UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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Ally Financial Inc.
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March 22, 2017
Dear Fellow Stockholders:
We are pleased to invite you to Ally Financial Inc.’s 20172018 Annual Meeting of Stockholders. The meeting will be held at the Waterview Loft, 130 E. Atwater Street, Detroit, Michigan 48226, on May 2, 2017,8, 2018, at 9:00 a.m., Eastern Daylight Time.
We use the internet as our primary means of furnishing proxy materials to our stockholders, including the notice and proxy statement, a proxy card, and our 20162017 annual report. Your vote is very important. The notice and proxy statement contain important information about proxy voting and the business to be conducted at the meeting. Whether or not you plan to attend the meeting, please vote as promptly as possible to make sure your vote is counted. Every stockholder vote is important, and we want to ensure your shares are represented at the meeting.
In 2017, we successfully continued down our strategic and financial path to becoming the leading digital financial services company. We navigated shifting dynamics in the auto industry, expanded our consumer and commercial product offerings, and posted our highest revenue since becoming a public company. We achieved all of this through the dedicated efforts of our nearly 8,000 teammates, whose relentless focus on the financial well-being of our customers continues to drive long-term value for our stockholders.
Thank you for your continued support of Ally Financial Inc.
Sincerely,
Jeffrey J. Brown
Chief Executive Officer
NOTICE OF ANNUAL MEETING
DATE | Tuesday, May | ||
TIME | 9:00 a.m. Eastern Daylight Time | ||
LOCATION | Waterview Loft | ||
130 E. Atwater Street | |||
Detroit, Michigan 48226 | |||
MATTERS TO BE VOTED ON | 1 | Election of directors | |
2 | Advisory vote on executive compensation | ||
3 | |||
Ratification of the Audit Committee’s engagement of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for | |||
4 | Such other business as may properly come before the meeting or any adjournment of the meeting | ||
Jeffrey A. Belisle | |||
Corporate Secretary | |||
March |
Only stockholders of record at the close of business on March 9, 2017,12, 2018, the record date fixed by the Board of Directors of the Company, will be entitled to notice of and to vote at the meeting or any adjournment thereof. A list of all stockholders of record entitled to vote is on file at the principal executive office of the Company located at 500 Woodward Avenue, MC: MI-01-10-CORPSEC, Detroit, Michigan 48226.
We use the internet as our primary means of furnishing proxy materials to our stockholders, including the notice and proxy statement, a proxy card, and our 20162017 annual report. Consequently, most stockholders will not receive paper copies of our proxy materials. We will instead send these stockholders a notice with instructions for accessing the proxy materials and voting via the internet. The notice will also will provide information on how stockholders may obtain paper copies of our proxy materials if they so choose. Internet transmission and voting are designed to be efficient, minimize cost and conserve natural resources.
Voting procedures are described in the proxy statement. No stockholder has a dissenter’s right of appraisal or similar right in connection with any of the proposals. If you wish to attend the meeting in person, you will need to request an admission ticket in advance by following the instructions set forth on page 23 of the proxy statement and otherwise satisfy the eligibility criteria described there.
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Corporate Governance and Director Compensation | ||
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Security Ownership and Other Governance Matters | ||
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Security Ownership of Directors, Nominees, and Executive Officers | 17 | |
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Code of Conduct and Ethics and Review, Approval or Ratification of Transactions with Related Persons | 18 | |
Executive Compensation, Stock Ownership Guidelines and Trading Restrictions | ||
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Other Proposals | ||
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Fees of the Principal Independent Registered Public Accounting Firm | 42 | |
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Other Matters | ||
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THESE PROXY MATERIALS, AND VOTING YOUR SHARES
SOLICITATION
The solicitation of your proxy is made on behalf of the Board of Directors of Ally Financial Inc. (Board)(Board or Board of Directors) for use at our 20172018 annual meeting of stockholders to be held on May 2, 2017,
This proxy statement and the related form of proxy will first be sent or given on or about March 22, 2017,23, 2018, to the stockholders of record of our common stock at the close of business on March 9, 201712, 2018 (
The complete mailing address of the Company’s principal executive office is 500 Woodward Avenue, MC: MI-01-10-CORPSEC, Detroit, Michigan 48226. The Annual Meeting will be held at Waterview Loft, 130 E. Atwater Street, Detroit, Michigan 48226.
ELECTRONIC AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 2, 2017.
VOTING RIGHTS AND PROCEDURES
Stockholders of record at the close of business on the record date may vote at the Annual Meeting. As of the record date, 464,200,147433,422,387 shares of our common stock were issued and outstanding and, therefore, eligible to be voted at the Annual Meeting. Only one class of our common stock exists, and each share is entitled to one vote.
Stockholders of record
or record holders have shares of our common stock registered in their names with our transfer agent, Computershare Trust Company. Beneficial owners, in contrast, own shares of our common stock that are held in “street name” through a broker, bank, or other nominee. Beneficial owners generally cannot vote their shares directly and must instead instruct their brokers, banks, or other nominees how to vote the shares. If you are a beneficial owner of our common stock, your proxy is being solicited through your broker, bank, or other nominee.You may vote
FOR, AGAINST, or ABSTAIN on each of theProposal 1 - FOR the election of each of the 1110 nominees to our Board.
Proposal 2 - FOR the advisory resolution approving the compensation paid to our named executive officers.
Proposal 3 - FOR the approval of the Ally Financial Inc. Incentive Compensation Plan, amended and restated effective as of May 2, 2017 (Incentive Plan).
When this proxy statement was printed, we did not know of any matter to be presented at the Annual Meeting other than these sixthree proposals. If any other matter may be properly considered at the Annual Meeting, your proxy can exercise discretion in voting your shares on the matter. We currently do not anticipate that any other matter will be presented at the Annual Meeting.
We expect that the election of directors in Proposal 1 will be uncontested
—that is, an election where the number of properly nominated director candidates does not exceed the number of directors to be elected. In that case, each director will be elected-1- | 2018 Proxy Statement |
by a majority of the votes cast with respect to the director. This means that the number of votes cast FOR a director nominee must exceed the number of votes cast AGAINST that director nominee. In an uncontested election of directors, our director
If the election of directors in Proposal 1 unexpectedly becomes contested
—that is, an election where the number of properly nominated director candidates exceeds the number of directors to be elected—plurality voting will apply. This means that the seats on the Board will be filled by the director nominees who receive the highest number of FOR votes. Voting AGAINST or ABSTAIN in a contested election will have no effect on the outcome.For each of Proposals 2 through 6,and 3, a
We strongly encourage all stockholders to submit their votes in advance of the Annual Meeting, even if you are planning to attend in person.
If you are a record holder, you may vote your shares (1) through the internet, (2) by telephone, (3) by completing, signing, dating, and returning your proxy card in the provided envelope, or (4) in person by ballot at the Annual Meeting. Other proxy materials that you receive together with this proxy statement contain the website address and the telephone number for internet or telephone voting. Internet or telephone votes must be received by 11:59 p.m. EDT on May 1, 2017,7, 2018, in order to be counted. Completed, signed, and dated proxy cards must be received prior to the Annual Meeting in order to be counted. If you as a record holder submit a valid proxy prior to the Annual Meeting but do not provide voting instructions, your shares will be voted according to the recommendations of the Board described earlier in this section.
If you are a beneficial owner, you may not vote your shares directly but instead may instruct your broker, bank, or other nominee how to vote your shares. You should receive materials from your broker, bank, or other nominee with directions on how to provide voting instructions. Those materials also will identify the time by which your broker, bank, or other nominee must receive your voting instructions. The availability of internet or telephone voting will depend on the processes adopted by your broker, bank, or other nominee. If you want to vote your shares in person at the Annual Meeting, you will need to obtain a legally enforceable proxy from your broker, bank, or other nominee in advance and present that proxy to the inspectors of election together with a valid form of government-issued photo identification (such as a driver’s license or passport). For Proposals 1 through 5,and 2, if you are a beneficial owner of shares, your broker, bank, or other nominee is not permitted to vote your shares if no instruction is received from you. For Proposal 6,3, your broker, bank, or other nominee can exercise discretion in voting your shares if no instruction is received from you.
You may revoke or change your proxy at any time before the vote is taken at the Annual Meeting. If you are a record holder, you may revoke or change your proxy by (1) executing and delivering a later-dated proxy for the same shares in compliance with the requirements described in this proxy statement, (2) voting the same shares again over the internet or telephone by 11:59 p.m. EDT on May 1, 2017,7, 2018, (3) voting a ballot at the Annual Meeting, or (4) notifying the Secretary of your revocation of the proxy prior to the Annual Meeting. If you are a beneficial owner, you must follow the directions provided to you by your broker, bank, or other nominee. Any beneficial owner of shares who wants to revoke a proxy at the Annual Meeting will need to present to the inspectors of election a legally enforceable proxy from the broker, bank, or other nominee indicating that the person is the beneficial owner of the shares together with a valid form of government-issued photo identification (such as a driver’s license or passport).
We will pay the costs of preparing the proxy materials and soliciting proxies, including the reasonable charges and expenses of brokers, banks, and other nominees for forwarding proxy materials to beneficial owners and updating proxy cards and directions. In addition to our solicitation of proxies, your proxy may be solicited by telephone, facsimile, internet, or e-mail or in person by directors, officers, or regular employees of Ally or its affiliates who will receive no additional compensation for doing so.
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Attendance at the Annual Meeting will be limited to stockholders of record or their proxies, beneficial owners of our common stock, and our guests. Record holders and beneficial owners must request an admission ticket in advance by visiting www.proxyvote.com/ally and following the instructions provided, which will require the 12-digit number included on your proxy card or voting instructions. Requests for admission tickets will be processed in the order in which they are received and must be requested no later than April 28, 2017.May 4, 2018. On the day of the meeting, each stockholder, beneficial owner, or guest may be required to present a valid form of government-issued photo identification, such as a driver’s license or passport, to gain admittance.
CAUTIONARY NOTICE ABOUT FORWARD-LOOKING STATEMENTS AND OTHER TERMS
This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts.facts—such as our statements about targets and expectations for various financial and operating metrics. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “pursue,” “seek,” “continue,” “estimate,” “project,” “outlook,” “forecast,” “potential,” “target,” “objective,” “trend,” “plan,” “goal,” “initiative,” “priorities,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, or results. All forward-looking statements, by their nature, are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Actual future objectives, strategies, plans, prospects, performance, conditions, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events or circumstances to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2016,2017, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the SEC.U.S. Securities and Exchange Commission (collectively, our SEC filings). Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC.
Our use of the term “loans” describes all of the products associated with our direct and indirect lending activities. The specific products include loans, retail installment sales contracts, lines of credit, leases, and other financing products. The term “lend” or “originate” refers to our direct origination of loans or our purchase or acquisition of loans.
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2018 Proxy Statement |
The Board currently has 11 seats and, effective at the time of the election of directors at the Annual Meeting, will have 10 seats. The Board believes that this size is appropriate at the present time based on its assessment of the need for particular talents or other qualities, the benefits associated with a diversity of perspectives and backgrounds, the availability of qualified candidates, the workloads and needs of the Board’s committees, and other relevant factors. All seats on the Board are up for election annually.
The Compensation, Nominating, and Governance Committee (
CNGC) has recommended, and the Board has nominated, the following slate ofNominee/Principal Occupation | Age | Director Since | Independent | Audit Committee | Risk and Compliance Committee | Digital Transformation Committee (a) | CNGC |
Franklin W. Hobbs Former Chairman, UBS AG’ s Warburg Dillon Read & Co. | 69 | 2009 | Yes | Ÿ | Ÿ | ||
Kenneth J. Bacon Former Executive Officer, Fannie Mae | 62 | 2015 | Yes | Ÿ | Ÿ | ||
Robert T. Blakely Former EVP & CFO, Fannie Mae | 75 | 2009 | Yes | Chair | Ÿ | ||
Maureen A. Breakiron-Evans Former CFO, Towers Perrin | 62 | 2015 | Yes | Ÿ | Ÿ | ||
William H. Cary (b) Former Executive Officer, General Electric | 57 | 2016 | Yes | Ÿ | |||
Mayree C. Clark Former Executive Officer, Morgan Stanley | 60 | 2009 | Yes | Ÿ | Chair | ||
Kim S. Fennebresque Former Chairman and CEO, Cowen Group, Inc. | 67 | 2009 | Yes | Ÿ | Chair | ||
Marjorie Magner Former Executive, Citigroup | 67 | 2010 | Yes | Ÿ | Ÿ | ||
John J. Stack Former Chairman and CEO, Ceska Sporitelna, A.S. | 70 | 2014 | Yes | Ÿ | Ÿ | ||
Michael F. Steib Current CEO, XO Group, Inc. | 40 | 2015 | Yes | Chair | |||
Jeffrey J. Brown Current CEO, Ally Financial Inc. | 44 | 2015 | No | ||||
Number of meetings in 2016 | 11 | 6 | 3 | 10 |
This slate comprises all of the current directors of the Company, except Robert T. Blakely. As described in May 2016.
Nominee/Principal Occupation | Age | Director Since | Independent | Audit Committee | Risk Committee | Digital Transformation Committee | CNGC |
Franklin W. Hobbs | 70 | 2009 | Yes |
| ● |
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Kenneth J. Bacon | 63 | 2015 | Yes |
| Chair | ● |
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Maureen A. Breakiron-Evans | 63 | 2015 | Yes | ● |
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William H. Cary | 58 | 2016 | Yes | Chair |
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Mayree C. Clark | 61 | 2009 | Yes | ● | ● |
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Kim S. Fennebresque | 68 | 2009 | Yes |
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Marjorie Magner | 68 | 2010 | Yes |
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John J. Stack | 71 | 2014 | Yes | ● | ● |
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Michael F. Steib | 41 | 2015 | Yes |
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| Chair |
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Jeffrey J. Brown | 45 | 2015 | No |
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Number of meetings in 2017 | 12 | 6 | 5 | 8 |
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We expect that this will be an uncontested election of directors—that is, an election where the number of properly nominated director candidates does not exceed the number of directors to be elected. In that case, under our Bylaws, each director will be elected by a majority of the votes cast with respect to the director. A “majority of the votes cast” means that the number of shares voted FOR a director nominee must exceed the number of shares voted AGAINST that director nominee.
If the election of directors unexpectedly becomes contested
—that is, an election where the number of properly nominated director candidates exceeds the number of directors to be elected—plurality voting will apply under our Bylaws. “Plurality voting” means that the seats on the Board will be filled by the director nominees who receive the highest number of FOR votes. Voting AGAINST or ABSTAIN in a contested election will have no effect on the outcome.No cumulative voting rights exist in this election. If you are a beneficial owner of shares, your broker, bank, or other nominee is not permitted to vote your shares on this matter if no instruction is received from you.
We do not anticipate that any nominee will become unavailable for election. If that were to happen for any reason, however, the shares represented by proxies and voting for a nominee who unexpectedly becomes unavailable will be voted instead for a substitute candidate nominated by the Board, unless the Board elects to reduce its size.
The Board recommends that stockholders vote FOR the election of each of the 1110 nominees to our Board.
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2018 Proxy Statement |
The Board recognizes that it is important for the Company’s directors to possess a diverse array of backgrounds and skills, whether in terms of education, business acumen, accounting and financial expertise, risk-management experience, or experience with other organizations. When considering director candidates, the CNGC and the Board take into account these factors as well as other characteristics that, in their judgment, will contribute in a meaningful way to increasing the fundamental value of Ally and creating long-term value for stockholders. These characteristics include independence, the ability to provide guidance on Ally’s risk profile and effective challenge on Ally’s strategy in the context of its risk profile, the ability to make independent and disinterested decisions in the balanced and best interests of Ally’s stockholders as a whole, the ability and willingness to devote sufficient time and attention to Ally, personal and professional integrity, honesty, ethics, and values, and the candidate’s overall fit within the existing mix of director characteristics. In addition, the CNGC and the Board consider diversity in the characteristics of director candidates, including each candidate’s perspective and background, with the ultimate aim of enhancing the Board’s ability to perform its oversight function most effectively.
In their consideration of director candidates, the CNGC and the Board also take into account the Board’s responsibility to provide direction and oversight for the Company’s business and affairs. In its oversight role, the Board’s primary responsibilities include the following:
providing general direction, guidance, and effective challenge on Ally’s strategy in the context of its risk profile, including reviewing strategic, business, and financial objectives and plans and monitoring performance against all of them;
selecting the CEO, and through the CNGC, setting goals and compensation for, and evaluating the performance of, the CEO and other identified senior executives and overseeing compensation policies relative to risks and applicable law;
through the CNGC, reviewing succession plans for the CEO and other identified senior executives;
through the Risk and Compliance Committee (RCRCC);, establishing and approving Ally’s risk-appetite framework;
through the AC, monitoring the integrity of Ally’s financial statements and financial-reporting process and the adequacy of its financial and other internal controls, including disclosure controls and procedures;
requiring and, through the AC and the RC, reviewing effective compliance systems and policies for ethical and legal conduct, including procedures for confidential, anonymous, and non-retaliatory reporting of unethical or illegal behavior; and
establishing the proper “tone at the top” by setting clear expectations for Ally’s ethical behavior and compliance with applicable law, including monitoring management’s promotion of integrity, honesty, and ethical and legal conduct throughout Ally.
The CNGC and the Board are dedicated to assembling directors who excel in fulfilling these responsibilities, exercise independent leadership and oversight of management, and operate in a cohesive and effective manner. Each existing director bringscandidate possesses valued backgrounds, skills, and other characteristics, to the Board, and collectively, these directorsdirector candidates are positioned to meaningfully contribute to increasing the fundamental value of Ally and creating long-term value for stockholders.
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The Board has affirmatively determined in its business judgment that each of Mr. Hobbs, Mr. Bacon, Mr. Blakely, Ms. Breakiron-Evans, Mr. Cary, Ms. Clark, Mr. Fennebresque, Ms. Magner, Mr. Stack, and Mr. Steib is independent as defined in the New York Stock Exchange (NYSE) listing standards and applicable SEC rules (each independent and an independent director). The Board has determined that Mr. Brown, the Company’s CEO, is not independent as defined in the NYSE listing standards and applicable SEC rules due to his position as an executive officer of the Company. In evaluating the independence of each director candidate, transactions, relationships, and arrangements between the director candidate or any related person or interest and the Company or any of its subsidiaries were assessed. These included a variety of financial-services relationships—such as deposit accounts, extensions of credit, and investment services—and one commercial arrangement involving the provision of services in the ordinary course of business to Ally. All of these transactions, relationships, and arrangements were judged to have been made on terms and under circumstances at least as favorable to the Company or its subsidiaries as those that were prevailing at the time for comparable transactions, relationships, or arrangements with unrelated persons or interests or those that would have applied to unrelated persons or interests. In addition, none of these transactions, relationships, or arrangements were determined to require disclosure under Item 404(a) of SEC Regulation S-K. The Board concluded as well that no independent director has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Set forth here is a brief description of the backgrounds, skills, and other characteristics that led the CNGC and the Board to conclude that all of the current directorsdirector candidates should be renominatednominated for election at the Annual Meeting.
Franklin W. Hobbs | Director of Ally since May | |
Mr. Hobbs is nominated to be a director because he brings extensive business experience in: leading large, heavily regulated, complex | ||
Kenneth J. Bacon | Director of Ally since February 2015. Mr. Bacon is the co-founder and a partner of RailField Realty Partners, a real estate asset management and private equity firm based in Bethesda, | |
Mr. Bacon is nominated to be a director because he brings extensive business experience in: the financial services industry; leading large, complex, heavily regulated institutions; strategic planning; and risk management, through his prior professional positions and current service on other boards. | ||
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Maureen A. Breakiron-Evans | Director of Ally since July 2015. Ms. Breakiron-Evans served as Chief Financial Officer of Towers Perrin from January 2007 to April 2008. Prior to that, Ms. Breakiron-Evans served as Vice President and General Auditor of CIGNA Corporation, Executive Vice President and Chief Financial Officer at Inovant, LLC, and held several positions at Transamerica Corporation. Ms. Breakiron-Evans began her career as a financial auditor, ultimately serving as an Audit Partner with Arthur Andersen & Co. She has served on the board of directors of Cognizant Technology Solutions Corp. since 2009 where she is a member of the nominating and corporate governance committee as well as the chair of the audit committee, and has served on the board of directors of Cubic Corporation since February 2017 where she is a member of the nominating and corporate governance and audit committees. Ms. Breakiron-Evans has previously served on the board of directors of the Federal Home Loan Bank of Pittsburgh, a private government sponsored-enterprise, and ING Direct, an internet bank. Ms. Breakiron-Evans also served on the board of directors of Heartland Payment Systems, Inc., a provider of payment processing services, from 2012 to 2016, where she chaired the audit committee. Ms. Breakiron-Evans received a bachelor’s degree in business administration from Stetson University, a master’s degree in business administration from Harvard Business School and a master’s degree in liberal arts from Stanford University. She is also a Certified Public Accountant in the State of California. | |
Ms. Breakiron-Evans is nominated to be a director because she brings extensive business experience in: the financial and technology services industry; audit and financial reporting matters; strategic planning and risk management through her prior professional positions and service on other boards and board committees. |
William H. Cary | Director of Ally since June 2016. Mr. Cary is a former executive of General Electric (GE). During his 29 years at GE, he held several leadership positions in consumer and wholesale finance, as well as in the areas of finance, risk and capital markets. His roles included the president and chief operating officer at GE Capital and the president and chief executive officer of GE Money in London. Prior to working with GE, Mr. Cary worked for the Clorox Company, where he started his career. Mr. Cary currently serves on the | |
Mr. Cary is nominated to be a director because he brings extensive business experience in: the financial services | ||
Mayree C. Clark | Director of Ally since May 2009. Ms. Clark is the founding partner of Eachwin Capital, | |
Ms. Clark is nominated to be a director because she brings extensive business experience: as an executive of a major public financial services company, as well as specific experience in investment banking and capital | ||
-8- | 2018 Proxy Statement |
Kim S. Fennebresque | Director of Ally since May 2009. Mr. Fennebresque served as Chairman, President, and Chief Executive Officer of Cowen Group, Inc., where he oversaw all aspects of the management and operations of the company. Prior to joining Cowen Group, Mr. Fennebresque held positions as Head of the Corporate Finance and Mergers & Acquisitions departments at UBS, General Partner and Co-Head of Investment Banking at Lazard Frères & Co., and various positions at The First Boston Corporation. Mr. Fennebresque is a graduate of Trinity College and Vanderbilt Law School. He currently serves on the boards of BlueLinx | |
Mr. Fennebresque is nominated to be a director because of his extensive business experience in: investment | ||
Marjorie Magner | Director of Ally since May 2010. Ms. Magner is a founding member and partner of Brysam Global Partners, a specialized private equity firm that invests in financial services. Previously, she served as Chairman and Chief Executive Officer of the Global Consumer Group at Citigroup. In this position, she was responsible for the company’s operations, serving consumers through retail banking, credit cards and consumer finance. She earned a bachelor’s degree in psychology from Brooklyn College and a master’s degree from Krannert School of Management, Purdue University. Ms. Magner also serves as chairman of the board of TEGNA Inc. and on the boards of Accenture | |
Ms. Magner is nominated as a director because she brings extensive business experience in: the financial services | ||
John J. Stack | Director of Ally since July 2014. | |
Mr. Stack is nominated to be a director because he brings extensive business experience in: the financial services |
Michael F. Steib | Director of Ally since July 2015. Mr. Steib has served as the Chief Executive Officer and director of XO Group Inc. since 2014. Prior to joining XO Group, Mr. Steib served as Chief Executive Officer at Vente-Privee USA beginning in 2011. Prior to that position, Mr. Steib served at Google, Inc. as Director, Google TV Ads from January 2007 to September 2009, and Managing Director, Emerging Platforms, from September 2009 to July 2011. From 2001 through 2006, Mr. Steib held positions at NBC Universal/General Electric, where he served as General Manager, Strategic Ventures, and prior to that as Vice President, Business Development. In addition, he previously worked on the development of new media businesses for Walker Digital, LLC, and as a management consultant with McKinsey & Company. Mr. Steib serves on the board of Literacy Partners. Mr. Steib received his bachelor’s degree in economics from the University of Pennsylvania. | |
Mr. Steib is nominated to be a director because he brings extensive experience: as an executive of a publicly traded company, as well as specific experience in strategic planning and business development through his prior professional positions and service on other boards. | ||
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Jeffrey J. Brown | Jeffrey Brown was named chief executive officer of Ally the Year award by the Father’s Day Council and benefiting the American Diabetes Association. | |
Mr. Brown is nominated to be a director because he brings extensive experience in: | ||
In identifying and recommending candidates to stand for election to the Board, the CNGC may consider existing directors for renomination and may use search firms or other resources to identify other potential director candidates. The CNGC also considers potential director candidates who are recommended by stockholders in compliance with applicable law and listing rules and our Bylaws. Stockholders desiring to recommend candidates for membership on the Board for consideration by the CNGC should address their recommendations in writing, including all information required by our Bylaws, to the Compensation, Nominating, and Governance Committee of the Board of Directors, Ally Financial Inc., Attention: Corporate Secretary, 500 Woodward Avenue, MC: MI-01-10-CORPSEC, Detroit, Michigan 48226. The CNGC uses the same criteria to evaluate all potential director candidates regardless of how they have been identified.
The effectiveness of these policies and processes for identifying and considering potential director candidates is assessed by the CNGC in connection with its periodic evaluation of the performance of the Board and each committee as contemplated by the Governance Guidelines.
Directors are strongly encouraged to attend each annual meeting of stockholders in order to provide an opportunity for informal communication between directors and stockholders and to enhance the Board’s understanding of stockholder priorities and perspectives. Other than Mr. Cary, who was appointed to the Board in June 2016, allAll existing directors attended the last annual meeting of stockholders on May 3, 2016.
The Board met 11eight times during 2016.2017. Each nominee who is currently a director attended at least 75% of the aggregate of (1) the total number of meetings held in 20162017 by the Board during the period when the director was serving in that capacity and (2) the total number of meetings held in 20162017 by all applicable committees during the period when the director was serving on those committees.
-10- | ||
2018 Proxy Statement |
A majority of the full Board elects the Chairman, and under our existing Bylaws, the Chairman is elected from among Ally’s independent directors. Mr. Hobbs serves as the Chairman of the Board and is a non-executive and independent director. Mr. Brown is our CEO.
The Board believes that separating the roles of Chairman and CEO is currently in the best interests of the Company and its stockholders because, based on the Company’s present circumstances, the structure provides a balance between strategic development and independent oversight of management. The Board, however, maintains its flexibility to make this determination at any given point in time to provide appropriate leadership for the Company as circumstances warrant.
Under the Governance Guidelines, the Chairman (or in the Chairman’s absence, an alternate director designated by the Chairman or, if the Chairman has not made a designation, an alternate director designated by a majority of the independent directors then present) will preside at Board meetings and executive sessions of the independent or non-management directors. The Chairman also has the following responsibilities: (1) serve as a liaison between the independent directors and management, (2) periodically communicate with the CEO to discuss matters of importance to the independent directors, (3) provide for adequate deliberations on all agenda items and other matters properly brought before the Board, and (4) perform other duties that are appropriate for a non-executive chair and that a majority of the independent directors may identify from time to time.
The standing committees of the Board are the AC, the RCC,RC, the Digital Transformation Committee (
Audit Committee (AC)
The AC is a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 as amended (the
The Company’s independent registered public accounting firm is ultimately and solely accountable to, and reports directly to, the AC. The AC has the sole authority and direct responsibility to appoint, retain, compensate, evaluate,oversee, and where appropriate, replace the Company’s independent registered public accounting firm. The AC also reviews and approves the appointment, retention, performance evaluation, and compensation replacement, reassignment, or dismissal of the Company’s general auditorGeneral Auditor and, at least annually, approves the internal-audit charter, the audit policy, and the General Auditor’s proposed audit plan, financial budget, and staffing. Periodically, the AC meets with management, the General Auditor, and the Company’s independent registered public accounting firm in separate executive sessions.
The Board has determined that all members of the AC are qualified to serve on the AC under applicable SEC rules and NYSE listing standards (including the independence and financial-literacy requirements for audit-committee members), are audit-committee financial experts under applicable SEC rules, and have accounting or related financial management expertise under applicable NYSE listing standards. None of the members of the AC simultaneously serves on more than three public-
-11- | 2018 Proxy Statement |
company audit committees. Additional information about the AC and its members can be found in the Audit Committee Report later in this proxy statement. None of the members of the AC simultaneously serves on more than three public-company audit committees.
Risk and Compliance Committee (RCC)
The RCCRC assists the Board in overseeing Ally’s risk-management policies and global risk-management framework, including its risk-appetite framework and risk-managementits program and reviews the independence and accountability of our risk andfor managing compliance functions.risk. The RCCRC establishes and approves the risk-appetite framework, including the risk-appetite and culturerisk-culture statement, the material risk taxonomy, risk-specific appetite statements,risk guardrails, and risk appetite guardrails,metrics. The RC also reviews Ally’s global risk-management framework and oversees management’s responsibility for ensuring that this framework is commensurate with an emphasis on credit, vehicle-residual, market, operational, insurance/underwriting, liquidity, business/strategic,Ally’s structure, risk profile, complexity, activities, and reputation risks from both an enterprisesize. At least annually, the RC reviews and a line-of-business perspective. The RCC also approves ourAlly’s business-continuity, model-risk-management, and loan-review plans. Additionally, the RCCRC approves the appointment, retention, performance evaluation, and compensation of the Chief Risk Officer, who directly reports to both the RC and the CEO, and reviews the qualifications and independence of the Chief Risk Officer.
Digital Transformation Committee
The DTC assists the Board in overseeing management’s responsibility to maintain Ally’s compliance program.
Compensation, Nominating, and Governance Committee (CNGC)
The CNGC overseesassists the Board in overseeing the establishment, maintenance, and administration of Ally’s compensationexecutive-compensation plans. This responsibility includes evaluating, determining, and approving the goals and objectivescompensation of the CEO, the other individuals who are designated as officers or executive officers (together with the CEO, the Executive Officers) under SEC Rule 16a-1 or 3b-7 respectively, and other senior executives who are designated by the CNGC as under
A narrative description of the processes for considering and determining executive and director compensation
—including (1) the CNGC’s authority and the extent to which that authority may be delegated and (2) the roles of Ally’s executive officers and compensation consultants in determining or recommending the amount or form of executive and director compensation—can be found in the Compensation Discussion and Analysis and in Director Compensation later in this proxy statement. The CNGC’s policies on the nomination process for directors can be found in Director Qualifications and Responsibilities earlier in this proxy statement.Charters for the AC, the RCC,RC, the DTC, and the CNGC, along with the Governance Guidelines and the Code of Conduct and Ethics, are available on the Company’s website at
-12- | 2018 Proxy Statement |
The Board’s primary responsibilities include providing general direction, guidance, and effective challenge on Ally’s strategy in the context of its risk profile and, understandingthrough the RC, establishing and approving Ally’s risk profile, risk appetites, and enterprise-wide risk-management program.
The Board has established the RCC to assist in discharging these responsibilities and to provide reports to the Board on significant risk-management matters. The RCCRC is composed of only independent directors and has oversight over Ally’s risk-appetite framework andglobal risk-management program.framework. Among the RCC’sRC’s specific duties are the following:
review Ally’s global risk-management framework and oversee management’s responsibility for ensuring that the framework is commensurate with Ally’s structure, risk profile, complexity, activities, and size;
review reports from the risk-appetiteChief Risk Officer on the risk-management policies of Ally’s global operations and the operation of its global risk-management framework, including reports on risk-management deficiencies, the risk-appetiteresolution of those deficiencies, and culture statement, the material risk taxonomy, the risk-specific appetite statements, and the risk appetite guardrails;emerging risks;
review reports and trends on Ally’s material risk exposuresrisks as set forth in its risk-appetite framework and programs-spanning credit, market, liquidity, insurance/underwriting, vehicle-residual, business/strategic, reputation,reports from management on its actions to assess, monitor, and operational risks-including risk concentrations, inherent risks in products and businesses, and related controls;control those risks;
review reports and trends on Ally’s liquidity planning and capital-management processes, includingand at least annually, review and approve the contingency fundingcontingency-funding plan, any material revisions to it, and stress tests;stress-test policies and procedures;
review reports and trends on Ally’s program for managing compliance risk;
review reports on the new-product-approval process, including risks and performance;performance of high-risk-rated products and alignment to the risk-appetite framework;
review compliance with regulatoryreports and other legal requirements;
at least annually, review and approve Ally’s business-continuity-and-testing plans;
at least annually, review the independence and accountability of the riskapprove Ally’s model-risk-management plan, and compliance functionsperiodically review reports and specialtrends on Ally’s model-risk-management program; and
at least annually, approve Ally’s loan-review plan, and periodically review reports from them.Ally’s loan-review function.
The RCCRC also meets in joint session with the AC, at least annually, to review and discuss with management the policiesguidelines and guidelinespolicies for assessing and managing exposuresAlly’s exposure to risks, including major financial risk exposures, and the procedures for monitoring, controlling,steps management has taken to monitor, control, report on, and, reportingas necessary, disclose those exposures as well as the state of the compliance program and significant regulatory or other legal matters.
In addition, the CNGC is responsible for overseeing the management of risks relating to the Company’s executive-compensation policies plans, and arrangements, reviewing leadership developmentpractices and succession planning, and overseeing corporate-governanceconfirming that those policies and practices relateddo not encourage excessive or unnecessary risk taking and that any level of risk that they do encourage is not reasonably likely to have a material adverse effect on the independence of the Board and any potential conflicts of interest.Company. The AC correspondingly has responsibility to oversee the Company’s financial risk exposures as well as the effectiveness of the Company’s risk management and internal controls that are designed to (1) safeguard assets, (2) confirm the accuracy and integrity of accounting, financial-reporting,financial reporting, and internal-controldisclosures, (3) maintain compliance with ethical standards, policies, procedures, and practices.
While each of these committees is responsible for evaluating certainspecified risks and overseeing the management of those risks, the entirefull Board is regularly informed aboutupdated on the state of the Company’s risk profile, risk appetites, and enterprise-wide risk-management program and considers them in assessing and directing the strategy and the business of the Company. Our independent Chairman and our CEO are individually focused as well on the Company’s risk-management policies and practices.
Under the Governance Guidelines, stockholders and other members of the public may send communications tocommunicate with the Board, the Chairman of the Board, any other individual director, the non-management directors as a group, the independent directors as a
-13- | 2018 Proxy Statement |
group, or any committee of the Board by sending written correspondence in care of the Ally Financial Inc. Corporate Secretary, 500 Woodward Avenue, MC: MI-01-10-CORPSEC, Detroit, Michigan 48226. The Secretary will forward correspondence relating to a director’s duties or responsibilities to the specified recipient. Correspondence that is unrelated to a director’s duties and responsibilities may be discarded or otherwise addressed by the Secretary. Any correspondence that expresses a concern about any governance, conduct, ethical, accounting, financial-reporting, or internal-control matter will be addressed as provided in the Governance Guidelines.
No person who served as a member of the CNGC during the year ended December 31, 2016
Consistent with the Governance Guidelines, Mr. Brown and Mr. Feinberg diddoes not receive any separate compensation for their Board activities. Thehis service on the Board.
Each non-employee director is awarded an annual retainer paid to non-employee directors for the first two quarters of 2016 was $200,000. This amount was increased to $225,000 beginning in the third quarter of 2016 as a result of added responsibilities following the appointmentannual meeting of all Ally directors to the board of Ally Bank in July 2016. For 2016, thestockholders. In 2017, this annual retainer totaled $225,000 and was divided fifty percent (50%)composed of $90,000 in cash and fifty percent (50%) equity,$135,000 in the form of director deferred stock units, (
An additional annual retainer is paid in cash. Beginningafter the annual meeting to each non-employee director who serves as chair of a standing committee of the Board. In 2017, an annual cash retainer of $60,000 was paid to the chair of the AC and the chair of the RC, and an annual cash retainer of $50,000 was paid to the chair of the CNGC and the chair of the DTC. Further, each non-employee director receives at the same time a separate annual retainer for each standing committee on which the director serves, including as chair, which in 2017 the Chairman retainer will be increased to $275,000 to recognize the additional responsibilities as a result of being appointed as Chair of the Ally Bank Board in July 2016. Additionally, to better align the Chairman’s pay to a market driven practice, beginning in 2017 sixty percent (60%) of the annual retainer will be awarded in the form of Director DSUs, withwas $20,000 for each Director DSU representing a right to receive one share of our common stock. Meeting feescommittee. A meeting fee of $2,000 areis payable to each non-employee director for each Board or applicable committee meeting in excess of eight per year.
Consistent with the Governance Guidelines, non-employee |
Ally began allowingallows its non-employee directors to defer from 0% to 100% of their cash retainers in 25% increments. These deferrals willcan be made into either fully vested Director DSUs or a cash account that is credited with interest quarterly. Interest earned will beon a cash account is based on the average rate for theoffered by Ally Bank for deposits in its online savings account.accounts.
-14- | 2018 Proxy Statement |
The following table providesdescribes compensation for non-employee directors who served during fiscal year 2016.2017.
2017 Director Compensation Table | |||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (a) | Total ($) |
Franklin W. Hobbs (b) | 240,035 | 300,016 | 540,051 |
Kenneth J. Bacon | 140,000 | 135,000 | 275,000 |
Robert T. Blakely | 198,000 | 135,000 | 333,000 |
Maureen A. Breakiron-Evans (c) | 138,050 | 135,000 | 273,050 |
William H. Cary | 114,000 | 135,000 | 249,000 |
Mayree C. Clark | 196,000 | 135,000 | 331,000 |
Kim S. Fennebresque | 180,000 | 135,000 | 315,000 |
Marjorie Magner | 140,000 | 135,000 | 275,000 |
John J. Stack | 146,000 | 135,000 | 281,000 |
Michael F. Steib | 160,000 | 135,000 | 295,000 |
2016 Director Compensation Table | ||||||
Fees Earned or Paid in Cash ($) (a) | Stock Awards ($) (b) | Total ($) | ||||
Franklin W. Hobbs (c) | 402,299 | 110,433 | 512,732 | |||
Kenneth J. Bacon | 163,250 | 110,433 | 273,683 | |||
Robert T. Blakely | 215,250 | 110,433 | 325,683 | |||
Maureen A. Breakiron-Evans (d) | 157,296 | 110,433 | 267,729 | |||
William H. Cary | 91,250 | 210,445 | 301,695 | |||
Mayree C. Clark | 215,250 | 110,433 | 325,683 | |||
Steven A. Feinberg (e) | — | — | — | |||
Kim S. Fennebresque (f) | 199,250 | 110,433 | 309,683 | |||
Marjorie Magner | 176,250 | 110,433 | 286,683 | |||
John J. Stack (g) | 175,250 | 110,433 | 285,683 | |||
Michael F. Steib | 160,750 | 110,433 | 271,183 |
(a) | |
Includes annual |
(b) | |
Mr. Hobbs elected to defer 50% of cash retainer payment in the form of Director DSUs, which had a fair value of |
(c) | |
Ms. Breakiron-Evans elected to defer 100% of cash retainer payment in the form of Director DSUs, which had a fair value of |
The following table sets forth the aggregate number of Director DSUs held by each non-employee director at December 31, 2016.2017. Each Director DSU represents one common share of Ally.Ally’s common stock.
Director DSU Balances as of December 31, 2017 | |||
Name | Annual Equity Grant (#) (a) | Non-Employee Director (NED) Deferred Stock (#) (b) | Total DSUs (#) (c) |
Franklin W. Hobbs | 15,683 | 5,178 | 60,633 |
Kenneth J. Bacon | 7,057 | - | 24,397 |
Robert T. Blakely | 7,057 | - | 30,836 |
Maureen A. Breakiron-Evans | 7,057 | 5,610 | 35,179 |
William H. Cary | 7,057 | - | 19,455 |
Mayree C. Clark | 7,057 | - | 30,836 |
Kim S. Fennebresque | 7,057 | - | 30,836 |
Marjorie Magner | 7,057 | - | 30,836 |
John J. Stack | 7,057 | - | 26,439 |
Michael F. Steib | 7,057 | - | 21,951 |
Director DSU Balances as of December 31, 2016 | ||||||||
Annual Equity Grant (#) (a) | Non-Employee Director (NED) DSUs (#) (b) | One-Time Grant (#) | Total DSUs (#) (c) | |||||
Franklin W. Hobbs | 6,452 | 10,692 | — | 39,772 | ||||
Kenneth J. Bacon | 6,452 | — | — | 17,340 | ||||
Robert T. Blakely | 6,452 | — | — | 23,779 | ||||
Maureen A. Breakiron-Evans | 6,452 | 7,618 | — | 22,512 | ||||
William H. Cary (d) | 6,452 | — | 5,946 | 12,398 | ||||
Mayree C. Clark | 6,452 | — | — | 23,779 | ||||
Kim S. Fennebresque | 6,452 | — | — | 23,779 | ||||
Marjorie Magner | 6,452 | — | — | 23,779 | ||||
John J. Stack | 6,452 | — | — | 19,382 | ||||
Michael F. Steib | 6,452 | — | — | 14,894 |
(a) | |
Annual Equity Grant includes the annual retainer. |
(b) | |
Summary of NED elected Director DSUs. Number of shares is determined using the fair market value at quarter end. |
(c) | |
Total Director DSUs for all Directors include Director DSU grants from prior |
-15- | ||
2018 Proxy Statement |
At the close of business on March 15, 2017,12, 2018, the following were known to the Company to be the beneficial owners (as defined in SEC Rule 13d-3) of more than five percent of the Company’s common stock:
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership |
| Percentage |
| |
Persons affiliated with Harris Associates LP (a) c/o Harris Associates, LP 111 S. Wacker Drive Suite 4600, Chicago, Illinois 60606 |
| 40,508,483 |
| 9.35% |
|
Persons affiliated with The Vanguard Group (b) c/o The Vanguard Group 100 Vanguard Blvd., Malvern, Pennsylvania 19355 |
| 37,939,564 |
| 8.75% |
|
Persons affiliated with Blackrock, Inc. (c) c/o Blackrock, Inc. 55 East 52nd Street New York, NY 10055 |
| 22,691,452 |
| 5.24% |
|
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage |
Persons affiliated with Harris Associates LP (a) c/o Harris Associates, LP 111 S. Wacker Drive Suite 4600, Chicago, Illinois 60606 | 36,248,807 | 7.7% |
Persons affiliated with The Vanguard Group (b) c/o The Vanguard Group 100 Vanguard Blvd., Malvern, Pennsylvania 19355 | 34,981,651 | 7.4% |
(a) | |
This is according to information provided to the Company in a Schedule |
(b) | |
This is according to information provided to the Company in a Schedule 13G/A filed by The Vanguard Group with the SEC on February |
(c) | ||
This is according to information provided to the Company in a Schedule 13G filed by BlackRock, Inc. with the SEC on February 1, 2018. According to the Schedule 13G, BlackRock Inc. has sole voting power over 19,432,192 shares of our common stock and sole dispositive power over 22,691,452 shares of our common stock. |
-16- | 2018 Proxy Statement |
The following tables set forth information, at the close of business on March 15, 2017,12, 2018, concerning the number of shares of common stock and stock-settled units of the Company beneficially owned (as defined in SEC Rule 13d-3) by each director, nominee, and NEO (as defined in the Compensation Discussion and Analysis later in this proxy statement) as well as all directors and executive officers (as defined in SEC Rule 3b-7) as a group. Our executive officers under SEC Rule 3b-7 are also the individuals designated as our officers under Section 16(a) of the Exchange Act and SEC Rule 16a-1. Each of the individuals listed in the following table owns less than one percent of the outstanding shares of our common stock, and all directors and executive officers as a group own less than one percent of the outstanding shares of our common stock. The persons named have furnished this information to us.
Beneficial Ownership |
| ||||||||
Name | Shares of Common Stock Beneficially Owned |
| Stock-Settled Units (a) |
| Total Beneficial Ownership (b) |
| |||
Franklin W. Hobbs |
| 5,000 |
|
| 60,633 |
|
| 65,633 |
|
Kenneth J. Bacon | - |
|
| 24,397 |
|
| 24,397 |
| |
Robert T. Blakely | - |
|
| 30,836 |
|
| 30,836 |
| |
Maureen A. Breakiron-Evans | - |
|
| 35,179 |
|
| 35,179 |
| |
William H. Cary | - |
|
| 19,455 |
|
| 19,455 |
| |
Mayree C. Clark |
| 10,000 |
|
| 30,836 |
|
| 40,836 |
|
Kim S. Fennebresque | - |
|
| 30,836 |
|
| 30,836 |
| |
Marjorie Magner |
| 2,700 |
|
| 30,836 |
|
| 33,536 |
|
John J. Stack |
| 4,000 |
|
| 26,439 |
|
| 30,439 |
|
Michael F. Steib | - |
|
| 21,951 |
|
| 21,951 |
| |
Jeffrey J. Brown |
| 142,110 |
|
| 59,102 |
|
| 201,212 |
|
Christopher A. Halmy |
| 66,335 |
|
| 26,596 |
|
| 92,931 |
|
Timothy M. Russi |
| 57,959 |
|
| 26,596 |
|
| 84,555 |
|
Diane E. Morais |
| 52,291 |
|
| 26,596 |
|
| 78,887 |
|
Scott A. Stengel |
| 9,981 |
| - |
|
| 9,981 |
| |
Directors and Executive Officers as a Group |
| 350,376 |
|
| 458,391 |
|
| 808,767 |
|
Beneficial Ownership | ||||||
Name | Shares of Common Stock Beneficially Owned | Stock-Settled Units (a) | Total Beneficial Ownership (b) | |||
Franklin W. Hobbs | 5,000 | 39,772 | 44,772 | |||
Kenneth J. Bacon | — | 17,340 | 17,340 | |||
Robert T. Blakely | — | 23,779 | 23,779 | |||
Maureen A. Breakiron-Evans | — | 22,512 | 22,512 | |||
William H. Cary | — | 12,398 | 12,398 | |||
Mayree C. Clark | 10,000 | 23,779 | 33,779 | |||
Kim S. Fennebresque | — | 23,779 | 23,779 | |||
Marjorie Magner | 2,700 | 23,779 | 26,479 | |||
John J. Stack | 4,000 | 19,382 | 23,382 | |||
Michael F. Steib | — | 14,894 | 14,894 | |||
Jeffrey J. Brown | 66,690 | 59,102 | 125,792 | |||
Christopher A. Halmy | 38,196 | 26,596 | 64,792 | |||
Timothy M. Russi | 24,759 | 26,596 | 51,355 | |||
Diane E. Morais | 22,796 | 26,596 | 49,392 | |||
David P. Shevsky (c) | 27,377 | 48,410 | 75,787 | |||
William B. Solomon (c) (d) | 15,410 | 54,273 | 69,683 | |||
Directors and executive officers as a group | 216,928 | 462,987 | 679,915 |
(a) | |
Stock-settled units in this column comprise all vested stock-settled |
(b) | |
Under SEC rules, stock units are not treated as beneficially owned if the holder does not have the right to acquire the underlying stock within 60 days of March |
Name | Number of cash settled DSUs (1) | Number of RSUs (1) | Number of PSUs (1) | Total | ||||
Jeffrey J. Brown | 10,452 | 313,820 | 234,395 | 558,667 | ||||
Christopher A. Halmy | 5,081 | 117,471 | 77,321 | 199,873 | ||||
Diane E. Morais | 5,811 | 122,592 | 69,400 | 197,803 | ||||
Timothy M. Russi | 6,388 | 122,650 | 69,458 | 198,496 | ||||
David P. Shevsky | — | — | 26,094 | 26,094 |
| Beneficially Owned |
|
|
|
|
|
|
|
|
|
| ||||
Name | Shares of Common Stock |
| Stock-Settled Units |
| Number of RSUs (1) |
| Number of PSUs (1) |
| Total |
| |||||
Jeffrey J. Brown |
| 142,110 |
|
| 59,102 |
|
| 268,658 |
|
| 341,009 |
|
| 810,879 |
|
Christopher A. Halmy |
| 66,335 |
|
| 26,596 |
|
| 90,816 |
|
| 107,927 |
|
| 291,674 |
|
Diane E. Morais |
| 52,291 |
|
| 26,596 |
|
| 95,962 |
|
| 101,432 |
|
| 276,281 |
|
Timothy M. Russi |
| 57,959 |
|
| 26,596 |
|
| 92,480 |
|
| 98,324 |
|
| 275,359 |
|
Scott A. Stengel |
| 9,981 |
| - |
|
| 53,841 |
|
| 32,794 |
|
| 96,616 |
|
(1) | RSUs and PSUs settle in shares of Ally common stock. The number of PSUs reflect shares to be received assuming the related performance goals are achieved at the target. For further information on |
The CEO, all other members of the Purview Group,Executives, all directors, and specified associated persons are subject to personal trading restrictions to further align the interests of management and directors with those of stockholders. The restrictions apply to all of Ally’s securities, including common stock, preferred stock, and debt. In the absence of an exception granted in accordance with Ally’s Enterprise General Insider Trading and Blackout Policy, the restrictions prohibit (1) any transaction that hedges the person’s economic interest in and exposure to the full rewards and risks of ownership in a security of Ally, (2) any
-17- | 2018 Proxy Statement |
Section 16(a) of the Exchange Act requires our directors, our officers (as defined in Section 16(a) of the Exchange Act and SEC Rule 16a-1), and any person who beneficially owns more than 10% of the Company’s common stock to file initial reports of ownership and reports of changes in ownership of the Company’s common stock with the SEC. These reporting persons also are required by SEC rules to furnish us with copies of all forms that they file with the SEC pursuant to Section 16(a) of the Exchange Act. To the Company’s knowledge, based solely on its review of the copies received by the Company during or with respect to 20162017 and written representations from reporting persons that no other forms or reports were required to be filed, the Company believes that each person who was a reporting person during 20162017 timely filed the reports required by Section 16(a) during 2016.
Our Board has adopted a Code of Conduct and Ethics to promote integrity in the workplace, in the marketplace, and in our communities. The Code of Conduct and Ethics applies to all of Ally’s officers and employees, including the CEO, the Chief Financial Officer (
CFO), and the Controller. We will post any amendment to the Code of Conduct and Ethics, as well as any waiver that is required to be disclosed under applicable SEC rules or NYSE listing standards, on the Company’s website at http://www.ally.com/about/company-structure/policies-charters/index.html. There were no waivers from any provision of the Code of Conduct and Ethics inThe Board has adopted a written Related Party TransactionTransactions Policy and Protocols (
A
related-person transaction under the Related-Person Transaction Policy is an existing or currently proposed transaction or series of similar transactions for which disclosure under Item 404(a) of SEC Regulation S-K is mandated—that is, where (1) Ally was or will be a participant, (2) the amount involved exceeds $120,000, and (3) any related person had or will have a direct or indirect material interest. The term related person under Item 404(a) means, at the applicable time, (a) any director or director nominee of Ally, (b) any executive officer of Ally, (c) any beneficial owner of more than 5% of any class of Ally’s voting securities, and (d) any immediate family member (as defined in Item 404) of any of those directors, nominees, executive officers, or beneficial owners. An indirect material interest can arise from a related person’s position or relationship with a firm, corporation, or other entity that engages in a transaction with Ally (excluding any interest arising only from the person’s position as a director of such an entity, the person’s direct or indirect attributed ownership of less than a 10% equity interest in such a corporate or similar entity, or the person’s position as a limited partner with less than a 10% direct or indirect attributed interest in such a partnership entity).The following categories of transactions are treated as appropriately approved or pre-approved for purposes of the Related-Person Transaction Policy: (i) director or executive-officer compensation that is separately approved by the Board or the CNGC, including the reimbursement of ordinary-course expenses consistent with Ally’s policies, (ii) indemnification or advancement of expenses consistent with Ally’s certificateCertificate of incorporationIncorporation and any related written agreement, (iii) financial services that are provided by Ally in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with unrelated persons and that do not involve more than the normal risk of collectability or present other unfavorable features, and (iv) transactions where the interest of the related person arises solely from the ownership of our common stock and all holders of our common stock receive the same benefit on a pro rata basis.
Information about any potential related-person transaction must be reported to and reviewed by the Company’s General Counsel. If the General Counsel determines that a related-person transaction is being proposed, the matter will be referred to the CNGC or, if necessary, the Board for review. If any transaction is executed without the prior approval of the CNGC or the Board and if the CNGC or the Board decides not to ratify it, the Company’s management must rescind or terminate the transaction as promptly and on as favorable of terms as feasible.
Under the Related-Person Transaction Policy, when considering whether to approve or ratify a related-person transaction, the CNGC or the Board will consider (A) the commercial reasonableness and arm’s-length nature of the transaction, (B) the
There has been no transaction since January 1, 2016,2017, that is required to be reported under Item 404(a) but that did not require review and approval or ratification under the Related-Person Transaction Policy or for which the Related-Person Transaction Policy was not followed.
-18- | 2018 Proxy Statement |
PROPOSAL 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION
Section 14A of the Exchange Act and SEC Rule 14a-21 require us, at least every third calendar year, to hold a non-binding stockholder advisory vote at our annual meeting on the compensation paid to our NEOs (as defined in the Compensation Discussion and Analysis later in this proxy statement) as disclosed in our proxy statement in accordance with applicable SEC rules. This is commonly known as a say-on-pay advisory vote.
Under the Company’s executive-compensation programs, the NEOs are rewarded for the achievement of specific annual, long-term, strategic, and corporate goals, and the realization of increased stockholder value. Please read the Compensation Discussion and Analysis along with the information in the compensation tables for additional details about the executive-compensation programs, including information about the fiscal year 2017 compensation of the NEOs.
Stockholders are asked to indicate their support for the NEO compensation as described in this proxy statement. This say-on-pay advisory vote is not intended to address any specific item of compensation but rather the overall compensation of the NEOs and the compensation philosophy, policies, and practices described in this proxy statement. Accordingly, stockholders are requested to vote on the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2018 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2017 Summary Compensation Table and the other related tables and disclosures.”
This say-on-pay vote is advisory and, therefore, not binding on the Company, the CNGC, or the Board. The Board and the CNGC, however, greatly value the opinions of stockholders, and to the extent that there is a significant vote against the NEO compensation as disclosed in this proxy statement, the CNGC will consider stockholders’ concerns and will evaluate whether any actions are necessary to address those concerns.
The Board recommends that stockholders vote FOR the advisory resolution approving the compensation paid to our named executive officers as disclosed in this proxy statement.
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The CNGC, with the assistance of Ally’s Risk and Human Resources functions, conducts an annual assessment of the risks associated with Ally’s compensation policies and practices. Based on the assessment conducted during 2016,2017 and through the 2017–2018 compensation cycle, the CNGC believes that the design, implementation, and governance of Ally’s executive compensationincentive-compensation program are consistent with high standards of risk management (including the Interagency Guidance on Sound Incentive Compensation Policies issued by the federal banking agencies) and that Ally’s executive compensationincentive-compensation policies and practices reflect an appropriate mix of compensation elements, balancing currentshort-term and long-term performance objectives, cash and equityequity-based compensation, and risks and rewards.
The CNGC in 20162017 also reviewed Ally’s compensation policies and practices as generally applicable to all of our employees and believes that these policies and practices do not encourage excessive or unnecessary risk-taking and that any level of risk that they do encourage is not reasonably likely to have a material adverse effect on the Company. This conclusion has been reported by the CNGC to the Board. In addition, in keeping with this conclusion, Ally’s Enterprise Compensation Policy contains language forauthorizes the cancellation, recovery, or other recoupment of variable incentive pay when it has been later discoveredif the Board, the CNGC, or the CEO, as applicable, determines that incentive compensation had been paidthe variable pay was based on a materially inaccurate statement of earnings or other performance criteria, a material misrepresentation or a mistake irrespective of facts,the source or cause, or other similar conduct deemed materially adverse to Ally as determined by the CNGC.
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2018 Proxy Statement |
Introduction
Named Executive Officers
Our Compensation Discussion and Analysis (
CD&A) describes our executive compensation philosophy and program as reported in the executive compensation tables that follow, which provide information relating primarily to compensation decisions for the followingNamed Executive Officer | Title |
Jeffrey J. Brown | Chief Executive Officer |
Christopher A. Halmy(a) | Chief Financial Officer |
Diane E. Morais | President, Consumer & Commercial Banking Products |
Timothy M. Russi | President, Auto Finance |
Scott A. Stengel | |
General Counsel |
(a) | |
On December 12, 2017, Ally announced the retirement of Mr. Halmy as CFO effective March 1, 2018. Further, Ally announced that Jennifer A. LaClair had been appointed as CFO Designate effective December 18, 2017, with the intent that she be appointed to succeed Mr. Halmy as CFO effective upon his retirement from that position. On February 26, 2018, Ms. |
2017 Business Highlights
In 2016,2017, Ally made significant progress in its evolution as asuccessfully continued down our strategic and financial path to becoming the leading digital financial services company, and hascompany. Operationally, we navigated shifting dynamics in the auto industry with a strong momentum heading into 2017. Operational performance improved across the board, including record deposit growthfocus on credit discipline and improved risk-adjusted returns in retail auto finance. Our efforts to fortifymargins. We expanded our consumer and grow our businesses have strengthened the Company’s financial performance and, as a result, we expect earnings growth to accelerate over the next several years. Significant progress was also made in optimizing our capital structure as Ally eliminated preferred stock and related dividends, introduced a common dividend and repurchased significant amounts of common stock to further drive long-term stockholder value creation.
Financially, we posted the highest revenue and adjusted Earnings Per Share (adjusted EPS) since becoming a public company. Overall, the foundation we’ve established is solid, the business establishedis aligned with secular trends towards digital financial services, and we remain well positioned to drive stockholder value.
Additional highlights from our performance in 2016 position Ally well for2017 are set forth in the ongoing evolutionfollowing table. These highlights and other portions of this CD&A include specifically identified non-GAAP financial measures—such as adjusted EPS, which is referenced in consumer preferencesthe preceding paragraph. Non-GAAP financial measures supplement the results that are impacting all aspects of the auto industry.
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2018 Proxy Statement |
OVERALL | ||||
• • Earnings per share: $2.04; adjusted EPS (a) up 11% YoY to $2.39 • Executed $753 million • Net Interest Margin (NIM ) of 2.71%, up 8 basis points (bps) YoY; Ex. OID, NIM of 2.76%, up 9 bps YoY Consolidated• 0.85% Retail auto net charge-offs of 1.48%• • Efficiency | ||||
DEPOSITS | • • • | |||
AUTO FINANCE | • | |||
• | ||||
INSURANCE | • • Insurance premiums and service revenue written increased 5% YoY to $996 million | |||
CORPORATE FINANCE | • Pre-tax income of $114 million • Held For Investment (HFI) portfolio up | |||
MORTGAGE FINANCE | • HFI assets increased $3.4 billion YoY to $11.7 billion |
(a) | This is a non-GAAP financial measure. Refer to Appendix A for applicable definitions and reconciliations. |
Ally’s Executive Compensation Program
Ally believes that there should be a strong linkage between compensation and performance as well as alignment with good governance principles and stockholder interests. This linkage is embodied throughout our executive-compensation program, including its three incentive-compensation plans: (1) the Executive Summary includes disclosurePerformance Plan (EPP), under which the CNGC establishes the total incentive compensation for each of adjusted EPSour NEOs, (2) the Annual Incentive Plan, which governs the awards of cash-based incentive compensation, and adjusted efficiency ratio. Each(3) the Incentive Compensation Plan (ICP), which governs the awards of these items are non-GAAP financial measures. Descriptions and reconciliations to Generally Accepted Accounting Principles (GAAP) are provided in Appendix A.
2017 Compensation Decisions
In December 2016, Ally announced2017 and January 2018, the introduction of a direct-to-consumer mortgage offering, named Ally Home®, to further expand its financial services product portfolio, and to fulfill customer requests for an offering. The addition of this offering will further diversifyCNGC determined the Company’s revenue streams while entering the market in a controlled manner that will allow us to grow the business.
Total Direct Compensation in Cash | Total Direct Compensation in Long-Term Incentive Awards | Long-Term Incentive Awards Breakdown | ||
Performance-based stock units (PSUs) | Time-based stock units (RSUs) | |||
CEO | 40% | 60% | 50% | 50% |
Other NEOs | 50 | 50 | 50 | 50 |
The table below summarizes how the CNGC views itsCNGC’s TDC decisions (base salary, cashcash-based incentive awards, PSUs, and RSUs) for the NEOs for 20162017 performance under our compensationexecutive-compensation program on an annualized basis.
|
| Jeffrey J. Brown |
| Christopher A. Halmy |
| Diane E. Morais |
| Timothy M. Russi |
| Scott A. Stengel | ||||||||||||||||||||
Base Salary |
|
| $ | 1,000,000 |
|
|
|
| $ | 600,000 |
|
|
|
| $ | 600,000 |
|
|
|
| $ | 600,000 |
|
|
|
| $ | 500,000 |
|
|
Cash Incentive |
|
|
| 2,700,000 |
|
|
|
|
| 950,000 |
|
|
|
|
| 1,100,000 |
|
|
|
|
| 900,000 |
|
|
|
|
| 500,000 |
|
|
PSU |
|
|
| 2,775,000 |
|
|
|
|
| 775,000 |
|
|
|
|
| 850,000 |
|
|
|
|
| 750,000 |
|
|
|
|
| 500,000 |
|
|
RSU |
|
|
| 2,775,000 |
|
|
|
|
| 775,000 |
|
|
|
|
| 850,000 |
|
|
|
|
| 750,000 |
|
|
|
|
| 500,000 |
|
|
Total Compensation |
|
| $ | 9,250,000 |
|
|
|
| $ | 3,100,000 |
|
|
|
| $ | 3,400,000 |
|
|
|
| $ | 3,000,000 |
|
|
|
| $ | 2,000,000 |
|
|
Jeffrey J. Brown | Christopher A. Halmy | Diane E. Morais | Timothy M. Russi | David P. Shevsky | |||||||||||
Base Salary | $ | 1,000,000 | $ | 600,000 | $ | 600,000 | $ | 600,000 | $ | 500,000 | |||||
Cash Incentive | 2,400,000 | 1,050,000 | 1,075,000 | 1,025,000 | 400,000 | ||||||||||
PSU | 2,550,000 | 825,000 | 837,500 | 812,500 | 360,000 | ||||||||||
RSU | 2,550,000 | 825,000 | 837,500 | 812,500 | 540,000 | ||||||||||
Total Direct Compensation | $ | 8,500,000 | $ | 3,300,000 | $ | 3,350,000 | $ | 3,250,000 | $ | 1,800,000 |
This table is not meant to be a substitute for the Summary Compensation Table on page 30, set forth later in this proxy statement but is provided to show the compensation approved by the CNGC for the NEOs’ performance in respect to 2016.during 2017. The values in this table differ from those shown in the “Stock Awards” column of the Summary Compensation Table due to SEC rules requiring that equitysalary be reported for the past year rather than the coming year and equity-based awards be reported based on the year of grant rather than the service year to which they relate. Accordingly, the salary and the PSU and RSU awards reflected in this table will be reported in next year’s Summary Compensation Table, as they were effective or granted in 2017. Note, the2018. The number of PSUs assume that the related
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performance goals are achieved at 100%.the target. For further information on all equityequity-based awards, refer to the Components of Ally’s Compensation Program—Incentive Awards—Long-Term Equity-Based Incentive Awards section below.later in this proxy statement.
Compensation Philosophy
Ally’s compensation philosophy is that there should be a strong linkage between compensation and performance as well as alignment with good governance principles and stockholder interests. In support of this compensation philosophy, Ally’s compensationexecutive-compensation program is structured to:
Align with long-term value creation for our stockholders;
Provide appropriate short- and long-term incentives based on individual, business, and Company performance;
Encourage prudent, but not excessive, risk taking;
Provide a total compensation opportunity competitive with market practice and reflecting relativereflective of the responsibilities of the role; and
Encourage retention of key executives.
Elements and Mix of Executive Compensation
TDC under Ally’s executive-compensation program is primarily composed of cash base salary, annual cash-based incentive awards, and long-term equity-based incentive awards.
Total Pay Mix
|
|
|
|
|
|
| Long-Term Incentive Awards Breakdown |
| ||
| Total Direct Compensation in Cash |
| Total Direct Compensation in Long-Term Incentive Awards |
| Performance-Based Stock Units (PSUs) |
| Time-Based Stock Units (RSUs) |
| ||
CEO | 40% |
| 60% |
| 50% |
| 50% |
| ||
Other NEOs | 50% |
| 50% |
| 50% |
| 50% |
|
Cash Base Salaries — Determined based on market levels for the responsibilities of each NEO and individual considerations of performance and experience.
Incentive Awards — Funded through an annual incentive pool based on Ally’s financial performance, with the pool then allocated based on evaluations of individual attainment of performance objectives.
Annual Cash-Based Incentive Awards — A portion of the NEOs’ incentive awards is delivered in the form of annual cash-based incentive awards.
Long-Term Equity-Based Incentive Awards — A portion of the NEOs’ incentive awards is delivered in the form of (1) PSUs that vest in whole on the third anniversary of the grant date subject to the achievement of applicable performance goals and continued employment through that time and (2) RSUs that vest one-third on the first anniversary of the grant date, one-third on the second anniversary of the grant date, and one-third on the third anniversary of the grant date, in each case, subject to continued employment through that time. Awards of PSUs and RSUs are settled in shares of Ally’s common stock.
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Compensation Program Governance
In addition to implementing a performance-based compensation framework, Ally has strong compensation governance as demonstrated by the practices listed below that are included in our executive-compensation program and those practices that are excluded from our program. All of these practices apply to our NEOs, against that of executives of companies with whom we compete forand most apply to other senior executive talent. We use publicly available reported pay data from a peer group of companies approved by the CNGC to conduct the competitive assessment for the CEO and CFO positions.
Our Practices | Excluded Practices | |
✓Alignment of pay with performance through use of annual and long-term incentives for a majority of NEO total compensation ✓Alignment of NEOs’ interests with those of our stockholders by awarding 50% or more of TDC in the form of long-term equity-based incentive compensation ✓Annual risk assessments of both our compensation programs and the risk management behavior of each of the NEOs ✓Meaningful stock-ownership guidelines ✓Enforcement of stock trading restrictions ✓Enhanced clawback policy applicable to all incentives ✓Utilization of an independent board compensation consultant | ||
✘ No hedging or pledging of Company stock ✘ No excessive perquisites or executive retirement benefits ✘ No guaranteed incentive payouts for NEOs ✘ No single-trigger payments or vesting upon a change in control ✘ No extensive use of employment agreements ✘ No tax gross-ups for excise or income taxes |
At our 2017 annual meeting, we provided our stockholders the opportunity to vote on an advisory resolution approving the peer groupcompensation paid to better reflect Ally’s size and core businesses. Ally utilized several screening criteria to help establish the revised peer group, including Global Industry Classification Standard (our NEOs in 2016. Approximately 94%GICS) industries, net revenue, total assets, peers identified by Institutional Shareholder Services Inc. (ISS), and peers of Ally’s current peer group companies. The four peer group additions, including Charles Schwab, CIT Group, Comerica, and Huntington Bancshares were selected due to size-appropriateness, frequent peer of peers, and relevant industry segment. The revised peer group consists of the 17 bankingoutstanding shares present in person or represented by proxy at that meeting and financial services companies listed below:
Ally’s executive-compensation program is overseen by the CNGC. Updated 2016 survey data used for the remaining NEOs and other senior executives came from one or more survey sources, including the Hewitt Total Compensation Measurement™ database, the Willis Towers Watson Executive Financial Services survey, the McLagan Partners Investment Management survey, the McLagan Partners Fixed Income Sales and Trading survey, and the McLagan Partners Treasury and Asset Liability Management survey. Because multiple survey sources are used and not all survey participants provide data for each of the remaining NEOs, it is not possible to list the survey participants included in the competitive data analyzed for positions other than the CEO and the CFO.
Compensation recommendations for the NEOs other than the CEO are presented to and discussed with the CNGC by the CEO. Factors that were discussed and considered by the CNGC include overall Ally financial results, business unit or corporate function results, individual performance evaluations, risk scorecards, control function input, and market data. In particular, the CEO recommends the compensation of the NEOs based on his view as to the strategic importance of each NEO’s role, knowledge and performance. The CEO’s unique insight into our business and day-to-day interaction with the NEOs provide a valuable perspective to the CNGC for its deliberations. The CNGC then evaluates the NEOs and determines and approves the compensation for the NEOs.
The CNGC evaluates the CEO and determines and approves thehis compensation of the CEO without the recommendation of management. Neither the CEO nor the other NEOs are present for discussion of their pay.
The Company engaged Pearl Meyer & Partners to provide consulting assistance on matters pertaining to executive compensation, including an updated competitive assessment of the compensation for the Purview Group.
Frederic W. Cook & Co., Inc. (
FW Cook) served asNEO | Annual Cash Base Salary at the end of 2016 ($) | Annual Ongoing Cash Base Salary ($) | ||
Jeffrey J. Brown | 1,000,000 | 1,000,000 | ||
Christopher A. Halmy | 600,000 | 600,000 | ||
Diane E. Morais | 550,000 | 600,000 | ||
Timothy M. Russi | 550,000 | 600,000 | ||
David P. Shevsky | 500,000 | 500,000 |
The NEOs are employed on an at willat-will basis, and none of themno NEO is party to a separate employment agreement with the Company.
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2018 Proxy Statement |
The NEOs are eligible for benefits under the Ally Financial Inc. Severance Plan on the same basis as other Ally employees.Plan. See Potential Payments Upon a Termination or Changelater in Control below.
In connection with the risk assessment that Ally conducted in 2016,2017, the Company has reviewed all of its incentive compensation programsexecutive-compensation program to ensure they includethat language existed allowing the Company to recoup incentive payments made to recipients in the event those payments were based on financial statements that are later found to bea materially inaccurate. Incentive plans that did not include such language were revised to allow for incentive payments to be recovered.inaccurate statement of earnings or other performance criteria, a material misrepresentation or a mistake irrespective of the source or cause, or other similar conduct or circumstances. In addition, all recoupment practices were consolidated into a more comprehensive enterprise-wide RecoupmentAlly’s Enterprise Compensation Policy. A recipient who fails to promptly repay Ally under such circumstances is subject to termination of employment.
Ally also engages in a “loss trigger” review process, which is applicable to Material Risk Takers (
MRTs) whoThe Board believes that the interests of management and stockholders are further aligned by stock-ownership guidelines for the CEO and other members of the Purview Group.Executives. As a result, the Governance Guidelines provide for the following minimum ownership levels:
Officer | Stock Ownership | ||
CEO: | |||
5 times cash base salary | |||
Other NEOs: | 3 times cash base salary | ||
Other Purview | 2 times cash base salary |
Ownership is generally based on whether the executive is meaningfully exposed to changes in the share price of Ally stock and, as a result, includes shares owned outright, unvested RSUs and restricted stock, and earned but unvested PSUs and performance-based stock. Ownership levels are measured at year-end, and for a newly employed or promoted executive, the applicable level of ownership begins to apply in the year following employment or promotion. The Board understands, however, that some period of time beyond one year will be required for a newly employed or promoted executive to accumulate the requisite shares and that family or other personal reasons may necessitate a sale of accumulated shares. To ensure that the purposes of these stock-ownership guidelines are achieved, whenever the minimum ownership level is not achieved or maintained, the executive must retain 50% of the net (after tax) shares received from any equity grant that has been made since Ally’s initial public offering.
The CEO and other members of the Purview GroupExecutives are subject to personal trading restrictions, including anti-hedging and -pledginganti-pledging policies, to further align the interests of management with those of stockholders. Refer to
We compare the TDC of Equity-Based Awardsour NEOs against that of executives of companies with whom we compete for senior executive talent. We use publicly available pay data from a peer group of companies approved by the CNGC to conduct the competitive assessment for the CEO and CFO positions.
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Ally’s peer group consists of the 17 banking and financial-services companies listed below:
• | BB&T | • | Discover | • | PNC Financial |
• | Capital One | • | Fifth Third Bancorp | • | Regions Financial |
• | Charles Schwab | • | Huntington Bancshares | • | Sun Trust Banks |
• | CIT Group | • | KeyCorp | • | Synchrony Financial |
• | Citizens Financial Group | • | M&T Bank | • | U.S. Bancorp |
• | Comerica | • | Navient |
For the other NEO and senior executive positions, we use market survey data from several survey sources to conduct competitive assessments. Wherever practical, the market surveys include companies that are part of the peer group approved by the CNGC. Updated 2017 survey data used for the remaining NEOs and other senior executives came from one or more survey sources, including the Hewitt Total Compensation Measurement™ database, the Willis Towers Watson Executive Financial Services survey, the Willis Towers Watson Executive General Industry Survey, the McLagan Partners Consumer Retail and Small Banking Survey, the Mercer Executive Compensation Survey, and the McLagan Partners Top Management survey. Because multiple survey sources were used and not all survey participants provided data for all of the positions served by the remaining NEOs, it is not possible to identify the survey participants included in the competitive data analyzed for positions other than the CEO and the CFO.
When we measure the compensation of our CEO, CFO, and other NEOs against the above peer group and survey data, we compare our compensation to the median. On an individual basis, compensation for any executive may be set above or below the median based on a variety of factors, including time in position, sustained performance over time, criticalness to retain, and skill set and experience relative to external market counterparts. Compensation will also vary above or below median based on Company and individual performance. For 2017, TDC and individual elements of pay (i.e., base salary, annual cash-based incentives, and long-term equity-based incentives) for our NEOs were determined consistent with competitive market levels and pay mix taking into account Company and individual performance. The CNGC typically approvesdoes not benchmark against these competitive and peer references, but rather the CNGC considers them as one data point in our decision making.
Components of Ally’s Compensation Program
As outlined in Compensation Design—Elements and Mix of Executive Compensation earlier in this CD&A, TDC for our NEOs consists primarily of cash base salary, annual cash-based incentive awards, and long-term equity-based awards annuallyincentives in the form of PSUs and RSUs. In addition, we offer limited benefits and perquisites.
Cash Base Salary
Under our compensation philosophy, cash base salary is intended to provide a predictable level of compensation. It is determined based on market levels for the responsibilities of each NEO and individual considerations of performance and experience. The annual rates of cash base salary for the NEOs at its January meeting whenthe end of 2017 are the same after the 2017–2018 compensation cycle.
NEO | Annual Cash Base Salary at the end of 2017 ($) |
| Annual Ongoing Cash Base Salary as of February 5, 2018 ($) |
| ||
Jeffrey J. Brown |
| 1,000,000 |
|
| 1,000,000 |
|
Christopher A. Halmy |
| 600,000 |
|
| 600,000 |
|
Diane E. Morais |
| 600,000 |
|
| 600,000 |
|
Timothy M. Russi |
| 600,000 |
|
| 600,000 |
|
Scott A. Stengel |
| 500,000 |
|
| 500,000 |
|
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Ally’s executive-compensation program is intended to reward and retain executives, including the NEOs, with an emphasis on performance. Accordingly, a combination of the following factors determines individual incentive awards and change in TDC from year to year:
• Overall Ally financial results;
• Business unit or corporate function results;
• Individual performance evaluations;
• Risk scorecards;
• Market data; and
• Input from Ally’s control functions (i.e., audit, compliance, risk, and loan review).
Once the CNGC determines each NEO’s total incentive compensation under the EPP, the different types of incentives are awarded in a formulaic manner in accordance with the total compensation mix and equity mix of the compensation structure. Refer to Compensation Design—Elements and Mix of Executive Compensation section earlier in this proxy statement. Within the first two months after the performance year has concluded, the annual cash-based incentive awards are paid, and the long-term equity-based incentive awards are granted.
Individual Performance
Consistent with Executive Summary—2017 Compensation Decisions earlier in this CD&A, the CNGC considered the following indicia of performance during 2017 in determining each NEO’s TDC under our executive-compensation program.
Jeffrey J. Brown Chief Executive Officer | • Achieved adjusted EPS (a) of $2.39, deposits of $93 billion, and adjusted total net revenue (a) of $5.8 billion • Achieved 11% adjusted EPS (a) growth in 2017 relative to growth target of 5–15% that was communicated to the investment community • Achieved Core Return on Tangible Common Equity (ROTCE) (a) of 9.8% in 2017 relative to 10%+/- target that was communicated to the investment community • Achieved adjusted efficiency ratio (a) of 45.8% in 2017 relative to target of 45–47% that was communicated to the investment community • Continued to enhance and integrate several new lines of business to diversify the balance sheet including Ally Invest and Ally Home, while expanding direct-to-consumer capabilities with rollout of Clearlane • Numerous positive regulatory outcomes, including: removal of 15% Tier 1 leverage-ratio requirement and ability to originate full spectrum of auto loans at Ally Bank, non-objection to 2017 Comprehensive Capital Analysis and Review (CCAR) capital plan, ensured implementation of tax reform legislation, increased dividend and share repurchase programs • Equity performance of the Company achieved an all-time high • Maintained focus on controls and risk management by driving appropriate risk culture throughout the organization |
Christopher A. Halmy Chief Financial Officer | • Achieved adjusted EPS (a) of $2.39, deposits of $93 billion, and adjusted total net revenue (a) of $5.8 billion • Achieved 11% adjusted EPS (a) growth in 2017 relative to growth target of 5–15% that was communicated to the investment community • Achieved Core ROTCE (a) of 9.8% in 2017 relative to 10%+/- target that was communicated to the investment community • Achieved adjusted efficiency ratio (a) of 45.8% in 2017 relative to target of 45–47% that was communicated to the investment community • Adjusted tangible book value (a) at $28.07 per share, up 7% from 2016 • Numerous positive regulatory outcomes, including: removal of 15% Tier 1 leverage-ratio requirement and ability to originate full spectrum of auto loans at Ally Bank, non-objection to 2017 CCAR capital plan, ensured implementation of tax reform legislation, increased dividend and share repurchase programs • Maintained focus on controls and risk management by driving appropriate risk culture throughout the organization |
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President, Consumer & Commercial Banking Products | • Total deposits of $93 billion at December 31, 2017; deposit growth of $12+ billion was communicated to the investment community and $14.2 billion was achieved • Grew Corporate Finance HFI portfolio by 23% YoY to $3.9 billion • Improved upon and continued to integrate several new products and lines of business including: Ally Invest, the Ally Card Controls app, and the Ally Skill for Amazon Alexa • Named “Best Internet Bank” and “Best Bank for Millennials” by Kiplinger’s • Increased deposit customer base by 16% YoY to 1.4 million • Continued to broaden customer base and grow key demographic segments • Maintained focus on controls and risk management by driving appropriate risk culture throughout the organization |
Timothy M. Russi President, Auto Finance | • Delivered $1.2 billion pre-tax income in a competitive marketplace • Achieved 1.48% retail auto net charge-offs relative to 1.4–1.6% target that was communicated to the investment community • Achieved 6.4% lease yield relative to 5.6–6.0% target that was communicated to the investment community • Completed the strategic repositioning of the Auto business in support of Ally’s overall diversification strategy and shifting dynamics within the industry • Established new partners and diversified auto business through the rollout of Clearlane and expansion of the Carvana agreement • Maintained focus on controls and risk management by driving appropriate risk culture throughout the organization |
Scott A. Stengel General Counsel | • Served as a trusted counsel to the Board and executive management on strategic, business, governance, and regulatory matters • Produced financial results for the Legal and Government Affairs functions in line with forecasts • Oversaw the effective management and advantageous resolution of complex regulatory matters, investigations, and litigation • Delivered impactful strategic and tactical legal advice in connection with Ally’s diversification strategy, including the repositioning of the auto business and the expansion of our consumer and commercial product offerings • Assumed leadership of the Government Affairs function and enhanced its strategic orientation • Led and proactively influenced the enhancement of corporate-governance, disclosure, risk, and compliance frameworks, policies, and practices • Maintained focus on controls and risk management by driving appropriate risk culture throughout the organization |
(a) | This is a non-GAAP financial measure. Refer to Appendix A for applicable definitions and reconciliations. |
Annual Cash-Based Incentive Awards
For details on the annual cash-based incentive awards granted to the NEOs in respect of 2017 performance, see Executive Summary—2017 Compensation Decisions earlier in this proxy statement and the Summary Compensation Table later.
Long-Term Equity-Based Incentive Awards
A central principle of our executive-compensation program is linking compensation of our NEOs directly to Company performance by awarding at least 50% of the TDC paid to the NEOs in the form of long-term equity-based incentive awards. Accordingly, we grant both time-based RSUs and performance-based PSUs to our NEOs. The CNGC believes that our commitment to award a significant portion of the TDC paid to our NEOs in the form of RSUs and PSUs helps to further align the interests of our leaders and our stockholders, as the ultimate value received depends on the share price in the future after the awards vest and the shares are sold and, in the case of PSUs, the level of attainment of the applicable performance goals.
The PSUs granted to our NEOs have a two-year performance period followed by an additional year of required service after which earned PSUs will be fully vested and settled in shares. Any dividends declared over the three-year vesting period will be accumulated and paid at settlement based on the number of PSUs earned at the conclusion of the performance period.
The performance metrics applicable to the PSUs granted in 2018, 2017, and 2016 are Core ROTCE and total stockholder value growth rate (TSV), each having an equal weight. The CNGC believes that these two metrics align executive compensation with the Company’s operating performance, risk appetite, and long-term stockholder returns. These are balanced
-28- | 2018 Proxy Statement |
measures that ensure that NEOs are focused on the overall returns of the business and not motivated to drive performance on one measure or one business unit over another. The selection of Core ROTCE as a metric reflects management’s responsibility to produce an appropriate return on equity for stockholders and represents a metric widely used in the banking industry. TSV, which is defined as growth in adjusted tangible book value per share plus dividends per share, was selected because we believe that growth in the tangible book value of the Company should result in increased long-term value creation for stockholders and is directly impacted by management performance. Core ROTCE, TSV, and adjusted tangible book value per share are non-GAAP financial measures, which are reconciled to comparable GAAP financial measures in Appendix A. Consistent with the ICP, which governs our PSUs, the CNGC has excluded from Core ROTCE and TSV the impact of designated items so that these performance goals reflect factors that management can directly control and that payout levels are not artificially inflated or impaired by factors unrelated to the ongoing operation of the business. Refer to Appendix A for more detail on these designated items.
PSUs will pay out between 0% and 150% of target based on the achievement of predetermined goals for Core ROTCE and TSV using a tiered structure rather than linear interpolation between goal levels. The tiers for payout under each of the metrics are as follows for awards granted in 2017 and 2016:
Tier | Payout Amount | Core ROTCE | Total Stockholder Value Growth Rate | |
Maximum | 150% | >12.00% | >13.00% | |
Above Target, Under Maximum | 125% | 10.01% - 12.00% | 10.01% - 13.00% | |
Target | 100% | 8.01% - 10.00% | 7.01% - 10.00% | |
Above Threshold, Under Target | 75% | 6.01% - 8.00% | 4.01% - 7.00% | |
Threshold | 50% | 4.01% - 6.00% | 1.01% - 4.00% | |
Below Threshold | 0% | <4.01% | <1.01% |
The performance period for our PSUs granted in 2016 is complete, and the CNGC has certified the results. We generated a two-year average Core ROTCE of 9.8%, which resulted in payout at the 100% level. The calculation of Core ROTCE for this period included adjustments for items designated by the CNGC at the time of grant, primarily relating to the effect of changes in tax laws (including the Tax Cuts and Jobs Act of 2017) and the effect of acquisitions (including goodwill associated with acquisitions). We also generated a two-year average TSV, after the previously described adjustment items, of 10.1%, which resulted in achieving a 125% payout level. The achievement of these metrics combined resulted in an expected future payout of 112.5% for recipients who complete their third year of service requirement.
Due to expected impacts of the Tax Cuts and Jobs Act of 2017 (including changes in the corporate tax rate), the CNGC determined that adjustments to the levels of the performance goals were appropriate. As a result, for PSUs granted in 2018, the tiers for payout under each of the metrics were approved as follows:
Tier | Payout Amount | Core ROTCE | Total Stockholder Value Growth Rate | |
Maximum | 150% | >13.50% | >14.50% | |
Above Target, Under Maximum | 125% | 11.51% - 13.50% | 11.51% - 14.50% | |
Target | 100% | 9.51% - 11.50% | 8.51% - 11.50% | |
Above Threshold, Under Target | 75% | 7.51% - 9.50% | 5.51% - 8.50% | |
Threshold | 50% | 5.51% - 7.50% | 2.51% - 5.50% | |
Below Threshold | 0% | <5.51% | <2.51% |
Threshold, target, and approved.maximum goals were established for each metric that reflect performance expectations considering factors such as the Company’s prior-year performance, the current year’s financial plan, and the multi-year strategic plan.
Ally also utilizes RSUs for a portion of the NEOs’ long-term equity-based incentives. While RSUs do not have explicit performance-based conditions, the ultimate value realized from the RSUs depends on the share price in the future after the awards vest and the shares are sold. The RSUs are subject to time-based vesting and will vest and settle in shares of three equal annual installments on the first, second, and third anniversaries of the date of grant. Any dividends over the vesting period will be accumulated and paid at settlement.
-29- | 2018 Proxy Statement |
We provide our NEOs with health and welfare benefits under the broad-based program generally available to all of our employees. This meetingallows our NEOs and employees to receive certain benefits that are not readily available to individuals except through an employer and to receive certain benefits on a pre-tax basis. Our benefit program includes the tax-qualified Ally Financial Inc. Retirement Savings Plan (Savings Plan). We provide the Savings Plan to support our employees in saving for retirement in a manner that is prescheduled,favorable from a tax perspective. Eligible compensation under the Savings Plan has comprised salary and annual grants will typically be madecash bonus up to the equivalent of 50% of salary, but as of January 1, 2018, the cash bonus is no longer limited. Under the Savings Plan, after one year of employment, employee contributions up to 6% of eligible compensation are matched 100% by Ally. The Savings Plan also provides for a 2% nonmatching contribution on eligible compensation and a discretionary 2% nonmatching contribution on eligible base pay, which is generally subject to the Company’s performance. Nonmatching contributions fully vest after the releaseindividual has been employed for three years.
Ally also maintains the Enhanced Retirement Savings Plan, which is a nonqualified benefit equalization plan for highly compensated employees. Ally suspended nonqualified contributions in 2009 and has not made any since that time, including in 2017. Certain NEOs maintain balances within the plan. This plan is designed to allow for the equalization of our year-end earnings. benefits for highly compensated employees when such employees’ qualified plan benefits are limited by the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended (Code). This plan is maintained as an unfunded plan, and all expenses for administration of the plan and payment of amounts to participants are borne by Ally.
In addition to broad-based benefits, the annual equity-based awards,NEOs receive limited additional benefits and perquisites so that the CNGC may approve equity-based grants for purview executives on a limited basis on other datesCompany can remain competitive in special situations, such asattracting and retaining executive talent. These benefits are itemized in the hire of an executive ornotes to retain executives important to the success of the Company.
Prior to 2018, as a company that had recently conducted its initial public offering, we arewere not subject to the ordinary limits on deductibility of compensation pursuant to rules issued by the rulesU.S. Department of the Treasury under Section 162(m) of the Code (
-30- | 2018 Proxy Statement |
CNGC RProposal No. 3EPORT) and the Performance Plan (see Proposal No. 5) will allow us to pay qualified performance-based compensation under Section 162(m) following the grandfather period.
The CNGC has reviewed and discussed with management the
Compensation Discussion and Analysis that immediately precedes this report. Based on this review and discussion, the CNGC recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,The Compensation, Nominating, and Governance Committee
Kim S. Fennebresque (CNGC Chairman)
Robert T. Blakely
Franklin W. Hobbs
Marjorie Magner
John J. Stack
As provided by SEC Regulation S-K, this CNGC Report is not deemed to be soliciting material or to be filed or incorporated by reference into any other filing by the Company under the Securities Act of 1933 as amended or the Exchange Act.
-31- | ||
2018 Proxy Statement |
Summary Compensation Table
The following table sets forth specified information regarding the compensation paid by the Company during 2017, 2016 2015 and 2014,2015, and the cash bonuses awarded in respect of each of these years, as applicable, to the NEOs.
Name and Principal Position | Year | Salary ($) (a) |
| Bonus ($) (b) |
| Stock Awards ($) (c) |
| All Other Compensation ($) (d) |
| Total ($) |
| |||||
Jeffrey J. Brown | 2017 |
| 1,000,000 |
|
| 2,700,000 |
|
| 5,100,019 |
|
| 33,332 |
|
| 8,833,351 |
|
Chief Executive Officer | 2016 |
| 1,000,000 |
|
| 2,400,000 |
|
| 3,974,140 |
|
| 157,121 |
|
| 7,531,261 |
|
| 2015 |
| 924,992 |
|
| 1,649,425 |
|
| 5,876,445 |
|
| 32,678 |
|
| 8,483,540 |
|
Christopher A. Halmy | 2017 |
| 600,000 |
|
| 950,000 |
|
| 1,650,024 |
|
| 33,062 |
|
| 3,233,086 |
|
Chief Financial Officer | 2016 |
| 600,000 |
|
| 1,050,000 |
|
| 1,336,544 |
|
| 72,483 |
|
| 3,059,027 |
|
| 2015 |
| 600,000 |
|
| 736,539 |
|
| 2,676,924 |
|
| 32,525 |
|
| 4,045,988 |
|
Diane E. Morais | 2017 |
| 594,231 |
|
| 1,100,000 |
|
| 1,675,037 |
|
| 30,634 |
|
| 3,399,902 |
|
President, Consumer & Commercial Banking Products | 2016 |
| 550,000 |
|
| 1,075,000 |
|
| 1,307,713 |
|
| 56,990 |
|
| 2,989,703 |
|
| 2015 |
| 543,838 |
|
| 757,692 |
|
| 2,734,616 |
|
| 29,947 |
|
| 4,066,093 |
|
Timothy M. Russi | 2017 |
| 594,231 |
|
| 900,000 |
|
| 1,625,011 |
|
| 36,866 |
|
| 3,156,109 |
|
President Auto Finance | 2016 |
| 541,800 |
|
| 1,025,000 |
|
| 1,359,636 |
|
| 98,830 |
|
| 3,025,266 |
|
| 2015 |
| 510,566 |
|
| 850,615 |
|
| 2,780,770 |
|
| 33,233 |
|
| 4,175,184 |
|
Scott A. Stengel | 2017 |
| 500,000 |
|
| 500,000 |
|
| 875,016 |
|
| 33,233 |
|
| 1,908,249 |
|
General Counsel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position | Year | Salary ($) (a) | Bonus ($) (b) | Stock Awards ($) (c) | All Other Compensation ($) (d) | Total ($) |
Jeffrey J. Brown | 2016 | 1,000,000 | 2,400,000 | 3,974,140 | 157,121 | 7,531,261 |
Chief Executive Officer | 2015 | 924,992 | 1,649,425 | 5,876,445 | 32,678 | 8,483,540 |
2014 | 600,000 | — | 3,797,892 | 31,350 | 4,429,242 | |
Christopher A. Halmy | 2016 | 600,000 | 1,050,000 | 1,336,544 | 72,483 | 3,059,027 |
Chief Financial Officer | 2015 | 600,000 | 736,539 | 2,676,924 | 32,525 | 4,045,988 |
2014 | 500,000 | — | 1,850,000 | 31,668 | 2,381,668 | |
Diane E. Morais | 2016 | 550,000 | 1,075,000 | 1,307,713 | 56,990 | 2,989,703 |
President, Consumer & Commercial Banking Products | 2015 | 543,838 | 757,692 | 2,734,616 | 29,947 | 4,066,093 |
Timothy M. Russi | 2016 | 541,800 | 1,025,000 | 1,359,636 | 98,830 | 3,025,266 |
President Auto Finance | 2015 | 510,566 | 850,615 | 2,780,770 | 33,233 | 4,175,184 |
David P. Shevsky | 2016 | 500,000 | 400,000 | 402,524 | 209,015 | 1,511,539 |
Chief Risk Officer | ||||||
William B. Solomon | 2016 | 384,615 | — | 963,859 | 1,513,239 | 2,861,713 |
Former General Counsel | 2015 | 503,307 | 463,846 | 1,422,322 | 38,394 | 2,427,869 |
2014 | 500,000 | — | 1,830,000 | 37,604 | 2,367,604 |
(a) | |
The amounts in this column reflect the actual amounts of salary paid to the NEOs in the relevant fiscal year. |
(b) | |
The amounts in this column for |
(c) | |
The amounts in this column reflect the aggregate grant date fair values of the RSUs and PSUs granted |
(d) | |
This column includes the incremental cost of certain perquisites and other personal benefits provided to the NEOs. For |
| Jeffrey J. Brown |
| Christopher A. Halmy |
| Diane E. Morais |
| Timothy M. Russi |
| Scott A. Stengel |
| |||||
Financial counseling (1) | $ | 3,500 |
| $ | 3,500 |
| $ | - |
| $ | 3,500 |
| $ | 4,031 |
|
Liability insurance (2) |
| 492 |
|
| 492 |
|
| 492 |
|
| 492 |
|
| 492 |
|
Total perquisites |
| 3,992 |
|
| 3,992 |
|
| 492 |
|
| 3,992 |
|
| 4,523 |
|
Life insurance (3) |
| 2,340 |
|
| 2,070 |
|
| 3,142 |
|
| 5,874 |
|
| 1,710 |
|
401(k) matching contribution (4) |
| 27,000 |
|
| 27,000 |
|
| 27,000 |
|
| 27,000 |
|
| 27,000 |
|
Total all other compensation | $ | 33,332 |
| $ | 33,062 |
| $ | 30,634 |
| $ | 36,866 |
| $ | 33,233 |
|
(1) | ||
Jeffrey J. Brown | Christopher A. Halmy | Diane E. Morais | Timothy M. Russi | David P. Shevsky | William B. Solomon | |||||||
Financial Counseling (1) | $ | 3,500 | $ | 3,500 | $ | — | $ | 1,475 | $ | — | $ | 3,500 |
Liability Insurance (2) | 475 | 475 | 475 | 475 | 475 | 356 | ||||||
Total Perquisites | 3,975 | 3,975 | 475 | 1950 | 475 | 3,856 | ||||||
Life Insurance (3) | 2,358 | 2,070 | 2,930 | 2,854 | 4,933 | 5,882 | ||||||
401(k) Contribution (4) | 26,500 | 26,500 | 26,500 | 26,500 | 26,500 | 21,200 | ||||||
Relocation | — | — | — | — | 101,506 | — | ||||||
Previously Accrued Benefit (5) | 124,288 | 39,938 | 27,085 | 67,526 | 75,601 | 67,301 | ||||||
Separation Treatment (6) | — | — | — | — | — | 1,415,000 | ||||||
Total All Other Compensation | $ | 157,121 | $ | 72,483 | $ | 56,990 | $ | 98,830 | $ | 209,015 | $ | 1,513,239 |
We generally provide a modest taxable allowance to certain senior executives for financial counseling, tax preparation and estate planning services. Costs associated with this benefit are reflected in the table above, based on the actual charge for the services received. Any taxes assessed on the imputed income for the value of this service are the responsibility of the executive. |
(2) | |
We provide a taxable allowance for a personal umbrella liability insurance for certain executives. Any taxes assessed on the imputed income for the value of this service are the responsibility of the executive. |
(3) | |
Represents tax value of the Company provided life insurance for |
(4) | |
Represents the employer contribution, Company match contribution and discretionary contribution made to each NEO’s account under the Ally 401(k) plan. |
-32- | ||
2018 Proxy Statement |
The following table provides information on grants of plan-based awards made to our NEOs during 2016.2017 under the 2014 Incentive Plan.
Name | Award | Grant Date | Threshold (#) |
| Target (#) |
| Maximum (#) |
| All Other Stock Awards: Number of Shares or Unit of Stock (#) (b) |
| Grant Date Fair Value of Stock or Unit Awards ($) (c) |
| |||||
Jeffrey J. Brown | RSU | 2/1/2017 |
|
|
|
|
|
|
|
|
|
| 118,056 |
|
| 2,550,010 |
|
| PSU (a) | 2/1/2017 |
| 59,028 |
|
| 118,056 |
|
| 177,084 |
| - |
|
| 2,550,010 |
| |
Christopher A. Halmy | RSU | 2/1/2017 |
|
|
|
|
|
|
|
|
|
| 38,195 |
|
| 825,012 |
|
| PSU (a) | 2/1/2017 |
| 19,098 |
|
| 38,195 |
|
| 57,293 |
| - |
|
| 825,012 |
| |
Diane E. Morais | RSU | 2/1/2017 |
|
|
|
|
|
|
|
|
|
| 38,774 |
|
| 837,518 |
|
| PSU (a) | 2/1/2017 |
| 19,387 |
|
| 38,774 |
|
| 58,161 |
| - |
|
| 837,518 |
| |
Timothy M. Russi | RSU | 2/1/2017 |
|
|
|
|
|
|
|
|
|
| 37,616 |
|
| 812,506 |
|
| PSU (a) | 2/1/2017 |
| 18,808 |
|
| 37,616 |
|
| 56,424 |
| - |
|
| 812,506 |
| |
Scott A. Stengel | RSU | 2/1/2017 |
|
|
|
|
|
|
|
|
|
| 24,306 |
|
| 525,010 |
|
| PSU (a) | 2/1/2017 |
| 8,102 |
|
| 16,204 |
|
| 24,306 |
| - |
|
| 350,006 |
|
Award | Grant Date | Estimated Future Payouts Under Equity Incentive Plan Awards (a) | All Other Stock Awards: Number of Shares or Unit of Stock (#) (b) | Grant Date Fair Value of Stock or Unit Awards ($) (c) | |||
Threshold (#) | Target (#) | Maximum (#) | |||||
Jeffrey J. Brown | RSU | 2/3/2016 | 116,339 | 1,987,070 | |||
PSU (a) | 2/3/2016 | 58,170 | 116,339 | 174,509 | — | 1,987,070 | |
Christopher A. Halmy | RSU | 2/3/2016 | 39,126 | 668,272 | |||
PSU (a) | 2/3/2016 | 19,563 | 39,126 | 58,689 | — | 668,272 | |
Diane E. Morais | RSU | 2/3/2016 | 45,938 | 784,621 | |||
PSU (a) | 2/3/2016 | 15,313 | 30,626 | 45,939 | — | 523,092 | |
Timothy M. Russi | RSU | 2/3/2016 | 47,762 | 815,775 | |||
PSU (a) | 2/3/2016 | 15,921 | 31,842 | 47,763 | — | 543,861 | |
David P. Shevsky (d) | RSU | 2/3/2016 | 14,140 | 241,511 | |||
PSU (a) | 2/3/2016 | 4,714 | 9,427 | 14,141 | — | 161,013 | |
William B. Solomon (d) | RSU | 2/3/2016 | 28,216 | 481,929 | |||
PSU (a) | 2/3/2016 | 14,108 | 28,216 | 42,324 | — | 481,929 |
(a) | |
These amounts reflect the PSUs granted to the NEOs in |
(b) | |
The amounts in this column represent the number of common shares of Ally underlying the award of RSUs granted to the NEOs in |
(c) | |
The amounts in this column reflect the aggregate grant date fair values of the awards, calculated in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures and, for PSUs, based on the probable outcome of the applicable Core ROTCE and TSV performance metrics as of the grant date. The grant date fair value amounts shown do not reflect realized cash compensation by the NEOs. The actual value, if any, realized by each NEO for these awards is a function of the value of the shares if and when these awards vest. For the value of the PSUs, assuming attainment of the Core ROTCE and TSV performance metrics at the maximum level of performance, see footnote (c) to the Summary Compensation Table above. For additional information on how we account for equity-based compensation, see Note 24 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, |
-33- | ||
2018 Proxy Statement |
The following table provides information regarding the outstanding equity awards held by the NEOs as of December 31, 2016. This table does not include the NEOs’ holdings of DSUs, the value of which is determined by reference to our common stock (see Nonqualified Deferred Compensation table below).2017.
Name | Grant date | Number of Shares or Units of Stock That Have Not Vested (#) (a) |
| Market Value of Shares or Units of Stock That Have Not Vested ($) (b) |
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (c) |
| Equity Incentive Plan Awards: Market or Payout Value of Shares, Units or Other Rights That Have Not Vested (#) (b) |
| ||||
Jeffrey J. Brown | 2/1/2017 |
| 118,056 |
|
| 3,442,513 |
|
|
|
|
|
|
|
| 2/1/2017 |
|
|
|
|
|
|
| 118,056 |
|
| 3,442,513 |
|
| 2/3/2016 |
| 77,560 |
|
| 2,261,650 |
|
|
|
|
|
|
|
| 2/3/2016 |
|
|
|
|
|
|
| 130,882 |
|
| 3,816,519 |
|
| 3/18/2015 |
| 118,204 |
|
| 3,446,814 |
|
|
|
|
|
|
|
Christopher A. Halmy | 2/1/2017 |
| 38,195 |
|
| 1,113,766 |
|
|
|
|
|
|
|
| 2/1/2017 |
|
|
|
|
|
|
| 38,195 |
|
| 1,113,766 |
|
| 2/3/2016 |
| 26,084 |
|
| 760,609 |
|
|
|
|
|
|
|
| 2/3/2016 |
|
|
|
|
|
|
| 44,018 |
|
| 1,283,565 |
|
| 3/18/2015 |
| 53,192 |
|
| 1,551,064 |
|
|
|
|
|
|
|
Diane E. Morais | 2/1/2017 |
| 38,774 |
|
| 1,130,650 |
|
|
|
|
|
|
|
| 2/1/2017 |
|
|
|
|
|
|
| 38,774 |
|
| 1,130,650 |
|
| 2/3/2016 |
| 30,626 |
|
| 893,054 |
|
|
|
|
|
|
|
| 2/3/2016 |
|
|
|
|
|
|
| 34,456 |
|
| 1,004,737 |
|
| 3/18/2015 |
| 53,192 |
|
| 1,551,064 |
|
|
|
|
|
|
|
Timothy M. Russi | 2/1/2017 |
| 37,616 |
|
| 1,096,883 |
|
|
|
|
|
|
|
| 2/1/2017 |
|
|
|
|
|
|
| 37,616 |
|
| 1,096,883 |
|
| 2/3/2016 |
| 31,842 |
|
| 928,513 |
|
|
|
|
|
|
|
| 2/3/2016 |
|
|
|
|
|
|
| 35,824 |
|
| 1,044,628 |
|
| 3/18/2015 |
| 53,192 |
|
| 1,551,064 |
|
|
|
|
|
|
|
Scott A. Stengel | 2/1/2017 |
| 24,306 |
|
| 708,763 |
|
|
|
|
|
|
|
| 2/1/2017 |
|
|
|
|
|
|
| 16,204 |
|
| 472,509 |
|
| 2/3/2016 |
| 21,047 |
|
| 613,731 |
|
|
|
|
|
|
|
Name | Grant Date | Number Of Shares Or Units Of Stock That Have Not Vested (#) (a) | Market Value Of Shares Or Units Of Stock That Have Not Vested ($) (b) | Equity Incentive Plan Awards: Number of unearned shares, units or other rights that have not vested (#) (c) | Equity Incentive Plan Awards: Market or payout value of shares, units or other rights that have not vested (#) (b) |
Jeffrey J. Brown | 02/03/2016 | 116,339 | 2,212,768 | ||
02/03/2016 | 116,339 | 2,212,768 | |||
03/18/2015 | 177,305 | 3,372,346 | |||
Christopher A. Halmy | 02/03/2016 | 39,126 | 744,177 | ||
02/03/2016 | 39,126 | 744,177 | |||
03/18/2015 | 79,787 | 1,517,553 | |||
Diane E. Morais | 02/03/2016 | 45,938 | 873,741 | ||
02/03/2016 | 30,626 | 582,507 | |||
03/18/2015 | 79,787 | 1,517,553 | |||
Timothy M. Russi | 02/03/2016 | 47,762 | 908,433 | ||
02/03/2016 | 31,842 | 605,635 | |||
03/18/2015 | 79,787 | 1,517,553 | |||
David P. Shevsky (d) | 02/03/2016 | 14,140 | 268,943 | ||
02/03/2016 | 9,427 | 179,302 | |||
06/30/2015 | 3,344 | 63,608 | |||
03/18/2015 | 10,639 | 202,349 | |||
01/29/2015 | 16,356 | 311,091 | |||
William B. Solomon (d) | 02/03/2016 | 28,216 | 536,668 | ||
02/03/2016 | 28,216 | 536,668 | |||
03/18/2015 | 35,462 | 674,478 |
(a) | |
The amounts reflected in this column represent the number of Ally common shares underlying (i) the supplemental one-time RSU awards granted in 2015 that are scheduled to vest in equal annual amounts over four years following the date of grant and (ii) the RSU awards granted to the NEOs in 2016 and 2017 that are scheduled to vest over three years from the date of grant, in each case, based solely on service. |
(b) | |
The market values of the awards were calculated by multiplying the number of shares underlying the awards by |
(c) | |
The amounts reflected in this column represent the number of Ally common shares underlying the PSU awards granted to the NEOs in 2016 and 2017 (with a performance period that ended on December 31, 2017 and is scheduled to end on December 31, |
-34- | ||
2018 Proxy Statement |
The following table provides information on the NEOs’ equity awards that vested in 2016.2017. The NEOs do not hold any options.
Name | Number of Shares Acquired on Vesting (#) (a) |
| Value Realized on Vesting ($) (b) |
| ||
Jeffrey J. Brown |
| 97,881 |
|
| 2,130,673 |
|
Christopher A. Halmy |
| 39,638 |
|
| 858,684 |
|
Diane E. Morais |
| 41,908 |
|
| 910,236 |
|
Timothy M. Russi |
| 42,516 |
|
| 924,043 |
|
Scott A. Stengel |
| 10,523 |
|
| 199,621 |
|
Name | Number Of Shares Acquired On Vesting (#) (a) | Value Realized On Vesting ($) (b) |
Jeffrey J. Brown | 61,627 | 1,142,477 |
Christopher A. Halmy | 27,700 | 513,464 |
Diane E. Morais | 28,089 | 521,213 |
Timothy M. Russi | 28,204 | 523,499 |
David P. Shevsky (c) | 18,478 | 309,930 |
William B. Solomon | 11,821 | 218,443 |
(a) | |
All amounts exclude those shares becoming nonforfeitable vesting solely due to retirement eligibility. |
(b) | |
The value realized on vesting of the equity was calculated by multiplying the number of common shares underlying awards that vested in |
Nonqualified Deferred Compensation in 2016
The table below reflects year-end balances, Company distributions, and all earnings associated primarily with vested DSU awards and the Ally nonqualified equalization plan.
Name | Plan name | Executive Contributions in Last Fiscal Year ($) |
| Registrant Contributions in Last Fiscal Year ($) |
| Aggregate Earnings in Last Fiscal Year ($) |
| Aggregate Withdrawals/ Distributions ($) |
| Aggregate Balance at Last FYE ($) |
| |||||
Jeffrey J. Brown | Nonqualified Benefit Equalization Plan (a) |
| - |
|
| 659 |
|
| 5,474 |
|
| - |
|
| 41,590 |
|
Christopher A. Halmy | Nonqualified Benefit Equalization Plan (a) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
Diane E. Morais | Nonqualified Benefit Equalization Plan (a) |
| - |
|
| 164 |
|
| 2,107 |
|
| - |
|
| 11,427 |
|
Timothy M. Russi | Nonqualified Benefit Equalization Plan (a) |
| - |
|
| - |
|
| 195 |
|
| - |
|
| 8,703 |
|
Scott A. Stengel | Nonqualified Benefit Equalization Plan (a) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
Name | Plan Name | Executive Contributions In Last Fiscal Year ($) | Registrant Contributions In Last Fiscal Year ($) | Aggregate Earnings In Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance At Last FYE ($) |
Jeffrey J. Brown | Nonqualified Benefit | — | 684 | 1,955 | — | 35,457 |
Equalization Plan (a) | ||||||
DSUs (b) | — | — | (26,360) | 1,113,622 | 246,136 | |
Christopher A. Halmy | DSUs (b) | — | — | (12,850) | 544,627 | 119,646 |
Diane E. Morais | Nonqualified Benefit | |||||
Equalization Plan (a) | — | 271 | 504 | — | 9,156 | |
DSUs (b) | — | — | (14,620) | 617,866 | 136,839 | |
Timothy M. Russi | Nonqualified Benefit | — | — | 193 | — | 8,508 |
Equalization Plan (a) | ||||||
DSUs (b) | — | — | (16,052) | 678,514 | 150,420 | |
David P. Shevsky | Nonqualified Benefit | |||||
Equalization Plan (a) | — | 1,185 | 1,512 | — | 27,008 | |
William B. Solomon | Nonqualified Benefit | — | 4,365 | 6,013 | — | 147,885 |
Equalization Plan (a) | ||||||
DSUs (b) | — | — | (12,748) | 538,856 | 119,438 |
(a) | |
The amounts reflect employee balances in the nonqualified Enhanced Retirement Savings Plan. Each participant is credited with earnings based on a set of investment options selected by the participant similar to 401(k) investment option to all employees, but employer contributions to this plan have not been made since 2009. For more information on this plan, see Compensation Discussion and Analysis-Components of Ally’s Compensation Program-Benefits and Perquisites above. |
Potential Payments Upon a Termination
Ally Financial Inc. Severance Plan
All NEOs are eligible to participate in the Company Severance Plan, which entitles each participantNEO to receive a numberreceive: two times the sum of weeks oftheir annual base salary usingand designated annual cash incentive compensation opportunity; the pro-rated designated annual cash incentive compensation opportunity for the year of their termination; and a tiered lengthpayment equal to 24 months of service schedulemedical premiums valued at their COBRA rate, in the event of certain qualified terminationsa qualifying termination of hisemployment or her employmenta termination of service without cause (as definedsummarized below), in each case, within the plan and summarized below). Under24-month period immediately following a change in control. In the schedule, asevent of December 31, 2016, Messrs. Brown, Halmy, and Russi and Ms. Morais were each eligible for cash severance equala qualifying termination, that is not in connection with a change in control, our CEO is entitled to 39 weeks of his or her base pay; Mr. Shevsky
The Company Severance Plan generally defines qualifiedqualifying terminations of employment as: (i) the elimination of a participant’s current position, termination associated with the reduction in the total number of employees in the same department performing the same or similar job, or termination associated with a restructuring of different departments which results in the reduction in the total number of employees, including the participant, in the affected departments; (ii) a substantial change in current duties for which the participant no longer qualifies; (iii) a substantial change in the participant’s current duties which results in a 20% or more reduction in the participant’s base salary; or (iv) declining a geographic transfer in connection with the elimination of the participant’s current position to a new position offered toat a location more than 50 miles from the participant uponlocation of the elimination ofparticipant’s current position as an alternative to termination (provided that the participant was offeredregardless of whether reimbursement of relocation expenses associated with the transfer in accordance with the Company’s then-current relocation program).is offered.
-35- | 2018 Proxy Statement |
Supplemental One-Time RSUs and 2016Annual RSUs
In the event of a NEO’s termination of employment (a) due to death, “disability or”“disability” or “retirement,” (b) by Ally without “cause” or (c) in the case of the Annual RSUs granted to the NEOs, in 2016, due to a “qualifying termination” (as such terms are defined in the 2014 Ally Financial Inc. 2014 Incentive Plan (
In the case of the supplemental one-time RSUs granted to the NEOs in 2015, in the event of a NEO’s termination of employment due to a qualifying termination, or retirement as approved by the Company, the unvested portion will fully vest and will be paid on the original settlement dates.
In the case of a NEO who is employed by a business unit of the Company, if the NEO is terminated (i) as a result of a “sale of such business unit” (as defined in the 2014 Incentive Plan and summarized below) or (ii) without cause or due to a qualifying termination, in each case, within the 24-month period immediately following the sale of such business unit, then all unvested RSU awards will fully vest as of the date of such termination and will be paid on the award’s original settlement dates.
In the event of a change“change in controlcontrol” (as defined in the 2014 Incentive Plan and summarized below), if the RSU awards are not continued or converted into a restricted stock or RSU award over to shares of the survivor or successor (or parent corporation) on a basis substantially equivalent to the consideration received by stockholders of Ally in connection with the change in control, the outstanding RSUs will vest and be immediately due and payable. If the RSUs are continued or converted as described above, then in the event of a termination of the NEO’s employment without cause or due to a qualifying termination within the 24-month period following the change in control, the RSUs will fully vest and become immediately payable.
Annual PSUs
In the event of a NEO’s termination of employment due to his or her death or disability, the PSU awards will fully vest as of the date of such termination of employment and will be paid within 75 days of such termination of employment, with the performance conditions applicable to the PSUs deemed achieved (i) at the target performance level if the termination of service occurs prior to the end of the performance period or (ii) based on actual performance if the termination of service occurs on or after the last day of the performance period.
In the event of a NEO’s termination of employment (a) due to retirement, (b) by the Company without cause or (c) due to a qualifying termination (whether as a result of a sale of a business unit or otherwise), in each case, other than in connection with a change in control, the PSU awards will fully vest as of the date of such termination of employment, subject to achievement of the applicable Core ROTCE and TSV performance conditions and will be payable on the award’s original settlement dates. However, in the case of a termination of employment by the Company without cause or due to a qualifying termination (whether as a result of a sale of a business unit or otherwise), if the performance goals are achieved above the target performance level, the number of shares that will be payable in excess of the target number of shares will be prorated based on the number of calendar days during the performance period the NEO was employed by the Company.
In the event of a change in control, if the PSU awards are not continued or converted into a restricted stock award over to shares of the survivor or successor (or parent corporation) on a basis substantially equivalent to the consideration received by stockholders of Ally in connection with the change in control, the outstanding PSUs will vest and be immediately due and payable. If the PSUs are continued or converted as described above, then in the event of a termination of the NEO’s
-36- | 2018 Proxy Statement |
Under the 2014 Incentive Plan, “cause,” “change in control,” “disability,” “qualifying termination,” “retirement,” and “sale of such business unit” are generally defined as follows:
“Cause” generally means, unless otherwise defined in any employment agreement with the participant (if any) or as otherwise provided in an individual award agreement, the participant’s: (i) felony indictment or misdemeanor conviction; (ii) failure to perform any material responsibility of the leadership position; (iii) a course of conduct, which would tend to hold the Company or any of its affiliates in disrepute or scandal, as determined by the Board in its sole discretion; (iv) failure to follow lawful directions of the Board; (v) any material breach of fiduciary duty to the Company; (vi) gross negligence; (vii) willful misconduct; (viii) failure to comply with a material Company policy; (ix) any act of fraud, theft, or dishonesty; (x) breach of any restrictive covenants set forth in the 2014 Incentive Plan; or (xi) failure to promptly repay any award payment that is determined to be owed to the Company pursuant to the recoupment or “clawback” provisions under the 2014 Incentive Plan.
“Change in control” generally means the occurrence of one or more of the following events: (i) any person or entity becomes, directly or indirectly, the beneficial owner of more than 30% of the combined voting power of the Company’s outstanding securities entitled to vote generally in the election of directors; (ii) the replacement of a majority of the Company’s directors during any 12-month period; (iii) the consummation of (x) a merger or consolidation of the Company or any of its subsidiaries with any other entity, or the issuance of voting securities in connection with oura merger or consolidation with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent at least 60% of the combined voting power and total fair market value of the securities of the Company or such surviving entity or parent outstanding immediately after such merger or consolidation or (y) any sale, lease, exchange or other transfer to any person (other than an affiliate of the Company) of assets of the Company and/or any of its subsidiaries having a total gross fair market value equal to or more than 40% of the total gross fair market value of the Company and its subsidiaries immediately prior to such transaction(s).
“Disability” generally means, unless otherwise provided in an individual award agreement, (i) a long-term disability that entitles the participant to disability income payments under any long-term disability plan or policy provided by the Company under which the participant is covered, as such plan or policy is then in effect; or (ii) if such participant is not covered under a long-term disability plan or policy provided by the Company at such time for whatever reason, then the term “disability” means disability within the meaning of Treasury Reg. Section 1.409A-3(i)(4).
“Qualifying Termination” generally means a termination of employment or service as a result of any of the following: (i) elimination of the participant’s current position or reduction in the total number of employees in the same department performing the same or similar job; (ii) a substantial change in current duties for which the employee no longer qualifies; (iii) a substantial change in current duties, which results in a twenty percent (20%)20% or more reduction in salary; or (iv) declining a geographic transfer to a new position offered to the participant upon the elimination of current position as an alternative to termination (provided that the participant was offered reimbursement of relocation expenses associated with the transfer in accordance with the Company’s then-current relocation program).
“Retirement” generally means a termination of employment or service other than for cause following attainment of (i) age 55, and the total of age and years of service to the Company and its affiliates equals or exceeds 70, or (ii) age 65.
“Sale of such business unit” generally means whether effected directly or indirectly, or in one transaction or a series of transactions: (i) any merger, consolidation, reorganization or other business combination pursuant to which a “business unit” (i.e., a single business or product line or related group of business or product lines of the Company that, in the ordinary course of the Company’s business, managerial and financial reporting are considered and managed as a division, including, but not limited to, the Company’s North American Auto Finance, Insurance and
-37- | 2018 Proxy Statement |
The tables below for each of the active NEOs reflect the payments and benefits to which each of the active NEOs would have been entitled under the Company’s compensation and benefit plans in the event of a change in control, an involuntary termination by the Company without cause, a Qualifying Terminationqualifying termination or a termination due to death or disability, in each case, as of December 31, 2016.2017. The amounts reflected in the tables below for “Equity Acceleration”: (i) do not include the value of any stock awards that were vested (or non-forfeitable due to retirement provisions) as of December 31, 2016 or any DSUs (which are reported in the Nonqualified Deferred Compensation Table above)2017 and (ii) assume achievement of any applicable performance goals at the target performance level.
Jeffrey J. Brown, Chief Executive Officer |
| |||||||||||||
Executive Benefits and Payments Upon Termination |
| Termination Without Cause or Qualifying Termination ($) |
|
|
| Termination Following a Change in Control ($) |
|
|
| Death/Disability ($) |
| |||
Base Salary (a) | $ |
| 2,000,000 |
|
| $ |
| 2,000,000 |
|
| $ | — |
| |
Annual Incentive (b) |
| — |
|
|
|
| 5,400,000 |
|
|
| — |
| ||
Long-Term Incentives (c) |
|
| 16,410,009 |
|
|
|
| 16,410,009 |
|
|
|
| 16,410,009 |
|
Outplacement (d) |
|
| 20,000 |
|
|
|
| 20,000 |
|
|
| — |
| |
Total | $ |
| 18,430,009 |
|
| $ |
| 23,830,009 |
|
| $ |
| 16,410,009 |
|
Jeffrey J. Brown, Chief Executive Officer | |||
Termination without Cause or Qualifying Termination ($) | Termination following a Change in Control ($) | Death/Disability ($) | |
Base Salary (a) | 750,000 | 750,000 | — |
Annual Incentive | — | — | — |
Equity Acceleration (b) | 7,797,881 | 7,797,881 | 7,797,881 |
Outplacement (c) | 20,000 | 20,000 | — |
Total | 8,567,881 | 8,567,881 | 7,797,881 |
(a) | |
Represents a cash payment under the Company Severance Plan equal to |
(b) | Represents a cash payment under the Company Severance Plan equal to two times annual cash incentive opportunity in the event of a “Change in Control” (as defined in the plan). Mr. Brown’s annual cash incentive opportunity rate as of December 31, 2017 was $2,700,000. |
(c) | Represents the value associated with the Equity Acceleration of the unvested portion of (i) the supplemental one-time RSUs granted in 2015 in the event of a termination of employment by Ally without cause |
(d) | |
Represents the estimated value of outplacement services provided under the Company Severance Plan, at a level which is determined by the CNGC on an individual-by-individual basis. |
Christopher A. Halmy, Chief Financial Officer |
| |||||||||||||
Executive Benefits and Payments Upon Termination |
| Termination Without Cause or Qualifying Termination ($) |
|
|
| Termination Following a Change in Control ($) |
|
|
| Death/Disability ($) |
| |||
Base Salary (a) | $ |
| 600,000 |
|
| $ |
| 1,200,000 |
|
| $ | — |
| |
Annual Incentive (b) |
| — |
|
|
|
| 1,900,000 |
|
|
| — |
| ||
Long-Term Incentives (c) |
|
| 5,822,771 |
|
|
|
| 5,822,771 |
|
|
|
| 5,822,771 |
|
Outplacement (d) |
|
| 20,000 |
|
|
|
| 20,000 |
|
|
| — |
| |
Total | $ |
| 6,442,771 |
|
| $ |
| 8,942,771 |
|
| $ |
| 5,822,771 |
|
Christopher A. Halmy, Chief Financial Officer | |||
Termination without Cause or Qualifying Termination ($) | Termination following a Change in Control ($) | Death/Disability ($) | |
Base Salary (a) | 450,000 | 450,000 | — |
Annual Incentive | — | — | — |
Equity Acceleration (b) | 3,005,907 | 3,005,907 | 3,005,907 |
Outplacement (c) | 20,000 | 20,000 | — |
Total | 3,475,907 | 3,475,907 | 3,005,907 |
(a) | Represents a cash payment equal to two-times base salary following a change in control and one-times base salary for a qualified termination without cause. Mr. Halmy’s annual base salary rate as of December 31, 2017 was $600,000. |
(b) | Represents a cash payment under the Company Severance Plan equal to |
(c) | |
Represents the value associated with the Equity Acceleration of the unvested portion of (i) the supplemental one-time RSUs granted in 2015 in the event of a termination of employment by Ally without cause |
(d) | |
Represents the estimated value of outplacement services provided under the Company Severance Plan, at a level which is determined by the CNGC on an individual-by-individual basis. |
Diane E. Morais, President, Consumer & Commercial Banking Products |
| |||||||||||||
Executive Benefits and Payments Upon Termination |
| Termination Without Cause or Qualifying Termination ($) |
|
|
| Termination Following a Change in Control ($) |
|
|
| Death/Disability ($) |
| |||
Base Salary (a) | $ |
| 600,000 |
|
| $ |
| 1,200,000 |
|
| $ | — |
| |
Annual Incentive (b) |
| — |
|
|
|
| 2,200,000 |
|
|
| — |
| ||
Long-Term Incentives (c) |
|
| 5,710,155 |
|
|
|
| 5,710,155 |
|
|
|
| 5,710,155 |
|
Outplacement (d) |
|
| 20,000 |
|
|
|
| 20,000 |
|
|
| — |
| |
Total | $ |
| 6,330,155 |
|
| $ |
| 9,130,155 |
|
| $ |
| 5,710,155 |
|
(a) | ||
Represents a cash payment equal to two-times base salary following a change in control and one-times base salary for a qualified termination without cause. Ms. Morais’s annual base salary rate as of December 31, 2017 was $600,000. |
Diane E. Morais, President, Consumer & Commercial Banking Products | |||
Termination without Cause or Qualifying Termination ($) | Termination following a Change in Control ($) | Death/Disability ($) | |
Base Salary (a) | 412,500 | 412,500 | — |
Annual Incentive | — | — | — |
Equity Acceleration (b) | 2,973,801 | 2,973,801 | 2,973,801 |
Outplacement (c) | 20,000 | 20,000 | — |
Total | 3,406,301 | 3,406,301 | 2,973,801 |
(b) | |
Represents a cash payment under the Company Severance Plan equal to |
-38- | 2018 Proxy Statement |
(d) | |
Represents the estimated value of outplacement services provided under the Company Severance Plan, at a level which is determined by the CNGC on an individual-by-individual basis. |
Timothy M. Russi, President - Auto Finance |
| |||||||||||||
Executive Benefits and Payments Upon Termination |
| Termination Without Cause or Qualifying Termination ($) |
|
|
| Termination Following a Change in Control ($) |
|
|
| Death/Disability ($) |
| |||
Base Salary (a) | $ |
| 600,000 |
|
| $ |
| 1,200,000 |
|
| $ | — |
| |
Annual Incentive (b) |
| — |
|
|
|
| 1,800,000 |
|
|
| — |
| ||
Long-Term Incentives (c) |
|
| 5,717,970 |
|
|
|
| 5,717,970 |
|
|
|
| 5,717,970 |
|
Outplacement (d) |
|
| 20,000 |
|
|
|
| 20,000 |
|
|
| — |
| |
Total | $ |
| 6,337,970 |
|
| $ |
| 8,737,970 |
|
| $ |
| 5,717,970 |
|
Timothy M. Russi, President, Auto Finance | |||
Termination without Cause or Qualifying Termination ($) | Termination following a Change in Control ($) | Death/Disability ($) | |
Base Salary (a) | 412,500 | 412,500 | — |
Annual Incentive | — | — | — |
Equity Acceleration (b) | 3,031,622 | 3,031,622 | 3,031,622 |
Outplacement (c) | 20,000 | 20,000 | — |
Total | 3,464,122 | 3,464,122 | 3,031,622 |
(a) | Represents a cash payment equal to two-times base salary following a change in control and one-times base salary for a qualified termination without cause. Mr. Russi’s annual base salary rate as of December 31, 2017 was $600,000. |
(b) | Represents a cash payment under the Company Severance Plan equal to |
(c) | |
Represents the value associated with the Equity Acceleration of the unvested portion of (i) the supplemental one-time RSUs granted in 2015 in the event of a termination of employment by Ally without cause |
(d) | |
Represents the estimated value of outplacement services provided under the Company Severance Plan, at a level which is determined by the CNGC on an individual-by-individual basis. |
Scott A. Stengel, General Counsel |
| |||||||||||||
Executive Benefits and Payments Upon Termination |
| Termination Without Cause or Qualifying Termination ($) |
|
|
| Termination Following a Change in Control ($) |
|
|
| Death/Disability ($) |
| |||
Base Salary (a) | $ |
| 500,000 |
|
| $ |
| 1,000,000 |
|
| $ | — |
| |
Annual Incentive (b) |
| — |
|
|
|
| 1,000,000 |
|
|
| — |
| ||
Long-Term Incentives (c) |
|
| 1,795,002 |
|
|
|
| 1,795,002 |
|
|
|
| 1,795,002 |
|
Outplacement (d) |
|
| 20,000 |
|
|
|
| 20,000 |
|
|
| — |
| |
Total | $ |
| 2,315,002 |
|
| $ |
| 3,815,002 |
|
| $ |
| 1,795,002 |
|
David P. Shevsky, Chief Risk Officer | |||
Termination without Cause or Qualifying Termination ($) | Termination following a Change in Control ($) | Death/Disability ($) | |
Base Salary (a) | 500,000 | 500,000 | — |
Annual Incentive | — | — | — |
Equity Acceleration (b) | 265,957 | 265,957 | 265,957 |
Outplacement (c) | 20,000 | 20,000 | — |
Total | 785,957 | 785,957 | 265,957 |
(a) | Represents a cash payment equal to two-times base salary following a change in control and one-times base salary for a qualified termination without cause Mr. Stengel’s annual base salary rate as of December 31, 2017 was $500,000. |
(b) | Represents a cash payment under the Company Severance Plan equal to |
(c) | |
Represents the value associated with the Equity Acceleration of the unvested |
(d) | |
Represents the estimated value of outplacement services provided under the Company Severance Plan, at a level which is determined by the CNGC on an individual-by-individual basis. |
-39- | ||
2018 Proxy Statement |
The Dodd-Frank Wall Street Reform and Consumer Protection Act enablesof 2010 and SEC Regulation S-K require a public company to disclose the Company’s stockholders to vote to approve, on an advisory (non-binding) basis, theannual total compensation of its Principal Executive Officer (PEO), the NEOs as disclosed in this proxy statement in accordance withmedian of the SEC’s rules.
In determining the
To identify our median employee from our adjusted employee population, we used base salary plus 2017 target incentive opportunities. Base salaries were annualized for issuance underthose permanent employees who were not employed by us for all of 2017.
Once we identified our median employee, we determined our median employee’s annual total compensation for 2017 by using the Incentive Plan, the Board and CNGC carefully considered the potential dilution to our current stockholders and projected future share usage needs for the Company to be able to make competitive grants to participants.
Please note that generally results in a “change in control” (as defined inSEC rules for identifying the Incentive Planmedian employee and summarized below) ofcalculating the business unit (using certain specified criteria of such “change in control” definition underpay ratio allow companies to apply various methodologies and apply various assumptions and, as result, the Incentive Plan); or (ii) the sale, transfer or other disposition of all or substantially all of the assets of the business unit or the capital stock of the subsidiaries of the Company comprising the business unitpay ratio reported by way of negotiated purchase, tender or exchange offer, option, leveraged buyout, joint venture over which the Company does not exercise voting control or otherwise.
-40- | ||
2018 Proxy Statement |
PROPOSAL 4 — APPROVAL OF THE ALLY FINANCIAL INC. NON-EMPLOYEE DIRECTORS EQUITY COMPENSATION PLAN
Plan Category | (1) Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) (in thousands) | (2) Weighted-average exercise price of outstanding options, warrants and rights | (3) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (1))(b) (in thousands) |
Equity compensation plans approved by security holders | 7,517 | — | 25,405 |
Total | 7,517 | — | 25,405 |
The AC is solely and directly responsible for the appointment, compensation, retention, and oversight of the Company’s independent registered public accounting firm. In connection with these responsibilities, the AC evaluates and monitors the qualifications, quality of service, objectivity, and independence of the firm. The AC is also involved in the selection of, and ongoing evaluation of the lead audit partner, including the regular rotation of the lead audit partner in compliance with applicable law. The AC approves all fees and terms of engagement of the firm. Deloitte & Touche has advised the Company that its members have no direct or indirect financial interest in the Company or any of its subsidiaries.
After assessing the performance, qualifications, independence, objectivity, and professional skepticism of Deloitte & Touche
—the Company’s current independent registered public accounting firm—the AC and the Board believe that the continued retention of Deloitte & Touche as our independent auditor is in the best interests of the Company and its stockholders. Deloitte & Touche has been serving the Company and its subsidiaries in this role forThe Board asks our stockholders to ratify the AC’s engagement of Deloitte & Touche as the Company’s independent registered public accounting firm for fiscal year 2017.2018. The AC, however, will retain its sole authority over the appointment, compensation, retention, and oversight of the Company’s independent auditor. As a result, in the event that a majority of the stockholders vote to not ratify the appointmentengagement of Deloitte & Touche is not ratified by stockholders, the AC will consider that action in the ongoing exercise of its authority over the independent auditor but will be under no obligation to engage a new independent auditor. In addition, even if a majority of the stockholders do ratify the appointment,engagement is ratified, the AC will retain its discretion to terminate the appointment at any time during the year, to engage a new independent auditor, and to take any other related action if judged by the AC to be in the best interests of the Company and its stockholders.
Representatives of Deloitte & Touche are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so. We also expect that these representatives will be available to respond to appropriate questions from stockholders.
The Board recommends that stockholders vote FOR the ratification of the Audit Committee’s engagement of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2017.
-41- | ||
2018 Proxy Statement |
Total fees for professional services provided by our principal independent registered public accounting firm, Deloitte & Touche LLP, for the fiscal years ended December 31, 20162017 and 20152016 are as follows:
($ in millions) |
| 2017 |
| 2016 |
Audit fees (a) | $ | 8 | $ | 8 |
Audit-related fees (b) |
| 3 |
| 3 |
Audit and audit-related fees |
| 11 |
| 11 |
Tax fees (c) |
| 1 |
| 1 |
Total fees | $ | 12 | $ | 12 |
($ in millions) | 2016 | 2015 | |
Audit fees (a) | $8 | $9 | |
Audit-related fees (b) | 3 | 4 | |
Audit and audit-related fees | 11 | 13 | |
Tax fees (c) | 1 | — | |
All other fees | — | — | |
Total fees | $12 | $13 |
(a) | |
Audit fees include fees for the integrated audit of Ally’s annual Consolidated Financial Statements, reviews of interim financial statements included in Ally’s Quarterly Reports on Form 10-Q, and audit services in connection with statutory and regulatory filings. In addition, this category includes approximately $1 million in both |
(b) | |
Audit-related fees include fees for assurance and related services that are traditionally performed by the principal accountant, including attest services related to servicing and compliance, agreed-upon procedures relating to securitizations and financial asset sales, and consultation concerning financial accounting and reporting |
(c) | |
Includes amount of tax fees for services performed for tax compliance, tax planning, and tax advice, including preparation of tax returns and claims for refund, and tax payment-planning services. Tax planning and advice also include assistance with tax audits and appeals and tax advice related to specific transactions. |
Our Independent Auditor Services and Preapproval Policy ofis approved by the AC and sets forth the processes that must be followed when engaging the independent registered public accounting firm. For both audit services and non-audit services, the AC will consider whether the firm’s provision of the services areis consistent with the SEC’s rules on auditor independence and whether the provision of the services by the independent registered public accounting firm couldwould not impair the independence of the firm with respect to us. The AC will also consider any other matters it deems relevant, including as appropriate whether the firm is best positioned to provide the most effective and efficient service given its familiarity with our business and operations.
Consistent with the Independent Auditor Services and Preapproval Policy, management and the independent registered public accounting firm annually present proposedpresents to the AC (1) an engagement letter that sets forth the annual integrated audit services (including quarterly reviews) and fees and (2) a summary of services that sets forth statutory audits, projected non-audit reports, and other projected services that may be requested during the fiscal year together with corresponding fees. The AC will review and, in its discretion, preapprove these services and related fees by appointing the firm and approving the engagement letter and the summary of services.
Any proposed engagement of the firm for a statutory audit, a non-audit report, or other service that was preapproved in the summary of services is directed to our Controller’s office, which is charged with verifying that the service was preapproved and will be provided consistent with the fees projected in the summary of services. If the fees for the preapproved service exceed or are expected to exceed the projected fees, the engagement must be approved by the Controller or Chief Tax Officer as applicable (in the case of total fees for the service of $100,000 or less), the Chair of the AC (in the case of total fees for the service of more than $100,000 but less than or equal to $500,000), or the AC (in the case of total fees for the service of more than $500,000).
Any proposed engagement of the firm for an audit or non-audit service that was not preapproved in the annual engagement letter or the summary of services and that does not exceed $500,000 in fees may be preapproved by the Chair of the AC, subject to the condition that the Chair’s decision is presented to the AC at a subsequent meeting within a reasonable timeframe. Instead of considering such an engagement, the Chair may elect to refer it to the AC for approval prior topreapproval. Any proposed engagement of the commencement of services. To the extent approved, these services and fees form the basisfirm for an annual limit on the firm’s fees. The AC periodically reviews the spending against this limit, and any audit or non-audit service that was not preapproved in the annual engagement letter or the summary of services not initially contemplated or considered during the initial fee review and approvalthat exceeds $500,000 in fees must be separately addressed in accordance with the Independent Auditor Services and Preapproval Policy. Preapproval of these additional services may be granted by action of the AC or by the AC Chair, who has been delegated authority by the AC to preapprove permissible services provided that such services are promptly reportedsubmitted to the AC and do not individually exceed $500,000. Preapproval is not required underfor preapproval.
Under the Independent Auditor Services and Preapproval Policy, for additional non-audit services if (1) the aggregate amount of all such non-audit services constitute no more than 5%engagement may be finalized, no financial commitment may be made, and no work may begin related to a proposed engagement of the total amount of fees paidfirm until all appropriate preapprovals have been given and verifications have been made, except in the limited circumstance permitted by the Company to the firm during the fiscal year in which the non-audit services are provided, (2) such services were not recognized by the Company at the time of engagement to be non-audit services, and (3) such services are promptly brought to the attentionSection 10A(i) of the ACExchange Act and approved prior to the completion of the audit.SEC Rule 2-01(c)(7). All audit and non-audit services performed by Deloitte & Touche in 20162017 were approved in accordance with the Independent Auditor Services and Preapproval Policy of the AC.Policy.
-42- | 2018 Proxy Statement |
Management is responsible for the Company’s internal control over financial reporting, preparation of consolidated financial statements, and overall reporting process.accounting and financial-reporting processes. Deloitte & Touche LLP, our independent registered public accounting firm, is responsible for planning and conducting an independent audit of the Company’s consolidated financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board (PCAOB) and for expressing an opinion as to the conformity of these financial statements with GAAP and as to the effectiveness of our internal controls over financial reporting. The AC’s responsibilityCompany’s Internal Audit function, under the direction of the General Auditor, is independent of the Company’s business units, functionally reports to monitorthe AC, and overseeis responsible for preparing an annual audit plan and conducting internal audits to test and evaluate the Company’s risk management, governance, and internal controls. The AC is responsible for monitoring and overseeing these processesactivities on behalf of the Board.
The AC, in connection with its monitoring and oversight responsibilities, assesses the activities and performance of the Company’s independent auditor.auditor, which reports directly to the AC. Annually, the AC considers the results of an evaluation of the performance, qualifications, independence, objectivity, and professional skepticism of the independent auditor in determining whether to retain the firm for the next fiscal year. The AC oversees the audit fee negotiations associated with the retention of the independent auditor and has the sole authority to approve the engagement letter and the audit fees. In accordance with SEC rules, audit partners are subject to rotation requirements to limit the number of consecutive years that an individual partner may provide services. In conjunction with this five-year mandated rotation of the firm’s lead client serviceaudit partner, the AC and its chairpersonChair are directly involved in the selection of the independent auditor’s new lead client serviceaudit partner. The AC has sole authority and direct responsibility to appoint or replace the Company’s independent registered public accounting firm, which reports directly to the AC.firm. Additionally, the AC has oversight responsibility for the Company’s internal auditInternal Audit function, including the appointment, removal,retention, performance evaluation, and compensation of the Company’s general auditor.
The AC discussed the interim financial and other information contained in each quarterly earnings announcement and periodic SEC filing with management and Deloitte & Touche prior to the public release of the announcement. The AC has reviewed and discussed with management and with Deloitte & Touche the Company’s audited financial statements as of and for the fiscal year ended December 31, 2016,2017, management’s assessment of the effectiveness of the Company’s internal control over financial reporting, and Deloitte & Touche’s evaluation of the Company’s internal control over financial reporting. In addition, the AC has discussed with Deloitte & Touche the matters that independent registered public accounting firms must communicate to audit committees under applicable PCAOB standards, including Auditing Standard No. 16 (
Based on these reviews and discussions, the AC recommended to the Board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2017, for filing with the SEC.
The Audit Committee of the Board of Directors of Ally Financial Inc.
Robert T. Blakely (Chair)
William H. Cary (Chair effective March 1, 2018)
Maureen A. Breakiron-Evans
Mayree C. Clark
John J. Stack
As provided by SEC Regulation S-K, this Audit Committee Report is not deemed to be soliciting material or to be filed or incorporated by reference into any other filing by the Company under the Securities Act of 1933 as amended or the Exchange Act.
-43- | 2018 Proxy Statement |
Any proposal that a stockholder wishes to be considered for inclusion in Ally’s proxy materials for the 20182019 annual meeting of stockholders pursuant to SEC Rule 14a-8 must be received in writing by Ally not later than November 22, 2017.23, 2018. We recommend that any stockholder proposal be delivered by means that provide proof of the date of delivery, such as certified mail (postage prepaid and return receipt requested). Please note that SEC Rule 14a-8 addresses when we must include a stockholder proposal in our proxy materials, including eligibility and procedural requirements that apply to the proponent.
Any stockholder proposal that is not submitted for inclusion in our proxy materials for the 20182019 annual meeting of stockholders under SEC Rule 14a-8 (including any director nomination) but that is sought to be presented at that annual meeting under our Bylaws must be received in writing by Ally not earlier than January 2, 2018,8, 2019, and not later than February 1, 2018.7, 2019. Such a proposal (including any director nomination) also must satisfy the information and other requirements specified in our Bylaws, which are available on our web site at https://www.ally.com/resources/pdf/corporate/ally-bylaws.2016-03-16.pdf.ally-bylaws.2016-03-16.pdf
Any stockholder proposal (including any director nomination) submitted to Ally in connection with the 20182019 annual meeting of stockholders must be received at the following address: Ally Financial Inc., Corporate Secretary, 500 Woodward Avenue, Mail Code MI-01-10-CORPSEC, Detroit, Michigan 48226.
-44- | ||
2018 Proxy Statement |
SEC rules allow the delivery of one proxy statement, annual report, or notice of internet availability of proxy materials, as applicable, to all stockholders who share an address if specified conditions are met. This is called “householding” and can minimize the costs involved in printing and delivering proxy materials as well as the associated impact on the environment. For eligible stockholders who share an address, we are sending only one proxy statement, annual report, or notice of internet availability, as applicable, to that address unless we received instructions to the contrary from any stockholder at that address.
If you are the beneficial owner but not the record holder of our common stock, your broker, bank, or other nominee may household our proxy statements, annual reports, or notices of internet availability, as applicable, for all stockholders at your address unless that nominee has received contrary instructions from one or more of the affected stockholders. If you want this householding to cease or if you want householding to commence, please notify your broker, bank, or other nominee.
If you did not receive a separate copy of our proxy statement, annual report, or notice of internet availability, as applicable, we will promptly provide you with a separate copy if you request one by contacting us as follows:
Ally Financial Inc.
Corporate Secretary
500 Woodward Avenue
Mail Code: MI-01-10-CORPSEC
Detroit, Michigan 48226
(866) 710-4623
This notice and proxy statement are sent by order of the Board of Directors.
Jeffrey A. Belisle
Corporate Secretary
Detroit, Michigan
March 22, 2017
PLEASE COMPLETE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS MAILED IN THE UNITED STATES OF AMERICA. ALTERNATIVELY, YOU MAY VOTE BY TELEPHONE OR INTERNET AS DESCRIBED ON THE PROXY CARD. |
ALLY FINANCIAL INC.500 WOODWARD AVENUE MI-01-10-CORPSEC DETROIT, MI 48226 | VOTE BY INTERNET - www.proxyvote.com/allyUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on May ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on May VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
-45- | 2018 Proxy Statement |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |||||||
E22613-P87183 | KEEP THIS PORTION FOR YOUR RECORDS | ||||||
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | ||||||||||||||||||||||||
ALLY FINANCIAL INC. | ||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following: | ||||||||||||||||||||||||
1. | Election of Directors: | |||||||||||||||||||||||
Nominees: | For | Against | Abstain | |||||||||||||||||||||
01) Franklin W. Hobbs | ☐ | ☐ | ☐ | |||||||||||||||||||||
02) Kenneth J. Bacon | ☐ | ☐ | ☐ | |||||||||||||||||||||
03) | ||||||||||||||||||||||||
☐ | ☐ | ☐ | ||||||||||||||||||||||
04) William H. Cary | ☐ | ☐ | ☐ | |||||||||||||||||||||
05) Mayree C. Clark | ☐ | ☐ | ☐ | |||||||||||||||||||||
06) Kim S. Fennebresque | ☐ | ☐ | ☐ | |||||||||||||||||||||
07) Marjorie Magner | ☐ | ☐ | ☐ | |||||||||||||||||||||
08) John J. Stack | ☐ | ☐ | ☐ | |||||||||||||||||||||
09) Michael F. Steib | ☐ | ☐ | ☐ | |||||||||||||||||||||
10) Jeffrey J. Brown | ☐ | ☐ | ☐ | |||||||||||||||||||||
The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | |||||||||||||||||||||
2. | ||||||||||||||||||||||||
Advisory vote on executive compensation. | ☐ | ☐ | ☐ | |||||||||||||||||||||
3. | ||||||||||||||||||||||||
Ratification of the Audit Committee’s engagement of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for | ☐ | ☐ | ☐ | |||||||||||||||||||||
NOTE: The proxies may vote in their discretion on any other business as may properly come before the meeting or any adjournment or postponement thereof. | ||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||||||||||||
-46- | 2018 Proxy Statement |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement, Annual Report and Form 10-K are available at www.proxyvote.com/ally. | ||||||||||
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E22613-P87183 | ||||||||||
ALLY FINANCIAL INC. Annual Meeting of Stockholders May 8, 2018 This proxy is solicited by the Board of Directors | ||||||||||
The stockholder(s) hereby appoint(s) Jeffrey J. Brown and | ||||||||||
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted FOR Proposals 1 through | ||||||||||
Continued and to be signed on reverse side |
-47- | ||
2018 Proxy Statement |
Set forth below is a list of the defined terms used within this proxy statement.
Defined Terms | See Page No. |
AC | 4 |
Adjusted EPS | 21 |
Ally | 1 |
Annual Meeting | 1 |
Beneficial Owners | 1 |
Board or Board of Directors | 1 |
bps | 22 |
CCAR | 27 |
CD&A | 21 |
CEO | 5 |
CFO | 18 |
CNGC | 4 |
Code | 30 |
Company | 1 |
Director DSU | 14 |
DTC | 11 |
Exchange Act | 11 |
Executive Officers | 12 |
EPP | 22 |
FW Cook | 24 |
GAAP | 21 |
Governance Guidelines | 4 |
HFI | 22 |
Householding | 45 |
ICP | 22 |
Incentive Plan | 36 |
Independent | 7 |
Independent Director | 7 |
MRT | 25 |
NED | 15 |
NEO | 21 |
NIM | 22 |
NYSE | 7 |
OID | 22 |
PCAOB | 43 |
PEO | 40 |
Purview Executives | 12 |
PSU | 17 |
RC | 6 |
Record Date | 1 |
Related Person | 18 |
Related-Person Transaction | 18 |
Related-Person Transaction Policy | 18 |
ROTCE | 27 |
RSU | 17 |
Savings Plan | 30 |
SEC | 5 |
SEC filings | 3 |
Section 162(m) | 30 |
Stockholders of Record or Record Holders | 1 |
TDC | 22 |
-49- | |
2018 Proxy Statement |
The following are reconciliations of identified non-GAAP financial measures to comparable GAAP financial measures.
Note: The totals in the tables may not foot due to rounding. | 2017 |
| 2016 |
| 2015 |
| |||
Adjusted Earnings Per Share |
|
|
|
|
|
|
|
|
|
Numerator ($ in millions) |
|
|
|
|
|
|
|
|
|
GAAP Net Income Attributable to Common Stockholders | $ | 929 |
| $ | 1,037 |
| $ | (1,282) |
|
Discontinued Operations, Net of Tax |
| (3) |
|
| 44 |
|
| (392) |
|
Core Original Issue Discount (OID) and accelerated OID |
| 71 |
|
| 59 |
|
| 59 |
|
Repositioning Items |
| — |
|
| 11 |
|
| 349 |
|
Core OID & Repo. Items Tax (35% starting 1Q16, 34% prior) |
| (25) |
|
| (24) |
|
| (139) |
|
Significant Discrete Tax Items |
| 119 |
|
| (84) |
|
| — |
|
Series G Actions |
| — |
|
| — |
|
| 2,350 |
|
Series A Actions |
| — |
|
| 1 |
|
| 22 |
|
Core Net Income Attributable to Common Stockholders [a] | $ | 1,091 |
| $ | 1,043 |
| $ | 967 |
|
Denominator |
|
|
|
|
|
|
|
|
|
Weighted-Average Shares Outstanding - (Diluted, thousands) [b] |
| 455,350 |
|
| 482,182 |
|
| 483,934 |
|
Adjusted Earnings Per Share [a] ÷ [b] | $ | 2.39 |
|
| 2.16 |
| $ | 2.00 |
|
|
|
|
|
|
|
|
|
|
|
Net Financing Revenue (ex.OID) |
|
|
|
|
|
|
|
|
|
($ millions) |
|
|
|
|
|
|
|
|
|
GAAP Net Financing Revenue | $ | 4,221 |
| $ | 3,907 |
| $ | 3,719 |
|
Core OID |
| 71 |
|
| 57 |
|
| 45 |
|
Net Financing Revenue (ex. OID) [a] | $ | 4,292 |
| $ | 3,964 |
| $ | 3,764 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Other Revenue |
|
|
|
|
|
|
|
|
|
($ millions) |
|
|
|
|
|
|
|
|
|
GAAP Other Revenue | $ | 1,544 |
| $ | 1,530 |
| $ | 1,142 |
|
Accelerated OID & Repositioning Items |
| — |
|
| 4 |
|
| 356 |
|
Adjusted Other Revenue [b] | $ | 1,544 |
| $ | 1,534 |
| $ | 1,498 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Total Net Revenue |
|
|
|
|
|
|
|
|
|
($ millions) |
|
|
|
|
|
|
|
|
|
Adjusted Total Net Revenue [a] + [b] | $ | 5,836 |
| $ | 5,498 |
| $ | 5,262 |
|
|
|
|
|
|
|
|
|
|
|
Original Issue Discount Amortization Expense |
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
Core OID Amortization Expense (excludes accelerated OID) | $ | 71 |
| $ | 57 |
| $ | 45 |
|
Other Original Issue Discount Expense |
| 20 |
|
| 21 |
|
| 16 |
|
GAAP Original Issue Discount Amortization Expense | $ | 90 |
| $ | 78 |
| $ | 61 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding Original Issue Discount Balance |
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
Outstanding Core OID Balance | $ | (1,178) |
| $ | (1,249) |
| $ | (1,304) |
|
Other outstanding Original Issue Discount Balance |
| (57) |
|
| (77) |
|
| (87) |
|
GAAP Outstanding Original Issue Discount Balance | $ | (1,235) |
| $ | (1,326) |
| $ | (1,391) |
|
A-1 | ||
2018 Proxy Statement |
|
| 2017 |
|
| 2016 |
|
| 2015 |
|
Adjusted Efficiency Ratio ($ in millions) |
|
|
|
|
|
|
|
|
|
Numerator |
|
|
|
|
|
|
|
|
|
Total Noninterest Expense | $ | 3,110 |
| $ | 2,939 |
| $ | 2,761 |
|
Rep and Warrant Expense |
| (0) |
|
| (6) |
|
| (13) |
|
Insurance Expense |
| 950 |
|
| 940 |
|
| 879 |
|
Repositioning Items |
| — |
|
| 9 |
|
| 7 |
|
Adjusted Noninterest Expense for Adjusted Efficiency Ratio [a] | $ | 2,160 |
| $ | 1,997 |
| $ | 1,888 |
|
Denominator |
|
|
|
|
|
|
|
|
|
Total Net Revenue | $ | 5,765 |
| $ | 5,437 |
| $ | 4,861 |
|
Core OID and accelerated OID |
| 71 |
|
| 59 |
|
| 59 |
|
Repositioning Items |
| — |
|
| 3 |
|
| 342 |
|
Insurance Revenue |
| 1,118 |
|
| 1,097 |
|
| 1,090 |
|
Adjusted Net Revenue for Adjusted Efficiency Ratio [b] | $ | 4,718 |
| $ | 4,401 |
| $ | 4,172 |
|
Adjusted Efficiency Ratio [a] ÷ [b] |
| 45.8 | % |
| 45.4 | % |
| 45.3 | % |
|
|
|
|
|
|
|
|
|
|
Core Return on Tangible Common Equity |
|
|
|
|
|
|
|
|
|
Numerator ($ millions) |
|
|
|
|
|
|
|
|
|
GAAP Net Income Attributable to Common Stockholders | $ | 929 |
| $ | 1,037 |
| $ | (1,282) |
|
Discontinued Operations, Net of Tax |
| (3) |
|
| 44 |
|
| (392) |
|
Core OID and accelerated OID |
| 71 |
|
| 59 |
|
| 59 |
|
Repositioning Items |
| — |
|
| 11 |
|
| 349 |
|
Core OID & Repo. Items Tax (35% starting 1Q16, 34% prior) |
| (25) |
|
| (24) |
|
| (139) |
|
Significant Discrete Tax Items & Other |
| 119 |
|
| (84) |
|
| 22 |
|
Series G Actions |
| — |
|
| — |
|
| 2,350 |
|
Series A Actions |
| — |
|
| 1 |
|
| 22 |
|
Core Net Income Attributable to Common Stockholders [a] | $ | 1,091 |
| $ | 1,043 |
| $ | 990 |
|
Denominator (2-period average, $ billions) |
|
|
|
|
|
|
|
|
|
GAAP Stockholder’s Equity | $ | 13.4 |
| $ | 13.4 |
| $ | 14.4 |
|
Preferred Equity |
| — |
|
| (0.3) |
|
| (1.0) |
|
Goodwill & Identifiable Intangibles, Net of Deferred Tax Liabilities |
| (0.3) |
|
| (0.2) |
|
| — |
|
Tangible common equity |
| 13.1 |
|
| 12.9 |
|
| 13.4 |
|
Core OID Balance |
| (1.2) |
|
| (1.3) |
|
| (1.3) |
|
Net Deferred Tax Asset |
| (0.7) |
|
| (1.2) |
|
| (1.6) |
|
Normalized Common Equity [b] | $ | 11.2 |
| $ | 10.4 |
| $ | 10.5 |
|
Core Return on Tangible Common Equity [a] ÷ [b] |
| 9.8 | % |
| 10.0 | % |
| 9.4 | % |
Note: The totals in the tables may not foot due to rounding. | 2016 | 2015 | 2014 | ||||||
Adjusted Earnings Per Share (EPS) Calculation | |||||||||
Numerator ($ in millions) | |||||||||
GAAP net income available to common stockholders | $ | 1,037 | $ | (1,282 | ) | $ | 882 | ||
Less: Disc Ops, net of tax | 44 | (392 | ) | (225 | ) | ||||
Add back: Original Issue Discount (OID expense) | 59 | 59 | 186 | ||||||
Add back: Repositioning Items | 11 | 349 | 187 | ||||||
Less: OID & Repo. Tax (35% in ’16, 34% in ’14 & ‘15) | (24 | ) | (139 | ) | (127 | ) | |||
Significant Discrete Tax Items & Other | (84 | ) | — | (91 | ) | ||||
Series G Actions | — | 2,350 | — | ||||||
Series A Actions | 1 | 22 | — | ||||||
Core net income available to common stockholders [a] | $ | 1,043 | $ | 967 | $ | 812 | |||
Denominator | |||||||||
Weighted-Average Shares Outstanding - (Diluted, thousands) [b] | 482,182 | 483,934 | 481,934 | ||||||
Adjusted EPS [a] ÷ [b] | $ | 2.16 | 2.00 | $ | 1.68 | ||||
Adjusted Efficiency Ratio ($ in millions) | |||||||||
Numerator | |||||||||
Total noninterest expense | $ | 2,939 | $ | 2,761 | $ | 2,948 | |||
Less: Rep and warrant expense | (6 | ) | (13 | ) | (10 | ) | |||
Less: Insurance expense | 940 | 879 | 988 | ||||||
Adj: Repositioning items | 9 | 7 | 39 | ||||||
Adjusted noninterest expense [a] | $ | 1,997 | $ | 1,888 | $ | 1,932 | |||
Denominator | |||||||||
Total net revenue | $ | 5,437 | $ | 4,861 | $ | 4,651 | |||
Add back: Original issue discount | 59 | 59 | 186 | ||||||
Add back: Repositioning items | 3 | 342 | 148 | ||||||
Less: Insurance revenue | 1,097 | 1,090 | 1,185 | ||||||
Adjusted net revenue [b] | $ | 4,401 | $ | 4,172 | $ | 3,800 | |||
Adjusted Efficiency Ratio [a] ÷ [b] | 45.4 | % | 45.3 | % | 50.8 | % | |||
Core Return on Tangible Common Equity (ROTCE) | |||||||||
Numerator ($ millions) | |||||||||
GAAP net income available to common stockholders | $ | 1,037 | $ | (1,282 | ) | $ | 882 | ||
Less: Disc Ops, net of tax | 44 | (392 | ) | (225 | ) | ||||
Add back: Original Issue Discount (OID expense) | 59 | 59 | 186 | ||||||
Add back: Repositioning Items | 11 | 349 | 187 | ||||||
Less: OID & Repo. Tax (35% in ’16, 34% in ’14 & ‘15) | (24 | ) | (139 | ) | (127 | ) | |||
Significant Discrete Tax Items & Other | (84 | ) | 22 | (103 | ) | ||||
Series G Actions | — | 2,350 | — | ||||||
Series A Actions | 1 | 22 | — | ||||||
Core net income available to common stockholders [a] | $ | 1,043 | $ | 990 | $ | 800 | |||
Denominator (2-period average, $ billions) | |||||||||
GAAP stockholder’s equity | $ | 13.4 | $ | 14.4 | $ | 14.8 | |||
Less: Preferred equity | (0.3 | ) | (1.0 | ) | (1.3 | ) | |||
Less: Goodwill & identifiable intangibles, net of deferred tax liabilities | (0.2 | ) | — | — | |||||
Tangible common equity | 12.9 | 13.4 | 13.5 | ||||||
Less: Unamortized core original issue discount (OID discount) | (1.3 | ) | (1.3 | ) | (1.4 | ) | |||
Less: Net deferred tax asset | (1.2 | ) | (1.6 | ) | (1.9 | ) | |||
Normalized common equity [b] | $ | 10.4 | $ | 10.5 | $ | 10.2 | |||
Core Return on Tangible Common Equity [a] ÷ [b] (Note: Quarterly rate annualized by multiplying by 4) | 10.0 | % | 9.4 | % | 7.9 | % | |||
A-2 | ||
2018 Proxy Statement |
|
| 2017 |
|
| 2016 |
|
| 2015 |
|
Adjusted Tangible Book Value per Share |
|
|
|
|
|
|
|
|
|
Numerator ($ billions) |
|
|
|
|
|
|
|
|
|
GAAP Stockholder’s Equity | $ | 13.5 |
| $ | 13.3 |
| $ | 13.4 |
|
Preferred Equity |
| — |
|
| — |
|
| (0.7) |
|
GAAP Common Stockholder’s Equity | $ | 13.5 |
| $ | 13.3 |
| $ | 12.7 |
|
Goodwill and Identifiable Intangible Assets, Net of Deferred Tax Liabilities (DTLs) |
| (0.3) |
|
| (0.3) |
|
| — |
|
Tangible Common Equity |
| 13.2 |
|
| 13.0 |
|
| 12.7 |
|
Tax-effected Core OID (21% starting 4Q17, 35% starting 1Q16; 34% prior) |
| (0.9) |
|
| (0.8) |
|
| (0.9) |
|
Adjusted Tangible Book Value [a] | $ | 12.3 |
| $ | 12.2 |
| $ | 11.9 |
|
Denominator |
|
|
|
|
|
|
|
|
|
Issued Shares Outstanding (period-end, thousands) [b] |
| 437,054 |
|
| 467,000 |
|
| 481,980 |
|
Metric |
|
|
|
|
|
|
|
|
|
GAAP Stockholder’s Equity per Share | $ | 30.9 |
| $ | 28.5 |
| $ | 27.9 |
|
Preferred Equity per Share |
| — |
|
| — |
|
| (1.4) |
|
GAAP Common Stockholder’s Equity per Share | $ | 30.9 |
| $ | 28.5 |
| $ | 26.4 |
|
Goodwill and Identifiable Intangible Assets, Net of DTLs per Share |
| (0.7) |
|
| (0.6) |
|
| (0.1) |
|
Tangible Common Equity per Share | $ | 30.2 |
| $ | 27.9 |
| $ | 26.4 |
|
Tax-effected Core OID per Share (21% starting 4Q17, 35% starting 1Q16; 34% prior) |
| (2.1) |
|
| (1.7) |
|
| (1.8) |
|
Adjusted Tangible Book Value per Share [a] ÷ [b] | $ | 28.1 |
| $ | 26.2 |
| $ | 24.6 |
|
2016 | 2015 | 2014 | |||||||
Adjusted Tangible Book Value per Share | |||||||||
Numerator ($ billions) | |||||||||
GAAP stockholder’s equity | $ | 13.3 | $ | 13.4 | $ | 15.4 | |||
Less: Preferred equity | — | (0.7 | ) | (1.3 | ) | ||||
GAAP Common stockholder’s equity | $ | 13.3 | $ | 12.7 | $ | 14.1 | |||
Less: Goodwill and identifiable intangible assets, net of deferred tax liabilities | (0.3 | ) | — | — | |||||
Tangible common equity | 13.0 | 12.7 | 14.1 | ||||||
Less: Tax-effected bond OID (35% tax rate in 2016; 34% tax rate in ’14 & ‘15) | (0.8 | ) | (0.9 | ) | (0.9 | ) | |||
Less: Series G discount | — | — | (2.3 | ) | |||||
Adjusted tangible book value [a] | $ | 12.2 | $ | 11.9 | $ | 10.9 | |||
Denominator | |||||||||
Issued shares outstanding (period-end, thousands) [b] | 467,000 | 481,980 | 480,095 | ||||||
Metric | |||||||||
GAAP stockholder’s equity per share | $ | 28.5 | $ | 27.9 | $ | 32.1 | |||
Less: Preferred equity per share | — | (1.4 | ) | (2.6 | ) | ||||
GAAP Common stockholder’s equity per share | $ | 28.5 | $ | 26.4 | $ | 29.5 | |||
Less: Goodwill per share | (0.6 | ) | (0.1 | ) | (0.1 | ) | |||
Tangible common equity per share | $ | 27.9 | $ | 26.4 | $ | 29.4 | |||
Less: Tax-effected bond OID (35% tax rate in 2016; 34% tax rate in ’14 & ‘15) per share | (1.7 | ) | (1.8 | ) | (1.9 | ) | |||
Less: Series G discount per share | — | — | (4.9 | ) | |||||
Adjusted Tangible Book Value per Share [a] ÷ [b] | $ | 26.2 | $ | 24.6 | $ | 22.7 |
Ally believes that the non-GAAP financial measures here are importantmay be useful to the reader of the Consolidated Financial Statements,readers, but these are supplemental to and not a substitute for U.S. GAAP financial measures.
Adjusted Earnings per Share (Adjusted EPS)(Adjusted EPS) is a non-GAAP financial measure that adjusts GAAP EPS for revenue and expense items that are typically strategic in nature or that management otherwise does not view as reflecting the operating performance of the Company. Management believes Adjusted EPS can help the reader better understand the operating performance of the core businesses and their ability to generate earnings. In the numerator of Adjusted EPS, GAAP net income availableattributable to common stockholders is adjusted for the following items: (1) excludes discontinued operations, net of tax, as Ally is primarily a domestic company and sales of international businesses and previouslyother discontinued mortgage operations in the past have significantly impacted GAAP EPS, (2) adds back the tax-effected non-cash Core OID expense, bond exchange original issue discount (OID), (3) adds back tax-effected repositioning items primarily related to the extinguishment of high-cost legacy debt and strategic activities, (4) excludes certain discrete tax items that do not relate to the operating performance of the core businesses, and (5) adjusts for preferred stock capital actions (e.g., Series A and Series G) that have been taken by the Company to normalize its capital structure.
Adjusted Efficiency Ratio is a non-GAAP financial measure that management believes is helpful to readers in comparing the efficiency of its core banking and lending businesses with those of its peers. In the numerator of adjusted efficiency ratio,Adjusted Efficiency Ratio, total noninterest expense is adjusted for Insurance segment expense, repositioning items primarily related to strategic activities and rep and warrant expense. In the denominator, total net revenue is adjusted for Insurance segment revenue, repositioning items primarily related to the extinguishment of high-cost legacy debt and OID.Core OID expense.
Adjusted Tangible Book Value Per Share (Adjusted TBVPS) is a non-GAAP financial measure that reflects the book value of equity attributable to stockholders even if Core OID balance were accelerated immediately through the financial statements. As a result, management believes Adjusted TBVPS provides the reader with an assessment of value that is more conservative than GAAP common stockholder’s equity per share. Adjusted TBVPS generally adjusts common equity for (1) goodwill and identifiable intangibles, net of DTLs and (2) tax-effected Core OID balance to reduce tangible common equity in the event the corresponding discounted bonds are redeemed/tendered. In December 2017, tax-effected Core OID balance was adjusted from a statutory U.S. federal tax rate of 35% to 21% (“rate”) as a result of changes to U.S. tax law. The adjustment conservatively increased the tax-effected Core OID balance and consequently reduced Adjusted TBVPS as any acceleration of the non-cash charge in the future periods would flow through the financial statements at a 21% rate versus a previously modeled 35% rate.
Adjusted total net revenue is a non-GAAP financial measure that sums Net Financing Revenue excluding OID and Adjusted Other Revenue. GAAP Net Financing Revenue is adjusted for Core OID and GAAP Other Revenue is adjusted for accelerated issuance expense (Accelerated OID) and repositioning items. Accelerated issuance expense is the recognition of issuance expenses related to calls of redeemable debt. Repositioning items are primarily related to the extinguishment of high-cost legacy debt and strategic activities.
A-3 | 2018 Proxy Statement |
Core Net Income Attributable to Common Stockholders is a non-GAAP financial measure that serves as the numerator in the calculations of Adjusted EPS and Core ROTCE and that, like those measures, is believed by management to help the reader better understand the operating performance of the core businesses and their ability to generate earnings. Core net income attributable to common stockholders adjusts GAAP net income attributable to common stockholders for discontinued operations net of tax, tax-effected Core OID expense, tax-effected repositioning items primarily related to the extinguishment of high-cost legacy debt and strategic activities, certain discrete tax items and preferred stock capital actions.
Core original issue discount (Core OID) amortization expense is a non-GAAP financial measure for OID, primarily related to bond exchange OID which excludes international operations and future issuances.
Core outstanding original issue discount balance (Core OID balance) is a non-GAAP financial measure for outstanding OID, primarily related to bond exchange OID which excludes international operations and future issuances.
Core Return on Tangible Common Equity (Core ROTCE)(Core ROTCE) is a non-GAAP financial measure that management believes is helpful for readers to better understand the ongoing ability of the Company to generate returns on its equity base that supports core operations. For purposes of this calculation, tangible common equity is adjusted for unamortizedCore OID balance and net deferred tax assets (DTAs)(DTA). Ally’s core net income availableattributable to common utilized a static 34% tax rate for purposes of calculating Core ROTCE through 4Q 2015. As of 1Q 2016, Ally’s core net income available to commonstockholders for purposes of calculating Core ROTCE is based on the actual effective tax rate for the period adjusted for any discrete tax items including tax reserve releases, which aligns with the methodology used in calculating adjusted earningsAdjusted Earnings per share.
In the numerator of Core ROTCE, GAAP net income availableattributable to common stockholders is adjusted for discontinued operations net of tax, tax-effected Core OID expense, tax-effected repositioning items primarily related to the extinguishment of high-cost legacy debt and strategic activities, certain discrete tax items and preferred stock capital actions.
In the denominator, GAAP stockholder’s equity is adjusted for preferred equity and goodwill and identifiable intangibles net of deferred tax liabilities (DTLs)(DTLs), unamortizedCore OID balance, and net DTA.
Tangible Book Value Per Share (Adjusted TBVPS)Common Equity is a non-GAAP financial measure that reflects the book value ofis defined as common stockholders’ equity available to stockholders even if original issue discount (OID) expense were accelerated immediately through the
Total ShareholderStockholder Value (TSV)(TSV) is a non-GAAP financial measure that is defined as growth in tangible book value peradjusted TBVPS share plus dividends per share. This measure was selected as we believe that growth in the value of tangible book value of the Company should result in increased long-term value creation for stockholders and is directly impacted by management performance.
Measurement of Performance for PSUs Granted
Consistent with the ICP, for purposes of the measurement ofmeasuring performance under the PSUs granted by the Company, the calculation ofCNGC has excluded from Core ROTCE and TSV will be adjustedthe impact of designated items so that these performance goals reflect factors that management can directly control and that payout levels are not artificially inflated or impaired by factors unrelated to excludethe ongoing operation of the business.
For the PSUs granted in 2016, the designated items were items not related to the core operating performance of the Company, to the extent these items are not excluded in the basic calculation of Core ROTCE and TSV described above; including items relating to(1) litigation and regulatory judgments, charges or settlements, (2) the effect of changes in law, discontinued operations, acquisitions, divestiturestax laws or restructurings, debt pre-payments,other laws or provisions or regulatory pronouncements affecting reported results, (3) the effect of changes in accounting principles, andincluding any related accounting restatements, (4) income or losses from discontinued operations, (5) any extraordinary charge items that are, unusual in nature and/or infrequently occurring within the meaning of GAAP.
For the following terms shall havePSUs granted in 2017 and 2018, the meanings set forth below:
A-4 | ||
2018 Proxy Statement |