Independent members of the Board of Directors and its committees meet in executive session, outside the presence of management or the CEO at several times during each Board meeting as well as at the end of each Board and committee meeting. The Chair of the Board (or the applicable committee chair) presides over these sessions.
Navient maintains stock ownership and retention guidelines for directors and executive officers and has a policy prohibiting the hedging or pledging of its stock.
The Board of Directors and each committee conduct performance reviews annually through a combination of online questionnaires and individual director interviews.
The Board of Directors and its committees may engage their own advisors.
The Nominations and Governance Committee routinely conducts an assessment of director skillsets in light of the Company’s present and future businesses to ensure Board effectiveness.
Board Leadership Structure
The Board of Directors has separated the roles of Chair of the Board of Directors and Chief Executive Officer, and the Board continues to believe that this structure properly balances the Board’s management and governance responsibilities. The Board of Directors also believes that its leadership structure has created an environment of open, transparent communication between the Board and management, enabling the Board to maintain an active, informed role in oversight by being able to monitor those matters that may present significant risks to Navient.
While it is the opinion of the Board of Directors that its leadership structure is appropriately balanced between promoting Navient’s strategic development with the Board’s management oversight function, in the future, when the Board contemplates either CEO succession or Board Chair succession, it may choose to change this governance structure at any time.
Board Succession Planning
Our Board Governance Guidelines provide that no individual is eligible for nomination to the Board after the earlier to occur of (i) their 75th birthday or, (ii) after they have served more than 20 years on the Board.1 During 2019, in connection with the approval of the Company’s slate of nominees for the 2019 Annual Meeting and the Canyon Agreement, William M. Diefenderfer, III notified the Board that he would not to stand for re-election at the 2019 Annual Meeting. Additionally, pursuant to the Canyon Agreement, Barry L. Williams retired from the Board effective August 9, 2019. For additional information pertaining to the Canyon Agreement, please refer to “Shareholder Engagement and Communications with the Board” below.
The Board continues to actively engage in succession planning and director recruiting to ensure that the size of the Board and the skills of the directors align with our business strategy and the environment in which we operate.
Management Succession Planning
We have succession plans and talent management programs in place for our Chief Executive Officer and for our team of senior executives. Our senior management succession planning process is an organization-wide practice designed to proactively identify, develop and retain the leadership talent that is critical for future business success.
1 | Our Board Governance Guidelines state: “…individuals will not be nominated for election to the Board after the earlier to occur of (i) their 75th birthday or, (ii) after they have served more than 20 years on the Board.” |
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The succession plan for our Chief Executive Officer is reviewed regularly by the Compensation and Personnel Committee and the other independent directors. The plan identifies a “readiness” level for each internal candidate and also incorporates the flexibility to define an external hire as a succession option. Formal succession planning for the rest of our senior leaders is also an ongoing process, which includes identifying a readiness level for each potential internal candidate and strategically planning for external hires for positions where gaps, if any, are identified.
Our emergency CEO succession plan is intended to respond to an immediate and unexpected position vacancy, including resulting from a major catastrophe. The plan allows the Company to continue safe and sound operation and minimizes potential disruption or loss of continuity to business and operations.
For a director to be considered independent, the Board of Directors must determine that the director does not have any direct or indirect material relationship with Navient that would interfere with the director’s exercise of independent judgment or that would render the director incapable of making a decision with only the best interests of the Company in mind. The Board of Directors has adopted the Guidelines, which include the standards for determining director independence. In addition to Delaware law requirements, the Guidelines conform to the independence requirements of Rule 10A-3 of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Nasdaq listing standards. The Guidelines can be found at www.navient.com under “Investors, Corporate Governance” and a written copy may be obtained by contacting the Corporate Secretary at corporatesecretary@navient.com.
At the end of 2019, the Board of Directors was comprised of 10 members, 9 of whom were affirmatively determined to be independent. The independent members of the Board of Directors at the end of fiscal 2019 were: Frederick Arnold; Marjorie
L. Bowen; Anna Escobedo Cabral; Larry A. Klane; Katherine A. Lehman; Linda A. Mills; Jane J. Thompson; Laura S. Unger; and David L. Yowan. During 2019, and again in 2020, the Board of Directors determined that each of these individuals met the Nasdaq listing standards and Navient’s own director independence standards. In addition, the Board of Directors considered transactions and relationships between each director and any member of his or her immediate family on one hand, and Navient, on the other, to confirm that there were no transactions or relationships that would impair such director’s independence. Only Mr. Remondi was determined not to be independent.
Each member of the Board of Directors’ Audit, Compensation and Personnel, and Nominations and Governance Committees is independent within the meaning of the Nasdaq listing standards, Rule 10A-3 of the Exchange Act and Navient’s own director independence standards.
Board of Directors Meetings and Attendance at Annual Meeting
The full Board of Directors met 32 times in 2019. Each of our directors attended at least 79 percent of the total number of Board and committee meetings during his or her tenure on the Board and applicable committees, with the average attendance across all our directors being 94.8% in 2019. All directors other than Mr. Diefenderfer, who notified the Board that he would not to stand for re-election, attended the Company’s 2019 annual meeting of shareholders.
The Board of Directors has established the following standing committees to assist in its oversight responsibilities: an Audit Committee, a Compensation and Personnel Committee, a Nominations and Governance Committee, a Finance and Operations Committee, and an Executive Committee. The Board has directed the Nominations and Governance Committee to establish a Risk Committee in 2020 to replace the Finance and Operations Committee. The Risk Committee will focus primarily on oversight of the Company’s enterprise risk management infrastructure. In the coming months, the Nominations and Governance Committee will work with the Board’s other standing committees to shift certain risk oversight responsibilities to this new committee, with other oversight responsibilities moving to the full Board.
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Each standing committee is governed by a Board-approved written charter, which is evaluated annually, and which sets forth the respective committee’s functions and responsibilities. Membership of each of the committees is also changed as part of a regular rotation. Investors may find the current membership of the Board’s standing committees at http://www.navient.com/about/investors/corp_governance/.
For 2019, an 18-month work-plan was created from the charters of the Audit, Compensation and Personnel, Nominations and Governance, and Finance and Operations Committees so that the responsibilities of each committee would be addressed at appropriate times throughout the year. These work-plans will be reviewed and revised as a matter of course in 2020. Agendas for committee meetings are developed based on each committee’s work-plan together with other current matters the Board chair, the committee chair or management believes should be addressed at the meeting. The chair of each committee provides regular reports to the Board of Directors regarding the subject of the committee’s meetings and any committee actions.
In addition to the Board’s five standing committees, in 2019 the Board also formed a Special Committee of independent directors to facilitate communications and recommend strategic considerations to the Board in connection with the Company’s engagement with Canyon Capital Advisors LLC (“Canyon”). For additional information pertaining to Canyon, please refer to “Shareholder Engagement and Communications with the Board” below. The Special Committee is comprised of Katherine A. Lehman, David L. Yowan and Laura S. Unger. William M. Diefenderfer, III served as an ex officio member until he departed the Board, at which time Linda A. Mills joined the committee as an ex officio member.
The following table sets forth the membership and number of meetings held for each committee of the Board of Directors during 2019. This table reflects the membership of each committee as of December 31, 2019.2 It is the practice of the Board to hold its regular committee meetings in conjunction with the regular meetings of the Board. Given the Audit Committee’s responsibilities relating to our financial statements and financial reporting, it is expected that the Audit Committee will meet more often than the other committees.
| | Audit Committee | Compensation and Personnel Committee | Executive Committee | Finance and | Nominations
and Governance Committee | Special Committee |
| Frederick Arnold | X | | | X | | |
Marjorie L. Bowen (1) | X | | | | X | |
| Anna Escobedo Cabral | CHAIR | | X | | X | |
Larry A. Klane (2) | | X | | X | | |
| Katherine A. Lehman | | X | X | CHAIR | | X |
Linda A. Mills (3) | | | CHAIR | | | X |
| John F. Remondi | | | X | | | |
Jane J. Thompson (4) | | CHAIR | X | | X | |
| Laura S. Unger | X | | X | | CHAIR | X |
David L. Yowan (5) | | X | | X | | X |
| Number of Meetings in 2019 | 10 | 7 | 4 | 10 | 13 | 15 |
Chair = Committee Chair
X = Committee Member
| (1) | Ms. Bowen was appointed to the Board on May 1, 2019. Ms. Bowen is not being nominated by the Board for reelection, and her tenure as a director will end when her current term expires at our 2020 Annual Meeting. |
| (2) | Mr. Klane was appointed to the Board on May 1, 2019. |
| (3) | Ms. Mills served as a member of the Finance and Operations Committee and the Compensation and Personnel Committee until her appointment as Chair of the Board on June 6, 2019. For the remainder 2019, she served as Chair of the Executive Committee and as an ex officio member of the Special Committee. |
| (4) | Ms. Thompson served on the Finance and Operations Committee until June 6, 2019, when she became a member of the Nominations and Governance Committee. |
| (5) | Mr. Yowan served on the Audit Committee until June 6, 2019, when he became a member of the Compensation and Personnel Committee. |
2 | In connection with the Canyon Agreement, the terms of which are discussed on page 30 of this proxy statement, William M. Diefenderfer, III elected not to stand for re-election to the Board at the 2019 Annual Meeting. Before his departure, Mr. Diefenderfer served as Chairman of the Board and Chair of the Executive Committee. Barry L. Williams agreed to retire from the Board of Directors in connection with the Canyon Agreement. Mr. Williams served as a member of the Compensation and Personnel Committee, the Nomination and Governance Committee, and the Finance and Operations Committee at various times during 2019 until his retirement from the Board effective August 9, 2019. |
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Audit Committee
The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Exchange Act. During 2019, the Audit Committee, as set forth in its charter, assisted the Board of Directors in fulfilling its responsibilities by providing oversight relating to: (1) the integrity of Navient’s financial statements; (2) the Company’s system of internal controls; (3) the qualifications, performance and independence of Navient’s independent registered accounting firm; (4) the performance of the Company’s internal audit function; (5) risks related to Navient’s compliance, legal and regulatory matters; and (6) the review of related party transactions. In addition, the Audit Committee reviews the Company’s procedures for the receipt, retention and handling of confidential, anonymous complaints pertaining to accounting, internal accounting controls and auditing matters, including procedures for the periodic review of violations or waivers of compliance with the Company’s Code of Business Conduct, and prepares the report of the Audit Committee for Navient’s annual proxy statement, as required by the SEC. The Board of Directors has determined that one member of the Audit Committee—Frederick Arnold— qualifies as audit committee financial experts, as that term is defined under the rules promulgated by the SEC. During 2019, no member of the Audit Committee served on the audit committee of more than three public companies.
Compensation and Personnel Committee
Pursuant to the provisions of its charter, which can be found on our website in full, the primary responsibilities of the Compensation and Personnel Committee (also referred to herein as the “Compensation Committee”) during 2019 were to:
(1) approve or recommend, as appropriate, compensation, benefits and employment arrangements for Navient’s Chief Executive Officer and other executive officers who report to the CEO (collectively “Executive Management”), and independent members of the Board of Directors; (2) review and approve compensation plans, incentive plans and benefit plans applicable to Executive Management; (3) review, approve and administer all equity-based plans of the Company;
(4) supervise the administration of employee benefit plans of Navient as required by law or the plan terms or as otherwise appropriate; (5) receive periodic reports regarding the Company’s compensation programs as they relate to all employees;
(6) review Navient’s management development and recommend to the Board of Directors succession plans applicable to Executive Management; (7) review and consider current and developing compensation and personnel related topics as appropriate, including performance management, leadership development, turnover and retention, diversity, and employee engagement; and (8) prepare the report of the Compensation Committee for inclusion in this proxy statement, as required. The Compensation Committee, in coordination with the Audit Committee, also reviews the report of management on the potential risks arising from Navient’s compensation policies and practices to determine whether such policies and practices are reasonably likely to have a material adverse effect on the Company.
The Compensation Committee considers executive officer and director compensation on an annual basis. In January or February of each year, after consultation with the independent chair and other independent directors, as well as its independent consultant, if one has been retained, the Compensation Committee approves the compensation of the Chief Executive Officer and Executive Management. At that time, the Compensation Committee also makes a recommendation to the Board of Directors regarding director compensation. The Compensation Committee reviews executive compensation as described in the “Compensation Discussion and Analysis” section of this proxy statement. In addition, throughout the year, the Compensation Committee considers executive compensation consistent with its responsibilities, as warranted by any personnel changes.
Executive Committee
Since its creation, membership of the Executive Committee has included the committee chairs, the Chief Executive Officer and the Board chair. Under its charter, the Executive Committee has authority to act on behalf of the Board of Directors when the full Board of Directors is not available, and oversees the allocation of risk oversight responsibilities among Board committees. In conjunction with the Audit Committee, it also reviews with management the Company’s quarterly earnings and press releases.
Finance and Operations Committee
During 2019, the Finance and Operations Committee assisted the Board of Directors, as required by its charter, by providing oversight with respect to: (1) material corporate finance matters, including investments, mergers and acquisitions, capital management, financing and funding strategy; (2) technology and operations; (3) marketing and product development; (4) the Company’s lending programs; and (5) the Company’s information security program and cybersecurity. The Finance and Operations Committee also reviewed the financial risk profile of Navient, including capital market access, credit, interest rate, currency and programmatic/contractual risks and reviewed with management steps to manage those risks.
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Nominations and Governance Committee
In accordance with its charter, the Nominations and Governance Committee assists the Board of Directors in establishing appropriate standards for the governance of Navient, the operations of the Board of Directors generally and the qualifications of directors. It recommends to the Board of Directors the director nominees for the annual meeting of shareholders, oversees the orientation of new directors and the ongoing education of the Board, recommends director assignments to the Board’s standing committees, oversees the Company’s reputational and political risks, supervises the Board’s self-evaluation and succession process and reviews and recommends changes to the Board’s Governance Guidelines. Additionally, the Nominations and Governance Committee routinely benchmarks the Company’s governance practices against industry best practices and makes appropriate changes when necessary.
Each of the Committees’ charters is available at www.navient.com under “Investors, Corporate Governance.” Shareholders may obtain a written copy of a committee charter by contacting the Corporate Secretary at corporatesecretary@navient.com or Navient Corporation, 123 Justison Street, Wilmington, Delaware 19801.
Compensation Consultant and Independence
During 2019, the Compensation Committee retained Pearl Meyer as its independent compensation consultant (the “Compensation Consultant”).
The Compensation Consultant reported directly to the Compensation Committee, and the Compensation Committee retained authority to replace the Compensation Consultant or hire additional consultants at any time. A representative from the Compensation Consultant participated in meetings of the Compensation Committee and met with the committee without the presence of management, as requested, and directly communicated with the Chair of the Compensation Committee between meetings. However, the Compensation Committee made all decisions regarding the compensation paid to Navient’s named executive officers.
The Compensation Consultant provided various executive compensation services to the Compensation Committee pursuant to a written consulting agreement with the Compensation Committee. Generally, these services included advising the Compensation Committee on the principal aspects of Navient’s executive and director compensation programs, assisting in the selection of the compensation peer group, providing market information and analysis regarding the competitiveness of our compensation program design, reviewing Navient’s executive compensation disclosures, and informing the Committee about emerging compensation-related regulatory and industry issues.
During 2019, and again in 2020, the Compensation Committee considered the independence of the Compensation Consultant in light of SEC rules and Nasdaq listing standards. The Compensation Committee received a written statement of independence from the Compensation Consultant, which addressed the following factors: (1) other services provided to Navient by the Compensation Consultant; (2) fees paid by the Company as a percentage of the Compensation Consultant’s total revenues; (3) policies or procedures maintained by the Compensation Consultant that are designed to prevent a conflict of interest; (4) any business or personal relationships between the individual consultants involved in the engagement and any member of the Compensation Committee; (5) any Navient Common Stock owned by the individual consultants involved in the engagement; and (6) any business or personal relationships between our executive officers and the Compensation Consultant or the individual consultants involved in the engagement. The Compensation Committee discussed these considerations and concluded that the work of the Compensation Consultant did not raise any conflicts of interest. For more information on the Compensation Committee and the Compensation Consultant, please see the “Compensation Discussion and Analysis” section in this proxy statement.
Compensation Committee Interlocks and Insider Participation
Ms. Thompson, Mr. Klane, Ms. Lehman, and Mr. Yowan were members of the Compensation Committee during fiscal year 2019.3 All members of the Compensation Committee were independent directors, and no member was an employee or
3 | Mr. Williams served on the Compensation Committee until his retirement in August 2019. Ms. Mills also served on the Compensation Committee until her appointment to Chair of the Board on June 6, 2019. |
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former employee of Navient or its affiliates. During fiscal year 2019, none of Navient’s executive officers served on a compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on the Compensation Committee.
The Board of Directors’ Role in Risk Oversight
Our Board of Directors has the ultimate responsibility for risk oversight for Navient’s Enterprise Risk Management (“ERM”) philosophy and framework. In carrying out this critical responsibility, the Board has designated the Audit Committee as having primary responsibility to assist the Board in the development, maintenance and governance of the company’s ERM policy, standards and program. Other standing committees of the Board are charged with overseeing specific enterprise risks, as described below. The Board and its standing committees are responsible for ensuring we adhere to established risk tolerances and parameters that form a cornerstone of the company’s ERM framework.
The Board has delegated day-to-day responsibility for risk oversight to our Chief Executive Officer and senior management team, who in turn have established the following management committees to implement this directive: Enterprise Risk and Compliance Committee, Credit and Loan Loss Committee, Asset and Liability Committee, and Incentive Compensation Plan Committee. These internal management committees, described in more detail below, provide regular reports to the Board and its standing committees—either directly or through one or more senior executives. The overall risk governance structure is illustrated below:
The Nominations and Governance Committee regularly reviews the composition and membership of each standing committee of the Board and makes recommendations to the Board. Outside of the SEC and Nasdaq requirements for eligibility to serve on certain committees, such as the Audit Committee and the Compensation and Personnel Committee, the Nominations and Governance Committee actively considers each committee’s responsibilities, as outlined in its charter, as well as individual director skillsets when deciding which directors will serve on specific standing committees.
The Board has directed the Nominations and Governance Committee to establish a Risk Committee in 2020 to replace the Finance and Operations Committee. The Risk Committee will focus primarily on oversight of the Company’s enterprise risk management infrastructure. In the coming months, the Nominations and Governance Committee will work with the Board’s other standing committees to shift certain risk oversight responsibilities to this new committee, with other oversight responsibilities moving to the full Board.
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Risk Appetite Framework
Navient employs a Risk Appetite Framework to identify the most significant risks that could impact our business and provides the process for evaluating and quantifying those risks. The Risk Appetite Framework defines the type and degree of risk Navient is able and willing to assume, given its business objectives, contractual and other legal requirements, and obligations to stakeholders. As noted below, our Risk Appetite Framework segments enterprise risk into nine enterprise risk domains.
Enterprise Risk Domains
Our Risk Appetite Framework segments Navient’s enterprise risks across nine enterprise risk domains: (1) Credit; (2) Market; (3) Funding and Liquidity; (4) Compliance; (5) Legal; (6) Operational; (7) Reputational and Political; (8) Governance; and (9) Strategy. These risk domains are disclosed in our Form 10-K and proxy statements filed with the SEC. As noted above, our Board of Directors has the ultimate responsibility for risk oversight for Navient’s ERM framework.
The Board has assigned oversight responsibility for each risk domain to one or more of its standing committees. These risk oversight responsibilities are spelled out in each standing committee’s charter. Investors can find the charter of each committee on our website at https://www.navient.com/about/investors/corp_governance/board_charters/.
Each of the enterprise risk domains is described below, along with the standing committee(s) responsible for risk oversight.
| Enterprise Risk Domain | Board Committee | | Risk Description |
| Credit | Finance and Operations Committee | | Risk resulting from an obligor's failure to meet the terms of any contract with the Company or otherwise fail to perform as agreed. |
| Market | Finance and Operations Committee | | Risk resulting from changes in market conditions, such as interest rates, spreads, commodity prices or volatilities. |
| Funding and Liquidity | Finance and Operations Committee | | Risk arising from the Company's inability to meet its obligations when they come due without incurring unacceptable losses. |
| Compliance | Audit Committee Finance and Operations Committee | | Risk arising from violations of, or non-conformance with, laws, rules, regulations, prescribed practices, internal policies, and procedures, or ethical standards. |
| Legal | Audit Committee Finance and Operations Committee | | Risk manifested by claims made through the legal system, including litigation brought against the Company. Legal risk may arise from a product, a transaction, a business relationship, property (real, personal, or intellectual), employee conduct, or a change in law or regulation. |
| Operational | Finance and Operations Committee Compensation and Personnel Committee | | Risk resulting from inadequate or failed internal processes, personnel and systems, inadequate product design and testing, or from external events. |
| Reputational and Political | Nominations and Governance Committee | | Risk from stakeholder perceptions regarding actual or alleged violations of law, our internal code of conduct or other employee misconduct. |
| Governance | Nominations and Governance Committee | | Risk of not establishing and maintaining a control environment that aligns with stakeholder and regulatory expectations, including tone at the top and board performance. |
| Strategic | Executive Committee | | Risk from adverse business decisions or improper implementation of business strategies. |
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Cybersecurity Risk Oversight
The Board of Directors, through the Finance and Operations Committee, plays an important role in overseeing the Company’s cybersecurity risk management. The Finance and Operations Committee receives regular briefings from the Company’s Chief Information Security Officer relating to the most recent developments in cybersecurity prevention, detection, response and recovery as well as updates on breaches and exploitations, both successful and unsuccessful, at other companies.
Additional Risk Oversight Information
Additional information about how we actively managing risk for our stakeholders, including our customers, clients, employees, and shareholders, can be found on our website at https://navient.com/assets/about/investors/corp-governance/Navient-Board-Risk-Oversight.pdf.
Risk Assessment of Compensation Policies
Navient maintains an internal Incentive Compensation Plan Committee (the “ICP Committee”) that conducts an annual risk review and assessment of the various incentive compensation plans covering our employees—including plans that cover our named executive officers—to ensure that our employees are not incented to take inappropriate risks which could impact our financial position and controls, reputation and operations. Our Chief Risk and Compliance Officer, Chief Legal Officer, Chief Audit Officer and Chief Human Resources Officer serve on the ICP Committee, along with other senior business leaders. The ICP Committee presented its annual findings to the Compensation Committee and the Audit Committee in early 2020, and the Compensation Committee determined that the Company’s incentive compensation programs do not encourage or create unnecessary risk-taking, and that the risks arising from the programs are not reasonably likely to have a material adverse effect on the Company. The ICP Committee will continue to monitor our incentive compensation plans, as well as the plan governance structure put in place to mitigate risks associated with the plans, to ensure that our incentive compensation practices properly incent our employees and reflect industry best practices.
The Nominations and Governance Committee considers director candidates recommended by shareholders and also receives suggestions for candidates from Board members or third parties. The Nominations and Governance Committee has, from time to time, engaged and may continue, in the future, to engage third-party search firms to assist in identifying director candidates.
Candidates are evaluated based on the needs of the Board of Directors and Navient at that time, given the then-current mix of Board members, their individual skills and experiences relative to the Company’s business strategy, and the Nominations and Governance Committee’s desire to bring additional skills or experiences to the Board. While Navient does not have a formal Board diversity policy, the Board of Directors actively seeks representation that reflects gender, ethnic, age and geographic diversity as reflected in the Guidelines. The Nominations and Governance Committee, through its charter, is charged with reviewing the composition, skills and diversity of the Board of Directors, and as part of the process, the Nominations and Governance Committee incorporates into the Board of Directors’ annual evaluation process, the opportunity for each Board member to provide input regarding the current and desired composition of the Board of Directors and desired attributes of Board members. The minimum qualifications and attributes that the Nominations and Governance Committee believes a director nominee must possess include:
Knowledge of Navient’s business;
Proven record of accomplishment;
Willingness to commit the time necessary for Board of Director service;
Integrity and sound judgment;
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Willingness to represent the best interests of all shareholders and effectively oversee management performance;
Ability to challenge and stimulate management; and
In addition, the Nominations and Governance Committee believes the Board of Directors collectively should encompass a mix of skills and expertise in the following areas:
Finance, including capital allocation;
Information security and cybersecurity;
Financial services, including financial technology and innovation;
Business operations and operating efficiency;
Mergers and acquisitions;
Business processing solutions and outsourcing;
Consumer marketing and product development, including customer experience;
Government/Regulatory; and
The Nominations and Governance Committee considers and evaluates candidates recommended by shareholders in the same manner that it considers and evaluates all other director candidates. To recommend a candidate, shareholders should send, in writing, the candidate’s name, credentials, contact information, and his or her consent to be considered as a candidate to the Chair of the Nominations and Governance Committee at corporatesecretary@navient.com or c/o Corporate Secretary, Navient Corporation, 123 Justison Street, Wilmington, Delaware 19801. The shareholder should also include his or her contact information and a statement of his or her share ownership. A shareholder wishing to nominate a candidate must comply with the notice and other requirements described under “Shareholder Proposals for the 2021 Annual Meeting” in this proxy statement.
The Company will include in its proxy statement and on its form of proxy card, the name of a director nominee submitted by an “Eligible Holder” who provides the information and satisfies the other provisions of the Company’s bylaws. To qualify as an “Eligible Holder,” a shareholder or a group of no more than 20 shareholders must have continuously owned at least three percent (3%) of the outstanding shares of the Company’s Common Stock entitled to vote in the election of directors for a period of at least three years and thereafter continue to own the shares through the Company’s annual meeting. There are no proxy access board nominees for the 2020 annual meeting. A complete version of the Company’s Second Amended and Restated Bylaws can be found on the Corporate Governance page of our website at the following location: https://navient.com/about/investors/corp_governance/.
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Director Orientation and Continuing Education
The Nominations and Governance Committee oversees the orientation of new directors and the ongoing education of the Board. As part of Navient’s director orientation program, new directors participate in one-on-one introductory meetings with Navient business and functional leaders and are given presentations by members of senior management on Navient’s strategic plans, financial statements and key issues, policies and practices. In addition, directors receive education on governance and director fiduciary duties and expectations. Directors may enroll in director continuing education programs on corporate governance and critical issues associated with a director’s service on a public company board. Navient makes an annual stipend available to each director towards the expenses of these programs. Our senior management meets regularly with the Board and meets annually to review with the Board the operating plan of the Company and each of our strategic business groups. The Board also regularly participates in full Board educational programs and visits to Navient operation centers.
Shareholder Engagement and Communications with the Board
Our CEO, Chief Financial Officer, and Vice President of Investor Relations, together with other members of management, meet periodically with investors to discuss Navient’s strategy and financial and business performance, and to update investors on key developments. During 2019 and into 2020, Navient participated in at least 100 meetings with investors and potential investors. In addition, we routinely seek our shareholders’ views on governance and compensation matters.
At various times prior to December of 2017, representatives of the Company met with representatives of Canyon Capital Advisors LLC (“Canyon”) as a part of the Company’s engagement strategy that focuses on regularly meeting with its shareholders, bond holders and investors in the asset-backed securities it sponsors. In May 2019, the Company became aware that Canyon had accumulated a beneficial interest in approximately 9.6% of the Company’s outstanding common stock.4 In August 2018, at the request of Canyon, the Board agreed to appoint Frederick Arnold to the Board. On May 2, 2019, we entered into a cooperation agreement with Canyon (the “Canyon Agreement”) whereby the Board agreed, among other things, to appoint Marjorie Bowen and Larry Klane as directors of the Company, subject to the satisfaction of certain customary conditions, and to nominate and recommend Ms. Bowen and Mr. Klane for election to the Board at the Company’s 2019 Annual Meeting of Shareholders. The appointments of Mr. Arnold, Ms. Bowen and Mr. Klane were approved by our shareholders in June 2019. On January 27, 2020, the Company entered into a Stock Repurchase Agreement with Canyon to repurchase its remaining interest in the Company’s common stock. During this time, various representatives of Canyon met or held discussions with various members of management, the Special Committee and other members of the Board.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Canyon Agreement, included as Exhibit 10.01 to the Company’s Form 8-K that was filed with the SEC on May 3, 20195, the Company’s Definitive Proxy Statement filed with the SEC on Form DEF 14A on April 30, 20196, and its Amended Definitive Proxy Statement on Form DEF 14A filed with the SEC on May 8, 20197, all of which are furnished herewith.
Shareholders and other interested parties may submit communications to the Board of Directors, the non-management directors as a group, the Chair or any other individual member of the Board of Directors by contacting the Chair of the Board in writing at corporatesecretary@navient.com or c/o Corporate Secretary, Navient Corporation, 123 Justison Street, Wilmington, Delaware 19801.
Except as discussed below or otherwise directed, the Corporate Secretary forwards all such communications to the Board Chair. The Chair in turn determines whether the communications should be forwarded to other members of the Board and, if so, forwards them accordingly. However, for communications addressed to a particular member of the Board, the Chair
4 | On May 4, 2019, Canyon reported on Form 13D/A filed with the SEC that it beneficially owned 25,435,480 or 9.6% of the Company’s outstanding shares. |
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of a particular Board committee or the non-employee directors as a group, the Corporate Secretary forwards those communications directly to those individuals.
The directors have requested that communications that do not directly relate to their duties and responsibilities as our directors be excluded from distribution. Such excluded items include “spam,” advertisements, mass mailings, form letters and email campaigns that involve unduly large numbers of similar communications, solicitations for goods, services, employment or contributions, surveys and individual product inquiries or complaints. Additionally, communications that appear to be unduly hostile, intimidating, threatening, illegal or similarly inappropriate will be screened for omission. Any omitted or deleted communications will be made available to any director upon request.
Policy on Political Contributions, Disclosure and Oversight
We did not make any political contributions using corporate funds in 2019, and we have no intention of making such political contributions in 2020. The Company's Government Relations personnel are responsible for the development and implementation of policies pertaining to the Company’s political activities. They report annually to the Nominations and Governance Committee of the Board on major lobbying priorities and principles. Government Relations also provides the Committee with a report on any payments made to trade associations, political expenditures, contributions made to other tax-exempt political organizations, as well as contributions by the Company's Political Action Committee. Navient also maintains numerous compliance processes structured to ensure that the Company and its employees conduct all their activities in accordance with our Code of Business Conduct and with all relevant laws governing political contributions and lobbying activities.
Since 2016, we have disclosed our political activity and contributions through the publication of our Transparency in Policy Engagement and Political Participation Report. In 2018, the Company was recognized as a “Trendsetter” in the CPA-Zicklin Index for political transparency. The Report provides an overview of the Company’s legislative and political priorities and also provides details pertaining to Navient’s contributions to members of Congress, trade associations, 527 political organizations and other political organizations. The Nominations and Governance Committee has instructed the Company to update the report on a semi-annual basis. The current Report is available on the Company’s website at https://www.navient.com/about/who-we-are/transparency/.
The Company has a Code of Business Conduct that applies to Board members and all employees, including the chief executive officer, the chief financial officer and the chief accounting officer. The Code of Business Conduct is available on the Company’s corporate governance website at https://navient.com/about/investors/corp_governance/ and a written copy is available from the Corporate Secretary. The Company intends to post amendments to or waivers of the Code of Business Conduct (to the extent applicable to the Company’s chief executive officer, chief financial officer or chief accounting officer or any director) at this location on its website. There were no waivers during 2019.
Policy on Review and Approval of Transactions with Related Parties
The Company has adopted a Policy on Related Party Transactions to ensure that all Interested Transactions with Related Parties, as those terms are defined in the policy, will be at arm’s length and on terms generally available to an unaffiliated third-party under the same or similar circumstances. The policy states that, except for the limited exceptions specifically stated in the policy, Interested Transactions with Related Parties that will exceed $120,000 in any calendar year must be reviewed by the Audit Committee and receive approval of the Board of Directors prior to the Corporation entering into the Interested Transaction. A copy of the policy can be found on the Company’s Corporate Governance website at https://www.navient.com/about/investors/corp_governance/. For additional information pertaining to Related Party Transactions, please refer to “Certain Relationships and Related Transactions” below.
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Our director compensation program is designed to reasonably compensate our non-employee directors for work required for a company of our size, complexity and risk, and to align the interests of our directors with those of our shareholders. The Compensation Committee reviews the compensation of our non-employee directors on an annual basis and makes recommendations to the Board.
In late 2018, the Compensation Committee reviewed our director compensation with the assistance of the Compensation Consultant and concluded that the existing program should remain unchanged for 2019. The Compensation Committee again reviewed director compensation in 2019 and will keep the existing program unchanged for 2020, with the exception of changes to the form of annual equity awards described below.
Our 2019 director compensation program is detailed below.
| Director Compensation Elements | |
The following table highlights the material elements of our 2019 director compensation program:
| 2019 Compensation Elements | Compensation Value
|
| Annual Cash Retainer | $100,000 |
| Additional Cash Retainer for Independent Board Chair | 50,000 |
| Additional Cash Retainer for Audit Committee Chair | 30,000 |
| Additional Cash Retainer for Compensation and Personnel Committee Chair | 25,000 |
| Additional Cash Retainer for Other Committee Chairs | 20,000 |
| Annual Equity Award | 130,000 |
| Additional Equity Award for Independent Board Chair | 65,000 |
Annual cash retainers are paid in quarterly installments in or around June, September, December and March. Annual equity awards typically are granted in February each year in the form of restricted stock.
Restricted stock granted to our non-employee directors in February 2019 was structured to vest only upon the recipient’s election to the Board at the Company’s next following annual meeting of shareholders (or, if earlier, upon death, disability, or a change in control). Beginning in 2020, the Board modified the vesting provisions incorporated in these equity awards to address the potential for partial-year Board service. Restricted stock granted to our non-employee directors in February 2020 will vest in quarterly increments beginning on the grant date and thereafter on May 1st, August 1st and November 1st, provided the director remains on the Board through each vesting date (with immediate vesting, if earlier, upon death, disability, or a change in control).
We also reimburse each non-employee director for any out-of-pocket expenses incurred in connection with their service as a director. As described below, our non-employee directors may elect to defer all or a portion of their annual compensation under the Navient Corporation Deferred Compensation Plan for Directors.
Share Ownership Guidelines
We maintain share ownership guidelines for our non-employee directors. Under these share ownership guidelines, each director is expected, within five years of his or her initial election to the Board of Directors, to own Navient Common Stock with a value equivalent to at least four times his or her annual cash retainer. Currently, that minimum ownership amount is
$400,000. The following shares and share units count towards the ownership guidelines: shares held in brokerage accounts; notional shares credited to deferred compensation accounts; restricted stock and restricted stock units (“RSUs”) that vest solely upon the passage of time; and vested stock options, to the extent that they are “in-the-money.”
All non-employee directors are in compliance with the share ownership guidelines as of the date of this proxy statement due to their share ownership amount or because the five-year period from their initial election has not ended.
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Anti-Hedging and Pledging Policy
Navient’s Securities Trading Policy prohibits directors and officers (as defined by Rule 16a-1(f) of the Exchange Act and referred to as “Section 16 Officers”) from selling Navient stock short, holding Navient securities in a margin account, or pledging Navient securities as collateral for a loan or otherwise. Additionally, no director, Section 16 Officer or any other officer of the Company who is subject to the Company’s Stock Ownership Guidelines is permitted to enter into derivative or speculative transactions involving Navient securities (including prepaid variable forward contracts, equity swaps, collars, credit default swaps and exchange funds) that are designed to hedge or offset any decrease in the market value of Navient securities. All directors and named executive officers were in compliance with this policy throughout 2019 and remain in compliance as of the date of this proxy statement.
Policy on Rule 10b5-1 Trading Plans
The Company’s Securities Trading Policy governs the circumstances under which Navient directors and Section 16 Officers may enter into trading plans pursuant to SEC Rule 10b5-1. Rule 10b5-1 trading plans are pre-established trading plans for sales of our Common Stock. We believe our Rule 10b5-1 policy is effective in ensuring compliance with legal requirements. Under the policy:
All Rule 10b5-1 trading plans must be pre-cleared by the Company’s Securities Trading Compliance Officer.
A trading plan may be entered into, modified or terminated only during an open trading window and while not in possession of material non-public information.
Once adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade.
We provide non-employee directors with company-paid group life insurance, accidental death and disability and business travel accident insurance. We also provide current non-employee directors the opportunity to participate in the Company’s medical and dental plans. If a director elects to participate in these plans, the director pays the full cost of medical and dental coverage (which for an employee is shared by the Company and the employee). After retirement from the Board, a former non-employee director may continue medical coverage for up to 18 months under the Consolidated Omnibus Budget Reconciliation Act (COBRA) at his/her own expense.
Deferred Compensation Plan for Directors
Navient sponsors a deferred compensation plan for its non-employee directors. Under the Navient Corporation Deferred Compensation Plan for Directors (“Director Deferred Compensation Plan”), our non-employee directors may elect annually to defer receipt of all or a percentage of their annual cash retainer. In addition, directors may elect to receive a credit under the Director Deferred Compensation Plan in lieu of their annual equity retainer. Provided this election is made before the beginning of the year, the director’s plan account will be credited with a dollar amount equivalent to the annual equity retainer and automatically invested in a notional Company stock fund. Notional stock units remain subject to the same vesting schedule applicable to the annual equity retainer.
Deferrals are credited with earnings based on the performance of certain investment funds selected by the participant. The plan does not pay above-market or preferential earnings on amounts deferred. Deferrals invested in the notional Company stock fund are payable in shares of Navient Common Stock. All other deferrals are payable in cash (in a single lump sum or in installments at the election of the director) upon termination of the director’s service on the Board or after a minimum
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number of years (except for hardship withdrawals in limited circumstances). As noted below, Ms. Bowen, Mr. Diefenderfer, Ms. Thompson and Ms. Unger each elected to defer all or a portion of his/her 2019 compensation under the Director Deferred Compensation Plan.
Director Compensation Table
The tables below present information regarding the compensation and stock awards that we have paid or granted to the non-employee directors for the year ended December 31, 2019.
| | Fees Earned or Paid in Cash(1) | Stock Awards(2) | All Other Compensation(3) | Total |
| Name | ($) | ($) | ($) | ($) |
| Frederick Arnold | 100,000 | 129,992 | 58 | 230,050 |
Marjorie L. Bowen(4) | 81,666 | 100,082 | 34 | 181,782 |
| Anna Escobedo Cabral | 130,000 | 129,992 | 58 | 260,050 |
William M. Diefenderfer, III(5) | 37,500 | 195,000 | 29 | 232,529 |
Larry A. Klane(6) | 81,666 | 100,071 | 34 | 181,771 |
| Katherine A. Lehman | 120,000 | 129,992 | 58 | 250,050 |
Linda A. Mills(7) | 137,500 | 173,618 | 58 | 311,176 |
Jane J. Thompson(8) | 125,000 | 130,000 | 58 | 255,058 |
Laura S. Unger(9) | 120,000 | 130,000 | 58 | 250,058 |
Barry L. Williams(10) | 50,000 | 129,992 | 39 | 180,031 |
| David L. Yowan | 100,000 | 129,992 | 58 | 230,050 |
| (1) | This table includes all fees earned or paid in fiscal year 2019. Unless timely deferred under the Director Deferred Compensation Plan, annual cash retainers are paid in quarterly installments beginning shortly after the Company’s annual meeting of shareholders in May each year. Thus, the amounts paid (or deferred) in 2019 include the fourth and final quarterly payment for the period from May 2018 to May 2019, and three quarterly payments for the period from May 2019 to May 2020. |
| (2) | The grant date fair market value for each share of restricted stock granted in 2019 to directors is based on the closing market price of the Company’s Common Stock on the grant date. Additional details on accounting for stock-based compensation can be found in “Note 2–Significant Accounting Policies” and “Note 11–Stock-Based Compensation Plans and Arrangements” to the audited consolidated financial statements included in the 2019 Annual Report on Form 10-K. Stock awards are rounded down to the nearest whole share to avoid the issuance of fractional shares. As noted in the footnotes below, certain directors timely elected to receive a credit under the Director Deferred Compensation Plan in lieu of their 2019 annual equity retainer. Plan credits are automatically invested in a notional Company stock fund and are not subject to rounding for fractional shares. |
| (3) | All Other Compensation is detailed in a table on the following page. |
| (4) | Ms. Bowen joined the Board on May 1, 2019, and her compensation for 2019 was pro-rated accordingly. Ms. Bowen timely elected to receive a credit under the Director Deferred Compensation Plan in lieu of her 2019 annual equity retainer, with the credit being automatically invested in a notional Company stock fund. |
| (5) | Mr. Diefenderfer elected not to stand for reelection to the Board in June 2019, and his cash compensation for 2019 was pro-rated accordingly. Mr. Diefenderfer timely elected to receive a credit under the Director Deferred Compensation Plan in lieu of his 2019 annual equity retainer, with the credit being automatically invested in a notional Company stock fund. Because Mr. Diefenderfer elected not to stand for reelection to the Board in June 2019, he forfeited this credit when he departed the Board. |
| (6) | Mr. Klane joined the Board on May 1, 2019, and his compensation for 2019 was pro-rated accordingly. |
| (7) | Ms. Mills was elected as Chair of the Board effective June 6, 2019, and her annual cash retainer was adjusted accordingly. She also received an additional stock award at the time she became Chair of the Board. |
| (8) | Ms. Thompson timely elected to receive a credit under the Director Deferred Compensation Plan in lieu of her 2019 annual equity retainer, with the credit being automatically invested in a notional Company stock fund. |
| (9) | Ms. Unger timely elected to receive a credit under the Director Deferred Compensation Plan in lieu of her 2019 annual equity retainer, with the credit being automatically invested in a notional Company stock fund. Ms. Unger also elected to defer her annual cash retainer under the Director Deferred Compensation Plan. |
| (10) | Mr. Williams retired from the Board effective August 9, 2019, and his cash compensation for 2019 was pro-rated accordingly. |
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All Other Director Compensation:
| | Life Insurance Premiums(A) | Total |
| Name | ($) | ($) |
| Frederick Arnold | 58 | 58 |
| Marjorie L. Bowen | 34 | 34 |
| Anna Escobedo Cabral | 58 | 58 |
| William M. Diefenderfer III | 29 | 29 |
| Larry A. Klane | 34 | 34 |
| Katherine A. Lehman | 58 | 58 |
| Linda A. Mills | 58 | 58 |
| Jane J. Thompson | 58 | 58 |
| Laura S. Unger | 58 | 58 |
| Barry L. Williams | 39 | 39 |
| David L. Yowan | 58 | 58 |
| (A) | The amount reported is the annual premium paid by Navient to provide a life insurance benefit of up to $100,000. |
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Proposal 2 — Ratification of the Appointment of the Independent Registered Public Accounting Firm
Navient’s independent registered public accounting firm, KPMG LLP (“KPMG”), is selected by the Audit Committee. On February 21, 2020, the Audit Committee engaged KPMG as Navient’s independent registered public accounting firm for the fiscal year ending December 31, 2020. Representatives of KPMG are expected to be present at the Annual Meeting and they will have the opportunity to respond to appropriate questions from shareholders and to make a statement if they desire to do so.
This proposal is put before the shareholders because the Board of Directors believes it is a good corporate governance practice to ask shareholders to ratify the selection of the independent registered public accounting firm.
For ratification, this proposal requires the affirmative vote of the holders of a majority of the Common Stock present, represented and entitled to vote, and voting affirmatively or negatively at the Annual Meeting. Accordingly, shares that are not voted affirmatively or negatively with respect to this proposal, including abstentions and broker non-votes, will not be relevant to the outcome. If the appointment of KPMG is not ratified, the Audit Committee will evaluate the basis for the shareholders’ vote when determining whether to continue the firm’s engagement. Even if the selection of Navient’s independent registered public accounting firm is ratified, the Audit Committee may direct the appointment of a different independent registered public accounting firm at any time during 2020 if, in its discretion, it determines that such a change would be in the Company’s best interests.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF KPMG AS NAVIENT’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020.
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Independent Registered Public Accounting Firm
Fees Paid to Independent Registered Public Accounting Firms for 2019 and 2018
Aggregate fees billed for services performed for Navient by its independent accountant, KPMG, for the fiscal years ended December 31, 2019, and 2018, are set forth below.
| | 2019 | 2018 |
| Audit Fees | $4,132,351 | $3,353,617 |
| Audit-Related Fees | $1,021,909 | $1,017,232 |
| Tax Fees | $378,881 | $822,374 |
| All Other Fees | - | - |
| Total | $5,533,141 | $5,193,223 |
Audit Fees. Audit fees include fees for professional services rendered for the audits of the consolidated financial statements of Navient and statutory and subsidiary audits, issuance of comfort letters, consents, income tax provision procedures, and assistance with review of documents filed with the SEC.
Audit-Related Fees. Audit-related fees include fees for assurance and other services related to service provider compliance reports, trust servicing and administration reports, internal control reviews, and attest services that are not required by statute or regulation.
Tax Fees. Tax fees include fees for federal and state tax compliance, and tax consultation services.
Pre-approval Policies and Procedures
The Audit Committee has a policy that addresses the approval of audit and non-audit services to be provided by the independent registered public accounting firm to the Company. The policy requires that all services to be provided by the Company’s independent registered public accounting firm be pre-approved by the Audit Committee or its Chair. Each approval of the Audit Committee or the Chair of the Audit Committee must describe the services provided and set a dollar limit for the services. The Audit Committee, or its Chair, pre-approved all audit and non-audit services provided by KPMG during 2019. Reporting is provided to the Audit Committee regarding services that the Chair of the Audit Committee pre- approved between committee meetings. The Audit Committee receives regular reports from management regarding the actual provision of all services by KPMG. No services provided by our independent registered public accounting firm were approved by the Audit Committee pursuant to the “de minimis” exception to the pre-approval requirement set forth in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
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Report of the Audit Committee
The following report shall not be deemed incorporated by reference in any filing under the federal securities laws by virtue of any general incorporation of this proxy statement by reference and shall not otherwise be treated as filed under the federal securities laws.
The Audit Committee is responsible for monitoring our financial reporting processes and system of internal controls, supervising our internal auditors and overseeing the independence and performance of the independent auditors. In carrying out these responsibilities, the Audit Committee meets, on a regular basis, with our internal auditors and our independent auditors to review the overall scope and plans for their respective audits of our financial statements. The Audit Committee also meets privately (and in separate meetings) with members of management, our independent auditors and our internal auditors as may otherwise be needed. The Audit Committee meets with management and with the independent auditors each quarter to review and discuss the Company’s quarterly reports on Form 10-Q prior to their being filed with the SEC and annually to review and discuss the Company’s Annual Report on Form 10-K. The Committee also meets with management and our independent auditors to review and discuss the Company’s quarterly earnings prior to review by the Executive Committee and public release.
The Audit Committee’s responsibility is to monitor and oversee the audit and financial reporting processes. However, the members of the Audit Committee are not practicing certified public accountants or professional auditors and rely, without independent verification, on the information provided to them and on the representations made by management, and the report issued by the independent registered public accounting firm. While the Audit Committee and the Board monitor the Company’s financial record-keeping and controls, management is ultimately responsible for the Company’s financial reporting process, including its system of internal controls, disclosure control procedures and the preparation of the financial statements. The independent auditors support the financial reporting process by performing an audit of the Company’s financial statements and issuing a report thereon.
The Audit Committee has reviewed and discussed with management and Navient’s independent registered accounting firm, KPMG LLP, the Company’s audited financial statements as of and for the year ended December 31, 2019. The Audit Committee also discussed with KPMG LLP the matters under Public Company Accounting Oversight Board (“PCAOB”) standards, including among other things, those relating to the audit of our financial statements.
The Audit Committee received, reviewed and discussed with KPMG LLP the written disclosures and letter (as required by applicable requirements of the PCAOB) regarding the independent accountant’s communications with the Audit Committee about the firm’s independence.
Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors that the financial statements referred to above be included in the 2019 Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the Securities and Exchange Commission.
Audit Committee
Anna Escobedo Cabral, Chair
Frederick Arnold
Marjorie L. Bowen
Laura S. Unger
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Ownership of Common Stock
The following table provides information, as of March 10, 2020, about each shareholder known to Navient to beneficially own more than five percent of the outstanding shares of our Common Stock, based solely on the information filed by each such shareholder on Schedules 13D or 13G with the SEC on the dates indicated in the footnotes to this table (percentages are calculated assuming continuous beneficial ownership at March 23, 2020).
| Name and Address of Beneficial Owner | Shares | Percent |
The Vanguard Group, Inc. (1) | 27,510,806 | 12.44% |
| 100 Vanguard Blvd. | | |
| Malvern, PA 19355 | | |
| | | |
BlackRock Inc. (2) | 19,358,945 | 10% |
| 40 East 52nd Street | | |
| New York, NY 10022 | | |
| | | |
Dimensional Fund Advisors LP (3) | 14,752,125 | 6.67% |
| Building One | | |
| 6300 Bee Cave Road | | |
| Austin, Texas 78746 | | |
| | | |
| (1) | This information is based on the Schedule 13G/A filed with the SEC by The Vanguard Group, Inc., on February 11, 2020. The Vanguard Group, Inc., directly and through its subsidiaries, has sole power to vote or direct the voting of 101,258 shares of Common Stock, shared voting power of 40,510 shares, sole power to dispose of or direct the disposition of 27,396,166 shares of Common Stock, and shared power to dispose of or direct the disposition of 114,640 shares of Common Stock. According to this Schedule 13G/A, Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., beneficially owns 74,130 shares of Common Stock; and Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., beneficially owns 67,638 shares of Common Stock. |
| (2) | This information is based on the Schedule 13G/A filed with the SEC by BlackRock, Inc. on March 9, 2020. BlackRock, Inc. has sole power to vote or direct the voting of 18,451,823 shares of Common Stock and has sole power to dispose of or direct the disposition of for 19,358,945 shares of Common Stock. |
| (3) | This information is based on the Schedule 13G filed with the SEC by Dimensional Fund Advisors LP on February 12, 2020. Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). The Funds directly have sole power to vote or direct the voting of 14,374,107 shares of Common Stock, and sole power to dispose of or direct the disposition of 14,752,125 shares of Common Stock. |
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Ownership of Common Stock by Directors and Executive Officers
The following table sets forth information concerning the beneficial ownership of Navient’s Common Stock by: (i) our current directors and director nominees; (ii) the named executive officers listed in the Summary Compensation Table; and (iii) all of the Company’s current directors and executive officers as a group. Under SEC rules, beneficial ownership for purposes of this table takes into account stock as to which the individual has or shares voting and/or investment power as well as stock that may be acquired within 60 days (such as by exercising vested stock options). Information is provided as of March 3, 2020. The beneficial owners listed have sole voting and investment power with respect to stock beneficially owned, except as to the interests of spouses or as otherwise indicated. As of March 3, 2020, there were 194,143,990 shares of our Common Stock issued, outstanding and entitled to vote.
Director Nominees | Shares (1) | Vested Options (2) | Total Beneficial Ownership (3) | Percent of Class |
| Frederick Arnold | 28,551 | - | 28,551 | * |
Marjorie L. Bowen(4) | 12,218 | - | 12,218 | * |
Anna Escobedo Cabral(5) | 56,348 | - | 56,348 | * |
Larry A. Klane(6) | 11,952 | - | 11,952 | * |
| Katherine A. Lehman | 59,565 | - | 59,565 | * |
| Linda A. Mills | 76,002 | - | 76,002 | * |
Jane J. Thompson(7) | 62,162 | - | 62,162 | * |
Laura S. Unger(8) | 58,909 | - | 58,909 | * |
David L. Yowan(9) | 40,039 | - | 40,039 | * |
| | | | | |
| Named Executive Officers | | | | |
Jack Remondi(10) | 2,590,375 | 111,358 | 2,701,733 | 1.38% |
Christian Lown(11) | 316,849 | - | 316,849 | * |
John Kane(12) | 464,527 | 36,553 | 501,080 | * |
Mark Heleen(13) | 286,085 | - | 286,085 | * |
Steve Hauber(14) | 144,510 | 19,529 | 164,039 | * |
| | | | | |
| Directors and Current Officers as a Group | 4,208,092 | 167,440 | 4,375,532 | 2.24% |
| (14 Persons) | | | | |
| | | | | |
| (1) | Shares of Common Stock and stock units held directly or indirectly, including vested deferred stock units and unvested deferred stock units that may vest within 60 days of March 3, 2020, credited to Company-sponsored retirement and deferred compensation plans. Totals for named executive officers include (i) restricted stock units (“RSUs”) that vest and are converted into shares only upon the passage of time, (ii) performance stock units (“PSUs”) that vest and are converted into shares upon the satisfaction of pre-established performance conditions, and (iii) associated dividend equivalent units (“DEUs”) issued on outstanding RSUs and PSUs. The individuals holding such RSUs, PSUs and DEUs have no voting or investment power over these units. |
| (2) | Shares that may be acquired within 60 days of March 3, 2020, through the exercise of stock options. The stock options held by our officers are net- settled pursuant to their terms (i.e., shares are withheld upon exercise to cover the aggregate exercise price, and the net resulting shares are delivered to the option holder). Net-settled stock options therefore are shown on a “spread basis,” with out-of-the-money options shown as 0. |
| (3) | Total of columns 1 and 2. Except as otherwise indicated and subject to community property laws, each owner has sole voting and sole investment power with respect to the shares listed. |
| (4) | For Ms. Bowen, 12,218 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. Ms. Bowen is not being nominated by the Board for reelection, and her tenure as a director will end when her current term expires at our 2020 Annual Meeting. |
| (5) | For Ms. Cabral, 38,122 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (6) | For Mr. Klane, 4,610 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (7) | For Ms. Thompson, 55,901 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (8) | For Ms. Unger, 18,011 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
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| (9) | For Mr. Yowan, 10,564 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (10) | Mr. Remondi’s share ownership includes 250 shares held as custodian for his child. 930,530 of the shares reported in this column are RSUs, PSUs or DEUs over which Mr. Remondi has no voting or dispositive control. |
| (11) | 259,418 of the shares reported in this column are RSUs, PSUs, or DEUs over which Mr. Lown has no voting or dispositive control. |
| (12) | 207,265 of the shares reported in this column are RSUs, PSUs or DEUs over which Mr. Kane has no voting or dispositive control. 1,250 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (13) | 144,125 of the shares reported in this column are RSUs, PSUs or DEUs over which Mr. Heleen has no voting or dispositive control. |
| (14) | 96,724 of the shares reported in this column are RSUs, PSUs or DEUs over which Mr. Hauber has no voting or dispositive control. |
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Executive Officers
Our executive officers are appointed annually by the Board of Directors. The following sets forth biographical information concerning Navient’s executive officers who are not directors. Biographical information for Mr. Remondi is included in Proposal 1 — Election of Directors.
| Name and Age | Position and Business Experience |
| |
Christian Lown 50 | • Chief Financial Officer, Navient — March 2017 to present • Managing Director and Co-Head, Global Financial Technology Group, North America Banks and Diversified Finance, Morgan Stanley — 2006 to March 2017 • Vice President, Financial Institutions Group — UBS AG — 2003 to 2006 • Associate, Financial Institutions Group, Credit Suisse First Boston — 2001 to 2003 |
| |
John Kane 51 | • Group President, Business Processing Solutions, Navient — June 2015 to present • Chief Operating Officer, Navient — April 2014 to June 2015 • Senior Vice President — Enterprise Project Management, SLM Corporation — March 2013 to April 2014 • Senior Vice President — Credit, SLM Corporation — August 2011 to March 2013 • Senior Vice President — Collections, SLM Corporation — 2008 to 2011 • Senior Vice President — Consumer Credit Operations, MBNA/Bank of America — 1990 to 2008 |
| |
Mark L. Heleen 57 | • Chief Legal Officer and Secretary, Navient — February 2015 to present • Senior Vice President and Senior Deputy General Counsel, Navient — June 2014 to February 2015 • Senior Attorney, Cadwalader Wickersham & Taft LLP — August 2013 to June 2014 • Independent Consultant — January 2011 to August 2013 • Executive Vice President and General Counsel, SLM Corporation — February 2009 to December 2010 • Various roles in the Office of the General Counsel, SLM Corporation — July 1998 to February 2009 |
| |
Steve Hauber 45 | • Chief Risk and Compliance Officer, Navient — June 2017 to present • Chief Audit Officer, Navient — April 2014 to June 2017 • Chief Audit Officer, SLM Corporation — January 2011 to April 2014 |
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Proposal 3 — Advisory Vote on Executive Compensation
Navient is asking shareholders to approve an advisory resolution (commonly referred to as a “say-on-pay” resolution) on the Company’s executive compensation as reported in this proxy statement. Navient urges shareholders to read the “Compensation Discussion and Analysis” section of this proxy statement, which describes how the Company’s executive compensation policies and procedures operate and are designed, as well as the Summary Compensation Table and other related compensation tables and narrative, which provide detailed information on the compensation paid to our named executive officers (“NEOs”).
This proposal gives you, as a shareholder, the opportunity to express your views on our NEOs’ compensation. Your vote is not intended to address any specific item of our compensation program, but rather to address our overall approach to and objectives of the compensation paid to our NEOs as described in this proxy statement. In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Navient is asking shareholders to approve the following advisory resolution at the Annual Meeting:
“Resolved, that Navient’s shareholders approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis and the related compensation tables and narrative disclosure in this proxy statement.”
The Company conducted a similar advisory vote at our last annual meeting of shareholders. At that time, shareholders expressed support for the 2018 compensation of our NEOs, with approximately 94% of the votes present in person or represented by proxy at the meeting and entitled to vote on the matter approving the 2018 compensation of our NEOs.
The Board of Directors believes that the Company’s 2019 executive compensation program strongly aligned pay to actual performance. Shareholders are encouraged to read the “Compensation Discussion and Analysis” section, which describes Navient’s executive compensation program in detail, including how it is designed to achieve the Company’s compensation objectives and how the Company’s performance in 2019 was reflected in the compensation of our NEOs.
This proposal to approve the resolution regarding the compensation paid to Navient’s NEOs requires the affirmative vote of the holders of a majority of the Common Stock present, represented and entitled to vote, and voting affirmatively or negatively at the Annual Meeting. Accordingly, shares that are not voted affirmatively or negatively with respect to this proposal, including abstentions and broker non-votes, will not be relevant to the outcome.
As an advisory vote, the “say-on-pay” resolution is not binding on Navient. The Board of Directors, however, values the opinions of our shareholders as expressed through their votes. Accordingly, the Board of Directors as well as the Compensation Committee will review and consider the results of the “say-on-pay” vote, the opinions of our shareholders, and other relevant factors in making future decisions regarding our executive compensation program.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS AND THE RELATED COMPENSATION TABLES AND NARRATIVE DISCLOSURE IN THIS PROXY STATEMENT.
Annual Incentive Awards: The 20172019 Management Incentive Plan.Plan
As part of Navient’s annual strategic planning process, management developed an operating plan for the Company’s 20172019 fiscal year. The Compensation Committee and management then discussed specific corporate performance metrics and goals for Navient to be set forth in a 20172019 annual incentive program—known as the Management Incentive Plan (“MIP”)—with the express purpose of focusing executives on achieving the operating plan.
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For 2017,the 2019 MIP, the Committee decided to continuecontinued its focus on Adjusted Diluted “Core Earnings” per share4 Per Share as athe plan’s key financial metric, which incorporates performance relative to capital management and is aligned with the focus of investors.metric. Three other financial metrics were carried forward from the 2016 MIP—revenue from growth businesses, private loan gross defaults2018 plan—Consumer Lending New Loan Volume, Private Education Loan Gross Defaults, and fee income. The firstAdjusted “Core Earnings” Operating Expenses—although the weight placed on operating expenses was increased because of these metrics stresses the importance of strategic growth, with specificaggressively managing expenses. As in prior years, all Consumer Lending New Loan Volume is subject to the Company’s Board-approved risk and return guidelines (e.g., regarding consumer credit quality, cost-to-acquire, net interest margin). The Committee also substituted EBITDA for revenue goals for those businesses that the Company has targeted for growth. Gross loan defaults is a key metric used by our investors and others to measurein measuring the performance of our loan portfolios. Incorporating this metric into our annual incentive plan helps drive our efforts to minimize loan defaults, which helps our investors as well as our student loan customers. Fee income emphasizes the continuing importance of our fee-based businesses, which generate income through loan servicing, asset recovery and other business processing activities. Lastly, the Committee eliminated the metric introduced in 2016 for strategic debt financing proceeds, which had been designedsolutions group to focus management on certain short-term financing challenges experienced in 2016 and earlier years. ensuring profitable growth as those business lines continue to scale up.
The Company was successful in meeting those challenges in 2016, thereby eliminatingfollowing table details the need to retain this performance metric.
In addition to establishing a performance target for each of thespecific performance metrics referenced above,utilized in our 2019 Management Incentive Plan, as well as the Committee assigned a weight to each performance metric. The weight assigned to “Core Earnings” per share (40%) remained unchanged from 2016. For 2017, the Committee determined that more emphasis should be placed on revenue from growth businesses, increasing the weight of this performance metric from 15% in 2016 to 25% in 2017. Additionally, the weights assigned to private loan gross defaults and fee income increased from 15% to 20% and from 10% to 15%, respectively. each metric:
| 2019 MIP Performance Metric | Weight | Rationale |
Adjusted Diluted “Core Earnings” Per Share19
| 35% | • Measures overall management effectiveness |
| | • Promotes shareholder value |
| | • Key financial metric for investors |
| | |
| Consumer Lending New Loan Volume | 20% | • Emphasizes growth in strategic businesses |
| | • Offers refinance opportunities to our existing customers, which helps retain and grow our customer base |
| | • Loan volume is a key focus in order to scale this growing business |
| | • All loan volume is subject to the Company’s Board-approved risk and return guidelines (e.g., regarding consumer credit quality, cost-to-acquire, net interest margin) |
| | |
Business Processing EBITDA20
| 20% | • Emphasizes profitable growth in strategic businesses |
| | • Growth helps to offset company-wide expenses as our legacy loan portfolio amortizes |
| | |
Adjusted “Core Earnings” Operating Expenses21 | 15% | • Focuses management attention on expense reduction as our legacy loan portfolio amortizes |
| | • Key financial metric for investors, which is also critical to the achievement of our Core Earnings Per Share goal |
| | |
| Private Education Loan Gross Defaults | 10% | • Enhances the profitability of our private education loan portfolio |
| | • Aids our private education student loan customers |
| | • Key financial metric for investors |
The Committee also established a scale of “payout factors” to assess the Company’s performance relative to target. As noted in the chart below, thetarget established for each of these performance metrics. These payout factors range from 50% based on a threshold level of performance, to 150% based on a maximum level of performance, with performance below threshold resulting in a payout factor of 0%.
The chart below sets forth the weight, target, and payout factors for each performance metric:
2017 Performance Metric | | Weight | | Below Performance Threshold (Payout Factor = 0%) | | Performance Threshold (Payout Factor = 50%) | | | Performance Target (Payout Factor = 100%) | | Performance Maximum (Payout Factor= 150%) |
Earnings Per Share on a “Core Earnings” Basis (1) | | | 40 | % | <$1.67 | | $ | 1.67 | | | $ | 1.82 | | >= $2.01 |
Revenue from Growth Businesses (millions) (2) | | | 25 | % | <$206 | | $ | 206 | | | $ | 240 | | >= $262 |
Private Education Loan Gross Defaults (millions) (3) | | | 20 | % | >$579 | | $ | 579 | | | $ | 546 | | <= $520 |
| Fee Income (millions) | | | 15 | % | <$685 | | $ | 685 | | | $ | 725 | | >= $755 |
(1) | Excludes any regulatory remediation charges. |
(2) | Revenue from non-federal-loan-related businesses. |
(3) | Based on pre-established adjustment guidelines, and in order to remain consistent with the MIP goals, 2017 results were adjusted to exclude defaults from a large loan portfolio acquired in mid-2017, as well as the estimated reduction in loan defaults resulting from borrowers being placed in disaster forbearance status following major hurricanes in 2017. |
For each metric, the Committee also established a payout curve for performance between threshold-target and target-maximum. When determining
| Adjusted “Core Earnings” Operating Expenses excludes net restructuring and regulatory-related charges, as well as certain extraordinary items such as strategic corporate transactions or other unusual or unplanned events. Adjusted “Core Earnings” Operating Expenses is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. For more information on the definition of Adjusted “Core Earnings” Operating Expenses and for a reconciliation of non-GAAP financial measures with GAAP results, please refer to our Investor Presentation for Fourth Quarter and Full Year 2019 on the Investor Relations section of our website located at http://www.navient.com/about/investors/. |
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The chart below sets forth the performance threshold, target, and maximum, and the payout factors for each performance metric:
2019 MIP Payout Factors
|
2019 Performance Metric | Below Performance Threshold (Payout Factor = 0%) | | (Payout Factor = 100%) | (Payout Factor= 150%) |
| Adjusted Diluted “Core Earnings” Per Share | <$1.73 | $1.73 | $1.94 | >= $2.14 |
| Consumer Lending New Loan Volume (millions) | <$2,860 | $2,860 | $3,651 | >=$4,650 |
| Business Processing EBITDA (millions) | <$48 | $48 | $60 | >= $71 |
| Adjusted “Core Earnings” Operating Expenses (millions) | >$994 | $994 | $949 | <=$915 |
| Private Education Loan Gross Defaults (millions) | >$508 | $508 | $459 | <= $408 |
Performance against three of the five MIP payouts, the Committee may also consider each NEO’s performance against individual goals.
goals in 2019 was notably strong. The Executive Summary of this Compensation Discussion and Analysis, beginning on page 46, details a number of our key achievements in 2019. The chart below sets forth (i) each performance metric, (ii) the performance target approved by the Compensation Committee for each metric, (iii) the 20172019 actual performance of the Company for each metric, (iv) the payout factor for each metric based on the Company’s level of achievement relative to target, (v) the relative weighting of each performance metric, and (vi) the performance score attributable to each metric, as well as the overall performance score.
4 “Core Earnings” per share is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. For more information on the definition of Core Earnings and for a reconciliation of non-GAAP financial measures with GAAP results, please refer to the discussion included in Item 7 of our 2017 Annual Report filed on Form 10-K on February 26, 2018, or refer to the Investor Relations section of our website located at http://www.navient.com/about/investors/.
2017 Performance Metric (i) | | Performance Target (ii) | | | 2017 Actual Performance (iii) | | | Payout Factor (iv) | | | Weighting (v) | | | Performance Score (vi) | |
| Earnings Per Share on a “Core Earnings” Basis | | $ | 1.82 | | | $ | 1.79 | | | | 90.0 | % | | | 40 | % | | | 36.0 | % |
| Revenue from Growth Businesses (millions) | | $ | 240 | | | $ | 226 | | | | 79.4 | % | | | 25 | % | | | 19.9 | % |
| Private Education Loan Gross Defaults (millions) | | $ | 546 | | | $ | 553 | | | | 89.7 | % | | | 20 | % | | | 17.9 | % |
| Fee Income (millions) | | $ | 725 | | | $ | 783 | | | | 150.0 | % | | | 15 | % | | | 22.5 | % |
| Overall Performance Score | | | | | | | | | | | | | | | | | | | 96.3 | % |
2019 MIP Performance Results
|
2019 Performance Metric (i) | | Performance Target (ii) | | 2019 Actual Performance (iii) | Payout Factor (iv) | Weighting (v) | Performance Score (vi) |
Adjusted Diluted “Core Earnings” Per Share22 | $
| 1.94 | $
| 2.64 | 150.0% | 35% | 52.5% |
| Consumer Lending New Loan Volume (millions) | $ | 3,651 | $
| 4,903 | 150.0% | 20% | 30.0% |
Business Processing EBITDA23 (millions) | $ | 60 | $
| 49 | 55.0% | 20% | 11.0% |
Adjusted “Core Earnings” Operating Expenses24 (millions) | $ | 949 | $
| 965 | 82.7% | 15% | 12.4% |
| Private Education Loan Gross Defaults (millions) | $ | 459 | $
| 428 | 130.5% | 10% | 13.1% |
| | | | | Overall Performance Score: | 119.0% |
These performance results were reviewed and certified by the Compensation Committee in January 2018. Annual2020. In determining the incentive awardsaward amounts to be paid to each of our NEOs under the 2019 MIP, the Committee also considered the individual performance of each NEO, as reflected in an annual performance assessment prepared by our CEO and presented to the Committee. The incentive award amounts for 2017our NEOs under the 2019 MIP, which were based solely on the overall performance score and paid in cash in February 2018. The 2017 incentive award amount for each of the NEOs under the 2017 MIP is2020, are set forth in the following table.
| 2019 MIP Payouts | | 2019 MIP Payouts |
| Navient NEOs | | Target % of Base Salary | | | 2017 Target Incentive Amount ($) | | | Overall Performance Score | | | 2017 MIP Incentive Award Amount ($) | | Target % of Base Salary | 2019 Target Incentive Amount ($) | 2019 MIP Incentive Award Amount ($) |
| Mr. Remondi | | | 150 | % | | | 1,500,000 | | | | 96.3 | % | | | 1,444,500 | | 150% | 1,500,000 | 1,785,000 |
| M. Lown | | | 150 | % | | | 600,000 | | | | 96.3 | % | | | 577,800 | | 150% | 600,000 | 714,000 |
| Mr. Chivavibul | | | 150 | % | | | 585,000 | | | | 96.3 | % | | | 563,355 | | |
| Mr. Kane | | | 150 | % | | | 690,000 | | | | 96.3 | % | | | 664,470 | | 150% | 690,000 | 821,100 |
| Mr. Whorley | | | 150 | % | | | 690,000 | | | | 96.3 | % | | | 664,470 | | |
| Mr. Hynes | | | 150 | % | | | 577,500 | | | | 96.3 | % | | | 556,133 | | |
| Mr. Heleen | | | 150 | % | | | 577,500 | | | | 96.3 | % | | | 556,133 | | 150% | 577,500 | 687,225 |
| Mr. Hauber | | 150% | 525,000 | 624,750 |
22 | See footnote 19 above for additional information regarding Adjusted Diluted “Core Earnings” Per Share. |
23 | See footnote 20 above for additional information regarding EBITDA. |
24 | See footnote 21 above for additional information regarding Adjusted “Core Earnings” Operating Expenses, which for 2019 excludes $6 million in regulatory-related expenses, $6 million in restructuring expenses and $12.5 million in expenses relating to the Canyon Agreement. For additional information pertaining to the Canyon Agreement, please refer to “Shareholder Engagement and Communications with the Board” above. |
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2019 Long-term Incentive Program.Program
Our long-term incentive program is designed to drive long-term performance and shareholder value by delivering a significant portion of NEO compensation through a mix of equity awards. For 2019, the Committee decided to discontinue the prior practice of granting stock options as part of the Company’s long-term incentive program. The Committee made this determination to update the mix of equity awards based on its review of equity grant practices among peer companies, general industry market trends and the Company’s historical grant practices. Each of our NEOs (other than Mr. Remondi) received long-term incentive awards split equally between restricted stock units (“RSUs”) and performance stock units (“PSUs”) in terms of grant date value.
Recognizing Mr. Remondi’s significant contributions to the Company, the Committee increased the grant date value of his 2019 long-term incentive award by 25% from the prior year, with this increase being delivered entirely in PSUs. Sixty percent of the grant date value of Mr. Remondi’s 2019 long-term incentive awards were delivered in the form of PSUs, with the remaining forty percent delivered in the form of RSUs. This increase brings Mr. Remondi’s 2019 long-term incentive award value in line with peer group median levels.
Based upon the recommendation of the Chief Executive Officerour CEO and on a market analysis of the 20172019 Navient peer group performed by the Committee’s independent consultant, the Compensation Committee approved 20172019 long-term incentive awards for our other NEOs in early 20172019 in the following amounts: Mr. RemondiLown ($4,000,000); Mr. Chivavibul ($900,000)1,200,000); Mr. Kane ($1,450,000)1,000,000); Mr. WhorleyHeleen ($1,350,000); Mr. Hynes ($1,000,000)750,000); and Mr. HeleenHauber ($750,000)500,000). In general, these award levels represent a modest increase over 2016, which the Committee determined were warranted by the executive team’s continued strong performance in the face of an increasingly challenging regulatory, rating agency and financial environment.
Mr. Lown received a one-time inducement equity award of $1,000,000 when he joined the Company in March 2017. Mr. Lown also is eligible to receive a one-time deferred signing bonus of $1,400,000, less applicable withholding taxes (“Deferred Signing Bonus”), to compensate him for a portion of the long-term equity and deferred compensation with his former employer that he forfeited by joining Navient. This Deferred Signing Bonus, will be payable in cash in two equal installments on the first and second anniversaries of his start date with the Company, March 17, 2017, provided he remains employed by the Company on each such date.
With the exception of Mr. Lown, the 2017 long-term incentive awards were delivered as 50% in PSUs, 30% in RSUs, and 20% in stock options. Mr. Lown’s one-time inducement equity award was delivered entirely in RSUs. In future years, Mr. Lown’s annual equity awards will be delivered in the same mix of awards as other NEOs. The chart below details the 20172019 long-term incentive awards for our NEOs:
| Navient NEOs | | Performance Stock Units(1) (#) | | | Restricted Stock Units(2) (#) | | | Stock Options(3) (#) | | | Total Award Value(4) ($) | | Performance Stock Units(1) (#) | Restricted Stock Units(2) (#) | Total Award
Value(3) ($) |
| Mr. Remondi | | | 129,198 | | | | 77,519 | | | | 297,397 | | | | 4,000,000 | | 262,237 | 174,825 | 5,000,000 |
| Mr. Lown | | | - | | | | 71,428 | | | | - | | | | 1,000,000 | | 52,447 | 52,447 | 1,200,000 |
| Mr. Chivavibul | | | 29,069 | | | | 17,441 | | | | 66,914 | | | | 900,000 | | |
| Mr. Kane | | | 46,834 | | | | 28,100 | | | | 107,806 | | | | 1,450,000 | | 43,706 | 43,706 | 1,000,000 |
| Mr. Whorley | | | 43,604 | | | | 26,162 | | | | 100,371 | | | | 1,350,000 | | |
| Mr. Hynes | | | 32,299 | | | | 19,379 | | | | 74,349 | | | | 1,000,000 | | |
| Mr. Heleen | | | 24,224 | | | | 14,534 | | | | 55,762 | | | | 750,000 | | 32,779 | 32,779 | 750,000 |
| Mr. Hauber | | 21,853 | 21,853 | 500,000 |
| (1) | This column represents the target PSUs granted to each of the NEOs on February 6, 2017,5, 2019, with the target number of PSUs equal to 50% (60% for Mr. Remondi) of the 20172019 long-term incentive award amount approved by the Compensation Committee divided by the closing price of Navient Common Stock on the grant |
date. Each PSU is subject to performance-based vesting over a three-year performance period beginning on January 1, 2017, and ending on December 31, 2019. date. Each PSU is subject to performance-based vesting over a three-year performance period beginning on January 1, 2019 and ending on December 31, 2021. The vesting provisions of these PSUs are described below.
| (2) | This column represents the RSUs granted to each of the NEOs on February 6, 2017,5, 2019, with the number of RSUs equal to 30%50% (40% for Mr. Remondi) of the 20172019 long-term incentive award amount approved by the Compensation Committee divided by the closing price of Navient Common Stock on the grant date. These RSUs are scheduled to vest in one-third increments on each of the first, second and third anniversaries of the grant date, subject to certain terms and conditions. |
(3) | This column represents the stock options granted to each of the NEOs on February 6, 2017, with the number of stock options determined using 20% of the 2017 long-term incentive award amount approved by the Compensation Committee and the Black-Scholes option value (which incorporates the closing price of Navient Common Stock on the grant date). These stock options are scheduled to vest in one-third increments on each of the first, second and third anniversaries of the grant date, subject to certain terms and conditions. |
(4)(3) | Total award value differs slightly from the grant date fair value, as reflected in the “Summary Compensation Table” and “Grants of Plan-Based Awards” table, as the number of units/options is rounded down to the nearest whole unit or option to avoid the issuance of fractional units or shares. |
The Compensation Committee determined that
2019-21 Performance Stock Units
PSUs should continue to have the most weight (50%)granted in the mix2019 as part of our 2019 long-term incentive vehiclesprogram are designed to strongly align executive payvest at the end of 2021, with a potential payout ranging from 0% to 150% of the Company’s long-term performance. The mixtarget number of RSUs and stock options remained the same as the 2016 long-term incentives, with RSUs were given slightly more weight (30%) than stock options (20%).
For 2017, the Committee kept the PSU structure adopted in 2016, which aligns with the Company’s objectives for cash flow, revenue from growth businesses, and achievement of strategic objectives. These PSUs vestunits, based on cumulative performance over the 2019- 21 performance period.
The Committee approved newly designed PSUs for each of our NEOs in 2019. Recognizing net student loan cash flows as a primary driver of the Company’s value, the Committee increased the weight assigned to this three-year periodcumulative performance measure from 201750% to 2019. The70%. Additionally, the Committee added return on equity (“ROE”) as a new measure of company-wide success with a weight of 30%.
Maintaining (or improving) ROE requires a disciplined approach to managing, allocating and investing capital to achieve the best return for shareholders. As a “standard” financial metric, it also permits comparability across peer groups and industry- wide benchmarks. Given the impact of accounting rules on certain businesses—as well as general uncertainty regarding the impact of the new accounting standard governing current expected credit losses (“CECL”)—separate annual ROE targets will be established by the Committee for each year in the 2019-21 PSU performance cycle, with targets set at the beginning of each year. Each annual ROE target will have 10% weight and earned awards will not be paid until after the end of the 2019-21 performance period.
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These performance metrics weightingsfor the 2019-21 PSUs are summarized below:
| 2019-21 Performance Stock Units |
| 2019-21 PSU Performance Metric | Weight | Rationale |
Cumulative Net Student Loan Cash Flows25 | 70% | • Promotes successful management of our loan portfolios |
| | • Critical driver of shareholder value, supporting dividends, share repurchases and debt payments |
| | • Supports growth of strategic businesses, including consumer lending |
Core Earnings” Return on Equity26 | 10% / 10% / 10% | • Requires focus on managing, allocating and investing capital to achieve the best return for shareholders |
| | • Standard financial metric that permits comparability across peer groups and industry-wide benchmarks. |
The chart below shows the potential for PSU vesting as a percentage of the target number of PSUs are shown in the chart below:
| Performance Metric | Weight | Percentage of PSUs Vesting (1) |
| 0% | 50% | 100% | 150% |
Net Student Loan Cash Flows (2) | 50% | Less than $6.75 billion | $6.75 billion | $7.85 billion | $9.25 billion or greater |
Cumulative Revenue from Growth Businesses (3) | 30% | Less than $770 million | $770 million | $995 million | $1.27 billion or greater |
| Strategic Objectives | 20% | · Build strong relationships with state and federal regulators · Pursue opportunistic loan portfolio acquisitions · Significantly reduce expenses · Improve profitability of key business lines |
PSUs:
(1) |
| | 2019-21 Performance Stock Units | | | Performance Metric | Weight | Percentage of 2019-21 PSUs Vesting* | | 0% | 50% | 100% | 150% | | | Cumulative Net Student Loan Cash Flows | 70% | Less than $8.20 billion | $8.20 billion | $9.10 billion | $9.90 billion or greater | | | 2019 “Core Earnings” Return on Equity | 10% | Less than 11.2% | 11.2% | 12.7% | 14.2% | | | 2020 “Core Earnings” Return on Equity | 10% | Less than 18.6% | 18.6% | 20.6% | 22.6% | | | 2021 “Core Earnings” Return on Equity27 | 10% | - | - | - | - |
*For points between each performance level, the vesting percentages will be interpolated. That is, vesting will be interpolated between threshold performance (50% vesting) and target performance (100% vesting), as well as between target performance and maximum performance (150% vesting). |
(2) | Aggregate cash flows net of secured borrowings from all student loans (including private credit refinance loans) realized for the fiscal years 2017, 2018 and 2019, including student loan cash flows realized from new acquisitions, but excluding the impact of cash flows for fiscal years beyond 2019 that are accelerated through securitizing or pledging unencumbered student loans, or through loan sales. |
(3) | That portion of the Company’s aggregate revenue for fiscal years 2017-19 from non-federal-loan-related businesses, including revenue from private credit refinance loans. |
The Compensation Committee selected each of these performance metrics with specific business objectives in mind. Aggregate cash flows from student loans (net of secured borrowings) realized for the fiscal years 2017, 2018 and 2019 represent a critical driver of shareholder value, and thus are given the most weight. Strong cash flow performance supports our shareholder dividends, share repurchases, debt repayments and strategic investments in future growth areas. Cumulative revenue from growth businesses is a measure of our success in realizing our long-range business plans and our ability to incorporate new growth businesses into our portfolio to balance our maturing portfolio of FFELP loans. Finally, strategic objectives are focused on a limited number of critical, non-formulaic goals over the next three years.
With regard toRegarding the performance targets established for each metric, the Compensation Committee believes that these targets are set at challenging but achievable levels in light of the uncertain regulatory, rating agency and financial environment the Company
faces. The Committee believes thatconsiders these environmental factors increaseand the resulting degree of difficulty that management faces in achieving the Company’s long-term growth and performance goals of the Company.when establishing appropriate levels for threshold, target and maximum performance levels and payout curves.
2015-17 PSUs. Fiscal year 2017 marked the final year of a three-year performance period associated with PSUs granted to our executive team in early 2015. These long-term equity awards were designed to vest at the end of 2017, with a potential payout ranging from 0% to 130% of the target award, based on the Company’s “cumulative core net income” for the three-year performance period. Because the Company failed to meet the threshold performance level established for these PSUs, the awards were forfeited, resulting in no payout to our executive team.
Deferred Compensation.Compensation
We provide our NEOs with the opportunity to defer a portion of their compensation on a tax-deferred basis under the Navient Deferred Compensation Plan (the “Deferred Compensation Plan”).
The Deferred Compensation Plan is designed to provide all of our senior employees, including our NEOs, with the opportunity to save for retirement and other personal expenses on a tax-favoredtax-
25 | Cumulative Net Student Loan Cash Flows is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. Cumulative Net Student Loan Cash Flows are the aggregate cash flows net of secured borrowings from all student loans (including private credit refinance loans) realized for the fiscal years 2019, 2020 and 2021, including student loan cash flows realized from new acquisitions, but excluding the impact of cash flows for fiscal years beyond 2021 that are accelerated through securitizing or pledging unencumbered student loans or through loan sales. |
26 | Annual “Core Earnings” Return on Equity targets and range are established by the Committee at the beginning of each respective year, with each year’s performance counting 1/3 towards the total 30% weight. “Core Earnings” Return on Equity is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. “Core Earnings” Return on Equity is a percentage equal to the Company’s “core earnings” net income for each of fiscal years 2019, 2020 and 2021, divided by average stockholder’s equity for each such year (determined using the average balance of stockholder’s equity on a “core earnings” basis for each quarter in a given year), using yearly “core earnings” net income as shown in the segment reporting footnote in the Company’s audited financial statements as published in the Company’s annual report on Form 10-K, excluding the impact of any regulatory and restructuring costs. |
27 | “Core Earnings” Return on Equity targets and range for 2021 will be established by the Committee at the beginning of calendar year 2021. |
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advantaged basis. Each participating employee may elect to defer a portion of his or her eligible compensation under the Deferred Compensation Plan, and amounts deferred are credited to bookkeeping accounts along withaccounts. The Company matchingamended the Deferred Compensation Plan in 2018 to eliminate Company contributions designed to encourage employee participation.effective January 1, 2019. Amounts in each participant’s account are indexed to one or more investment alternatives chosen by each participant from a range of market-basedmarket- based alternatives. The Deferred Compensation Plan does not pay above-market or preferential earnings on compensation deferred under or contributed to the plan. Additional details for our NEOs who participate can be found below under the “Non-Qualified Deferred Compensation” table.
Health, Welfare and Retirement Benefits.Benefits
Our NEOs are eligible to participate in the same broad-based employee benefit programs that we offer to our other employees, such as group health benefits and tax-qualified retirement benefits.
Perquisites.
Perquisites
Perquisites are limited and are not a significant portion of our compensation program. Our policy is to allow limited personal use of the company’s aircraft by our NEOs. To the extent an NEO uses Navient’s private aircraft for personal travel, the NEO must reimburse Navient for the variable flight costs of such personal use. These reimbursements exceed the requirements of the Internal Revenue Code. In 2017,2019, we did not provide relocation allowances to our NEOs.any NEO. We provided transportation allowances to our CEO as described in the Summary Compensation Table.Table below.
Prior to 2018, the Compensation Committee approved annual physicals for our senior executives, including our NEOs. Consistent with a market trend to limit perquisites, the executive physical program was eliminated effective January 1, 2018.
Severance Benefits.Benefits
Navient has adopted an executive severance plan and a change in control severance plan, which are described in greater detail under the heading “Arrangements with Named Executive Officers” below. We generally utilize plans (as opposed to individual agreements) to provide severance and change in control payments and benefits for several reasons. First, a “plan” approach provides us with the flexibility to change the terms of severance benefits from time to time. In addition, this approach is more transparent, both internally and externally, which eliminates the need to negotiate severance or other employment separation benefits on a case-by-case basis and assures each of the executives that his or her severance benefits are comparable to those of other executives with similar levels of responsibility and tenure.
Under the executive severance plan, our NEOs are eligible for severance payments in the event of an involuntary termination of employment without “cause.” In addition, they are eligible for “double trigger” severance payments under the change in control severance plan in the event of an involuntary termination of employment without “cause” or a termination of employment with “good reason” in connection with a change in control of Navient. All plan participants, including our NEOs, are entitled to certain limited “single trigger” benefits upon a change in control, including equity acceleration, only when equity awards are not honored, assumed, or replaced by a successor employer of Navient. Such equity acceleration provides NEOs with the benefit of these outstanding awards granted in prior years. They also may be able to exercise the awards and possibly participate in the change in control transaction for the consideration received.
Other Arrangements, Policies and Practices Related to Our Executive Compensation Program
Share Ownership Guidelines.Guidelines
Navient has adopted share ownership guidelines applicable to its senior executives, including our NEOs. These ownership guidelines, which are expectedrequired to be achieved over a five-year period, are as follows:
Chief Executive Officer — Lesser of 1 million shares or $5 million in value
Executive Vice President — Lesser of 200,000 shares or $1 million in value
Senior Vice President — Lesser of 70,000 shares or $350,000 in value
our NEOs other than Mr. Remondi holds the title of Executive Vice President.The guidelines encourage continued ownership of a significant amount of Navient’s Common stock acquired through equity awards and help align the interests of our senior executives with the interests of our shareholders. A senior executive must hold Navient Common Stock acquired through equity grants until the applicable thresholds are met, and a senior executive will not be eligible to receive equity grants during the following year if he or she sells this stock (whether before or after such guidelines are met), if such sale would resultresulted in a decrease below the thresholds established by the guidelines.
The following shares and share units count towards the ownership guidelines: shares held in brokerage accounts; vested shares credited to deferred compensation accounts; shares credited to qualified retirement plan accounts; vested
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performance stock and PSUs;stock; restricted stock and RSUs that vest solely upon the passage of time, on an after-tax basis, and vested stock options, to the extent that they are “in-the-money” on an after-tax basis.
All of Navient’s NEOs are in compliance with the share ownership guidelines as of the date of this proxy statement either through their stock ownership levels or due to the five-year initial period not being finished.
Hedging/Pledging Prohibition.Prohibition
Navient policy prohibits directors and senior management from engaging in hedging, pledging and certain other transactions involving Navient Common Stock. See “Director Compensation” above for additional details.
Policy on Rule 10b5-1 Trading Plans.Plans
The Company has a policy governing the use by directors and executive officers of pre-established trading plans for sales of our Common Stock. See “Director Compensation” above for additional details.
Clawback.
Clawback
Awards made to senior officers, including our NEOs, under the Navient Corporation 2014 Omnibus Incentive Plan (as amended and restated) are subject to clawback in the event of a material misstatement of Navient’s financial results and other qualifying events. Navient enhanced its clawback policy in 2017 following an extensive review and consideration of the Company’s then-existing clawback policy by the Compensation Committee. The enhanced clawback policy grants the Board discretion to recoup incentive compensation both in the event of a financial restatement and in the case of the executive’s misconduct involving a material violation of Navient policy or commission of fraud or other misconduct involving Navient. Following engagement with its shareholders, the Board further enhanced the clawback policy in March 2018 to add a clawback trigger in the event of misconduct committed by persons under a senior officer’s supervision.
Navient Compensation Committee Process for Approving Long-term Awards.Awards
The Compensation Committee approves long-term awards on an annual basis at a regularly scheduled committee meeting. The Committee has delegated authority to a sub-committee consisting of the Compensation Committee Chair and the CEO (the “Sub-Committee”) to approve long-term awards for new employees and promotions below the executive officer level. These awards generally are effective on the day on which the Sub-Committee approves the awards. The Compensation Committee approves any awards to newly-hirednewly hired or promoted executive officers. The grant date for these awards generally is the applicable meeting date of the Committee at which the awards are approved. Under the terms of the Navient Corporation 2014 Omnibus Incentive Plan, as amended and restated, stock options are required to be priced at the closing market price of Navient’s Common Stock on the Nasdaq on the date of grant.
Tax Deductibility of Compensation Over $1 Million. Million
Section 162(m) of the Internal Revenue Code (“Section 162(m)”) can potentially disallowgenerally disallows a federal income tax deduction for annual compensation over $1 million paid to our chief executive officer, chief financial officer, three other most highly compensated officers and anyone who has served as one of our covered officers after 2016, other than pursuant to certain NEOs. grandfathered compensation arrangements described below. The Compensation Committee retains the flexibility to award compensation to the NEOs that is not deductible for U.S. federal income tax purposes.
Prior to federal tax reform enacted in late 2017,2018, the Section 162(m) limitations applied to the chief executive officer and the three other highest-paid NEOs (excluding the chief financial officer) who were serving as of the last day of Navient’s fiscal year (“covered employees”), subject to a “performance-based compensation” exception for compensation paid pursuant to shareholder-approved plans. Although muchCertain plans and arrangements in effect as of the compensation opportunity in our executive compensation program is performance-based and (prior to 2018) generally deductible for U.S. federal income tax purposes, the Compensation Committee retains the flexibility to award compensation to the NEOs that is not deductible for U.S. federal income tax purposes.
With regard to ourNovember 2, 2017 annual incentive program—known as the Management Incentive Plan (“MIP”Grandfathered Plans”)—special rules apply for executives subject to Section 162(m). The Committee established a separate performance target applicable only to these executives. This “162(m) performance target” for 2017 required that the Company achieve positive Core Net Income remain eligible for the year. If this target is achieved, each executive subject to Section 162(m) becomes eligible to receive an incentive payment based on the maximum applicable award (i.e., 150%). However, the Committee retained “negative discretion” to reduce the executive’s incentive payment using the same criteria established for all other MIP participants whoperformance-based compensation exception, provided that those plans are not subject to Section 162(m). This approach allows the 2017 MIP to operate in the same manner for all participants, regardless of whether they are subject to Section 162(m).
The Committee also established a separate 162(m) performance target formaterially modified. For PSUs granted in connection with our 2017 long-term incentive program. Thisprogram, which cover the three-year performance period from 2017 to 2019, the Committee established a separate 162(m) performance target which requires that the Company achieve positive Cumulative Core Net Income for the applicable three-year performance period. If this target is achieved, each executive subject to Section 162(m) becomes eligible for the maximum level of vesting available (i.e., 150%). However, the Committee retained (and exercised, with respect to the 2017 PSUs) “negative discretion” to reduce the level of vesting using the same criteria established for all other PSU recipients who are not subject to Section 162(m).
The Tax Cut and Jobs Act of 2017 includes special grandfathering rules intended to preserve the performance-based compensation exception under Section 162(m) for certain plans and arrangements in effect as of November 2, 2017 (“Grandfathered Plans”), provided that those plans are not materially modified thereafter. Subject to forthcomingUnder guidance from the U.S. Department of the Treasury regarding the scope of these rules, our ability to deduct executive compensation payments made under Grandfathered Plans to certain of our NEOs in 20182019 and beyond may be limited under Section 162(m).
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Certain Executive Compensation Payments in 2019
Deferred Signing Bonus
In March 2017, the Company agreed to pay Mr. Lown a deferred signing bonus of $1,400,000, less applicable withholding taxes (“Deferred Signing Bonus”), to compensate him for a portion of the long-term equity and deferred compensation with his former employer that he forfeited by joining Navient. This Deferred Signing Bonus was paid in cash in two equal installments on March 17, 2018 and March 17, 2019.
2017-19 Performance Stock Units
Fiscal year 2019 marked the final year of a three-year performance period associated with PSUs granted to our executive team in early 2017. These long-term equity awards were designed to vest at the end of 2019, with a potential payout ranging from 0% to 150% of the target number of units. The following chart summarizes the performance results under these PSUs:
| 2017-19 Performance Metric | Performance Target | 2017-19 Actual Performance | Payout Factor | Weight | Performance Score |
Cumulative Net Student Loan Cash Flows28 (millions) | $ 7,850 | $ 8,818 | 135% | 50% | 67% |
Cumulative Revenue from Growth Businesses29 (millions) | $ 995 | $ 839 | 65% | 30% | 20% |
Strategic Objectives | | | 110% | 20% | 22% |
• Pursue Opportunistic Loan Portfolio Acquisitions • Capture Operating Efficiencies in Asset Servicing • Improve Margins in Fee Businesses • Build Strong Relationships with State and Federal Regulators • Grow Intrinsic Value of Company |
| Overall Performance Score: | 109%
|
The Executive Summary of this Compensation Discussion and Analysis, beginning on page 46, provides additional details regarding our key achievements during the 2017-19 performance period, which the Committee considered when assessing the Company’s performance relative to the strategic goals established at the beginning that period.
 | Cumulative Net Student Loan Cash Flows is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. Cumulative Net Student Loan Cash Flows include aggregate cash flows net of secured borrowings from student loans realized for the fiscal years 2017, 2018 and 2019, including student loan cash flows realized from new acquisitions, but excluding the impact of cash flows for fiscal years beyond 2019 that are accelerated through securitizing or pledging unencumbered student loans or through loan sales. |
29 | Cumulative Revenue from Growth Businesses includes that portion of the Company’s aggregate revenue for fiscal years 2017-19 from non-federal-loan-related businesses. |
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Changes to Our Executive Compensation Program for 2020
The Compensation Committee made changes to our annual Management Incentive Program (“MIP”) for 2020. The resulting refinements are structured to drive the growth and profitability in 2020. These changes are described below. The target salaries and bonuses of our NEOs will remain unchanged for 2020, as will the structure of our long-term incentive program.
2020 Annual Incentive Program
The Committee continued its focus on Adjusted Diluted “Core Earnings” Per Share as the key financial metric in the annual Management Incentive Plan (“MIP”) for 2020. Three other financial metrics are carried forward from the 2019 MIP— Adjusted “Core Earnings” Operating Expenses, Business Processing EBITDA, and Private Education Loan Gross Defaults. Based on feedback from our shareholders, the Committee decided to eliminate the financial metric for Consumer Lending New Volume. Although all Consumer Lending New Loan Volume is subject to the Company’s Board-approved risk and return guidelines (e.g., regarding consumer credit quality, cost-to-acquire, net interest margin), some shareholders expressed the view that this financial metric was not sufficiently tied to profitability. The Committee reallocated the weighting assigned to each of the remaining financial metrics for 2020 as follows: Adjusted Diluted “Core Earnings” Per Share (50%); Adjusted “Core Earnings” Operating Expenses (20%); Business Processing EBITDA (15%); and Private Education Loan Gross Defaults (15%). The Company’s performance in the Consumer Lending market will continue to be included as part of the calculation for three of these measures (Business Processing EBITDA does not include performance in this market as part of its calculation).
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Summary Compensation Table
The table below summarizes compensation paid, awarded to or earned by each of our named executive officers (“NEOs”) for the fiscal years ended December 31, 2017,2019, December 31, 2016,2018, and December 31, 2015.2017.
NAME AND PRINCIPAL POSITION(1) | YEAR | | SALARY ($) | | | BONUS ($) | | | STOCK AWARDS(2) ($) | | | OPTION AWARDS(2) ($) | | | NON-EQUITY INCENTIVE PLAN COMPENSATION(3) ($) | | | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS(4) ($) | | | ALL OTHER COMPENSATION(5) ($) | | | TOTAL ($) | |
| Jack Remondi | 2017 | | | 1,000,000 | | | | 0 | | | | 3,199,979 | | | | 799,997 | | | | 1,444,500 | | | - | | | | 12,260 | | | | 6,456,736 | |
| President and Chief | 2016 | | | 1,000,000 | | | | 0 | | | | 3,079,980 | | | | 769,999 | | | | 1,666,500 | | | - | | | | 43,431 | | | | 6,559,910 | |
| Executive Officer | 2015 | | | 1,000,000 | | | | 0 | | | | 2,449,978 | | | | 1,050,000 | | | | 735,000 | | | - | | | | 39,930 | | | | 5,274,908 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Christian Lown | 2017 | | | 292,310 | | | | 0 | | | | 999,992 | | | | 0 | | | | 577,800 | | | - | | | | 3,000 | | | | 1,873,102 | |
| Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Somsak Chivavibul | 2017 | | | 388,461 | | | | 0 | | | | 719,974 | | | | 179,998 | | | | 563,355 | | | - | | | | 38,499 | | | | 1,890,287 | |
| Former Chief | 2016 | | | 379,999 | | | | 0 | | | | 791,985 | | | | 197,999 | | | | 633,270 | | | - | | | | 33,249 | | | | 2,036,502 | |
| Financial Officer | 2015 | | | 378,846 | | | | 0 | | | | 629,993 | | | | 269,998 | | | | 242,820 | | | - | | | | 33,077 | | | | 1,554,734 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| John Kane | 2017 | | | 458,461 | | | | 0 | | | | 1,159,978 | | | | 289,998 | | | | 664,470 | | | - | | | | 40,327 | | | | 2,613,234 | |
| Group President, | 2016 | | | 449,999 | | | | 0 | | | | 1,055,993 | | | | 263,999 | | | | 749,925 | | | - | | | | 38,249 | | | | 2,558,165 | |
| Business Processing | 2015 | | | 448,076 | | | | 0 | | | | 822,483 | | | | 352,499 | | | | 330,750 | | | - | | | | 38,249 | | | | 1,992,057 | |
| Solutions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Jeff Whorley | 2017 | | | 458,461 | | | | 0 | | | | 1,079,976 | | | | 269,997 | | | | 664,470 | | | - | | | | 13,499 | | | | 2,486,403 | |
| Group President, | 2016 | | | 449,999 | | | | 0 | | | | 1,055,993 | | | | 263,999 | | | | 749,925 | | | - | | | | 13,249 | | | | 2,533,165 | |
| Asset Management and Servicing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tim Hynes | 2017 | | | 382,703 | | | | 0 | | | | 799,974 | | | | 199,998 | | | | 556,133 | | | - | | | | 13,500 | | | | 1,952,308 | |
| EVP, Consumer | 2016 | | | 370,000 | | | | 0 | | | | 703,995 | | | | 175,999 | | | | 616,605 | | | - | | | | 13,249 | | | | 1,879,848 | |
| Lending | 2015 | | | 368,269 | | | | 0 | | | | 507,476 | | | | 217,499 | | | | 271,950 | | | - | | | | 13,249 | | | | 1,378,443 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mark Heleen | 2017 | | | 382,692 | | | | 0 | | | | 599,973 | | | | 149,999 | | | | 556,133 | | | - | | | | 19,498 | | | | 1,708,295 | |
| Chief Legal Officer | 2016 | | | 370,000 | | | | 0 | | | | 483,997 | | | | 120,999 | | | | 616,605 | | | - | | | | 19,232 | | | | 1,610,833 | |
| and Secretary | 2015 | | | 369,357 | | | | 0 | | | | 384,980 | | | | 164,998 | | | | 271,950 | | | - | | | | 19,220 | | | | 1,210,505 | |
NAME AND PRINCIPAL POSITION(1) | YEAR | | | | | | NONQUALIFIED DEFERRED COMPENSATION EARNINGS(5) ($) | | TOTAL ($) |
| Jack Remondi | 2019 | 1,000,000 | 0 | 4,999,989 | 0 | 1,785,000 | - | 8,332 | 7,793,321 |
| President and Chief | 2018 | 1,000,000 | 0 | 2,799,997 | 1,199,998 | 1,896,000 | - | 8,110 | 6,904,105 |
| Executive Officer | 2017 | 1,000,000 | 0 | 3,199,979 | 799,997 | 1,444,500 | - | 12,260 | 6,456,736 |
| | | | | | | | | | |
| Christian Lown | 2019 | 400,004 | 700,000 | 1,199,987 | 0 | 714,000 | - | 14,000 | 3,027,991 |
| Chief Financial | 2018 | 400,004 | 700,000 | 839,989 | 359,999 | 758,400 | - | 38,750 | 3,097,142 |
| Officer | 2017 | 292,310 | 0 | 999,992 | 0 | 577,800 | - | 3,000 | 1,873,102 |
| | | | | | | | | | |
| John Kane | 2019 | 460,000 | 0 | 999,993 | 0 | 821,100 | - | 14,000 | 2,295,093 |
| Group President, Business | 2018 | 460,000 | 0 | 909,979 | 389,999 | 690,000 | - | 38,750 | 2,488,728 |
| Processing Solutions | 2017 | 458,461 | 0 | 1,159,978 | 289,998 | 664,470 | - | 40,327 | 2,613,234 |
| | | | | | | | | | |
| Mark Heleen | 2019 | 384,999 | 0 | 749,983 | 0 | 687,225 | - | 14,000 | 1,836,207 |
| Chief Legal Officer | 2018 | 384,999 | 0 | 524,986 | 224,998 | 729,960 | - | 13,750 | 1,878,693 |
| and Secretary | 2017 | 382,692 | 0 | 599,973 | 149,999 | 556,133 | - | 19,498 | 1,708,295 |
| | | | | | | | | | |
| Steve Hauber | 2019 | 345,384 | 0 | 499,996 | 0 | 624,750 | - | 14,000 | 1,484,130 |
| Chief Risk and | 2018 | 310,000 | 0 | 349,977 | 149,999 | 489,800 | - | 34,158 | 1,333,934 |
| Compliance Officer | | | | | | | | | |
| (1) | Reflects the position held by each NEO as of December 31, 2017.2019. Mr. Chivavibul served as Chief Financial Officer of Navient until March 27, 2017, when Mr. Lown joined the Company and assumed the role of Chief Financial Officer. Mr. Lown was not an NEO in either 2015 or 2016. Mr. Chivavibul became the Company’s Chief Decision Management Officer on March 27, 2017, and he continued in that role until his departure from the Company on February 28, 2018. Mr. Whorley joined Navient in June 2015 as Group President, Asset Management and Servicing. HeHauber was not a NEO in 2015. Mr. Hynes served as the Company’s Chief Risk & Compliance Officer until June 19, 2017, when he assumed his current role overseeing the Company’s new consumer lending division.2017. |
| (2) | Mr. Lown became eligible to receive a one-time deferred signing bonus of $1,400,000, less applicable withholding taxes, to compensate him for a portion of the long-term equity and deferred compensation with his former employer that he forfeited by joining Navient in March 2017. This Deferred Signing Bonus was payable in cash in two equal installments on March 17, 2018 and March 17, 2019. |
| (3) | Amounts shown are the grant date fair values of the various stock-based awards granted during 2015, 20162017, 2018 and 20172019 computed in accordance with the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 718. Additional details on accounting for stock-based compensation can be found in “Note 2—Significant Accounting Policies” and “Note 11—Stock-Based Compensation Plans and Arrangements” to the audited consolidated financial statements included in the Company’s2019 Annual Report on Form 10-K. Performance stock units (“PSUs”) granted in 2017, 2018 and 2019 are shown at their grant date fair values for each of these years. |
Performance stock units (“PSUs”) granted in 2015, 2016 and 2017 areThe grant-date fair value of PSUs awarded during each fiscal year is shown at their grant date fair values for each of these years. PSUs granted in 2015 were set to vest after a three-year performance period (2015-2017), with the potential payout ranging from 0% to 130% of the target award based on the Company’s “cumulative core net income”probable performance (target) value of the awards. The maximum grant-date fair value of the PSU awards for such2019 assuming all performance period combined with an additional vesting modifier based on “strategic growth cumulative core net income” that can increase or decrease the payout by an additional 20%. The number of unitsgoals were achieved at their maximum levels would be as follows: for Mr. Remondi, $4,499,981; for Mr. Lown, $899,984; for Mr. Kane, $749,994; for Mr. Heleen, $562,481; and payout value reported is based on achieving threshold performance goals. Because the Company failed to meet the threshold performance level established for these PSUs, the awards were forfeited, resulting in no payout to our NEOs.Mr. Hauber, $374,991.
(3)(4) | Annual incentive awards were paid to NEOs under the Management Incentive Plan in cash. |
(4)(5) | Navient’s non-qualified deferred compensation plan does not provide for above-market or preferential earnings on compensation deferred under the plan. |
(5)(6) | For 2017,2019, the components of “All Other Compensation” were as follows: |
| NAME | | EMPLOYER CONTRIBUTIONS TO DEFINED CONTRIBUTION PLANS (A) ($) | | | TRANSPORTATION ALLOWANCE (B) ($) | | | ANNUAL PHYSICAL EXAMINATION (C) ($) | | | TOTAL ($) | | | TRANSPORTATION ALLOWANCE (B)($) | TOTAL ($) |
| Remondi | | | 6,692 | | | | 1,118 | | | | 4,450 | | | | 12,260 | | 7,692 | 640 | 8,332 |
| Lown | | | 0 | | | | 0 | | | | 3,000 | | | | 3,000 | | 14,000 | 0 | 14,000 |
| Chivavibul | | | 38,499 | | | | 0 | | | | 0 | | | | 38,499 | | |
| Kane | | | 38,500 | | | | 0 | | | | 1,827 | | | | 40,327 | | 14,000 | 0 | 14,000 |
| Whorley | | | 13,499 | | | | 0 | | | | 0 | | | | 13,499 | | |
| Hynes | | | 13,500 | | | | 0 | | | | 0 | | | | 13,500 | | |
| Heleen | | | 13,500 | | | | 0 | | | | 5,998 | | | | 19,498 | | 14,000 | 0 | 14,000 |
| Hauber | | 14,000 | 0 | 14,000 |
| (A) | Amounts credited to Navient’s tax-qualified defined contribution plan and non-qualified deferred compensation plan. |
| (B) | Automobile allowance benefit calculated based on the annual lease method. |
| (C) | Senior executives, including our NEOs, were eligible to receive an annual executive physical examination in 2017. Messrs. Chivavibul, Whorley, and Hynes did not utilize this allowance in 2017. The executive physical program was eliminated effective January 1, 2018. |
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Grants of Plan-Based Awards
| NAME | GRANT DATE | | ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(1) | | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(2) | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS(3) (#) | | | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS(4) (#) | | | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SHARE) | | | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS(5) ($) | | GRANT DATE | ESTIMATED POSSIBLE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(1) | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(2) | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS(3) (#) | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS(4) (#) | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SHARE) | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS(5) ($) |
Threshold ($) | | | Target ($) | | | Maximum ($) | Threshold (#) | | | Target (#) | | | Maximum (#) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
| Remondi | Management Incentive Plan | | | - | | | | 1,500,000 | | | | 2,250,000 | | | | | | | | | | | | | | | | | | | | | | | Management Incentive Plan | - | 1,500,000 | 2,250,000 |
|
| | |
| | 2/6/2017 | | | | | | | | | | | | | | | 64,599 | | | | 129,198 | | | | 193,797 | | | | | | | | | | | | | 1,999,985 | | 2/5/2019 | | | 131,118 | | |
| | 2,999,991 |
| | 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | 77,519 | | | | | | | | | | 1,199,994 | | 2/5/2019 | | | | | 174,825 |
| | 1,999,998 |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 297,397 | | | | 15.48 | | | | 799,997 | | |
| Lown | Management Incentive Plan | | | - | | | | 600,000 | | | | 900,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Management Incentive Plan | - | 600,000 | 900,000 |
| | | | | |
| 3/27/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | 71,428 | | | | | | | | | | | | 999,992 | | |
| Chivavibul | Management Incentive Plan | | | - | | | | 585,000 | | | | 877,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2/6/2017 | | | | | | | | | | | | | | | 14,534 | | | | 29,069 | | | | 43,603 | | | | �� | | | | | | | | | | | | 449,988 | | |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,441 | | | | | | | | | | | | 269,986 | | 2/5/2019 | | | 26,223 | | |
| | 599,993 |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 66,914 | | | | 15.48 | | | | 179,998 | | 2/5/2019 | | | | | 52,447 |
| | 599,993 |
| Kane | Management Incentive Plan | | | - | | | | 690,000 | | | | 1,035,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Management Incentive Plan | - | 690,000 | 1,035,000 | | | | |
|
| 2/6/2017 | | | | | | | | | | | | | | | 23,417 | | | | 46,834 | | | | 70,251 | | | | | | | | | | | | | | | | 724,990 | | 2/5/2019 | | | 21,853 | | |
| | 499,996 |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | 28,100 | | | | | | | | | | | | 434,988 | | 2/5/2019 |
| |
| | 43,706 |
|
| 499,996 |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 107,806 | | | | 15.48 | | | | 289,998 | | |
| Whorley | Management Incentive Plan | | | - | | | | 690,000 | | | | 1,035,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2/6/2017 | | | | | | | | | | | | | | | 21,802 | | | | 43,604 | | | | 65,406 | | | | | | | | | | | | | | | | 674,989 | | |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,162 | | | | | | | | | | | | 404,987 | | |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 100,371 | | | | 15.48 | | | | 269,997 | | |
| Hynes | Management Incentive Plan | | | - | | | | 577,500 | | | | 866,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2/6/2017 | | | | | | | | | | | | | | | 16,149 | | | | 32,299 | | | | 48,448 | | | | | | | | | | | | | | | | 499,988 | | |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | 19,379 | | | | | | | | | | | | 299,986 | | |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 74,349 | | | | 15.48 | | | | 199,998 | | |
| Heleen | Management Incentive Plan | | | - | | | | 577,500 | | | | 866,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Management Incentive Plan | - | 577,500 | 866,250 | | | | | |
| 2/6/2017 | | | | | | | | | | | | | | | 12,112 | | | | 24,224 | | | | 36,336 | | | | | | | | | | | | | | | | 374,987 | | 2/5/2019 | | | 16,389 | | 49,168 |
| | 374,991 |
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | 14,534 | | | | | | | | | | | | 224,986 | | 2/5/2019 |
|
| 32,779 |
|
| 374,991 |
| Hauber | | Management Incentive Plan | - | 525,000 | 787,500 |
|
|
|
|
| 2/6/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 55,762 | | | | 15.48 | | | | 149,999 | | 2/5/2019 | | | 10,926 | | |
| | 249,998 |
| | | 2/5/2019 |
|
| 21,853 |
|
| 249,998 |
| (1) | Represents the possible total payouts for each Navient Named Executive Officer (“NEO”) under the Navient 20172019 Management Incentive Plan (“MIP”). The actual amounts earned under the 20172019 MIP and paid in February 20182020 are set forth below.below: |
| | | Target 2017 MIP Payout ($) | | | Actual 2017 MIP Payout ($) | | Target 2019 MIP Payout ($) | Actual 2019 MIP Payout ($) |
| Mr. Remondi | | | 1,500,000 | | | | 1,444,500 | | 1,500,000 | 1,785,000 |
| Mr. Lown | | | 600,000 | | | | 577,800 | | 600,000 | 714,000 |
| Mr. Chivavibul | | | 585,000 | | | | 563,355 | | |
| Mr. Kane | | | 690,000 | | | | 664,470 | | 690,000 | 821,100 |
| Mr. Whorley | | | 690,000 | | | | 664,470 | | |
| Mr. Hynes | | | 577,500 | | | | 556,133 | | |
| Mr. Heleen | | | 577,500 | | | | 556,133 | | 577,500 | 687,225 |
| Mr. Hauber | | 525,000 | 624,750 |
| (2) | Represents the range of performance stock units (“PSUs”), granted on February 6, 2017,5, 2019, that may vest based on various performance metrics for the three-year performance period from January 1, 2017,2019, through December 31, 2019.2021. See “Long-term Incentive Program” in the Compensation Discussion and Analysis above for additional details regarding the performance metrics associated with these PSUs. |
| (3) | Stock awards granted on February 6, 2017,5, 2019, to Messrs. Remondi, Chivavibul,Lown, Kane, Whorley, HynesHeleen and HeleenHauber represent restricted stock units (“RSUs”) that have vested or will vest and convert into shares of Common Stock in one-third increments on February 6, 2018,5, 2020, February 6, 20195, 2021 and February 6, 2020. Stock awards granted on March 27, 2017, to Mr. Lown represent RSUs that have vested or will vest and convert into shares of Common Stock in one-third increments on March 27, 2018, March 27, 2019 and March 27, 2020.5, 2022. |
| (4) | Navient discontinued the practice of granting stock options granted on February 6, 2017 to NEOs have vested or will vestas part of the Company’s long-term incentive program in one-third increments on February 6, 2018, February 6, 2019 and February 6, 2020.2019. |
| (5) | Amounts disclosed for awards granted in 20172019 represent the grant date fair value computed in accordance with FASB ASC Topic 718. Additional details on accounting for stock-based compensation can found in “Note 2—Significant Accounting Policies” and “Note 11—Stock-Based Compensation Plans and Arrangements” to the audited consolidated financial statements included in the Company’s2019 Annual Report on Form 10-K. |
| 20182020 Proxy Statement | | 6067
|
Outstanding Equity Awards at Fiscal Year End
The table below sets forth information regarding Navient equity awards that were outstanding as of December 31, 2017.2019.
| | | | OPTION AWARDS | | | STOCK AWARDS | |
| NAME | GRANT DATE(1) | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS EXERCISABLE (#) | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS UNEXERCISABLE(2) (#) | | | OPTION EXERCISE PRICE ($) | | | OPTION EXPIRATION DATE | | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (3) (#) | | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (4) ($) | | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (5) (#) | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS, OR OTHER RIGHTS THAT HAVE NOT VESTED(4)(5) ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Remondi | 1/8/2008 | | | 2,000,000 | | | | - | | | | 11.0960 | | | 1/8/2018 | | | | - | | | | - | | | | - | | | | - | |
| 1/8/2009 | | | 1,000,000 | | | | - | | | | 6.5230 | | | 1/8/2019 | | | | - | | | | - | | | | - | | | | - | |
| 1/27/2011 | | | 80,000 | | | | - | | | | 9.3771 | | | 1/27/2021 | | | | - | | | | - | | | | - | | | | - | |
| 2/7/2013 | | | 256,107 | | | | - | | | | 11.4873 | | | 2/7/2018 | | | | - | | | | - | | | | - | | | | - | |
| 5/1/2014 | | | 509,461 | | | | - | | | | 17.0000 | | | 5/1/2019 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | 312,500 | | | | 156,250 | | | | 21.6500 | | | 2/18/2020 | | | | - | | | | - | | | | - | | | | - | |
| 2/3/2016 | | | 254,125 | | | | 508,251 | | | | 9.1800 | | | 2/3/2021 | | | | - | | | | - | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | 297,397 | | | | 15.4800 | | | 2/6/2022 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | 12,319 | | | | 164,089 | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 46,196 | | | | 615,330 | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | 91,932 | | | | 1,224,534 | | | | - | | | | - | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 229,828 | | | | 3,061,308 | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | 81,032 | | | | 1,079,346 | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 135,054 | | | | 1,798,919 | |
| Lown | 3/27/2017 | | | - | | | | - | | | | - | | | | - | | | | 73,877 | | | | 984,041 | | | | - | | | | - | |
| Chivavibul | 1/27/2011 | | | 40,000 | | | | - | | | | 9.3771 | | | 1/27/2021 | | | | - | | | | - | | | | - | | | | - | |
| 2/7/2013 | | | 43,663 | | | | - | | | | 11.4873 | | | 2/7/2018 | | | | - | | | | - | | | | - | | | | - | |
| 5/1/2014 | | | 109,170 | | | | - | | | | 17.0000 | | | 5/1/2019 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | 80,357 | | | | 40,178 | | | | 21.6500 | | | 2/18/2020 | | | | - | | | | - | | | | - | | | | - | |
| 2/3/2016 | | | 65,346 | | | | 130,693 | | | | 9.1800 | | | 2/3/2021 | | | | - | | | | - | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | 66,914 | | | | 15.4800 | | | 2/6/2022 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | 3,168 | | | | 42,197 | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 11,879 | | | | 158,228 | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | 23,639 | | | | 314,871 | | | | - | | | | - | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 59,098 | | | | 787,185 | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | 18,231 | | | | 242,836 | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 30,386 | | | | 404,741 | |
| Kane | 1/27/2011 | | | 13,333 | | | | - | | | | 9.3771 | | | 1/27/2021 | | | | - | | | | - | | | | - | | | | - | |
| 5/1/2014 | | | 145,560 | | | | - | | | | 17.0000 | | | 5/1/2019 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | 104,911 | | | | 52,455 | | | | 21.6500 | | | 2/18/2020 | | | | - | | | | - | | | | - | | | | - | |
| 2/3/2016 | | | 87,128 | | | | 174,258 | | | | 9.1800 | | | 2/3/2021 | | | | - | | | | - | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | 107,806 | | | | 15.4800 | | | 2/6/2022 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | 4,135 | | | | 55,078 | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 15,508 | | | | 206,566 | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | 31,519 | | | | 419,833 | | | | - | | | | - | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 78,798 | | | | 1,049,589 | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | 29,373 | | | | 391,248 | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 48,956 | | | | 652,093 | |
| Whorley | 6/1/2015 | | | 101,523 | | | | 50,761 | | | | 19.3400 | | | 6/1/2020 | | | | - | | | | - | | | | - | | | | - | |
| 2/3/2016 | | | 87,128 | | | | 174,258 | | | | 9.1800 | | | 2/3/2021 | | | | - | | | | - | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | 100,371 | | | | 15.4800 | | | 2/6/2022 | | | | - | | | | - | | | | - | | | | - | |
| 6/1/2015 | | | - | | | | - | | | | - | | | | - | | | | 5,864 | | | | 78,108 | | | | - | | | | - | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | 31,519 | | | | 419,833 | | | | - | | | | - | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 78,798 | | | | 1,049,589 | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | 27,347 | | | | 364,262 | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 45,580 | | | | 607,125 | |
| | OPTION AWARDS
| STOCK AWARDS
| |
| | | | | | |
| |
|
| |
| NAME | | | | | | | | | | |
| | | | | | | | | | | |
| Remondi | 1/27/2011 | 80,000 | - | 9.3771 | 1/27/2021 | - | - | - | - | |
| | 2/18/2015 | 468,750 | - | 21.6500 | 2/18/2020 | - | - | - | - | |
| | 2/3/2016 | 762,376 | - | 9.1800 | 2/3/2021 | - | - | - | - | |
| | 2/6/2017 | 198,265 | 99,132 | 15.4800 | 2/6/2022 | - | - | - | - | |
| | 2/5/2018 | 154,440 | 308,880 | 13.6300 | 2/5/2023 | - | - | - | - | |
| | 2/6/2017 | - | - | - | - | 28,660 | 392,068 | - | - | |
| | 2/6/2017 | - | - | - | - | 163,057 | 2,230,619 | | | |
| | 2/5/2018 | - | - | - | - | 41,518 | 567,966 | - | - | |
| | 2/5/2018 | - | - | - | - | - | - | 162,531 | 2,223,424 | |
| | 2/5/2019 | - | - | - | - | 175,920 | 2,406,585 | - | - | |
| | 2/5/2019 | - | - | - | - | - | - | 275,324 | 3,766,432 | |
| Lown | 2/5/2018 | 46,332 | 92,664 | 13.6300 | 2/5/2023 | - | - | - | - | |
| | 3/27/2017 | - | - | - | - | 27,277 | 373,149 | - | - | |
| | 2/5/2018 | - | - | - | - | 13,003 | 177,881 | - | - | |
| | 2/5/2018 | - | - | - | - | - | - | 48,759 | 667,023 | |
| | 2/5/2019 | - | - | - | - | 55,064 | 753,275 | - | - | |
| | 2/5/2019 | - | - | - | - | - | - | 55,064 | 753,275 | |
| Kane | 1/27/2011 | 13,333 | - | 9.3771 | 1/27/2021 | - | - | - | - | |
| | 2/18/2015 | 157,366 | - | 21.6500 | 2/18/2020 | - | - | - | - | |
| | 2/3/2016 | 261,386 | - | 9.1800 | 2/3/2021 | - | - | - | - | |
| | 2/6/2017 | 71,871 | 35,935 | 15.4800 | 2/6/2022 | - | - | - | - | |
| | 2/5/2018 | 50,193 | 100,386 | 13.6300 | 2/5/2023 | - | - | - | - | |
| | 2/6/2017 | - | - | - | - | 10,846 | 148,373 | - | - | |
| | 2/6/2017 | - | - | - | - | 59,107 | 808,583 | | | |
| | 2/5/2018 | - | - | - | - | 14,086 | 192,696 | - | - | |
| | 2/5/2018 | - | - | - | - | - | - | 52,821 | 722,591 | |
| | 2/5/2019 | - | - | - | - | 45,887 | 627,734 | - | - | |
| | 2/5/2019 | - | - | - | - | - | - | 45,887 | 627,734 | |
| Heleen | 2/18/2015 | 73,660 | - | 21.6500 | 2/18/2020 | - | - | - | - | |
| | 2/3/2016 | 79,868 | - | 9.1800 | 2/3/2021 | - | - | - | - | |
| | 2/6/2017 | 37,175 | 18,587 | 15.4800 | 2/6/2022 | - | - | - | - | |
| | 2/5/2018 | 28,957 | 57,915 | 13.6300 | 2/5/2023 | - | - | - | - | |
| | 2/6/2017 | - | - | - | - | 5,610 | 76,744 | - | - | |
| | 2/6/2017 | - | - | - | - | 30,572 | 418,224 | | | |
| | 2/5/2018 | - | - | - | - | 8,127 | 111,177 | - | - | |
| | 2/5/2018 | - | - | - | - | - | - | 30,473 | 416,870 | |
| | 2/5/2019 | - | - | - | - | 32,972 | 451,056 | - | - | |
| | 2/5/2019 | - | - | - | - | - | - | 34,414 | 470,783 | |
| 20182020 Proxy Statement | | 6168
|
| | OPTION AWARDS | | | STOCK AWARDS | | | | |
| NAME | GRANT DATE(1) | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS EXERCISABLE (#) | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS UNEXERCISABLE(2) (#) | | | OPTION EXERCISE PRICE ($) | | | OPTION EXPIRATION DATE | | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (3) (#) | | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (4) ($) | | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (5) (#) | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS, OR OTHER RIGHTS THAT HAVE NOT VESTED(4)(5) ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Hynes | 5/13/2008 | | | 100,000 | | | | - | | | | 13.9310 | | | 5/13/2018 | | | | - | | | | - | | | | - | | | | - | |
| 1/28/2010 | | | 50,000 | | | | - | | | | 6.6127 | | | 1/28/2020 | | | | - | | | | - | | | | - | | | | - | |
| 1/27/2011 | | | 40,000 | | | | - | | | | 9.3771 | | | 1/27/2021 | | | | - | | | | - | | | | - | | | | - | |
| 2/7/2013 | | | 42,572 | | | | - | | | | 11.4873 | | | 2/7/2018 | | | | - | | | | - | | | | - | | | | - | |
| 5/1/2014 | | | 87,336 | | | | - | | | | 17.0000 | | | 5/1/2019 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | 64,732 | | | | 32,366 | | | | 21.6500 | | | 2/18/2020 | | | | - | | | | - | | | | - | | | | - | |
| 2/3/2016 | | | 58,085 | | | | 116,172 | | | | 9.1800 | | | 2/3/2021 | | | | - | | | | - | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | 74,349 | | | | 15.4800 | | | 2/6/2022 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | 2,551 | | | | 33,979 | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 9,568 | | | | 127,445 | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | 21,013 | | | | 279,893 | | | | - | | | | - | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 52,532 | | | | 699,726 | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | 20,257 | | | | 269,823 | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 33,763 | | | | 449,723 | |
| Heleen | 6/10/2014 | | | 36,879 | | | | - | | | | 16.8000 | | | 6/10/2019 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | 49,107 | | | | 24,553 | | | | 21.6500 | | | 2/18/2020 | | | | - | | | | - | | | | - | | | | - | |
| 2/3/2016 | | | - | | | | 79,868 | | | | 9.1800 | | | 2/3/2021 | | | | - | | | | - | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | 55,762 | | | | 15.4800 | | | 2/6/2022 | | | | - | | | | - | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | 1,936 | | | | 25,787 | | | | - | | | | - | |
| 2/18/2015 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,259 | | | | 96,689 | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | 14,447 | | | | 192,434 | | | | - | | | | - | |
| 2/3/2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 36,116 | | | | 481,065 | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | 15,192 | | | | 202,357 | | | | - | | | | - | |
| 2/6/2017 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,322 | | | | 337,289 | |
| | | OPTION AWARDS
| | | STOCK AWARDS | | | |
NAME | GRANT DATE(1) | | | | OPTION EXPIRATION DATE
| | | | | |
| | | | | | | | | | | |
| Hauber | 1/27/2011 | 8,333 | | - | | 9.3771 | 1/27/2021 | - | - | - | - | |
| | 2/18/2015 | 46,666 | | - | | 21.6500 | 2/18/2020 | - | - | - | - | |
| | 2/3/2016 | 138,613 | | - | | 9.1800 | 2/3/2021 | - | - | - | - | |
| | 2/6/2017 | 26,022 | | 13,011 | | 15.4800 | 2/6/2022 | - | - | - | - | |
| | 2/5/2018 | 19,305 | | 38,610 | | 13.6300 | 2/5/2023 | - | - | - | - | |
| | 2/6/2017 | - | | - | | - | - | 1,745 | 23,871 | - | - | |
| | 2/6/2017 | - | | - | | - | - | 14,266 | 195,158 | | | |
| | 2/5/2018 | - | | - | | - | - | 5,418 | 74,118 | - | - | |
| | 2/5/2018 | - | | - | | - | - | - | - | 20,315 | 277,909 | |
| | 2/5/2019 | - | | - | | - | - | 22,943 | 313,860 | - | - | |
| | 2/5/2019 | - | | - | | - | - | - | - | 22,943 | 313,860 | |
| (1) | Navient was spun-off from the company now known as SLM Corporation (“SLM”) and became an independent public company effective April 30, 2014. Immediately prior to the Spin-Off, each of our NEOs (other than Messrs. Lown Whorley and Heleen) was employed by the company previously known as SLM Corporation (“Former SLM”). Former SLM equity awards outstanding on April 30, 2014, were adjusted and converted into Navient awards and SLM awards. In general, the adjusted and converted equity awards are subject to substantially the same terms and conditions as the original Former SLM equity awards, including the original vesting schedule. The continuous service of each NEO with Former SLM (pre-Spin-Off) and Navient (post-Spin-Off) has been taken into account for vesting purposes. Additional details regarding the adjustment and conversion of Former SLM equity awards can be found in Navient’s Registration Statement filed on Form 10 with the SEC on April 10, 2014. This table reflects only Navient equity awards that were outstanding as of December 31, 2017.2019. |
| (2) | Stock options granted in 2015 to Mr. Whorley have2017 vested or will vest in one-third increments on each of June 1, 2016, June 1, 2017, and June 1, 2018. Stock options granted in 2015 to other NEOs vested in one-third increments on each of February 18, 2016, February 18, 2017, and February 18, 2018. Stock options granted in 2016 have vested or will vest in one-third increments on February 3, 2017, February 3, 2018 and February 3, 2019. Stock options granted in 2017 have vested or will vest in one-third increments on February 6, 2018, February 6, 2019, and February 6, 2020. Stock options granted in 2018 have vested or will vest in one-third increments on February 5, 2019, February 5, 2020, and February 5, 2021. |
| (3) | Restricted stock units (“RSUs”) granted in 2015 to Mr. Whorley have vested or will vest and be converted into shares of Common Stock in one-third increments on each of June 1, 2016, June 1, 2017 and June 1, 2018. RSUs granted in 2015 to other NEOs vested and converted into shares of Common Stock in one-third increments on each of February 18, 2016, February 18, 2017, and February 18, 2018. RSUs granted in 2016 have vested or will vest in one-third increments on February 3, 2017, February 3, 2018 and February 3, 2019. RSUs granted in 2017 to NEOs other than Mr. Lown have vested or will vest in one-third increments on February 6, 2018, February 6, 2019 and February 6, 2020. RSUs granted in 2017 to Mr. Lown have vested or will vest in one-third increments on March 27, 2018, March 27, 2019 and March 27, 2020. RSUs granted in 2018 have vested or will vest in one-third increments on February 5, 2019, February 5, 2020 and February 5, 2021. RSUs granted in 2019 have vested or will vest in one-third increments on February 5, 2020, February 5, 2021 and February 5, 2022. |
| Amounts include all accrued and unvested whole share dividend equivalent units (“DEUs”) that vest only to the extent and at the same time the underlying award on which they are issued vest. |
PSUs granted in 2017 vest after a three-year performance period (2017-19), with the potential payout ranging from 0% to 150% of the target number of units. Based on the Company’s actual performance during the three-year performance period relative to pre-established performance goals, these PSUs vested at 109% of the target number of units and were settled in shares of the Company’s common stock on March 2, 2020. These 2017 PSUs are shown above as outstanding on December 31, 2019 based on the final vested amount (i.e., 109% of the target number of units). See “2017-19 Performance Stock Units” in the Compensation Discussion and Analysis above for additional details regarding these PSUs.
Amounts include all accrued and unvested whole share dividend equivalent units (“DEUs”) that vest only to the extent and at the same time the underlying award on which they are issued vest.
| (4) | Market value of shares or units is calculated based on the closing market price of $13.32$13.68 for Navient Common Stock on December 29, 2017.31, 2019. |
| (5) | Performance stock units (“PSUs”)PSUs granted in 2015 were set to2018 will vest after a three-year performance period (2015-2017)(2018-2020), with the potential payout ranging from 0% to 130%150% of the target award based on the Company’s “cumulative core net income” for such performance period combined with an additional vesting modifier based on “strategic growth cumulative core net income” that can increase or decrease the payout by an additional 20%. The number of units and payout value reported is based on achieving thresholda combination of (i) aggregate cash flows net of secured borrowings from all student loans (including private credit finance loans) over the performance goals. Because the Company failed to meet the threshold performance level established for these PSUs, the awards were forfeited, resulting in no payout to our NEOs. |
PSUs granted in 2016 will vest after a three-year performance period (2016-2018), with the potential payout ranging from 0% to 150% of the target award based on a combination of (i) aggregate cash flows from student loans (net of secured borrowings) over the performance period; (ii) cumulative revenue from growth businessesperiod; (ii) cumulative revenue derived from business processing products and services over the performance period; and (iii) the attainment of certain strategic objectives intended to highlight a limited number of critical, non-formulaic goals that management is focusing on over the three-year period. Assuming the Company meets or exceeds these performance levels, the PSUs will vest on the second business day after the Company files with the SEC its annual report on Form 10-K for the fiscal year 2020, and in no event later than March 15, 2021. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time that the underlying award on which they are issued vest. The number of units and payout value reported is based on achieving target performance goals.
PSUs granted in 2019 will vest after a three-year performance period (2019-21), with the potential payout ranging from 0% to 150% of the target number of units based on a combination of (i) aggregate cash flows net of secured borrowings from all student loans (including private credit finance loans) over the performance period; and (ii) annual “Core Earnings” Return on Equity for each year in the performance period. “Core Earnings” Return on Equity is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. “Core Earnings” Return on Equity is a
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percentage equal to the Company’s “core earnings” net income for each of fiscal years 2019, 2020 and 2021, divided by average stockholder’s equity for each such year (determined using the average balance of stockholder’s equity on a “core earnings” basis for each quarter in a given year), using yearly “core earnings” net income as shown in the segment reporting footnote in the Company’s audited financial statements as published in the Company’s annual report on Form 10-K, excluding the impact of any regulatory and restructuring costs. Assuming the Company meets or exceeds these performance levels, the PSUs will vest on the second business day after the Company files with the SEC its annual report on Form 10-K for the fiscal year 2018 with the SEC,2021, and in no event later than March 15, 2019. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time that the underlying award on which they are issued vest. The number of units and payout value reported is based on achieving target performance goals.
PSUs granted in 2017 will vest after a three-year performance period (2017-2019), with the potential payout ranging from 0% to 150% of the target award based on a combination of (i) aggregate cash flows from student loans (net of secured borrowings) over the performance period; (ii) cumulative revenue from growth businesses over the performance period; and (iii) the attainment of certain strategic objectives intended to highlight a limited number of critical, non-formulaic goals that management is focusing on over the three-year period. Assuming the Company meets or exceeds these performance levels, the PSUs will vest on the second business day after the Company files its annual report on Form 10-K for the fiscal year 2019 with the SEC, and in no event later than March 15, 2020.2022. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time that the underlying award on which they are issued vest. The number of units and payout value reported is based on achieving target performance goals. See “Long-term“2019 Long-term Incentive Program” in the Compensation Discussion and Analysis above for additional details regarding the performance metrics associated with these PSUs.
Option Exercises and Stock Vested
| | Option Awards | | | Stock Awards | | Option Awards | Stock Awards
|
| NAME | | NUMBER OF SHARES ACQUIRED ON EXERCISE (1) (#) | | | VALUE REALIZED ON EXERCISE (2) ($) | | | NUMBER OF SHARES ACQUIRED ON VESTING (3) (#) | | | VALUE REALIZED ON VESTING (4) ($) | | NUMBER OF SHARES ACQUIRED ON EXERCISE (1) (#) | VALUE REALIZED ON EXERCISE (2) ($) | NUMBER OF SHARES ACQUIRED ON VESTING (3) (#) | VALUE REALIZED ON VESTING (4) ($) |
| Remondi | | | 173,210 | | | | 830,403 | | | | 118,090 | | | | 1,828,750 | | 1,000,000 | | 2,677,000 | | 406,284 | | 4,901,690 | |
| Lown | | | 0 | | | | 0 | | | | 0 | | | | 0 | | 0 | | 0 | | 32,517 | | 375,153 | |
| Chivavibul | | | 0 | | | | 0 | | | | 26,789 | | | | 414,677 | | |
| Kane | | | 54,579 | | | | 191,719 | | | | 35,486 | | | | 549,260 | | 0 | | 0 | | 137,580 | | 1,654,769 | |
| Whorley | | | 0 | | | | 0 | | | | 20,747 | | | | 316,493 | | |
| Hynes | | | 0 | | | | 0 | | | | 22,727 | | | | 351,859 | | |
| Heleen | | | 39,933 | | | | 249,980 | | | | 12,575 | | | | 193,851 | | 0 | | 0 | | 65,902 | | 794,361 | |
| Hauber | | 0 | | 0 | | 34,734 | | 418,815 | |
| (1) | Mr. Remondi exercised 173,2101,000,000 net-settled stock options on January 30, 2017,3, 2019, with a strike price of $10.2558$6.5230 and a market price of $15.05, and received 35,760$9.20, receiving 171,422 net shares. Mr. Kane exercised 54,579 net-settled stockThese options were set to expire on September 26, 2017, with a strike price of $11.4873 and a market price of $15.00, and received 6,415 net shares. Mr. Heleen exercised 39,933 net-settled stock options on February 9, 2017, with a strike price of $9.18 and a market price of $15.44, and received 10,575 net shares.January 8, 2019. |
| (2) | The value realized upon exercise is the number of net-settled stock options exercised multiplied by the difference between the market price of Navient Common Stock at exercise and the strike price on the net-settled options. |
| (3) | Represents shares acquired upon the vesting of restricted stock units (“RSUs”), the associated dividend equivalent units (“DEUs”) and any fractional share settlement. PSUs granted to our executive team in early 2015 were designed to vest at the end of 2017, with a potential payout ranging from 0% to 130% of the target award, based on the Company’s “cumulative core net income” over a three-year performance period. Because the Company failed to meet the threshold performance level established for these PSUs, the awards were forfeited, resulting in no payout to our executive team. |
| (4) | The value realized on vesting is the number of shares vested multiplied by the closing market price of Navient Common Stock on the vesting date. |
Pension Benefits
The Company has no tax-qualified pension plans and no non-qualified supplemental pension plans.
Non-Qualified Deferred Compensation
Under the Navient Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), eligible employees, including our NEOs, may elect to defer up to 80 percent of their annual cash-based compensation. Each year, an employee who has completed one year of service generally is eligibleThe Company amended the Deferred Compensation Plan in 2018 to receive aeliminate Company contribution in an amount equal to the greater of: (i) five percent (5%) of the participant’s annual “eligible compensation,” or (ii) five percent (5%) of the participant’s annual deferral amount; provided, however, that the Company contribution for a given year will not exceed the participant’s annual deferral amount. For this purpose, “eligible compensation” is the employee’s annual cash-based compensation in excess of the annual compensation limit applicable to tax-qualified retirement plans, up to a maximum of $500,000.contributions effective January 1, 2019.
All participant deferrals and Company contributions are credited to bookkeeping accounts. Amounts in each participant’s account are indexed to one or more investment alternatives chosen by the participant from a range of market-based alternatives. The Deferred Compensation Plan does not pay above-market or preferential earnings. Participants elect the time and form of payment of their accounts. Accounts generally are paid no sooner than the first day of the seventh month following the participant’s termination of employment, although certain in-service distributions are permitted. Immediate distributions upon the death or disability of the participant also are permitted. Accounts generally may be distributed either in a single lump sum or in up to ten (10) annual installments.
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The following table provides information regarding contributions and earnings under the Deferred Compensation Plan in 2017,2019, as well as year-end account balances, for each of our NEOs.
| | | EXECUTIVE CONTRIBUTIONS IN 2019 (1) | REGISTRANT CONTRIBUTIONS IN 2019 (2) | AGGREGATE EARNINGS IN 2019 | AGGREGATE WITHDRAWALS / DISTRIBUTIONS IN 2019 | AGGREGATE BALANCE AT 12/31/2019 (3) |
| NAME | | EXECUTIVE CONTRIBUTIONS IN 2017 ($) | | | REGISTRANT CONTRIBUTIONS IN 2017 (1) ($) | | | AGGREGATE EARNINGS IN 2017 ($) | | | AGGREGATE WITHDRAWALS / DISTRIBUTIONS IN 2017 ($) | | | AGGREGATE BALANCE AT 12/31/2017 ($) | | ($) | ($) | ($) | ($) | ($) |
| Remondi | | | 0 | | | | 0 | | | | 237,026 | | | | 0 | | | | 1,006,018 | | 0 | | 0 | | 295,793 | | 0 | | 1,277,674 | |
| Lown | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | 0 | | 0 | | 12,349 | | 0 | | 60,804 | |
| Chivavibul | | | 25,000 | | | | 25,000 | | | | 37,143 | | | | 0 | | | | 365,922 | | |
| Kane | | | 25,000 | | | | 25,000 | | | | 38,382 | | | | 0 | | | | 335,485 | | 57,500 | | 0 | | 90,224 | | 0 | | 501,970 | |
| Whorley | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | |
| Hynes | | | 0 | | | | 0 | | | | 40,987 | | | | 0 | | | | 246,504 | | |
| Heleen | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | |
| Hauber | | 0 | | 0 | | 60,247 | | 0 | | 257,937 | |
| (1) | Registrant Contributions listed hereExecutive contributions are included underwithheld from the heading “Employer Contributions to Defined Contribution Plans”executive’s salary and/or non-equity incentive compensation for the relevant fiscal year and are reflected in Footnote 7 tothe relevant column in the Summary Compensation Table.Table for that year. |
| (2) | The Company amended the Deferred Compensation Plan in 2018 to eliminate Company contributions effective January 1, 2019. |
| (3) | The aggregate balance at fiscal year-end reflects current and prior fiscal year executive and registrant contributions previously reported in the Summary Compensation Table for those years for executives who were named executive officers in those years. |
Arrangements with Named Executive Officers
Navient has not entered into an employment agreement with any of its NEOs. However, our NEOs participate in the company’sCompany’s severance plans for senior officers, and each of our NEOs is entitled to certain severance payments pursuant to the terms and conditions of those plans, which are described below.
Executive Severance Plan
Under Navient’s Executive Severance Plan for Senior Officers, eligible officers will receive a lump sum cash payment equal to (i) a multiple of base salary and an average annual incentive award (determined over the last 24 months), plus (ii) pro-ratedpro- rated target annual incentive award for the year of termination, upon the following events: (a) resignation from employment for good reason (as defined in the plan); (b) the Company’s decision to terminate an eligible officer’s employment for any reason other than for cause (as defined in the plan), death or disability; or (c) upon mutual agreement of the Company and the eligible officer. The multiplier for each eligible officer position is as follows: CEO-2;CEO-2x; Executive Vice President-1.President-1x. Each of our NEOs other than Mr. Remondi holds the title of Executive Vice President. Under the plan, in no event will a severance payment exceed a multiple of three times an officer’s base salary and annual incentive award.
In addition to the cash severance payment, eligible officers will receive subsidized medical benefits and outplacement services for 18 months (24 months for the CEO). Treatment of outstanding equity awards upon severance is governed by the terms of the applicable equity award agreement and not the severance plan.
As noted earlier, Mr. Lown is eligible to receive a one-time deferred signing bonus of $1,400,000, less applicable withholding taxes (“Deferred Signing Bonus”), to compensate him for a portion of the long-term equity and deferred compensation with his former employer that he forfeited by joining Navient. This Deferred Signing Bonus, if any, will be payable in cash in two equal installments on the first and second anniversaries of his start date with the Company, March 17, 2017, provided he remains employed by the Company on each such date. If prior to the Deferred Signing Bonus being paid in full, either (x) his employment is terminated by the company without “Cause” (as that term is defined in Navient’s Executive Severance Plan for Senior Officers), or (y) his employment terminates due to death or disability, then any unpaid amount will be paid in an immediate lump sum.
Change in Control Severance Plan
Under Navient’s Change in Control Severance Plan for Senior Officers, if a termination of employment for reasons defined in the plan occurs within 24 months following a change in control of the Company, the participant is entitled to receive a lump sum cash payment equal to two times the sum of his or her base salary and average annual incentive award (based on the prior two years). A participant will also be entitled to receive a pro-rated portion of his or her target annual incentive award for the year in which the termination occurs, as well as continuation of medical benefits for a two-year period. Treatment of outstanding equity awards upon a change in control is governed by the terms of the applicable equity award agreement and not the severance plan. Under the plan,equity award agreements, outstanding equity awards become vested and non-forfeitable in connection with a change in control only if (i) the participant’s employment is terminated, or (ii) the acquiring or surviving entity does not assume the equity awards. The plan does not allow for tax gross-ups.
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Potential Payments upon Termination or Change in Control
The tables below reflect the amount of compensation that would have been payable to each of our NEOs who were employed as executive officers of Navient on December 31, 2017,2019, under various scenarios including if such individual’s employment had terminated and/or a change in control had occurred on December 31, 2017,2019, given the individual’s compensation and service levels as of December 31, 2017,2019, and based on Navient’s closing stock price of $13.32$13.68 per share on December 29, 2017,31, 2019, the last trading date of the year. The amounts disclosed in the tables below are in addition to:
(i) compensation and benefits available prior to the occurrence of a termination of employment, such as vested stock options, and (ii) compensation and benefits available generally to all employees, such as distributions under Navient’s defined contribution retirement program, disability plans and accrued vacation pay.
The following severance arrangements were effective for our NEOs who were employed as executive officers of Navient on December 31, 2017:2019: (i) the Navient Corporation Executive Severance Plan for Senior Officers, (ii) the Navient Corporation Change in Control Severance Plan for Senior Officers, as amended and restated, and (iii) the Navient Corporation 2014 Omnibus Incentive Plan, as amended and restated.
Change in Control Without Termination
| Name | | | | | | | | Medical Insurance / Outplacement ($) | | | Total ($) | |
| Remondi | - | - | | - | - | | | - | | | - | |
| Lown | - | - | | - | - | | | - | | | - | |
Chivavibul | | - | | | - | | | - | | | - | |
| Kane | - | - | | - | - | | | - | | | - | |
Whorley | | - | | | - | | | - | | | - | |
Hynes | | - | | | - | | | - | | | - | |
| Heleen | - | - | - | - |
| Hauber | - | | - | - | | | - | |
| (1) | Under the Change in Control Severance Plan for Senior Officers,equity award agreements, outstanding equity awards become vested and non-forfeitable in connection with a change in control only if (i) the participant’s employment is terminated, or (ii) the acquiring or surviving entity does not assume the equity awards. For purposes of this table, we have assumed that neither of these conditions is satisfied. |
Change in Control and (i) Termination without Cause, or (ii) Termination for Good Reason
| Name | | Equity Vesting(2) ($) | | | Cash Severance ($) | | | Medical Insurance / Outplacement(3) ($) | | | Total ($) | | | | Medical Insurance / Outplacement(3) ($) | |
| Remondi | | | 10,663,031 | | | | 6,611,000 | | | | 29,281 | | | | 17,303,312 | | 8,607,605 | | 7,181,000 | | 26,374 | | 15,814,979 | |
Lown(4) | | | 984,041 | | | | 4,044,400 | | | | 29,281 | | | | 5,057,722 | | 2,019,081 | | 2,872,400 | | 26,374 | | 4,917,855 | |
| Chivavibul | | | 2,649,358 | | | | 2,561,625 | | | | 29,178 | | | | 5,240,161 | | |
| Kane | | | 3,702,417 | | | | 3,024,395 | | | | 16,068 | | | | 6,742,880 | | 2,457,556 | | 3,121,100 | | 14,797 | | 5,593,453 | |
| Whorley | | | 3,240,346 | | | | 3,024,395 | | | | 18,224 | | | | 6,282,965 | | |
| Hynes | | | 2,469,002 | | | | 2,520,238 | | | | 29,281 | | | | 5,018,521 | | |
| Heleen | | | 1,762,966 | | | | 2,520,238 | | | | 29,281 | | | | 4,312,485 | | 1,503,920 | | 2,764,685 | | 26,374 | | 4,294,979 | |
| Hauber | | 904,810 | | 2,339,550 | | 26,505 | | 3,270,865 | |
| (2) | For stock and stock unit awards, the amounts shown reflect the closing market price of Navient Common Stock on December 29, 201731, 2019 ($13.32)13.68). For stock options where the December 29, 201731, 2019 closing market price of Navient Common Stock was higher than the option exercise price, the amounts reflect the intrinsic value of the options as if they had been exercised on December 29, 2017.31, 2019. PSUs granted in 2017 vested at 109% of the target number of units based on Company Performance over a three-year performance period (2017-19) and were settled on March 2, 2020. See “2017-19 Performance Stock Units” in the Compensation Discussion and Analysis above for additional details. These 2017 PSUs are valued based on the number of PSUs actually earned for the three-year performance period ending on December 31, 2019. |
| (3) | Includes Navient’s estimated portion of the cost of health care benefits for 24 months. |
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Termination without Cause or Termination for Good Reason
| Name | | Equity Vesting(5) ($) | | | Cash Severance ($) | | | Medical Insurance / Outplacement(6) ($) | | | Total ($) | | | | Medical Insurance / Outplacement(6) ($) | | |
| Remondi | | - | | | | 6,611,000 | | | | 44,281 | | | | 6,655,281 | | - | 7,181,000 | 41,374 | 7,222,374 | |
Lown(7) | | - | | | | 2,640,750 | | | | 36,961 | | | | 2,677,711 | | - | 1,736,200 | 34,780 | 1,770,980 | |
| Chivavibul | | - | | | | 1,573,312 | | | | 36,884 | | | | 1,610,196 | | |
| Kane | | - | | | | 1,857,197 | | | | 27,051 | | | | 1,884,248 | | - | 1,905,550 | 26,097 | 1,931,647 | |
| Whorley | | - | | | | 1,857,197 | | | | 28,668 | | | | 1,885,865 | | |
| Hynes | | - | | | | 1,548,869 | | | | 36,961 | | | | 1,585,830 | | |
| Heleen | | - | | | | 1,548,869 | | | | 36,961 | | | | 1,585,830 | | - | 1,671,092 | 34,780 | 1,705,872 | |
| Hauber | | - | 1,432,275 | 34,879 | 1,467,154 | |
| (5) | By their terms, in the event of a termination without cause or a termination for good reason, outstanding Navient equity awards generally continue to vest pursuant to the vesting schedule set forth in each applicable award agreement as if the NEO remains employed by Navient through the pre-establishedpre- established vesting date. |
| (6) | As President and Chief Executive Officer of Navient, Mr. Remondi is entitled to Navient’s estimated portion of the cost of health care benefits for a period of 24 months plus $15,000 of outplacement services. Amounts for Messrs. Lown, Chivavibul, Kane, Whorley, HynesHeleen, and HeleenHauber include Navient’s estimated portion of the cost of health care benefits for 18 months, plus $15,000 of outplacement services. |
(7) | Includes payment of a one-time deferred signing bonus of $1,400,000. See footnote 11 below. |
Termination for Cause
| Name | | ($) | | | Cash | | | Medical Insurance / Outplacement ($) | | | | |
| Remondi | - | - | | - | - | | | - | | | - | |
| Lown | - | - | | - | - | | | - | | | - | |
Chivavibul | | - | | | - | | | - | | | - | |
| Kane | - | - | | - | - | | | - | | | - | |
Whorley | | - | | | - | | | - | | | - | |
Hynes | | - | | | - | | | - | | | - | |
| Heleen | - | - | - | - |
| Hauber | - | | - | - | | | - | |
(8)(7) | Vested and unvested equity awards are forfeited upon Termination for Cause (as defined in the Navient Corporation 2014 Omnibus Incentive Plan, as amended and restated). |
Termination upon Retirement
| Name | | | | | | | | Medical Insurance / Outplacement ($) | | | | |
| Remondi | - | - | | - | - | | | - | | | - | |
| Lown | - | - | | - | - | | | - | | | - | |
Chivavibul | | - | | | - | | | - | | | - | |
| Kane | - | - | | - | - | | | - | | | - | |
Whorley | | - | | | - | | | - | | | - | |
Hynes | | - | | | - | | | - | | | - | |
| Heleen | - | - | - | - |
| Hauber | - | | - | - | | | - | |
(9)(8) | As of December 31, 2017, Messrs.Mr. Remondi and Chivavibul wereis eligible for retirement vesting of his outstanding equity awards pursuant to their terms and the Company’s retirement policy. Similarly, Mr. Heleen is eligible for retirement vesting of a portion of his outstanding equity awards. Outstanding equity awards generally continue to vest pursuant to the vesting schedule set forth in each applicable award agreement as if the NEO remains employed by Navient through the pre-establishedpre- established vesting date, provided that the NEO satisfies certain age and/or service conditions set forth in each company’sthe Company’s retirement policy. For equity awards originally granted by Former SLM prior to 2013, the award recipient must be age 60 or older upon retirement, or the award recipient must have attained a combination of age and years of service totaling at least 70 years, to be eligible for retirement vesting. For equity awards originally granted by Former SLM in 2013 or 2014, and for all Navient equity awards, the award recipient must be age 65 or older upon retirement, or the award recipient must have attained a combination of age and years of service totaling at least 75 years, to be eligible for retirement vesting. Service with both Former SLM and Navient is counted for these purposes. |
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Termination by Death or Disability
| Name | | | Medical Insurance / Outplacement ($) | ($) | |
| Remondi | 8,607,605 | | - | - | 8,607,605 | |
| Lown | 2,019,081 | | - | - | 2,019,081 | |
| Kane | 2,457,556 | | - | - | 2,457,556 | |
| Heleen | 1,503,920 | | - | - | 1,503,920 | |
| Hauber | 904,810 | | - | - | 904,810 | |
| Name | | Equity Vesting(10) ($) | | | Cash Severance ($) | | | Medical Insurance / Outplacement ($) | | | Total ($) | |
| Remondi | | | 10,663,031 | | | | - | | | | - | | | | 10,663,031 | |
Lown(11) | | | 984,041 | | | | 1,400,000 | | | | - | | | | 2,384,041 | |
| Chivavibul | | | 2,649,358 | | | | - | | | | - | | | | 2,649,358 | |
| Kane | | | 3,702,417 | | | | - | | | | - | | | | 3,702,417 | |
| Whorley | | | 3,240,346 | | | | - | | | | - | | | | 3,240,346 | |
| Hynes | | | 2,469,002 | �� | | | - | | | | - | | | | 2,469,002 | |
| Heleen | | | 1,762,966 | | | | - | | | | - | | | | 1,762,966 | |
(10)(9) | The vesting of all outstanding equity awards will accelerate upon termination of employment due to death or disability. For stock and stock unit awards, the amounts shown reflect the closing market price of Navient Common Stock on December 29, 201731, 2019 ($13.32)13.68). For stock options where the December 29, 2017,31, 2019, closing market price of Navient Common Stock was higher than the option exercise price, the amounts reflect the intrinsic value of the options as if they had been exercised on December 29, 2017.31, 2019. PSUs granted in 2019 vested at 109% of the target number of units based on Company Performance over a three-year performance period (2017-19) and were settled on March 2, 2020. See “2017-19 Performance Stock Units” in the Compensation Discussion and Analysis above for additional details. These 2017 PSUs are valued based on the number of PSUs actually earned for the three-year performance period ending on December 31, 2019. |
(11) | Mr. Lown is eligible to receive a one-time deferred signing bonus of $1,400,000 (“Deferred Signing Bonus”), to compensate him for a portion of the long-term equity and deferred compensation with his former employer that he forfeited by joining Navient. This Deferred Signing Bonus, if any, will be payable in cash in two equal installments on the first and second anniversaries of his start date with the Company, March 17, 2017, provided he remains employed by the company on each such date. If prior to the Deferred Signing Bonus being paid in full, either (x) his employment is terminated by the company without “Cause” (as that term is defined in Navient’s Executive Severance Plan for Senior Officers), or (y) his employment terminates due to death or disability, then any unpaid amount will be paid in an immediate lump sum. |
Actual Payments uponUpon Termination
Each of our NEOs remained employed by Navient as an executive officer on December 31, 2017.2019.
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the SEC adopted a rule requiring annual disclosure of:Navient to disclose annually: (i) the annual total compensation of the median employee identified by Navient (as described below), (ii) the annual total compensation of Navient’s principal or chief executive officer (“PEO”CEO”), and (iii) the estimated ratio of these two amounts. Navient’s 2017 fiscal year is the first year for which this disclosure is required.
To identify our median employee, we reviewed the annual compensation of all full-time, part-time, seasonal and temporary employees of Navient and its affiliated companies (other than companies acquired in 2017) as of December 31, 2017.2019. As permitted under SEC rules, we treated an employee’s 20172019 “annual compensation” for this purpose as equal to the sum of his or her gross income, as reported on payroll records, plus all employer contributions to Navient’s qualified retirement plan made on the employee’s behalf. In identifying the median employee, we excluded the PEO and approximately 170 individuals who were employed by Earnest LLC and approximately 180 individuals who were employed by Duncan Solutions, Inc. on December 31, 2017, as Navient acquired these companies in 2017.CEO. As of December 31, 2017,2019, Navient and its affiliated companies (including Duncan Solutions, Inc. and Earnest LLC) had approximately 6,7005,800 employees, all of whom reside in the United States or a U.S. territory.
Navient’s PEOCEO is Mr. Remondi. His annual total compensation for 20172019 was $6,456,736,$7,793,321, as reflected in the Summary Compensation Table. The 20172019 annual total compensation of the median employee identified by Navient, calculated in accordance with SEC rules regarding the Summary Compensation Table, was $43,865.$46,126. Accordingly, Navient’s estimated 20172019 pay ratio was 1 to 147.168.
SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the Navient pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. In addition, the median employee’s annual total compensation is unique to that individual and therefore is not an indicator of the annual total compensation of any other individual or group of employees.
Proposal 4 — Student Loan Risk ManagementThe following shareholder proposal has been submitted to the Company for action at the meeting by the AFL-CIO, on behalf of the AFL-CIO Reserve Fund, 815 Sixteenth Street, N.W., Washington, D.C. 2006, a beneficial owner of 165 shares of the Company’s stock and by Employees’ Retirement System of Rhode Island, State House – Room 102, Providence, Rhode Island 02903, a beneficial owner of 6,768 shares of the Company’s stock. The affirmative vote of a majority of the shares voted at the meeting is required for approval of the shareholder proposal. The text of the proposal and the proponent’s supporting statement is as follows:
Whereas there are more than 44 million borrowers with an estimated $1.3 trillion in student loan debt in the United States;
Whereas $137.4 billion in government-held or government-backed student loans is severely delinquent or in default;
Whereas Navient Corporation (“Navient”) services and manages more than $300 billion in federal and private student loans for approximately 12 million borrowers;
Whereas the U.S. Department of Education reports that the number of borrowers not making payments on their federal student loans within three years of leaving college has risen to 11.5%;
Whereas more than a million borrowers with Direct Loans at Navient have defaulted on student loans; and
Whereas, increased defaults create additional financial hardships for Navient customers, which may negatively impact the company and shareholders;
Now, therefore be it
RESOLVED, that the shareholders request the Board of Directors (the “Board”) issue a report to investors (at reasonable cost, excluding proprietary information, and within a reasonable time) on the governance measures Navient has implemented to more effectively monitor and manage financial and reputational risks related to the student loan crisis in the United States, including whether Navient has assigned responsibility for such monitoring to the Board or one or more Board committees or has revised senior executive compensation metrics or policies.
Supporting Statement:
The student loan crisis is a growing social problem in the United States. A representative of the U.S. Department of Education (DOE) recently characterized the student loan system as “a mess” and added that “income driven repayment plans are confusing.”1
Earlier this year, the Consumer Financial Protection Bureau (CFPB) reported a trend of triple digit increases in complaints related to student loan servicing as compared to similar periods, with complaints increasing in nearly every state.2
Previously, the Government Accountability Office found that the DOE lacked a minimum set of standards loan servicers to provide effective customer service [sic]; even as the DOE encouraged federal student loan servicers to adopt “high touch loan servicing” for borrowers at high risk of default.3
Board’s Statement in Opposition to Shareholder Proposal
The Proposal requests that the Company prepare a special report “on the governance measures Navient has implemented to more effectively monitor and manage financial and reputational risks related to the student loan crisis in the United States, including whether Navient has assigned responsibility for such monitoring to the Board or one or more Board committees or has revised senior executive compensation metrics or policies.” The Board has reviewed the proposal and does not believe that it is in the best interests of Navient or its shareholders, as described below.
1 https://www.reuters.com/investigates/special-report/usa-studentloans/
2 https://www.forbes.com/sites/johnwasik/2017/05/26/why-trumps-education-plan-will-make-student-debt-crisis-worse/#470c1a4721c
3 https://cleaver.house.gov/media-center/press-releases/congressmen-cleaver-and-bishop-call-for-gao-investigation-of-federal
Navient is committed to responsibly operating our business, a central element of which is identifying, monitoring, and managing financial and reputational risks, the subject matter of the Proposal. Risk management is among the most important duties of the Board and its committees, which set risk management philosophy, tolerance and parameters; establish procedures for assessing risk; and oversee risk management across the enterprise. As we have communicated for several years, the Board and the Audit Committee have responsibility for monitoring these risks.
To do so, we employ a Board-approved Risk Appetite Framework which defines the most significant risks to our business and provides a process for evaluating, quantifying and monitoring those risks across nine domains: credit, market, funding and liquidity, compliance, legal, operational, reputational/political, governance and strategy. Our Enterprise Risk Committee, composed of key members of management, monitors the Company’s performance against those approved risk limits and thresholds. Management and staff throughout our business operate according to it. Moreover, risk management is already a key factor in executive compensation throughout our business.
We are committed to disclosure and transparency concerning risk and regularly report on it. For example, both our 2017 proxy statement and this proxy statement include a detailed discussion entitled “The Board of Directors’ Role in Risk Oversight,” which explains our multi-layered approach to risk, including among other things the respective roles of the Board, the Audit Committee, the Finance and Operations Committee, the Nominations and Governance Committee and the Executive Committee. In addition, the charters for the Board and each committee are available on our website. We believe that our proxy statements, annual and quarterly reports, investor presentations and other information available on our website do a thorough job of summarizing how we manage risk, going well beyond merely complying with the law to provide shareholders with detailed, useful and appropriate information in this important area.
Navient agrees that the success of student loan borrowers is a very important topic for individuals and our economy. We remain committed to assisting all borrowers, including those who struggle to repay their loans, and support our student loan customers by regularly communicating, offering information on repayment options and continually enhancing our tools and assistance. We are proud that the borrowers whose loans we service are 37 percent less likely to default than their peers serviced elsewhere. Contact is key: when we make contact with a struggling federal student loan borrower, 9 times out of 10 we can find a way to keep that borrower out of default.
However, we disagree with the fundamental premise of the proposal. It is important to note that, as reported in more detail elsewhere in our disclosures, the vast majority of student loans are owned or guaranteed by the federal government, not Navient. As a result, the financial risks related to student loans, such as those attendant to borrower default, fall most heavily on the federal government, and not on our business. Moreover, the federal government, not Navient, sets federal student loan policy, including loan amounts, interest rates, and rules for various repayment options. Our review of complaints within the CFPB complaint portal bears this out, with the vast majority not being complaints about Navient servicing errors but rather complaints or questions by individuals about the terms, conditions and eligibility rules of their federal loans or their repayment options. Even though we do not bear the largest share of financial risk, nor do we set the policy or terms of the loans, we have a long and positive track record of supporting borrowers to successfully manage their loans. We work hard to continually enhance our student loan servicing program, engage with borrowers, regulators and other stakeholders, and advocate for innovative solutions, all within the federal regulatory framework. For example, we have advocated for the federal student loan program to provide better upfront resources to students before they borrow and for simplifying repayment options.
Lastly, the risks to our business are most appropriately managed by the Board and management, and not by shareholders. Devoting time and resources to creating a report that would substantially duplicate existing disclosures, and that would circumvent our existing risk reporting methodologies, is not a responsible use of our resources. Moreover, we do not believe that the report would cause us to modify our disciplined approach to risk management. The cost, both in dollars and employee time, of preparing the report would be better spent on growing our business.
The Board of Directors unanimously recommends a vote “AGAINST” this proposal for the reasons discussed above. Proxies solicited by the Board of Directors will be voted “AGAINST” this proposal unless a shareholder indicates otherwise in the proxy.
Certain Relationships and Related Transactions
Navient maintains a written policy regarding review and approval of transactions with related parties. Transactions covered by the policy include any transaction involving Navient and an amount in excess of $120,000 in any year in which any director, nominee, executive officer, greater-than-five percent beneficial owner of the Company, or any of their respective immediate family members, has or had a direct or indirect material interest, other than as a director or less-than-ten percent owner of an entity involved in the transaction (a “Related Party Transaction”). Certain loans made in the ordinary course of Navient’s business to executive officers, directors and their family members are considered Related Party Transactions and may be required to be disclosed in the proxy statement but are pre-approved under the policy if they meet specified requirements. As of the date of this proxy statement, no such loans are outstanding.
From the beginning of 20172019 until the present, there have been no (and there are no currently proposed) transactions involving an amount in excess of $120,000 in which Navient was (or is to be) a participant and any executive officer, director, five percent beneficial owner of our Common Stock or member of the immediate family of any of the foregoing persons had (or will have) a direct or indirect material interest, except the compensation arrangements described in this proxy statement for our named executive officers and directors.directors and the following transaction:
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a)On January 27, 2020, the Board of Directors, upon the recommendation of the Exchange Act requires Navient’s executive officersAudit Committee, approved the repurchase of 20,346,464 shares of our common stock from certain subsidiaries and directors, as well as persons who beneficially own more than 10 percentaffiliates of the Common Stock, to file reports with the SEC on their ownershipCanyon Capital Advisors LLC and changes in ownershipcertain of Navient Common Stock. Based solely on a reviewits subsidiaries for an aggregate purchase price of the copies$300,517,273.28 and per-share purchase price of such forms in our possession and on written representations from reporting persons, we believe that during the period from January 1, 2017 to December 31, 2017, all required reports were filed in a timely manner.$14.77.
Other Matters for the 20182020 Annual Meeting
As of the date of this proxy statement, there are no matters that the Board of Directors intends to present for a vote at the Annual Meeting other than the business items discussed in this proxy statement. In addition, Navient has not been notified of any other business that is proposed to be presented at the Annual Meeting that has not been withdrawn.Meeting. If other matters now unknown to the Board of Directors come before the Annual Meeting, the proxy given by a shareholder electronically, telephonically or on a proxy card gives discretionary authority to the persons named by Navient to serve as proxies to vote such shareholder’s shares on any such matters in accordance with their best judgment.
Shareholder Proposals for the 20192021 Annual Meeting
A shareholder who intends to introduce a proposal for consideration at Navient’s 20192021 Annual Meeting may seek to have that proposal and a statement in support of the proposal included in the Company’s 20192021 proxy statement if the proposal relates to a subject that is permitted under SEC Rule 14a-8. To be considered for inclusion, the proposal and supporting statement must be received by the Company no later than December 14, 2018,10, 2020, and must satisfy the other requirements of Rule 14a-8. The submission of a shareholder proposal does not guarantee that it will be included in Navient’s proxy statement.
Navient’s Bylaws provide that a shareholder may otherwise propose business for consideration or nominate persons for election to the Board of Directors, in compliance with federal proxy rules, applicable state law and other legal requirements and without seeking to have the proposal included in the Company’s proxy statement pursuant to Rule 14a-8. Navient’s Bylaws provide that any such proposals or nominations for the Company’s 20192021 Annual Meeting must be received by it on or after January 24, 2019,20, 2021, and on or before February 23, 2019.19, 2021. Any such notice must satisfy the other requirements in
Navient’s Bylaws applicable to such proposals and nominations. If a shareholder fails to meet these deadlines or fails to comply with the requirements of SEC Rule 14a-4(c), Navient may exercise discretionary voting authority under proxies it solicits to vote on any such proposal.
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Proxy Access Procedures
The Company’sCompany's Second Amended and Restated Bylaws generally permit a shareholder, or group of up to 20 shareholders, owning at least 3% of our outstanding shares for at least three years to nominate, and include in the Company’sCompany's proxy materials, director nominees constituting up to the greater of two or 20% of the company’sCompany's Board, provided that the shareholder(s) and nominee(s) satisfy the requirements in our bylaws. Written notice of proxy access director nominees must be received no later than the close of business on the 120thday, nor earlier than the close of business on the 150thday, prior to the first anniversary of the date our definitive proxy statement was first sent to stockholders in connection with the preceding year’syear's annual meeting—that is, withmeeting. With respect to the 20192021 annual meeting, this notice must be received between November 14, 2018,10, 2020 and December 14, 2018,10, 2020, assuming the date of the 20192021 annual meeting is not changed by more than 30 days before or after the first anniversary of the 20182020 annual meeting. Any notices should be addressed to Chief Legal Officer and Secretary, Navient Corporation, 123 Justison Street, Wilmington, Delaware 19801.
Solicitation Costs
All expenses in connection with the solicitation of proxies for the Annual Meeting will be paid by Navient. We have engaged MacKenzie Partners, Inc. to solicit proxies for an estimated fee of $15,000$17,500 plus reimbursement for out-of-pocket costs. In addition, officers, directors, regularcertain employees or other agents of Navient may solicit proxies in person, by telephone, telefax, personal calls, or other electronic means. Navient will request banks, brokers, custodians and other nominees in whose names shares are registered to furnish to the beneficial owners of Navient’s Common Stock Notices of Availability of the materials related to the Annual Meeting, and including, if so requested by the beneficial owners, paper copies of our 2019 Annual Report on Form 10-K, this proxy statement and the proxy card and, upon request, the Company will reimburse such registered holders for their out-of-pocket and reasonable expenses in connection therewith.
Householding
To reduce the expense and reduce environmental effects of printing and delivering duplicate proxy materials to shareholders who may have more than one account holding Navient stock but share the same address, Navient has adopted a procedure approved by the SEC called “householding.” Under this procedure, certain registered shareholders who have the same address and last name, and who do not participate in electronic delivery of proxy materials, will receive one copy of the Notice of Internet Availability and, as applicable, any additional proxy materials that are delivered until such time as one or more of these shareholders notifies us that they want to receive separate copies. Shareholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
If you are a registered shareholder and would like to have separate copies of the Notice of Internet Availability or proxy materials mailed to you in the future, or you would like to have a single copy of the Notice of Internet Availability or proxy materials mailed to you in the future, you must submit a request in writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717 or call at 1-800-542-1061. If you are a beneficial shareholder, please contact your bank or broker to opt in or out of householding.
However, please note that if you are a registered shareholder and wish to receive a separate proxy card or vote instruction form or other proxy materials for purposes of this year’s Annual Meeting, you should follow the instructions included in the Notice of Internet Availability that was sent to you and we will deliver promptly upon written or oral request, separate copies of the proxy materials for this year’s Annual Meeting.
| 20182020 Proxy Statement | | 7276
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NAVIENT CORPORATION
ATTN: CORPORATE SECRETARY
123 JUSTISON STREET
WILMINGTON, DE 19801
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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 the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
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.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E36039-P98502 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
NAVIENT CORPORATION | | | | | | | | | | | | | | | | |
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The Board of Directors recommends you vote FOR the following proposals: | | | | | | | | | | | | | | | | |
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1. | Election of Directors | | | | | | | | | | | | | | | | |
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| Nominees: | | For | | Against | | Abstain | | | | | | | | | | |
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| 1a. | Anna Escobedo Cabral | | ☐ | | ☐ | | ☐ | | | | | | | | | | |
| | | | | | | | | | | | | For | | Against | | Abstain | |
| 1b. | William M. Diefenderfer, III | | ☐ | | ☐ | | ☐ | | 2. | Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2018. | | ☐ | | ☐ | | ☐ | |
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| 1c. | Katherine A. Lehman | | ☐ | | ☐ | | ☐ | | | | | | | | | |
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| 1d. | Linda A. Mills | | ☐ | | ☐ | | ☐ | | 3. | Non-binding advisory vote to approve named executive officer compensation. | | ☐ | | ☐ | | ☐ | |
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| 1e. | John F. Remondi | | ☐ | | ☐ | | ☐ | | | | | | | | | |
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| 1f. | Jane J. Thompson | | ☐ | | ☐ | | ☐ | | The Board of Directors recommends you vote AGAINST the following proposal: | | | | | | | |
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| 1g. | Laura S. Unger | | ☐ | | ☐ | | ☐ | | | | | | | | |
| | | | | | | | | | 4. | Shareholder proposal concerning student loan risk management. | | ☐ | | ☐ | | ☐ | |
| 1h. | Barry L. Williams | | ☐ | | ☐ | | ☐ | | | | | | | | | |
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| 1i. | David L. Yowan | | ☐ | | ☐ | | ☐ | | | | | | | | | | |
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NOTE: The shares represented by this proxy when properly executed will be voted in the manner directed herein. If any other matters properly come before the meeting, the person named in this proxy will vote in their discretion. | | For address changes and/or comments, please check this box and write them on the back where indicated. | | | | | | ☐ | |
| | | | | | | | | | Please indicate if you plan to attend this meeting. | | ☐ | | ☐ | | | |
| | | | | | | | | | | | | Yes | | No | | | |
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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. | |
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Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com.
PLEASE VOTE, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
ADMISSION TICKET
Bring this ticket and photo ID with you if you plan on attending the meeting.
NOTE: Cameras, transmission, broadcasting and other recording devices, including smart phones, will not be permitted in the meeting room. Attendees may be asked to pass through a security screening device or adhere to other security measures prior to entering the Annual Meeting. We regret any inconvenience this may cause you and we appreciate your cooperation.
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,
▼ DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
E36040-P98502
NAVIENT CORPORATION
Annual Meeting of Shareholders
May 24, 2018 8:00 AM
Navient Corporation
123 Justison Street
Wilmington, DE 19801
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mark Heleen and Kurt Slawson, or each of them, each with full power of substitution, as the lawful attorneys and proxies of the undersigned to attend the Annual Meeting of Shareholders of Navient Corporation to be held on May 24, 2018, and any adjournments or postponements thereof, to vote the number of shares the undersigned would be entitled to vote if personally present, and to vote in their discretion upon any other business that may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED SHAREHOLDER. IF NO CHOICE IS SPECIFIED BY THE SHAREHOLDER, THIS PROXY WILL BE VOTED “FOR” ALL PORTIONS OF PROPOSALS 1, 2 AND 3, “AGAINST” PROPOSAL 4, AND IN THE PROXY’S DISCRETION ON ANY OTHER MATTERS PROPERLY COMING BEFORE THE MEETING.
THIS CARD WILL ALSO BE USED TO PROVIDE VOTING INSTRUCTIONS TO THE TRUSTEE FOR ANY SHARES HELD FOR THE ACCOUNT OF THE UNDERSIGNED IN THE NAVIENT 401(K) SAVINGS PLAN.
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
