were employed on December 31, 2021, but did not work for us the entire year. No full-time equivalent adjustments were made for part-time colleagues.
3.We identified an initial median colleague using this compensation measure and methodology, which was consistently applied to all our colleagues included in the calculation.
4.After identifying the median colleague, we added together all of the elements of such colleague’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $54,378.
5.With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2021 Summary Compensation Table and annualized the CEO’s base salary for 2021. We removed the one-time equity award from the “Total” column of the 2021 Summary Compensation Table to present the alternative pay ratio.
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DIRECTOR COMPENSATION
The Board’s philosophy for director compensation is to provide a balanced competitive total compensation program that allows for the attraction and retention of qualified directors and reflects the increasing demands of being a public company director, the increasing regulation of the banking industry and of publicly traded corporations in general, and the personal risk factors associated with being a director. The Compensation and Benefits Committee evaluates the competitiveness of director compensation on an ongoing basis. The Committee engaged Pay GovernanceMercer to perform a competitive analysis of Associated’s director compensation program and evaluate the levels of pay, pay mix and form with respect to its director compensation programs. These evaluations, among others, have guided director compensation towards the market range of the S&P 400 (of which Associated is a component company). The material terms of the non-employee director compensation arrangements for 20202022 are as follows:
•$75,000 annual retainer (with no additional meeting fees for meetings of the Board or standing committees thereof)
•RSUs with a fair market value of $120,000 are granted annually on February 1 of each year. A
director joining the Board after February 1 receives a prorated RSU
grant. The RSUs (and any related dividend equivalents) subject to each grant will become fully vested on the first anniversary of each grant date and, unless deferred pursuant to the Directors’ Deferred Compensation Plan, the shares of Common Stock will be issued to the director shortly after vesting.
•$100,000 additional retainer for the non-executive Chairman
•$10,000 additional retainer for the Chairs of the Audit Committee, Compensation and Benefits Committee, Corporate Development Committee, Corporate Governance and Social Responsibility Committee, Enterprise Risk Committee, and Trust Committee
•$1,500 ad hoc committee meeting fee (when and if such a committee is convened)
Mr. FlynnHarmening does not receive any additional compensation for serving on the Board or chairing the Corporate Development Committee.
| DIRECTORS’ DEFERRED COMPENSATION PLAN | ||
Through its acquisition of other banks and bank holding companies, Associated became the sponsor of several directors’ deferred compensation plans. To simplify ongoing administration, Associated established its own directors’ deferred compensation plan and merged the predecessor plans into it effective July 1, 1999. Prior to 2013, Associated made monetary contributions into the Directors’ Deferred Compensation Plan (the “Director Plan”) for each non-employee director. Those contributions were required to be invested in an account the balance of which is based on the trading price of Associated Common Stock.
Directors may defer any or all of their board fees, including retainers under the Director Plan. In an effort to provide directors additional flexibility with respect to managingmanage their annual RSU
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| DIRECTOR COMPENSATION IN | ||
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||
| John F. Bergstrom | $94,000 | $120,000 | $0 | $0 | $0 | $0 | $214,000 | ||||||||||||||||
Michael T. Crowley, Jr.(1) | 37,500 | 120,000 | 0 | 0 | 0 | 0 | 157,500 | ||||||||||||||||
| R. Jay Gerken | 85,000 | 120,000 | 0 | 0 | 0 | 0 | 205,000 | ||||||||||||||||
| Judith P. Greffin | 75,000 | 120,000 | 0 | 0 | 0 | 0 | 195,000 | ||||||||||||||||
| Michael J. Haddad | 84,000 | 120,000 | 0 | 0 | 0 | 0 | 204,000 | ||||||||||||||||
William R. Hutchinson(1) | 87,500 | 120,000 | 0 | 0 | 0 | 0 | 207,500 | ||||||||||||||||
| Robert A. Jeffe | 85,000 | 120,000 | 0 | 0 | 0 | 0 | 205,000 | ||||||||||||||||
| Eileen A. Kamerick | 95,500 | 120,000 | 0 | 0 | 0 | 0 | 215,500 | ||||||||||||||||
| Gale E. Klappa | 82,500 | 120,000 | 0 | 0 | 0 | 0 | 202,500 | ||||||||||||||||
Richard T. Lommen(1) | 42,500 | 120,000 | 0 | 0 | 0 | 0 | 162,500 | ||||||||||||||||
| Cory L. Nettles | 75,000 | 120,000 | 0 | 0 | 0 | 0 | 195,000 | ||||||||||||||||
| Karen T. van Lith | 85,000 | 120,000 | 0 | 0 | 0 | 0 | 205,000 | ||||||||||||||||
| John (Jay) B. Williams | 184,000 | 120,000 | 0 | 0 | 0 | 0 | 304,000 | ||||||||||||||||
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) |
| John F. Bergstrom | $75,000 | $120,000 | $0 | $0 | $0 | $0 | $195,000 |
| Michael T. Crowley, Jr. | 75,000 | 120,000 | 0 | 0 | 0 | 0 | 195,000 |
| R. Jay Gerken | 85,000 | 120,000 | 0 | 0 | 0 | 0 | 205,000 |
| Judith P. Greffin | 75,000 | 120,000 | 0 | 0 | 0 | 0 | 195,000 |
| Michael J. Haddad | 56,250 | 120,000 | 0 | 0 | 0 | 0 | 176,250 |
| William R. Hutchinson | 175,000 | 120,000 | 0 | 0 | 0 | 0 | 295,000 |
| Robert A. Jeffe | 75,000 | 120,000 | 0 | 0 | 0 | 0 | 195,000 |
| Eileen A. Kamerick | 85,000 | 120,000 | 0 | 0 | 0 | 0 | 205,000 |
| Gale E. Klappa | 75,000 | 120,000 | 0 | 0 | 0 | 0 | 195,000 |
| Richard T. Lommen | 85,000 | 120,000 | 0 | 0 | 0 | 0 | 205,000 |
| Cory L. Nettles | 75,000 | 120,000 | 0 | 0 | 0 | 0 | 195,000 |
| Karen T. van Lith | 85,000 | 120,000 | 0 | 0 | 0 | 0 | 205,000 |
| John (Jay) B. Williams | 107,500 | 120,000 | 0 | 0 | 0 | 0 | 227,500 |
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DELINQUENT SECTION 16(a) REPORTS
Under Section 16(a) of the Exchange Act, Associated’s directors and executive officers, as well as certain persons holding more than 10% of Associated’s stock, are required to report their initial ownership of stock and any subsequent change in such ownership to the SEC, NYSE, and Associated within specified time limits.
To Associated’s knowledge, based solely upon a review of the copies of such reports furnished to Associated and upon written representations of directors and executive officers that no other reports were required, Associated’s officers,
directors, and greater than 10% beneficial owners complied with all applicable Section 16(a) filing requirements during 2019,2021, except as follows: one late Form 4 for Mr. Erickson relating to shares withheld for taxes in connection with the exercise of an option was filed on behalf of Ms. Stadler; late Forms 4 relating toacceleration and vesting of RSUs and the receipt of dividend equivalent units under the Deferred Compensation Plan were filed on behalf of Messrs. Bohn, Flynn, Stein, Utz and Schmidt and Ms. Docter; and oneRSAs due to retirement eligibility. This late Form 4 relating to a grant of time-based RSUs and non-qualified stock options was filed on behalf of Ms. Stadler. Each of the late filingsfiling was due to administrative delays.
RELATED PARTY TRANSACTIONS
Certain officers and directors of Associated and its subsidiaries, members of their families, and the companies or firms with which they are affiliated were customers of, and had banking transactions with, Associated’s subsidiary bank and/or investment subsidiaries in the ordinary course of business during 2019.since the beginning of fiscal year 2021. Additional ordinary course transactions of this type may be expected to take place in the future. All loans and loan commitments were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to Associated and, in management’s opinion did not involve more than the normal risk of collectability or present other unfavorable features. At December 31, 2019,2021, the aggregate principal amount of loans outstanding to directors, officers, or their related interests was approximately $16.8$45 million, which represented approximately 0.4%1.1% of consolidated stockholders’ equity. Cory L. Nettles, a director of Associated since 2013, is the Founder and Managing Director of Generation Growth Capital, Inc. (“Generation Growth Capital”), a private equity fund manager. Prior to Mr. Nettles’ appointment to the Board, Associated made aggregate financial commitments of $1.0 million and $1.1 million to Generation Growth Capital Fund I and
Generation Growth Capital Fund II, respectively, each of which is managed by Generation Growth Capital. In 2016, Associated committed to an investment of up to $3.0 million in Generation Growth Capital Fund III, which is also managed by Generation Growth Capital. Each of these funds pays or will pay an annual management fee of up to 2.0% to 2.5% of total capital commitments to Generation Growth Capital, and Generation Growth Capital is or will be entitled to a customary 20% carried interest in each fund, along with certain management and transaction fees. Each of these investments was made in the ordinary course of Associated’s business and on the same terms as other investors in the funds. Investments made after Mr. Nettles joined the Board were reviewed and approved by the Corporate Governance and Social Responsibility Committee (without the participation of Mr. Nettles) in accordance with Associated’s Related Party Transaction Policies and Procedures as described below. Michael T. Crowley, III,In February 2022, Milwaukee Center Management, LLC, a subsidiary of Associated, entered into a lease with Generation Growth Capital for space in the son of Michael T. Crowley, Jr., receivedAssociated Bank River Center in Milwaukee, Wisconsin, providing for total compensationpayments over a ten year term of approximately $140,000 since January 1, 2019$324,000, which is based on a minimum annual rent of $28,250, plus annual payments for common area maintenance and real estate taxes. Milwaukee Center Management, LLC has also committed under the lease to fund tenant improvements in his capacity as Vice President,the amount of approximately $230,000. The Corporate Real Estate Integration ManagerGovernance and Social Responsibility Committee (without Mr. Nettles participating) reviewed and approved the terms of the Company.lease.
| RELATED PARTY TRANSACTION POLICIES AND PROCEDURES | ||
We have adopted written Related Party Transaction Policies and Procedures regarding the identification, review and approval or ratification of “interested transactions.” For purposes of Associated’s policy, an “interested transaction” is a transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including indebtedness or guarantee of indebtedness) in which Associated and any “related party” are participants involving an amount that exceeds $120,000. Certain transactions are not covered by this policy, including: transactions involving compensation for services provided to Associated as a director or executive officer, ordinary course banking transactions, and transactions where all receive proportional benefits, such as dividends. A related party is any executive officer, director, nominee for election as director or a greater-than-5% shareholder of Associated, and any “immediate family member” of such persons.
Under the policies and procedures, the Corporate Governance and Social Responsibility Committee reviews and either approves or disapproves any interested transactions. In considering interested transactions, the Corporate Governance and Social Responsibility Committee takes into account, among other factors it deems appropriate, whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. The Related Party Transaction Policies and Procedures can be found on Associated’s website at www.associatedbank.com, “Investor Relations,” “Governance Documents.”
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PROPOSAL 4:3:
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected, and the Board has approved, KPMG LLP to serve as Associated’s independent registered public accounting firm for the year ending December 31, 2020.2022. KPMG LLP audited Associated’s consolidated financial statements for the year ended December 31, 2019.2021. It is expected that a representative of KPMG LLP will be present at the Annual Meeting, will have the opportunity to make a statement if he or she so desires, and will be available to respond to appropriate questions.
If KPMG LLP declines to act or otherwise becomes incapable of acting, or if its appointment is otherwise discontinued, the Audit Committee will appoint another independent registered public accounting firm. If a majority of the votes cast is voted “FOR” this Proposal 4,3, it will pass. Unless otherwise directed, all proxies will be voted “FOR” Proposal 4.3. If the shareholders do not ratify the selection, the Audit Committee will take the shareholders’ vote under advisement.
| FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||
The following table presents fees for professional audit services rendered by KPMG LLP for the audit of Associated’s annual financial statements for 20192021 and 2018,2020, and fees billed for other services rendered by KPMG LLP.
| 2021 | 2020 | ||||||||||
Audit Fees(1)(4) | $ | 1,719,000 | $ | 2,046,400 | |||||||
Audit-Related Fees(2) | 119,500 | 112,600 | |||||||||
Tax Fees(3) | 86,527 | 627,226 | |||||||||
| All Other Fees | — | — | |||||||||
| Total Fees | $ | 1,925,027 | $ | 2,786,226 | |||||||
| 2019 | 2018 | ||||||
Audit Fees(1) | $ | 1,800,000 | (4) | $ | 1,980,000 | ||
Audit-Related Fees(2) | 97,600 | 94,100 | |||||
Tax Fees(3) | 223,437 | 385,982 | |||||
| All Other Fees | — | — | |||||
| Total Fees | $ | 2,121,037 | $ | 2,460,082 | |||
(2) Audit-related fees consist principally of fees for mortgage banking-related reports, SEC Custody Asset Verification, and Student Lending reports.
(3) Tax Fees consist primarily of fees for Domestic (federal, state & local) tax consulting services including, but not limited to, R&D tax credit consulting services, and tax consulting services in connection with Legal Entity Rationalization (LER) opinion in 2020.
(4) Excludes amounts to be billed for expenses at the completion of the audit based on actual amounts incurred.
The Audit Committee is responsible for reviewing and pre-approving any non-audit services to be performed by Associated’s independent registered public accounting firm. The Audit Committee has delegated its pre-approval authority to the Chairman of the Audit Committee to act between meetings of the Audit Committee. Any pre-approval given by the Chairman of the Audit Committee pursuant to this delegation is presented to the full Audit Committee at its next regularly scheduled meeting. The Audit Committee or Chairman of the Audit Committee reviews and, if appropriate, approves non-audit service engagements, taking into account the proposed scope of the non-audit services, the proposed fees for the non-audit services, whether the non-audit services are permissible under applicable law or regulation, and the likely impact of the non-audit services on the independent registered public accounting firm’s independence.
During 2019,2021, each new engagement of Associated’s independent registered public accounting firm to perform audit and non-audit services was approved in advance by the Audit Committee or the Chairman of the Audit Committee pursuant to the foregoing procedures.
The Audit Committee of the Board of Associated considers that the provision of the services referenced above to Associated is compatible with maintaining independence by KPMG LLP.
| RECOMMENDATION OF THE BOARD OF DIRECTORS | ||
The Board recommends that shareholders vote “FOR” the selection of KPMG LLP as Associated’s independent registered public accounting firm for the year ending December 31, 2020.
2022.
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board is responsible for providing independent, objective oversight of Associated’s accounting functions and internal controls. The Audit Committee is currently composed of fourthree directors, each of whom meets the independence requirements set forth under the Exchange Act requirements and in NYSE corporate governance rules. The Audit Committee operates under a written charter approved by the Board. The Charter can be found at Associated’s website at www.associatedbank.com, “Investor Relations,” “Governance Documents.” Associated’s Board has also determined that all of the members of the Audit Committee are “audit committee financial experts” based upon their education and work experience. Associated believes Mr. Gerken is an “audit committee financial expert” based upon his status as a Chartered Financial Analyst (CFA), and his experience as a CEO overseeing the issuance of public company (mutual fund) financial statements. Associated believesconsiders Mr. Jeffe isto be an “audit committee financial expert” based on his experience as Co-Chair and Co-Founder of a private oil and gas company, his extensive investment banking experience and his service as chair of the audit committees of two private companies. Associated believes Mr. Klappa is an “audit committee financial expert” based upon his experience as Chairman, CEO and CFO of a large, public company. Associated believes Mr. Williams is an “audit committee financial expert” based on his experience as a CEO actively supervising chief financial officers.
Management is responsible for Associated’s internal controls and financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of Associated’s consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and to issue a report thereon, as well as an audit of the effectiveness of our internal control over financial reporting in accordance with the Standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”). The Audit Committee’s responsibility is to monitor and oversee these processes. In connection with these responsibilities, the Audit Committee met with management and the independent registered public accounting firm to review and discuss the December 31, 20192021 consolidated financial statements. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. The Audit Committee also received written disclosures from the independent registered public accounting firm required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with the independent registered public accounting firm that firm’s independence.
Based upon the Audit Committee’s discussions with management and the independent registered public accounting firm, and the Audit Committee’s review of the representations of management and the independent registered public accounting firm, the Audit Committee recommended that the Board include the audited consolidated financial statements in the 20192021 Form 10-K, which has been filed with the SEC.
AUDIT COMMITTEE
Robert A. Jeffe, Chairman
R. Jay Gerken Chairman
Gale E. Klappa
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OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy Statement, Associated is not aware of any matters to be presented for action at the meeting other than those described in this Proxy Statement. If any matters properly come before the Annual Meeting, the proxy form sent herewith, if executed and returned, provides the designated proxies discretionary authority with respect to such matters.
SHAREHOLDER PROPOSALS
Proposals of a shareholder submitted pursuant to Rule 14a-8 of the SEC (“Rule 14a-8”) for inclusion in the proxy statement for the annual meeting of shareholders to be held April 27, 2021,25, 2023, must be received by Associated at its executive offices no later than November 13, 2020.11, 2022. This notice of the annual meeting date also serves as the notice by Associated under the advance-notice Bylaw described below. A shareholder that intends to present business other than pursuant to Rule 14a-8 at the next annual meeting, scheduled to be held on April 27, 2021,25, 2023, must comply with the requirements set forth in Associated’s Amended and Restated Bylaws. To bring business before an annual meeting, Associated’s Amended and Restated Bylaws require, among other things, that the shareholder submit written notice thereof to Associated’s executive offices not less than 75 days nor more than 90 days prior to April 27, 2021.26, 2023. Therefore, Associated must receive notice of a shareholder proposal submitted other than pursuant to Rule 14a-8 no sooner than January 27, 2021,26, 2023, and no later than February 11, 2021.10, 2023. If notice is received before January 27, 2021,26, 2023, or after February 11, 2021,10, 2023, it will be considered untimely, and Associated will not be required to present such proposal at the 20202023 Annual Meeting of Shareholders.
In addition to satisfying the foregoing requirements under our Amended and Restated Bylaws, to comply with the universal proxy rules (when effective) for the 2023 annual meeting of shareholders, shareholders who intend to solicit proxies in support of director nominees other than Associated’s nominees must provide notice that complies with Rule 14a-19 under the Exchange Act by February 25, 2023.
By Order of the Board of Directors,
Randall J. Erickson
Executive Vice President,
General Counsel &
Corporate Secretary
Green Bay, Wisconsin
March 13, 2020
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