• | DSAs and CRSUs: Service-based restrictions lapse and vesting is accelerated. The value of outstanding DSAs and CRSUs is based on the closing share price of our common stock on the NYSE on December 31, 2021 ($93.00). Performance-based RSUs: Service-based restrictions lapse on unearned performance-based RSUs and vesting is accelerated. The estimated value of unearned performance-based RSUs is calculated as follows:
i)
| Performance-based RSUs granted in 2019 is based on actual Company ROE performance and pre-tax margin performance for 2019 and 2020 and 100%the closing share price of target for 2021.our common stock on the NYSE on December 30, 2022 ($77.57). |
ii) • | Performance-based RSUs: Service-based restrictions lapse on unearned performance-based RSUs and vesting is accelerated. The estimated value of unearned performance-based RSUs is calculated as follows: |
i)
| Performance-based RSUs granted in 2020 is based on actual Company ROE performance and pre-tax margin performance for 2020 and 2021 and 100% of target for 2020 and 2021.2022. |
74 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Other Executive Compensation Information
iii) ii)
| Performance-based RSUs granted in 2021 is based on actual Company ROE performance, pre-tax margin performance and fee revenue growth for 2021 and 100% of target for 20212022 and 2023. |
iii)
| Performance-based RSUs granted in 2022 is based on 100% of target for 2022 - 2023.2024. |
PRSU performance has not been certified and is therefore subject to adjustment based on the terms of the relevant awards. The actual amount of the payout would be based on satisfaction of the performance criteria as certified by the Committee following a change of control. Performance-based RSUs are valued using an “adjusted fair market value” ($99.64)82.27), which is the highest average of the reported daily high and low prices per share of our common stock on the NYSE during the sixty (60)-day period prior to the first date of actual knowledge by the Board of the circumstances that resulted in a change in control, which is assumed to be December 31, 2021.2022. DVAs:• | DVAs: Service-based restrictions lapse and vesting is accelerated. Current year incentive compensation: The prior year’s cash-based incentive award (immediate cash and DVA) paid to each NEO in February 2021 for the 2020 performance year.
Defined contribution retirement cash equivalent: A lump sum payment equal to two times State Street’s annual contributions to the defined contribution retirement plans applicable to the NEO.
Continued vesting of ESRP-DC: Service-based restrictions lapse on all outstanding benefits. These defined contribution balances continue to vest according to the plan terms.
Health & welfare benefits: Continued employee health and welfare benefits for two years after the date of termination.
Tax equalization benefit: Estimated tax equalization payments to be made for awards granted to Mr. Erickson during his international assignment for which host country taxes would exceed his estimated home country taxes.
2022 Notice of Meeting and Proxy Statement / State Street Corporation 76
TABLE OF CONTENTS
Other Executive Compensation Information
Outplacement services: Personal outplacement services by a third-party provider.
|
• | Current year incentive compensation: The prior year’s cash-based incentive award (immediate cash and DVA) paid to each NEO in February 2022 for the 2021 performance year. |
• | Defined contribution retirement cash equivalent: A lump sum payment equal to two times State Street’s annual contributions to the defined contribution retirement plans applicable to the NEO. |
• | Continued vesting of ESRP-DC: Service-based restrictions lapse on all outstanding benefits. These defined contribution balances continue to vest according to the plan terms. |
• | Health & welfare benefits: Continued employee health and welfare benefits for two years after the date of termination. |
• | Outplacement services: Personal outplacement services by a third-party provider. |
Assumes zero for the legal fee benefit in connection with the enforcement of the NEO’s rights under the agreement. The change of control agreements include restrictive covenants concerning non-solicitation for a period of 18 months for U.S. employees and 12 months for Hong Kong employees following termination, and ongoing obligations of confidentiality, cooperation and non-disparagement. Change of Control State Street has entered into change-of-control agreements with each of our NEOs. Each agreement has a two-year term that automatically extends for an additional year at the end of each calendar year, unless State Street gives notice of nonrenewal with at least 60 days’ advance notice. The agreements become effective upon a change of control of State Street or upon a termination of employment arising in connection with or in anticipation of such change of control. A change of control is defined to include: The acquisition of 25% or more of our outstanding stock; The failure of incumbent directors (or their designated successors) to constitute a majority of the Board of Directors; A reorganization, merger, consolidation, sale or other disposition of all or substantially all of our assets in which State Street shareholders do not retain a majority of the voting power of the surviving or successor corporation and incumbent directors do not constitute a majority of the Board; or Approval by shareholders of a complete liquidation or dissolution of the Company. Each agreement provides for two years of continued employment after a change of control on terms commensurate with those previously in effect. The cessation of employment under a double-trigger mechanism requires the occurrence of both a change of control and either the termination of employment without cause or by the NEO for good reason during the two-year period. Each agreement provides that, in the event change-of-control benefits would exceed 110% of the maximum amount that the NEO can receive without any of the payments being subject to the excise tax imposed under Section 4999 of the Internal Revenue Code (the golden parachute excise tax), then the value of such benefits shall be either (i) subject to a cutback or (ii) delivered in full, whichever of the foregoing provides the executive the greatest benefit on an after-tax basis (with the NEO required to pay the golden parachute excise tax). If benefits are below the 110% threshold, the NEO would be subject to an automatic cutback to the extent necessary to assure that the change-of-control benefits are not subject to the golden parachute excise tax. Accordingly, assuming a change of control with a double trigger occurred on December 31, 2022, Mr. O’Hanley’s benefits are subject to a cutback and the following payments were eliminated from the table above: cash severance of $2,000,000; performance-based RSUs of $2,887,728; defined contribution retirement cash equivalent of $56,100; and health & welfare benefits of $35,336. Assuming a change of control with a double trigger occurred on December 31, 2022, Messrs. Aboaf, Erickson and Maiuri do not have a cutback to their benefits. 2023 Notice of Meeting and Proxy Statement / State Street Corporation 75
TABLE OF CONTENTS Other Executive Compensation Information
Refer to “Potential Payments upon Termination or Change of Control as of December 31, 2021”2022” table footnote 6 for a detailed description of payments and benefits under a termination in connection with change of control. Payments upon Termination of Employment Mr. Taraporevala was succeeded by Yie-Hsin Hung as President and CEO of State Street Global Advisors on December 5, 2022. Thereafter, he advised Ms. Hung and assisted with the transition, and served as an executive officer through December 31, 2022. Mr. Taraporevala subsequently retired from State Street on March 1, 2023. He received his base salary through his retirement date and his outstanding deferred incentive compensation awards will continue to vest according to their original terms and schedule because he had attained age 55 and completed 5 years of service prior to his retirement. In addition to the equity awards set forth under “Outstanding Equity Awards at Fiscal Year-End, December 31, 2022,” Mr. Taraporevala had outstanding DVAs worth $2,896,672 as of December 31, 2022. For his service during 2022, and as described above under the heading “Compensation Discussion and Analysis—Individual Performance Compensation Decisions,” on February 24, 2023 Mr. Taraporevala was awarded $6,300,000 of incentive compensation in the form of immediate cash and deferred incentive compensation awards, which included: $945,000 in immediate cash; $1,260,000 in DVAs; $1,575,000 in DSAs; and $2,520,000 in performance-based RSUs. At retirement, these DSAs and performance-based RSUs were worth $1,758,692 and $2,864,678, respectively, based on the closing share price of our common stock on the NYSE on March 1, 2023 ($89.51). Mr. Taraporevala did not receive severance or other retirement enhancements. Following his retirement, Mr. Taraporevala received a payment for 2023 unused vacation ($9,832). Following the elimination of his position in May 2022 and a subsequent transition period during which he served as a special advisor to Mr. Maiuri, Mr. Aristeguieta left State Street on January 31, 2023. Mr. Aristeguieta received his base salary through his termination date. As a result of the elimination of his position, Mr. Aristeguieta’s termination of employment was treated as an involuntary termination without cause and he was eligible to receive severance benefits under the same formula as applies to all other employees at the Executive Vice President level for that type of termination under our U.S. Severance Plan. These benefits include base severance equal to 12 weeks of base pay ($161,538), subsidized benefits continuation (estimated at $6,120), outplacement services (estimated at $40,000), severance equal to 25 percent of the incentive compensation he received for the 2021 performance year ($1,808,750), and a payment for unused vacation ($7,141). In addition, Mr. Aristeguieta’s outstanding deferred incentive compensation awards will continue to vest according to their original terms and schedule. In addition to the equity awards set forth under “Outstanding Equity Awards at Fiscal Year-End, December 31, 2022,” Mr. Aristeguieta had outstanding DVAs worth $2,789,104 as of December 31, 2022. Mr. Aristeguieta did not receive an incentive compensation award for his service during 2022. 77 202276 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Other Executive Compensation Information
Pay Versus Performance Shown and described below is information about the relationship between certain financial performance measures and executive “compensation actually paid” as determined in accordance with Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K. For further information regarding our pay-for-performance philosophy and how our Human Resources Committee seeks to align executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.” | 2022 | | | $ 18,004,619 | | | $ 10,071,943 | | | $ 7,633,068 | | | $ 4,733,007 | | | 107.6 | | | 97.5 | | | $ 2,774,105,680 | | | 12.5%
| | | 2021 | | | 14,113,660 | | | 22,684,590 | | | 8,719,980 | | | 12,311,262 | | | 124.7 | | | 124.1 | | | 2,693,086,657 | | | 11.5% | | | 2020 | | | 9,309,980 | | | 8,579,981 | | | 7,972,141 | | | 7,465,987 | | | 95.2 | | | 89.7 | | | 2,420,321,971 | | | 10.6% | |
(1)
| The closing share price of our common stock on the NYSE was $77.57 on December 30, 2022, $93.00 on December 31, 2021, $72.78 on December 31, 2020, and $79.10 on December 31, 2019. The Principal Executive Officer (PEO) was Mr. O'Hanley for all years in the table. The non-PEO NEOs were Messrs. Aboaf, Aristeguieta, Erickson and Maiuri (all years), plus Mr. Taraporevala (2022). |
(2)
| The following table describes the adjustments, each of which is prescribed by SEC rules, to calculate the CAP amount from the SCT amount. There were no adjustments with respect to defined benefit and actuarial pension plans. The SCT amount and the CAP amount do not reflect the actual amount of compensation earned by or paid during the applicable year, but rather are amounts determined in accordance with Item 402(v) of Regulation S-K. |
| Total Compensation from SCT | | | $ 18,004,619 | | | $ 7,633,068 | | | $ 14,113,660 | | | $ 8,719,980 | | | $ 9,309,980 | | | $ 7,972,141 | | | Adjustments for defined benefit and actuarial pension plans: Not Applicable | | | Adjustments for stock awards | | | (Subtraction): Stock Awards from SCT | | | (15,524,952) | | | (4,569,471) | | | (12,999,934) | | | (4,070,662) | | | (8,250,050) | | | (3,948,730) | | | Addition: Fair value at year end of awards granted during the covered fiscal year that are outstanding and unvested at year end | | | 10,882,975 | | | 3,643,545 | | | 15,752,504 | | | 5,680,273 | | | 8,728,150 | | | 4,186,016 | | | Addition (Subtraction): Year-over-year change in fair value of awards granted in any prior fiscal year that are outstanding and unvested at year end | | | (5,092,384) | | | (2,093,302) | | | 3,563,690 | | | 1,906,719 | | | (804,868) | | | (662,881) | | | Addition: Vesting date fair value of awards granted and vesting during such year | | | 1,683,962 | | | — | | | 2,148,550 | | | — | | | — | | | — | | | Addition (Subtraction): Change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during such year | | | 117,723 | | | 119,167 | | | 106,120 | | | 74,952 | | | (403,231) | | | (80,559) | | | Compensation Actually Paid (as calculated) | | | 10,071,943 | | | 4,733,007 | | | 22,684,590 | | | 12,311,262 | | | 8,579,981 | | | 7,465,987 | |
The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. (3)
| Amounts presented are averages for the entire group of non-PEO NEOs in each respective year. |
(4)
| Total Shareholder Return (TSR) data is calculated based on an initial investment on December 31, 2019 and reflects: for 2022 – three-year cumulative TSR (December 31, 2019 – December 31, 2022); for 2021 – two-year cumulative TSR (December 31, 2019 – December 31, 2021); and for 2020 – one-year TSR (December 31, 2019 – December 31, 2020). When comparing our annual and long-term performance to that of our peers for compensation purposes and for purposes of disclosure under Item 201(e) of Regulation S-K, we utilize the KBW Bank Index, which comprises State Street, our Direct Peers, and 21 other constituents with which we compete in some aspects of our businesses as of January 1, 2022. |
(5)
| Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. For a reconciliation of the non-GAAP ROE presented in the table above, see Appendix D. |
2023 Notice of Meeting and Proxy Statement / State Street Corporation 77
TABLE OF CONTENTS Other Executive Compensation Information
Financial Performance Measures As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, not all of those measures are presented in the Pay versus Performance table. Moreover, the Company’s executive compensation program is designed to incentivize long-term performance and shareholder value creation. The Human Resources Committee did not consider the pay versus performance disclosure when making its incentive compensation decisions. The metrics that the Company uses in determining annual incentive compensation awards and in the payout of our long-term performance-based RSUs are selected based on an objective of incentivizing our PEO and Non-PEO NEOs to increase the value of the Company for our shareholders. The following table lists the four performance measures that we believe represent the most important performance measures we used to link the CAP amounts for our NEOs for 2022 to Company performance, all of which are metrics used in our performance-based RSUs. Of these measures, we identified return on average common equity (non-GAAP) as the most important of our financial performance measures. | Return on Average Common Equity (non-GAAP) | | | Fee Revenue Growth (non-GAAP) | | | Pre-Tax Margin (non-GAAP) | | | Total Shareholder Return
| |
Analysis of the Information Presented in the Pay versus Performance Table In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Overview. The Committee reviews, evaluates and approves our executive compensation program annually, and designs our executive compensation program to effectively align pay with performance and shareholder interests over time. The design elements supporting this goal include our use of shareholder return-based metrics in assessing annual financial performance, heavy reliance on deferred equity-based compensation vehicles (substantially delivered in the form of performance-based equity) and the use of relative TSR in our long-term incentive design. In the Pay versus Performance table above: Equity-based vehicles comprised 90% of incentive compensation awarded to our PEO in 2022 for the 2021 performance year, 100% in 2021 for the 2020 performance year and 75% in 2020 for the 2019 performance year Equity-based vehicles comprised 65% of incentive compensation awarded to our Non-PEO NEOs in 2022, 2021 and 2020 for the 2021, 2020 and 2019 performance years, respectively Because we maintain significant levels of deferred compensation and equity-based compensation for our executives, the change in value over time of CAP for our PEO and Non-PEO NEOs in the table above is driven primarily by the change in our stock price and our performance against metrics aligned to our long-term strategy contained in our performance-based RSU vehicle. Relationship between CAP and ROE (non-GAAP). ROE (GAAP) is a component of the Committee’s assessment of annual financial performance, driving annual pay decisions. Additionally, ROE (non-GAAP) is a core metric in our performance-based RSU program, impacting the value of this long-term equity vehicle over time. As a result, CAP for our PEO and Non-PEO NEOs is influenced by ROE (non-GAAP). 78 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Other Executive Compensation Information
Relationship between CAP and State Street TSR and CAP and Peer Group/KBW Bank Index TSR. TSR, for both State Street itself and relative to the KBW Bank Index, is a component of the Committee’s assessment of financial performance, driving annual pay decisions. For 2022, CAP for our PEO is $10.1 million and the average CAP for our Non-PEO NEOs is $4.7 million, significantly below the SCT compensation of $18.0 million for our PEO and the average SCT compensation of $7.6 million for our Non-PEO NEOs, respectively, consistent with the decline of TSR from 124.7 in 2021 to 107.6 in 2022. For 2021, CAP for our PEO is $22.7 million and average CAP for our Non-PEO NEOs is $12.3 million, significantly higher than the SCT compensation of $14.1 million for our PEO and the average SCT compensation of $8.7 million for Non-PEO NEOs, respectively, consistent with the increase of TSR from 95.2 in 2020 to 124.7 in 2021. The increase or decrease in CAP versus SCT compensation is strongly aligned with State Street’s TSR performance linking PEO CAP and Non-PEO average CAP to the shareholder experience.
2023 Notice of Meeting and Proxy Statement / State Street Corporation 79
TABLE OF CONTENTS Other Executive Compensation Information
Relationship between CAP and Net Income (GAAP). Although Net Income (GAAP) is not itself included in our Financial Scorecard, the Committee reviews its primary components, Revenue and Expenses, as part of its annual assessment of financial performance, as well as Net Interest Income on a standalone basis. Likewise, although Net Income (GAAP) is not a metric in our performance-based RSU vehicle, other performance-based RSU metrics, including Pre-Tax Margin and Fee Revenue Growth, are related to Net Income (GAAP). As a result, CAP for our PEO and Non-PEO NEOs is indirectly impacted by Net Income (GAAP). 80 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Item 2: Approval of Advisory Proposal on Executive Compensation
The Board of Directors unanimously recommends that you voteThe Board of Directors unanimously recommends that you vote
FOR
this proposal (Item 2 on your proxy card)
FOR
this proposal (Item 2 on your proxy card)
|
The Board believes that shareholder feedback on executive compensation is important and has provided shareholders the opportunity to vote annually on an advisory executive compensation proposal since 2009. The advisory proposal is provided in accordance with Section 14A of the Securities Exchange Act of 1934, or the Exchange Act, and is non-binding. The outcome of this advisory proposal does not overrule any decision by, create or imply any change to the fiduciary duties of, or create or imply any additional fiduciary duties for State Street or the Board of Directors (or any of its committees). Though the vote is non-binding, the Human Resources Committee will take into account the outcome of the vote on this advisory proposal when considering future executive compensation arrangements. More information about executive compensation at State Street, including detail on the Human Resources Committee of the Board’s process for determining executive pay, is described under the heading “Compensation Discussion and Analysis.” The text of the proposal presented for your approval is as follows: VOTED:
| That the compensation of State Street’s executives, as disclosed pursuant to the SEC’s compensation disclosure rules, as set forth in this proxy statement under the heading “Executive“‘Executive Compensation,” including the Compensation Discussion and Analysis, the compensation tables and related material, is approved; provided that this resolution shall not be binding on State Street’s Board of Directors or any of its committees and may not be construed as overruling any decision by the Board of Directors or any of its committees. |
20222023 Notice of Meeting and Proxy Statement / State Street Corporation 78 81
TABLE OF CONTENTS Item 3: Advisory Proposal on the Frequency of Future Advisory Proposals on Executive Compensation
The Board of Directors unanimously recommends that you vote
ANNUAL
on this advisory proposal on executive compensation (Item 3 on your proxy card)
The Board of Directors recommends that shareholders vote on an advisory basis to have an advisory proposal on executive compensation annually, as described below. Section 14A of the Exchange Act requires that all public companies include a non-binding advisory vote on executive compensation matters at least once every three years and that at least every six years shareholders be given the opportunity to vote regarding how often the advisory proposal on executive compensation should be held. Shareholders may choose from the frequency intervals of annual (every one year), biennial (every two years) or triennial (every three years), or may abstain on this matter. We have provided our shareholders with an annual opportunity to vote on a non-binding executive compensation proposal in each year since 2009, including at this annual meeting, and in both 2011 and 2017 our shareholders voted in support of an annual frequency. State Street’s Board believes that having an advisory proposal on executive compensation every year is appropriate and in the best interests of shareholders at this time. The annual frequency of this vote is consistent with our approach for, and disclosure of, executive compensation matters and also maximizes a shareholder’s opportunity to evaluate and assess executive compensation decisions. This advisory proposal is non-binding, however, the Human Resources Committee and the Board of Directors will take into account the outcome of the vote when considering the frequency of future advisory proposals on executive compensation. 82 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
The Board of Directors unanimously recommends that you vote
FOR
this proposal (Item 4 on your proxy card)
Overview In the opinion of our Board of Directors, the future success of State Street depends, in large part, on our ability to maintain a competitive position in attracting, retaining and motivating key employees with the right experience and skill sets. Central to these objectives is our equity-based compensation program, which is consistent with our compensation philosophy and the compensatory practices of companies in our peer group and other companies with which we compete for talent. Our Board understands that our equity compensation needs must be balanced against the dilutive effect of such programs on our shareholders. To that end, and based on careful weighing of these considerations, as more fully described below, on March 3, 2023, upon the recommendation of our Human Resources Committee, and subject to shareholder approval, the Board adopted the Amended and Restated 2017 Stock Incentive Plan, which we refer to as the A&R Plan. The A&R Plan amends and restates our 2017 Stock Incentive Plan, which we refer to as the 2017 Plan. The 2017 Plan was approved by our Board on February 16, 2017 and was approved by our shareholders on May 17, 2017. The amendment and restatement will: increase the number of shares of common stock available for issuance under the plan by 6,775,000 shares; delete obsolete provisions no longer required by Section 162(m) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder, or the Code; eliminate the recycling of shares used to pay the exercise or measurement price of, and/or tax withholding with respect to, stock options and stock appreciation rights; clarify that any dividends paid with respect to unvested shares of restricted stock will be accrued and paid only if such restricted stock vests; confirm that in connection with a change in control of the Company (as defined below), awards that vest based on continued service will be subject to “double trigger” vesting (that is, accelerated vesting upon a qualifying termination following the change in control); and extend the term of the plan to ten years from the date of the 2023 annual meeting of shareholders. We intend to utilize the A&R Plan as we have utilized the 2017 Plan – specifically, to grant equity awards to our employees, non-employee directors, consultants and advisors in order to retain and reward those who are critical to our success. We determined the requested additional shares under the A&R Plan based on projected annual equity awards to employees and our non-employee directors, employee recognition and promotion awards, and an assessment of the magnitude of increase that our shareholders would likely find appropriate. If shareholders approve the A&R Plan, awards may be made under the A&R Plan for such number of shares of common stock (subject to adjustment in the event of stock splits and other similar events) as is equal to the sum of: (i) 15,075,000 shares of common stock; plus (ii) such additional number of shares of common stock (up to 28,500,000) as is equal to the sum of (x) the number of shares of common stock reserved for issuance under our 2006 Equity Incentive Plan, as amended (which we refer to as the 2006 Plan) that remained available for grant under the 2006 Plan immediately prior to the 2017 annual meeting of shareholders at which the 2017 Plan was approved and (y) the number of shares of common stock subject to awards granted under the 2006 Plan, which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject, however, in the case of incentive stock options to any limitations of the Code). If shareholders do not approve the A&R Plan, the 2017 Plan will remain in effect pursuant to its terms. 2023 Notice of Meeting and Proxy Statement / State Street Corporation 83
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
The following table includes information regarding all of our outstanding equity awards (under all of our equity-based compensation plans under which shares of common stock may be issued) and shares remaining available for future awards under the 2017 Plan (prior to its amendment and restatement) as of March 1 2023, as well as the additional shares being requested pursuant to the amendment and restatement: | Number of outstanding deferred stock awards as of March 1, 2023 | | | 6,290,826 | | | Number of outstanding performance-based restricted stock units (RSUs) as of March 1, 2023 (assuming target performance) | | | 2,218,823 | | | Shares available under the 2017 Plan (prior to its amendment and restatement) as of March 1, 2023 (assuming target performance for outstanding performance-based restricted stock units (RSUs)) | | | 12,767,228 | | | Additional shares requested for approval pursuant to the A&R Plan | | | 6,775,000 | | | Total number of shares available for issuance under all plans as of March 1, 2023 (assuming the amendment and restatement of the 2017 Plan is approved) | | | 19,542,228 | | | Number of shares of common stock outstanding as of March 1, 2023 | | | 336,409,656 | |
As of March 1, 2023, there were no outstanding stock appreciation rights, which we refer to as SARs, stock options nor any other stock-based awards. We expect that the proposed share pool under the A&R Plan will allow us to continue to grant equity awards at our historic rates for approximately five years, but the actual duration of the share pool may vary based on changes in participation and the Company’s stock price. We believe that our stock-based compensation programs have been integral to our success in the past and will be important to our ability to succeed in the future. If the A&R Plan is not approved by our shareholders, we will not be able to make long-term equity incentive awards that are sufficient to meet our needs. The inability to make competitive equity awards to retain talented employees in a highly competitive market could have an adverse impact on our business. Further, if the A&R Plan is not approved, we could be forced to increase cash compensation, which will reduce the resources we have allocated to meeting our business needs and objectives. Therefore, we believe the approval of the A&R Plan is vital to our ability to maintain a competitive position in attracting, retaining and motivating key employees with experience and ability and instrumental to our future success. For purposes of this proposal and except where the context otherwise requires, the term “Company” and similar terms shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board. The Board believes approval of the A&R Plan is in the best interests of the Company and its shareholders and recommends that shareholders vote FOR this proposal. The remainder of this Item 4 includes: Highlights of the A&R Plan; Reasons Why Shareholders Should Approve the A&R Plan; Information Regarding Overhang and Dilution; and Description of the A&R Plan. 84 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
Highlights of the A&R Plan The A&R Plan includes several features that are consistent with protecting the interests of our shareholders and sound corporate governance practices. These features are highlighted below, and are more fully described in the description of the A&R Plan further below in this Item as well as in the copy of the proposed A&R Plan in Appendix A to this proxy statement. No Evergreen. The A&R Plan does not include an “evergreen” or other provision that provides for automatic increases in the number of shares available for grant under the plan. Therefore, any increase to the maximum share reserve in the A&R Plan is subject to approval by our shareholders, allowing our shareholders to have a say in our equity compensation programs. Clawback Policy. In accepting an award under the A&R Plan, a participant will agree to be bound by any clawback policy the Company has adopted or may adopt in the future, or any other compensation recovery requirements that the Company determines are necessary or appropriate to be applicable to an award. No Automatic Vesting of Awards on a Change in Control; Double-trigger Acceleration of Vesting upon a Change in Control. The A&R Plan does not provide for the automatic vesting of awards in connection with a change in control. Instead, the A&R Plan provides “double trigger” acceleration, pursuant to which awards would become fully vested and nonforfeitable if the holder of such award is terminated without cause or resigns for good reason prior to the first anniversary of the change in control; provided that performance-based RSUs will vest to the extent set forth in the applicable award agreement. Restrictions on Share Recycling. The A&R Plan prohibits the re-granting of (i) shares withheld or delivered to satisfy the exercise price or measurement price of an award of stock options or SARs or to satisfy tax withholding obligations with respect to such awards, (ii) shares that were subject to a SAR, and were not issued upon the net settlement or net exercise of such award, or (iii) shares repurchased on the open market using proceeds from the exercise of an award. No Repricing of Awards. The A&R Plan prohibits the direct or indirect repricing of stock options or SARs without shareholder approval. No Discounted Options or SARs. All options and SARs must have an exercise or measurement price that is at least equal to the fair market value of the underlying common stock on the date of grant. No Reload Options or SARs. No options or SARs granted under the A&R Plan may contain a provision entitling the award holder to the automatic grant of additional options or SARs in connection with any exercise of the original option or SAR. Dividends and Dividend Equivalents on Restricted Stock, Restricted Stock Units and Other-Stock Based Awards Not Paid Until Award Vests. Any dividends paid with respect to restricted stock or dividend equivalents paid with respect to other types of awards will be subject to the same restrictions on vesting and forfeitability as the award with respect to which they may be paid. Limit on Non-Employee Director Compensation. In any calendar year, the sum of cash compensation paid to any non-employee director for service as a director and the value of awards under the A&R Plan made to such non-employee director (calculated based on the grant date fair value of such awards for financial reporting purposes) will not exceed $1,500,000, subject to certain exceptions in extraordinary circumstances. Limit on Per Participant Awards. The maximum number of shares of common stock with respect to which options may be granted to any person in any calendar year and the maximum number of shares of common stock subject to SARs granted to any person in any calendar year is each 2,000,000, and the maximum number of shares of common stock subject to other awards granted to any person in any calendar year is 2,000,000. Material Amendments Require Shareholder Approval. Shareholder approval is required prior to an amendment of the A&R Plan that would (i) materially increase the number of shares authorized (other than as provided under the A&R Plan with respect to certain corporate events or substitute awards), (ii) expand the types of awards that may be granted, or (iii) materially expand the class of participants eligible to participate. Administered by an Independent Committee. The A&R Plan is administered by the Human Resources Committee, as delegated by our Board. The Human Resources Committee is made up entirely of independent directors. 2023 Notice of Meeting and Proxy Statement / State Street Corporation 85
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
Reasons Why Shareholders Should Approve the A&R Plan Incentivizes, Retains and Motivates Talent. It is critical to our success that we incentivize, retain and motivate the best talent in what is a tremendously competitive labor market. Our equity-based compensation program has always been and will continue to be a key component in our ability to pay market-competitive compensation to our employees. Aligns with Our Pay-for-Performance Compensation Philosophy. We believe that equity-based compensation is fundamentally performance-based. As the value of our stock appreciates, our employees receive greater compensation at the same time that our shareholders are receiving a greater return on their investment. Conversely, if the stock price does not appreciate following the grant of an equity award, then our employees would receive lower compensation than intended in respect of deferred stock awards, cash-based restricted stock units and performance-based restricted stock units. Aligns Employee and Director Interests with Shareholder Interests. Providing our employees and non-employee directors with compensation in the form of equity directly aligns the interests of those employees and directors with the interests of our shareholders. If the A&R Plan is approved by shareholders, we will be able to continue granting equity-based incentives that foster this alignment between our employees and non-employee directors and our shareholders. Consistent with Shareholder Interests and Sound Corporate Governance. As described under the heading “Highlights of the A&R Plan” and more thoroughly below, the A&R Plan was purposefully designed to include features that are consistent with the interests of our shareholders and sound corporate governance. Information Regarding Overhang and Dilution In developing our share request for the A&R Plan and analyzing the impact of utilizing equity as a means of compensation on our shareholders, we considered both our “overhang” and our “burn rate.” Overhang is a measure of potential dilution and is defined as the sum of (1) the total number of shares underlying all equity awards outstanding and (2) the total number of shares available for future award grants, divided by: the sum of (a) the total number of shares underlying all equity awards outstanding, (b) the total number of shares available for future award grants and (c) the total number of shares of common stock outstanding. Our overhang at March 1, 2023 was 5.9%. If the additional 6,775,000 shares proposed to be authorized for grant under the A&R Plan were included in the calculation, our overhang would have been 7.7% at March 1, 2023. Burn rate provides a measure of the potential dilutive impact of our equity award program which we calculate by dividing the number of shares underlying awards granted in the year (excluding performance-based RSUs which will be counted as they are earned) by the basic weighted average number of shares of common stock outstanding during the year. Set forth below is a table that reflects our burn rate for the 2022, 2021 and 2020 calendar years as well as an average over those years. | 2022 | | | 2,841,423 | | | 683,912 | | | 954,132 | | | 3,795,555 | | | 365,213,550 | | | 1.04% | | | 2021 | | | 3,135,737 | | | 801,663 | | | 715,778 | | | 3,851,515 | | | 352,565,238 | | | 1.09% | | | 2020 | | | 2,926,332 | | | 810,998 | | | 409,726 | | | 3,336,058 | | | 352,865,237 | | | 0.95% | | | Three-Year Average | | | 2,967,831 | | | 765,524 | | | 693,212 | | | 3,661,043 | | | 356,881,342 | | | 1.03% | |
(1)
| Total shares reflect total of “Full-Value Shares Granted – Deferred Stock Awards” and “Full-Value Shares Vested - Performance-based RSUs.” |
(2)
| “Gross Burn Rate” is defined as the number of shares underlying awards granted in the year (excluding performance-based RSUs which will be counted as they are earned) divided by the basic weighted average number of shares of common stock outstanding during the year. |
86 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
Description of the A&R Plan The following is a brief summary of the A&R Plan, a copy of which is attached as Appendix A to this proxy statement. References to our Board in this summary and in this Item 4, generally, shall include our Board, a committee of our Board or our Board’s delegates to the extent that our Board’s powers or authority under the A&R Plan have been delegated to such committee or delegate in accordance with the A&R Plan. Types of Awards; Shares Available for Awards; Share Counting Rules The A&R Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Code, non-statutory stock options, SARs, restricted stock, restricted stock units (“RSUs”) and other stock-based awards, which we refer to collectively as “awards.” Subject to adjustment in the event of stock splits and other similar events, awards may be made under the A&R Plan for such number of shares of common stock equal to the sum of: (i) 15,075,000 shares of common stock; plus (ii) such additional number of shares of common stock (up to 28,500,000) as is equal to the sum of (x) the number of shares of common stock reserved for issuance under our 2006 Plan that remained available for grant under the 2006 Plan immediately prior to the 2017 annual meeting of shareholders and (y) the number of shares of common stock subject to awards granted under the 2006 Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject, however, in the case of incentive stock options to any limitations of the Code). Shares of common stock issued under the A&R Plan may consist in whole or in part of authorized but unissued shares or treasury shares. The maximum number of shares of common stock with respect to which stock options may be granted to any person in any calendar year is the maximum number of shares of common stock subject to SARs granted to any person in any calendar year is 2,000,000, and the maximum number of shares of common stock subject to other awards granted to any person in any calendar year is 2,000,000. In any calendar year, the sum of cash compensation paid to any non-employee director for service as a director and the value of awards under the A&R Plan made to such non-employee director (calculated based on the grant date fair value of such awards for financial reporting purposes) cannot exceed $1,500,000. Exceptions to this limit may be made for individual non-employee directors in extraordinary circumstances, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation. Director cash compensation and director equity compensation in any calendar year will include any amounts or grants that would have been paid or made, as applicable, to a particular non-employee director absent such director’s election to defer such compensation pursuant to any arrangement or plan of the Company permitting deferral of such compensation. For purposes of counting the number of shares available for the grant of awards under the A&R Plan and the per participant and non-employee director sublimits of the A&R Plan, all shares of common stock covered by SARs will be counted against the number of shares available for the grant of awards and against the sublimits. However, SARs that may be settled only in cash will not be so counted. In addition, if we grant a SAR in tandem with an option for the same number of shares of our common stock and provide that only one such award may be exercised (which we refer to as a “tandem SAR”), only the shares covered by the option, and not the shares covered by the tandem SAR, will be so counted, and the expiration of one in connection with the other’s exercise will not restore shares to the A&R Plan. Shares covered by awards under the A&R Plan that expire or are terminated, surrendered, or canceled without having been fully exercised or are forfeited in whole or in part (including as the result of shares subject to such award being repurchased by us at the original issuance price pursuant to a contractual repurchase right) or that result in any shares not being issued (including as result of an SAR that was settleable either in cash or in stock actually being settled in cash) will again be available for the grant of awards under the A&R Plan. Further, shares of common stock delivered (either by actual delivery, attestation or net exercise) to the Company to exercise an award or to satisfy any tax withholding obligations (including shares retained from the award to address such tax obligation) with respect to an award will (i) in the case of awards that are options or SARs, not be added back to the number of shares of common stock available for the future grant of awards and (ii) in the case of all other types of awards, be added back to the number of shares of common stock available for the future grant of awards, provided that no more than the number of shares used to satisfy the statutory minimum tax withholding obligation shall be added back to the A&R Plan. However, (1) in the case of incentive stock options, the foregoing shall be subject to any limitations under the Code, (2) in the case of the exercise of an SAR, the number of shares counted against the shares available under the A&R Plan and against the sublimits of the A&R Plan will be the full number of shares subject to the SAR multiplied by the percentage of the SAR actually exercised, regardless of the number of shares actually used to settle such SAR upon exercise and (3) the shares covered by a Tandem SAR shall not again become available for grant upon the expiration or termination of such Tandem SAR. Shares repurchased by us on the open market using proceeds from the exercise of an award will not increase the number of shares available for future grant of awards under the A&R Plan. 2023 Notice of Meeting and Proxy Statement / State Street Corporation 87
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
In connection with a merger or consolidation of an entity with us or our acquisition of property or stock of an entity, our Board may grant awards under the A&R Plan in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof on such terms as our Board determines appropriate in the circumstances, notwithstanding any limitation on awards contained in the A&R Plan. No such substitute awards shall count against the overall share limit or any sublimit, except as required by reason of Section 422 and related provisions of the Code. Descriptions of Awards Options. A participant who is awarded an option receives the right to purchase a specified number of shares of common stock at a specified exercise price and subject to the other terms and conditions that are specified in connection with the award agreement. An option that is not intended to be an “incentive stock option” is a “non-statutory stock option.” Options may not be granted at an exercise price that is less than 100% of the fair market value of our common stock on the date of grant (provided, however, that if our Board approves the grant of an option effective as of a future date, the exercise price shall not be less than 100% of the fair market value on such future date). Under present law, incentive stock options may not be granted at an exercise price less than 110% of the fair market value in the case of stock options granted to participants who hold more than 10% of the total combined voting power of all classes of our stock or any of our subsidiaries. Under the terms of the A&R Plan, options may not be granted for a term in excess of ten years (and, under present law, five years in the case of incentive stock options granted to participants who hold greater than 10% of the total combined voting power of all classes of our stock or any of our subsidiaries). The A&R Plan permits participants to pay the exercise price of options using one or more of the following manners of payment: (i) payment by cash or by check, (ii) except as may otherwise be provided in the applicable award agreement or approved by our Board, in connection with a “cashless exercise” through a broker, (iii) to the extent provided in the applicable award agreement or approved by our Board, and subject to certain conditions, by delivery to us (either by actual delivery or attestation) of shares of common stock owned by the participant valued at their fair market value, (iv) to the extent provided in an applicable non-statutory stock option award agreement or approved by our Board, by delivery of a notice of “net exercise” as a result of which we will retain a number of shares of common stock otherwise issuable pursuant to the stock option equal to the aggregate exercise price for the portion of the option being exercised divided by the fair market value of our common stock on the date of exercise, (v) to the extent permitted by applicable law and provided for in the applicable award agreement or approved by our Board, by any other lawful means, or (vi) by any combination of these forms of payment. No option granted under the A&R Plan may contain a provision entitling the participant to the automatic grant of additional options in connection with any exercise of the original option. Stock Appreciation Rights. A participant who is awarded a SAR receives, upon exercise, a number of shares of our common stock, or cash (or a combination of shares of our common stock and cash) determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of our common stock over the measurement price. The A&R Plan provides that the measurement price of a SAR may not be less than 100% of the fair market value of our common stock on the date the SAR is granted and that SARs may not be granted with a term in excess of 10 years. No SARs granted under the A&R Plan may contain a provision entitling the participant to the automatic grant of additional SARs in connection with any exercise of the original SAR. Limitation on Repricing of Options or SARs. With respect to options and SARs, unless such action is approved by shareholders or otherwise permitted under the terms of the A&R Plan in connection with certain changes in capitalization and covered transactions, we may not (i) amend any outstanding option or SAR granted under the A&R Plan to provide an exercise price or measurement price per share that is lower than the then-current exercise price or measurement price per share of such outstanding option or SAR, (ii) cancel any outstanding option or SAR (whether or not granted under the A&R Plan) and grant in substitution therefor new awards under the A&R Plan (other than certain substitute awards issued in connection with a merger or consolidation of an entity with us or an acquisition by us, described above) covering the same or a different number of shares of our common stock and having an exercise price or measurement price per share lower than the then-current exercise price or measurement price per share of the canceled option or SAR, (iii) cancel in exchange for a cash payment any outstanding option or SAR with an exercise price or measurement price per share above the then-current fair market value of our common stock, or (iv) take any other action under the A&R Plan that constitutes a “repricing” within the meaning of the rules of the NYSE (or any applicable stock exchange on which shares of common stock are traded). Restricted Stock Awards. A participant who is granted a restricted stock award is entitled to acquire shares of our common stock, subject to our right to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) in the event that the conditions specified in the applicable award are not satisfied prior to the end of the applicable restriction period established for such award. Any dividends (whether paid in cash, stock or property) declared and paid by us with respect to shares of restricted stock will be paid to the participant (or if the participant has died, to his or her designated beneficiary) only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. No interest will be paid on unvested dividends. 88 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
Restricted Stock Unit Awards. A participant who is granted an RSU award is entitled to receive shares of our common stock, or cash equal to the fair market value of such shares or a combination thereof, to be delivered at the time such award vests or on a deferred basis pursuant to the terms and conditions established by our Board. Our Board may provide that settlement of RSUs will be deferred, on a mandatory basis or at the election of the participant, in a manner that complies with Section 409A of the Code. A participant has no voting rights with respect to any RSU. Other Stock-Based Awards. Under the A&R Plan, our Board may grant other awards of shares of our common stock, and other awards that are valued in whole or in part by reference to, or are otherwise based on, shares of our common stock or other property, having such terms and conditions as our Board may determine. We refer to these types of awards as other stock-based awards. Other stock-based awards may be available as a form of payment in settlement of other awards granted under the A&R Plan or as payment in lieu of compensation to which a participant is otherwise entitled. Other stock-based awards may be paid in shares of our common stock or in cash, as our Board may determine. Dividend Equivalents. Our Board may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to shares of common stock subject to an award, provided that such dividend equivalents shall be subject to the same vesting and forfeiture provisions as the award with respect to which they may be paid. Any entitlement to dividend equivalents or similar entitlements shall be established and administered consistent either with exemption from, or compliance with the requirements of Code Section 409A to the extent applicable. Performance Conditions. Awards under the A&R Plan may be made subject to the achievement of performance goals. Our Board may specify that the degree of granting, vesting and/or payout of any award subject to the achievement of one or more objective performance measures established by our Board, which may be based on the relative or absolute attainment of specified levels of one or any combination of the following measures (and which may be determined pursuant to generally accepted accounting principles (which we refer to as “GAAP”) or on a non-GAAP basis, as determined by our Board): (i) earnings or earnings per share; (ii) return on equity; (iii) return on assets; (iv) return on capital; (v) cost of capital; (vi) total stockholder return; (vii) revenue; (viii) market share; (ix) quality/service; (x) organizational development; (xi) strategic initiatives (including acquisitions or dispositions); (xii) risk control; (xiii) expense; (xiv) operative leverage; (xv) operating fee leverage; (xvi) capital ratios; (xvii) liquidity ratios; (xviii) income; (xix) comprehensive capital analysis and review (CCAR); (xx) other regulatory-related metric; (xxi) margin; and (xii) any other measure selected by our Board. Such goals may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The performance measures: (x) may vary by participant and may be different for different awards; and (y) may be particular to a participant or the department, branch, line of business, subsidiary or other unit in which the participant works and may cover such period as may be specified by our Board. Our Board may provide that one or more of the performance measures applicable to any award for such year will be adjusted to reflect events (for example, but without limitation, acquisitions, dispositions, joint ventures or restructurings, expenses associated with acquisitions, dispositions, joint ventures or restructurings, amortization of purchased intangibles associated with acquisitions, impact (dilution and expenses) of securities issuances (debt or equity) to finance, or in contemplation of, acquisitions or ventures, merger and integration expenses, changes in accounting principles or interpretations, changes in tax law or financial regulatory law, impairment charges, fluctuations in foreign currency exchange rates, charges for restructuring or rationalization programs (e.g., cost of workforce reductions, facilities or lease abandonments, asset impairments), one-time insurance claims payments, extraordinary and/or non-recurring items, litigation, regulatory matter or tax rate changes that affect the applicable performance measure. At any time, our Board may adjust the number of shares payable pursuant to a performance award and waive the achievement of the applicable performance measures. Our Board has the power to impose such other restrictions on performance-based RSUs as it may deem necessary or appropriate. Eligibility to Receive Awards All of our employees, officers, and directors, as well as our consultants and advisors, are eligible to receive awards under the A&R Plan. However, incentive stock options may only be granted to our employees, employees of our present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and employees of any other entities the employees of which are eligible to receive incentive stock options under the Code. 2023 Notice of Meeting and Proxy Statement / State Street Corporation 89
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
Transferability of Awards Awards may not be sold, assigned, transferred, pledged or otherwise encumbered by a participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an incentive stock option, pursuant to a qualified domestic relations order. During the life of the participant, awards are exercisable only by the participant. However, except with respect to awards that are subject to Section 409A of the Code, our Board may permit or provide in an award for the gratuitous transfer of the award by the participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the participant and/or an immediate family member thereof if we would be eligible to use a Form S-8 under the Securities Act of 1933, as amended for the registration of the sale of the common stock subject to such award to the proposed transferee. Further, we are not required to recognize any such permitted transfer until such time as the permitted transferee has, as a condition to the transfer, delivered to us a written instrument in form and substance satisfactory to us confirming that such transferee will be bound by all of the terms and conditions of the award. None of the restrictions described in this paragraph prohibit a transfer from the participant to the Company. No Rights as a Shareholder; Clawback No participant or designated beneficiary shall have any rights as a shareholder with respect to any shares of common stock to be distributed with respect to an award granted under the A&R Plan until becoming a record holder of such shares, subject to the terms of an award agreement. In accepting an award under the A&R Plan, a participant will agree to be bound by any clawback policy the Company has adopted or may adopt in the future, or any other compensation recovery requirements that we determine are necessary or appropriate to be applicable to such award. Plan Benefits As of March 1, 2023, approximately 72,000 persons were eligible to receive awards under the A&R Plan, including the four NEOs who are current employees, 8 other executive officers who are not NEOs (all of whom are also current employees), approximately 43,000 employees (excluding NEOs and other executive officers), 12 non-employee directors and approximately 29,000 consultants and advisors. Though a large number of consultants and advisors are eligible to receive awards under the A&R Plan, we have not previously granted awards to such persons, and have no current plans to do so. On March 1, 2023, the last reported sale price of our common stock on the NYSE was $89.51. If our shareholders do not approve the A&R Plan, the 2017 Plan will remain in effect pursuant to its existing terms and we will grant the equity awards to our non-employee directors under such plan. New Plan Benefits Table The granting of awards under the A&R Plan is discretionary, and we cannot now determine the number or type of awards to be granted in the future to any particular person or group, other than as set forth below. We are obligated to grant each of our non-employee directors $195,000 in equity awards at each annual meeting (which will consist of vested stock awards) under the terms of our compensation arrangements for non-employee directors. In addition, non-employee directors may elect to receive their retainers in cash or shares of our common stock. See “Non-Management Director Compensation” for a further discussion of non-employee director compensation. | Ronald P. O’Hanley, Chairman and Chief Executive Officer | | | — | | | Eric W. Aboaf, Vice Chairman and Chief Financial Officer | | | — | | | Andrew J. Erickson, Executive Vice President, Chief Productivity Officer and Head of International | | | — | | | Louis D. Maiuri, President, Chief Operating Officer and Head of Investment Services | | | — | | | Cyrus Taraporevala, Former President and CEO of State Street Global Advisors | | | — | | | Francisco Aristeguieta, Former Executive Vice President and CEO of State Street Institutional Services | | | — | | | All current executive officers as a group | | | — | |
90 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
| All current directors who are not executive officers as a group(1) | | | $2,440,000 | | | All employees, including all current officers who are not executive officers, as a group | | | — | |
(1)
| Represents the sum of (i) the dollar value of the annual equity award that each non-employee director is entitled to receive, with the number of shares to be issued calculated based on the closing price of our common stock on the NYSE on the date of the 2023 annual meeting of shareholders, rounded up to the nearest whole share, and (ii) the dollar value of the shares elected by one non-employee director to be received as compensation in lieu of cash retainers in 2023, with the number of shares to be issued calculated based on the closing price of our common stock on the NYSE on the date of the 2023 annual meeting of shareholders, rounded up to the nearest whole share. As a result, the number of shares with respect to the shares issued in lieu of cash retainers and annual director awards to be issued on the date of our 2023 annual meeting of shareholders cannot yet be determined, and is not included in the table above. Also excludes (i) equity awards that the non-employee directors will be entitled to receive under our non-employee director compensation arrangements for years following 2023, (ii) any discretionary awards that any non-employee director may be awarded under the A&R Plan and (iii) any award that may be made to a non-employee director joining after the date of the 2023 annual meeting of shareholders. |
Awards Granted Under 2017 Plan The following table sets forth information about equity-based awards granted under the 2017 Plan since adoption of the 2017 Plan through March 1, 2023 to the individuals and groups described in the below table. | Ronald P. O’Hanley, Chairman and Chief Executive Officer | | | 229,956 | | | 425,979 | | | — | | | Eric W. Aboaf, Vice Chairman and Chief Financial Officer | | | 116,908 | | | 195,253 | | | — | | | Andrew J. Erickson, Executive Vice President, Chief Productivity Officer and Head of International | | | 100,570 | | | 191,400 | | | — | | | Louis D. Maiuri, President, Chief Operating Officer and Head of Investment Services | | | 117,466 | | | 197,932 | | | — | | | Cyrus Taraporevala, Former President and CEO of State Street Global Advisors | | | 113,263 | | | 197,570 | | | — | | | Francisco Aristeguieta, Former Executive Vice President and CEO of State Street Institutional Services | | | 201,368 | | | 153,048 | | | — | | | All current executive officers as a group | | | 1,038,221 | | | 1,399,463 | | | — | | | All current directors who are not executive officers as a group | | | — | | | — | | | 156,459 | | | Each nominee for election as a director | | | 229,956 | | | 425,979 | | | 140,923 | | | Each associate of any of such directors, executive officers or nominees | | | — | | | — | | | — | | | Each other person who received or is to receive 5 percent or more of such options, warrants or rights | | | — | | | — | | | — | | | All employees, including all current officers who are not executive officers, as a group | | | 11,084,213 | | | 1,656,672 | | | — | |
(1)
| Reflects actual number of shares issuable in respect of vested performance-based RSUs, if determinable; otherwise reflects target number of shares issuable under performance-based RSUs. |
2023 Notice of Meeting and Proxy Statement / State Street Corporation 91
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
Administration The A&R Plan will be administered by our Board. Our Board has the authority to grant awards and to adopt, amend and repeal the administrative rules, guidelines and practices relating to the A&R Plan that it deems advisable and to construe and interpret the provisions of the A&R Plan and any award agreements entered into under the A&R Plan. Our Board may correct any defect, supply any omission or reconcile any inconsistency in the A&R Plan or any award. All actions and decisions by our Board with respect to the A&R Plan and any awards made under the A&R Plan will be made in our Board’s discretion and will be final and binding on all persons having or claiming any interest in the A&R Plan or in any award. Pursuant to the terms of the A&R Plan, our Board may delegate any or all of its powers under the A&R Plan to one or more committees or subcommittees of our Board. The Board has authorized the Human Resources Committee to administer certain aspects of the A&R Plan. During such time as our common stock is registered under the Securities Exchange Act of 1934, or the Exchange Act, the Board shall appoint one such committee of not less than two members, each member of which shall be an independent director under applicable stock exchange rules and a “non-employee director” as defined in Rule 16b-3 under the Exchange Act. Awards granted to non-employee directors must be granted and administered by a committee of the Board, all of the members of which are independent directors as defined by Section 303A.02 of the New York Stock Exchange Listed Company Manual (or any successor rule or any rule under any applicable stock exchange on which shares of common stock are traded). The Board or a committee of the Board may delegate to (1) one or more of its members such of its duties, powers and responsibilities as it may determine; (2) to one or more officers of the Company the power and authority to grant or to allocate, consistent with the requirements of Chapter 156D of the Massachusetts General Laws and subject to such limitations under the A&R Plan or as the Board or the committee may impose, awards among such persons (other than to any “executive officer” of the Company (as defined by Rule 3b-7 under the Exchange Act) or to any “officer” of the Company (as defined by Rule 16a-1(f) under the Exchange Act)) eligible to receive awards under the A&R Plan as such delegated member or members of the Board or the committee or officer or officers of the Company determine consistent with such delegation; and (3) to such employees or other persons as it determines such ministerial tasks as it deems appropriate. Subject to applicable limitations contained in the A&R Plan, the Board, the Human Resources Committee, or any other committee or subcommittee or delegate to whom the Board has delegated authority pursuant to the A&R Plan, as the case may be, selects the recipients of awards and determines (i) the number of shares of common stock, cash or other consideration covered by awards and the terms and conditions of such awards, including the dates upon which such awards become exercisable or otherwise vest, (ii) the exercise or measurement price of awards, if any, and (iii) the duration of awards. Except as otherwise provided in the A&R Plan, each award under the A&R Plan may be made alone or in addition or in relation to any other award. The terms of each award need not be identical, and our Board need not treat participants uniformly. Unless our Board expressly provides otherwise, immediately upon the cessation of a participant’s employment or service, (i) each award requiring exercise that is then held by the participant or by the participant’s permitted transferees, if any, will cease to be exercisable and will terminate, and (ii) all other awards that are then held by the participant or by the participant’s permitted transferees, if any, to the extent not already vested will be forfeited, except that: (1) subject to the following provisions, all options and SARs held by the participant or the participant’s permitted transferees, if any, immediately prior to the termination of employment or service, to the extent then exercisable, will remain exercisable for a period of three months (or, if less, the expiration of the term); (2) all options and SARs held by a participant or the participant’s permitted transferees, if any, immediately prior to the participant’s death, to the extent then exercisable, will remain exercisable for the one year period ending with the first anniversary of the participant’s death (or, if less, the expiration of the term); and (3) all options and SARs held by a participant or the participant’s permitted transferees, if any, immediately prior to the termination of employment or service will immediately terminate upon such termination if our Board determines that such termination has resulted for reasons which cast such discredit on the participant as to justify immediate termination of the award. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of our common stock, other than an ordinary cash dividend, we are required to make equitable adjustments (or make substituted awards, as applicable), in the manner determined by our Board, to (i) the number and class of securities available under the A&R Plan, (ii) the share counting rules and sublimits set forth in the A&R Plan, (iii) the number and class of securities and exercise price per share of each outstanding option, (iv) the share- and per-share provisions and the measurement price of each outstanding SAR, (v) the number of shares subject to and the repurchase price per share subject to each outstanding award of restricted stock, and (vi) the share and per-share-related provisions and the purchase price, if any, of each outstanding RSU award and each outstanding other stock-based award. In the event we effect a split of our common stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding option are adjusted as of the date of the distribution of the 92 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Item 4: Approval of the Amended and Restated 2017 Stock Incentive Plan
dividend (rather than as of the record date for such dividend), then a participant who exercises an option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of common stock acquired upon such option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend. We will indemnify and hold harmless each director, officer, employee or agent to whom any duty or power relating to the administration or interpretation of the A&R Plan has been or will be delegated against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with our Board’s approval) arising out of any act or omission to act concerning the A&R Plan unless arising out of such person’s own fraud or bad faith. Amendment of awards. Except as otherwise provided under the A&R Plan with respect to repricing outstanding stock options or SARs, our Board may amend, modify or terminate any outstanding award, including but not limited to, substituting therefor another award of the same or a different type, changing the date of exercise or realization, and converting an incentive stock option to a non-statutory stock option. The Board may at any time accelerate the vesting or exercisability of an award, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration. The participant’s consent to any such action will be required unless our Board determines that the action, taking into account any related action, does not materially and adversely affect the participant’s rights under the A&R Plan or the change is otherwise permitted under the terms of the A&R Plan in connection with certain corporate events. Covered Transaction The A&R Plan contains provisions addressing the consequences of a covered transaction. A covered transaction is defined under the A&R Plan as (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which we are not the surviving corporation or which results in the acquisition of all or substantially all of our then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all of our assets or (iii) our liquidation or dissolution. Where a covered transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by our Board), the covered transaction shall be deemed to have occurred upon consummation of the tender offer. Except as otherwise provided in an award and subject to the provisions described below with respect to the treatment of awards in the event of a change in control in the case of a covered transaction that also qualifies as a change in control, (A) if the covered transaction is one in which there is an acquiring or surviving entity, our Board may provide for the assumption of some or all outstanding awards or for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor; (B) if the covered transaction is one in which holders of common stock will receive upon consummation a payment (whether cash, non-cash or a combination of the foregoing), our Board may provide for payment (which we refer to as a “cash-out”), with respect to some or all awards, equal in the case of each affected award to the excess, if any, of (1) the fair market value of one share of common stock times the number of shares of common stock subject to the award, over (2) the aggregate exercise or purchase price, if any, under the award (in the case of an SAR, the aggregate base price above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of common stock) and other terms, and subject to such conditions, as our Board determines; (C) if the covered transaction (whether or not there is an acquiring or surviving entity) is one in which there is no assumption, substitution or cash-out, each award requiring exercise will become fully exercisable, each award of restricted stock will become fully vested and the delivery of shares of common stock deliverable under each outstanding award of RSUs, performance-based RSUs (to the extent consisting of RSUs) and other stock-based awards will be accelerated and such shares will be delivered, prior to the covered transaction, in each case on a basis that gives the holder of the award a reasonable opportunity, as determined by our Board, following exercise of the award or the delivery of the shares, as the case may be, to participate as a shareholder in the covered transaction; (D) each award (unless assumed or substituted), other than outstanding shares of restricted stock (which shall be treated in the same manner as other shares of common stock, subject to certain limitations), will terminate upon consummation of the covered transaction; and (E) any share of common stock delivered pursuant to (A) or (C) above with respect to an award may, in the discretion of our Board, contain such restrictions, if any, as our Board deems appropriate to reflect any performance or other vesting conditions to which the award was subject. In the case of restricted stock, our Board may require that any amounts delivered, exchanged or otherwise paid in respect of such common stock in connection with the covered transaction be placed in escrow or otherwise made subject to such restrictions as the Board deems appropriate to carry out the intent of the A&R Plan. Change in Control The A&R Plan contains provisions addressing the consequences of a change in control of the Company. A change in control is defined under the A&R Plan as (A) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), or a Person, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of either (I) the then-outstanding shares of common stock, which we refer to as the Outstanding Company Common Stock, or (II) the combined voting power 2023 Notice of Meeting and Proxy Statement / State Street Corporation 93
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of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors, which we refer to as the Outstanding Company Voting Securities; excluding, however, the following acquisitions of Outstanding Company Common Stock and Outstanding Company Voting Securities: (W) any acquisition directly from the Company, (X) any acquisition by the Company, (Y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (Z) any acquisition by any Person pursuant to a transaction which complies with clauses (I), (II) and (III) of subsection (C) of this definition; (B) individuals who, as of the effective date of the 2017 Plan, constitute the Board (which we refer to as the Incumbent Board) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a member of the Board subsequent to such effective date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or (C) consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company, which we refer to as a Business Combination; excluding, however, such a Business Combination pursuant to which (I) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (II) no Person (other than any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed with respect to the Company prior to the Business Combination and (III) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (D) the approval by the shareholders of the Company of a complete liquidation or dissolution of the Company; provided, that, to the extent necessary to ensure compliance with the requirements of Section 409A of the Code, where applicable, an event described above shall be treated as a change in control only if it also constitutes or results in a change in ownership or control of the Company, or a change in ownership of assets of the Company, described in Section 409A of the Code. In the event of a change in control, (A) if, on or prior to the first anniversary of the consummation of the change in control, the participant’s employment or other service relationship with the Company or its subsidiaries is terminated for good reason (as defined in the A&R Plan) by the participant or is terminated without cause (as defined in the A&R Plan) by the Company, all outstanding options and SARs which are not then exercisable shall become exercisable to the full extent of the original grant, all shares of restricted stock, all RSUs and all other stock-based awards which are not otherwise vested shall vest, and performance-based RSUs shall vest to the extent set forth in the applicable award agreement; (B) after a change in control, options and SARs granted as substitution for existing awards shall remain exercisable following a termination of employment or service (other than termination by reason of death, disability (as determined by the Company) or retirement (as defined in the award)) for the lesser of (I) a period of seven months, or (II) the period ending on the latest date on which such option or SAR could otherwise have been exercised; and (C) in connection with or following a change in control, our Board may not impose additional conditions upon exercise or otherwise amend or restrict any award, or amend the terms of the A&R Plan in any manner adverse to the holder thereof, without the written consent of such holder. Provisions for Foreign Participants The Board may establish one or more sub-plans under the A&R Plan to satisfy applicable securities, tax or other laws of various jurisdictions. The Board will establish such sub-plans by adopting supplements to the A&R Plan containing any limitations on the Board’s discretion under the A&R Plan and any additional terms and conditions not otherwise inconsistent with the A&R Plan as the Board deems necessary or desirable. All supplements adopted by the Board will be deemed to be part of the A&R Plan, but each supplement will only apply to participants within the affected jurisdiction. 94 2023 Notice of Meeting and Proxy Statement / State Street Corporation
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Withholding The participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before we will deliver stock certificates or otherwise recognize ownership of common stock under an award. We may elect to satisfy the withholding obligations through additional withholding on salary or wages. If we elect not to or cannot withhold from other compensation, the participant must pay us the full amount, if any, required for withholding or have a broker tender to us cash equal to the withholding obligations. Payment of withholding obligations is due before we will issue any shares on exercise, vesting or release from forfeiture of an award or at the same time as payment of the exercise or purchase price, unless we determine otherwise. If provided for in an award or approved by the Board, a participant may satisfy the tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of common stock, including shares retained from the award creating the tax obligation, valued at their fair market value. However, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed our minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), except that, to the extent that we are able to retain shares of common stock having a fair market value that exceeds the statutory minimum applicable withholding tax without material financial accounting implications or we are withholding in a jurisdiction that does not have a statutory minimum withholding tax, we may retain such number of shares (up to the number of shares having a fair market value equal to the maximum individual statutory rate of tax) as we shall determine to be necessary to satisfy the tax liability associated with any award. Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements. Amendment or Termination Our Board may amend, suspend or terminate the A&R Plan or any portion of the A&R Plan at any time, except that (i) no amendment may be made to the plan to permit an option or SAR to be repriced without shareholder approval and (ii) no amendment that would require shareholder approval under the rules of the national securities exchange on which we maintain our primary listing may be made effective unless and until such amendment has been approved by our shareholders. If the national securities exchange on which we maintain our primary listing does not have rules regarding when shareholder approval of amendments to equity compensation plans is required (or if our common stock is not then listed on any national securities exchange), no amendment of the A&R Plan materially increasing the number of shares authorized under the plan (other than as provided under the A&R Plan with respect to certain corporate events or substitute awards), expanding the types of awards that may be granted under the plan or materially expanding the class of participants eligible to participate in the plan will be effective unless and until our shareholders approve such amendment. If at any time the approval of our shareholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to incentive stock options, our Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the A&R Plan adopted in accordance with the procedures described above will apply to, and be binding on the holders of, all awards outstanding under the A&R Plan at the time the amendment is adopted, provided that our Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of participants under the A&R Plan. No award will be made that is conditioned on shareholder approval of any amendment to the A&R Plan unless the award provides that (i) it will terminate or be forfeited if shareholder approval of such amendment is not obtained within no more than 12 months from the date the award was granted and (ii) it may not be exercised or settled (or otherwise result in the issuance of shares of our common stock) prior to the receipt of such shareholder approval. The A&R Plan will become effective upon the date of the 2023 annual meeting of shareholders, subject to approval of our shareholders. No awards may be granted under the A&R Plan after the expiration of 10 years from such date, but awards previously granted may extend beyond that date. Federal Income Tax Consequences The following is a summary of the United States federal income tax consequences that generally will arise with respect to awards granted under the A&R Plan. This summary is based on the federal tax laws in effect as of the date of this proxy statement. In addition, this summary assumes that all awards are exempt from, or comply with, the rules under Section 409A of the Code regarding nonqualified deferred compensation. Changes to these laws could alter the tax consequences described below. Incentive Stock Options. A participant will not have income upon the grant of an incentive stock option. Also, except as described below, a participant will not have income upon exercise of an incentive stock option if the participant has been employed by the Company or its 2023 Notice of Meeting and Proxy Statement / State Street Corporation 95
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corporate parent or 50% or majority-owned corporate subsidiary at all times beginning with the option grant date and ending three months before the date the participant exercises the option. If the participant has not been so employed during that time, then the participant will be taxed as described below under “Non-statutory Stock Options.” The exercise of an incentive stock option may subject the participant to the alternative minimum tax. A participant will have income upon the sale of the stock acquired under an incentive stock option at a profit (if sales proceeds exceed the exercise price). The type of income will depend on when the participant sells the stock. If a participant sells the stock more than two years after the option was granted and more than one year after the option was exercised, then all of the profit will be long-term capital gain. If a participant sells the stock prior to satisfying these waiting periods, then the participant will have engaged in a disqualifying disposition and a portion of the profit will be ordinary income and a portion may be capital gain. This capital gain will be long-term if the participant has held the stock for more than one year and otherwise will be short-term. If a participant sells the stock at a loss (sales proceeds are less than the exercise price), then the loss will be a capital loss. This capital loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term. Non-statutory Stock Options. A participant will not have income upon the grant of a non-statutory stock option. A participant will have compensation income upon the exercise of a non-statutory stock option equal to the value of the stock on the day the participant exercised the option less the exercise price. Upon sale of the stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the option was exercised. This capital gain or loss will be long-term if the participant has held the stock for more than one year and otherwise will be short-term. Stock Appreciation Rights. A participant will not have income upon the grant of a SAR. A participant generally will recognize compensation income upon the exercise of a SAR equal to the amount of the cash and the fair market value of any stock received. Upon the sale of the stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the SAR was exercised. This capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term. Restricted Stock Awards. A participant will not have income upon the grant of restricted stock unless an election under Section 83(b) of the Code is made within 30 days of the date of grant. If a timely Section 83(b) election is made, then a participant will have compensation income equal to the value of the stock less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the date of grant. If the participant does not make a Section 83(b) election, then when the stock vests the participant will have compensation income equal to the value of the stock on the vesting date less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term. Restricted Stock Units. A participant will not have income upon the grant of an RSU. A participant is not permitted to make a Section 83(b) election with respect to an RSU award. When the shares of common stock (or cash equivalent) are delivered with respect to the RSUs (which may be upon vesting or may be at a later date), the participant will have income on the date of delivery in an amount equal to the fair market value of the stock or on such date less the purchase price, if any (or on the amount of cash delivered). When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the delivery date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term. Other Stock-Based Awards. The tax consequences associated with any other stock-based award granted under the A&R Plan will vary depending on the specific terms of such award. Among the relevant factors are whether or not the award has a readily ascertainable fair market value, whether or not the award is subject to forfeiture provisions or restrictions on transfer, the nature of the property to be received by the participant under the award, and the participant’s holding period and tax basis for the award or underlying common stock. Tax Consequences to the Company. There will be no tax consequences to the Company except that the Company will be entitled to a deduction when a participant has compensation income, subject to the limitations of Section 162(m) of the Code. 96 2023 Notice of Meeting and Proxy Statement / State Street Corporation
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Related Stockholder Matters The following table presents the number of outstanding common stock awards, options, warrants and rights granted by State Street to participants in our equity compensation plans, as well as the number of securities available for future issuance under these plans, as of December 31, 2022. The table provides this information separately for equity compensation plans that have and have not been approved by shareholders. | Plan category: | | | | | | | | | | | | Equity compensation plans approved by shareholders | | | 7,575,326(2) | | | $— | | | 14,891,933 | | | Equity compensation plans not approved by shareholders | | | 18,324(3) | | | — | | | — | | | Total | | | 7,593,650 | | | — | | | 14,891,933 | |
(1)
| Excludes deferred stock awards and performance awards for which there is no exercise price. |
(2)
| Consists of 5,279,510 shares subject to deferred stock awards, zero shares subject to stock options, zero stock appreciation rights and 2,295,816 shares subject to performance awards (assuming payout at 100% for all awards, including awards for which performance is uncertain). |
(3)
| Consists of shares subject to deferral. |
Individual directors who are not our employees have received stock awards and cash retainers, both of which may be deferred. Directors may elect to receive shares of our common stock in place of cash. If payment is in the form of common stock, the number of shares is determined by dividing the approved cash amount by the closing price on the date of the annual shareholders' meeting or date of grant, if different. All deferred shares, whether stock awards or common stock received in place of cash retainers, are increased to reflect dividends paid on the common stock and, for certain directors, may include share amounts in respect of an accrual under a terminated retirement plan. Pursuant to State Street’s Deferred Compensation Plan for Directors, non-employee directors may elect to defer the receipt of 0% or 100% of their (1) retainers, (2) meeting fees or (3) annual equity grant award. Non-employee directors also may elect to receive their retainers in cash or shares of common stock. Non-employee directors who elect to defer the cash payment of their retainers or meeting fees may choose from four notional investment fund returns for such deferred cash. Deferrals of common stock are adjusted to reflect the hypothetical reinvestment in additional shares of common stock for any dividends or distributions on State Street common stock. Deferred amounts will be paid (a) as elected by the non-employee director on the date of their termination of service on the Board and (b) in the form elected by the non-employee director as either a lump sum or in installments over a two- to five-year period. Stock awards totaling 265,902 shares of common stock were outstanding as of December 31, 2022; awards made through June 30, 2003, totaling 18,324 shares outstanding as of December 31, 2022, have not been approved by shareholders. There are no other equity compensation plans under which our equity securities are authorized for issuance that have been adopted without shareholder approval. Awards of stock made or retainer shares paid to individual directors after June 30, 2003 have been or will be made under our 1997, 2006 or 2017 Equity Incentive Plan, which were approved by shareholders. 2023 Notice of Meeting and Proxy Statement / State Street Corporation 97
TABLE OF CONTENTS Examining and Audit Committee Matters Examining and Audit Committee Pre-Approval Policies and Procedures State Street’s Examining and Audit Committee has established pre-approval policies and procedures applicable to all services provided by State Street’s independent registered public accounting firm, pursuant to which the Committee reviewedreviews for approval each particular service expected to be provided. In connection with that review, the Committee is provided with detailed information so that it can make well-reasoned assessments of the impact of the services on the independence of the independent auditor. Pre-approvals could include pre-approved cost levels or budgeted amounts or a range of cost levels or budgeted amounts. Pre-approval is also required for substantive changes in terms, conditions and fee arrangements resulting from changes in the scope, structure or other items. The pre-approvals include services in categories of audit services, audit-related services, tax services and other services permissible under the SEC’s auditor independence rules. The services shown in the table below were approved by the Committee in accordance with these pre-approval policies and procedures. Ernst & Young LLP, or EY, was State Street’s independent registered public accounting firm for each of the fiscal years ended December 31, 20212022 and December 31, 2020.2021. Fees incurred by State Street and its subsidiaries for professional services rendered by EY with respect to 20212022 and 20202021 were as follows: | Description
(In millions) | | 2021 | | 2020 | | Description
(In millions) | | 2022 | | 2021 | | | Audit Fees | | $14.5 | | $14.5 | | Audit Fees | | $15.5 | | $14.5 | | | Audit-Related Fees | | 18.1 | | 18.4 | | Audit-Related Fees | | 17.9 | | 18.1 | | | Tax Fees | | 5.4 | | 4.4 | | Tax Fees | | 5.6 | | 5.4 | | | All Other Fees | | 0.0 | | 0.0 | | All Other Fees | | 0.0 | | 0.0 | |
Services provided under Audit Fees primarily included statutory and financial statement audits, the requirement to opine on the design and operating effectiveness of internal control over financial reporting and accounting consultations billed as audit services. Services provided under Audit-Related Fees consisted principally of reports on the processing of transactions by servicing organizations, non-statutory audits and due diligence procedures. Services provided under Tax Fees consisted principally of compliance and corporate tax advisory services. In addition to the services described above, EY provides audit and tax compliance services to certain mutual funds, exchange-traded funds, or ETFs, and foreign-based private investment funds for which State Street is the sponsor and investment adviser or manager. The mutual funds and ETFs have boards of directors or similar bodies that make their own determinations as to selection of the funds’ audit firms and approval of any fees paid to such firms. In the case of certain foreign-based private investment funds, State Street participates in the selection of the audit firm to provide the audit and tax compliance services. All of the fees for such services are paid by the mutual funds, ETFs and foreign-based private investment funds—not by State Street—and are not included in the table above. 79 202298 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Examining and Audit Committee Matters
Report of the Examining and Audit Committee The Examining and Audit Committee consists entirely of members who meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC, as determined by the Board of Directors. Further, all of the members of the Committee are financially literate, based upon their education and experience, as such qualification under the listing standards of the NYSE is interpreted by the Board. The Board has determined, based upon education and experience as a principal accounting or financial officer or public accountant, or experience actively supervising a principal accounting or financial officer or public accountant, or other relevant experience, that each member of the Committee satisfies the definition of “audit committee financial expert,” as set out in the rules and regulations under the Exchange Act, and has accounting or related financial management expertise, as such qualification under the listing standards of the NYSE is interpreted by the Board. The Committee operates under a written charter that is reviewed and approved annually by the Board. The Committee furnishes the following report: On behalf of State Street’s Board, the Committee oversees the operation of a system of internal controlcontrols designed to ensure the integrity of State Street’s financial statements and reports, compliance with laws, regulations and corporate policies and the qualifications, performance and independence of State Street’s independent registered public accounting firm. Additionally, the Committee oversees the Company’s efforts to promote and advance a culture of compliance and ethical business practices including the Company’s efforts to identify, manage and eliminate material conduct and reputational issues. It is management’s responsibility to prepare State Street’s consolidated financial statements and establish and maintain internal control over financial reporting. The role of the independent registered public accountant is to independently audit the consolidated financial statements and effectiveness of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board or PCAOB. Consistent with this oversight responsibility, the Committee has reviewed and discussed with management the audited consolidated financial statements for the year ended December 31, 20212022 and their assessment of internal control over financial reporting as of December 31, 2021.2022. EY, State Street’s independent registered public accounting firm, issued their unqualified report on State Street’s consolidated financial statements and the design and operating effectiveness of State Street’s internal control over financial reporting. The Committee has discussed with EY the matters required to be discussed by applicable requirements of the PCAOB and the SEC. The Committee has also received the written disclosures and the letter from EY required by applicable requirements of the PCAOB regarding EY’s communications with the Committee concerning independence. The Committee has actively monitored the relationship between audit and non-audit services provided by EY in evaluating the firm’s continued independence. Based on these reviews and discussions, the Committee recommended to the Board that State Street’s audited consolidated financial statements for the year ended December 31, 2021,2022, be included in State Street’s annual report on Form 10-K for the fiscal year then ended. Submitted by, William C. Freda, Chair
Marie A. Chandoha DonnaLee DeMaio
Patrick de Saint-Aignan
Sara Mathew
Richard P. Sergel 20222023 Notice of Meeting and Proxy Statement / State Street Corporation 80 99
TABLE OF CONTENTS Item 3:5: Ratification of the Selection of the Independent Registered Public Accounting Firm
The Board of Directors unanimously recommends that you voteThe Board of Directors unanimously recommends that you vote
FOR
this proposal (Item 5 on your proxy card)
FOR
this proposal (Item 3 on your proxy card)
|
The Board of Directors recommends that shareholders approve the ratification of the selection of the independent registered public accounting firm described below. The Examining and Audit Committee has appointed Ernst & Young LLP as State Street’s independent registered public accounting firm for the year ending December 31, 2022.2023. EY has acted as our independent auditor since 1972. We have been advised by EY that it is a registered public accounting firm with the PCAOB and that it complies with the auditing, quality control and independence standards and rules of the PCAOB and the SEC. Committee Responsibilities and Duties The Examining and Audit Committee has direct responsibility for the engagement, termination, compensation, retention, evaluation and oversight of the work of our independent registered public accounting firm, including the sole authority for the establishment of pre-approval policies and procedures for all audit and non-audit engagements. The Committee also oversees the internal controls and procedures covering the integrity of our accounting and financial reporting processes, the preparation, audit and disclosure of financial statements and regulatory reports and the qualifications, performance and independence of State Street’s independent registered public accounting firm. Further, the Committee oversees the internal corporate audit function, compliance program effectiveness and certain of State Street’s ESG (environmental, social and governance) obligations, initiatives and activities, including climate, within the Committee’s scope of responsibilities. For more information, see the description in this Proxy Statement of the Examining and Audit Committee under the heading “Committees of the Board of Directors.” Committee Considerations and Audit Firm Assessment In connection with the annual appointment of EY, the Committee undertook a comprehensive assessment and review of EY, and considered among other factors: Whether the retention of EY is in the best interests of State Street and its shareholders The results of an annual survey preparedand interviews conducted by management on the performance of EY EY’s technical expertise, geographical footprint, knowledge level and quality of service The recent performance of EY and the lead audit partner, including quality of communication, competence and responsiveness The independence of EY Known legal risks and significant proceedings involving EY The fees incurred by State Street for the services rendered In accordance with SEC rules and EY policies, the lead audit partner must be rotated at least every five years. The Committee and the Committee Chair are involved in the selection of the lead audit partner by vetting potential candidates, analyzing candidate qualifications and conducting interviews. The Committee is also consulted regarding the final selection of the lead audit partner. Recommendation and Voting TheAfter conducting this annual assessment, the Committee and the Board of Directors believe that the continued retention of EY as our independent registered public accounting firm is in the best interest of State Street and its shareholders. For more information, see the discussion in this proxy statement under the heading “Examining and Audit Committee Matters.”
While shareholder ratification of the selection of EY as our independent registered public accounting firm is not required, the Board is submitting the selection of EY to the shareholders for ratification to learn the opinion of shareholders on the selection. Should the selection of EY not be ratified by the shareholders, the Committee will reconsider the matter. Even in the event the selection of EY is ratified, the Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if in its view such a change is in the best interests of State Street and its shareholders. Representatives of EY will be present at the annual meeting to respond to appropriate questions, and they will have the opportunity to make a statement if they desire. 81 2022100 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Item 4:6: Shareholder Proposal
The Board of Directors unanimously recommends that you voteThe Board of Directors unanimously recommends that you vote
AGAINST
this proposal (Item 6 on your proxy card)
AGAINST
this proposal (Item 4 on your proxy card)
|
The Board of Directors recommends that shareholders vote AGAINST the shareholder proposal described below. Unless contrary instructions are given, shares represented by proxies solicited by the Board will be voted against the shareholder proposal. James McRitchie of 9295 Yorkship Court, Elk Grove, CA 95758, the beneficial owner of more than $2,000 of State Street’s common stock, is entitled to vote on the proposal at the meeting, has submitted the proposal as set forth below for inclusion in the proxy statement. The Board of Directors, on behalf of State Street, disclaims any responsibility for the content of the proposal and the supporting statement. The text of the proposal and supporting statement, as furnished to us by the proponent, are as follows: RESOLVED, shareholders ask thatProposal 6 – Report on Stewardship Practices and Diversified Investors
RESOLVED: Shareholders request the board of State Street Corporation (Company) commission and disclose a report on (1) how the majority of its clientson: 1.
| Conflict of interest between executives of portfolio corporations and shareholders—for whom overall stock-market performance is the primary determinant of financial returns—are affected by Company clients, whose investments could benefit from reductions in the social and environmental costs those corporations externalize, |
2.
| Whether Company stewardship practices could better account for this conflict, and |
3.
| Actions the Company could take to address this conflict including: |
a.
| Assessing systemic impacts on diversified portfolios; |
b.
| Soliciting input from clients; |
c.
| Initiatives to modify executive incentives; and |
d.
| Adopting voting policies that account for portfolio impacts of externalized costs. |
The report should account for the effect of social and environmental issueslegal limitations on portfolio companies’ financial performance, but not for the effect that portfolio company activities have on overall stock-market performance through their impacts on social and environmental systems and (2) whether its clients and shareholders would be better servedCompany actions, including limitations imposed by the adoption of asset management policies that directly accounted for the impact that portfolio companies have on the global economy.fiduciary duty. SUPPORTING STATEMENT Our Company provides investment management servicesmanages $4 trillion of client assets. Many clients or beneficiaries are workers saving for retirement. Most clients and has more than $3.4 trillionsavers likely have diversified portfolios in assets under management, primarily weighted toward indexed strategies. In line with Modern Portfolio Theory, mostmodern investing principles. Company stewardship policies do not account for diversification. Policies ignore the conflict between the interests of its clientscorporate executives and shareholdersdiversified investors. Executives are likelyincentivized to be broadly diversified. Such diversifiedmaximize the financial returns of their own company. Diversified investors rely onare best served by preserving healthy social economic, and environmental systems that support all their investments because diversified portfolio returns directly correlate to support allthe value of the overall economy.1 This creates a conflict whenever executives must choose between maximizing their investments. Corporateown company’s value or preserving the broader economy.
These conflicts frequently arise because companies can increase their profits through social and environmental practices that reduce GDP also decreaseburden the economy, such as emitting too much carbon, poorly managing data, and violating human rights instead of offering good-paying jobs. While these decisions may increase a company’s cash flow, they burden the economy, threatening the diversified portfolio returns.(1) As manager for more than $3 trillion in assets,portfolios of ordinary workers, institutional investors, and other savers the Company’sCompany serves. Company stewardship activities—activities, such as engaging with portfolio companies, voting proxies, and voting their shares—could significantly improve overall market performanceadvocating for public policy, should address this conflict by stewarding companies away from practices that degrade the global commons, even when those practices are profitable toprofit the company in question. However, the Company will currently steward a portfolio company to improve its social and environmental practices only when doing so improves such company’s own internal financial performance.(2) The Company’s stewardship policy does not address social and environmental practices of a portfolio company that harm the global economy if the practices can improve that company’s financial performance. This position encourages companies to externalize environmental and social costs, and is thus counter to the interests of both its clients and its shareholders.
Please vote for: Report on Asset Management Policies and Diversified Investors – Proposal 4
20222023 Notice of Meeting and Proxy Statement / State Street Corporation 82 101
TABLE OF CONTENTS Item 4:6: Shareholder Proposal
Instead, the Company appears to follow a “share primacy” model and only stewards portfolio companies to improve social and environmental practices if doing so directly improves their financial performance.2 As a result, the Company is not protecting its clients from corporate practices that threaten both their investment portfolios and critical environmental and social systems. The requested report would help determine whether and how clients would benefit from more systems-oriented stewardship. Enhance Portfolio Value, Vote FOR Report on Stewardship Practices and Diversified Investors– Proposal 6
102 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Item 6: Shareholder Proposal
RECOMMENDATION OF THE BOARD OF DIRECTORS THAT YOU VOTE AGAINST THIS PROPOSAL State Street has carefully considered the proposal and agrees that effective engagement regarding ESG matterssocial and environmental practices can have ana positive impact on the long-term performance of the portfolio companies in which we invest on behalf of our clients. It is for this reason that our asset management business, State Street Global Advisors (SSGA), conducts a leading asset stewardship program, including engagement with portfolio companies onabout risks related to sustainability, corporate governance, culture, diversity and other important matters. However, we do not believe implementation of the proposal, including creation of the requested report, is in the best interest of State Street, our shareholders or our clients because we believe potential changes identified in the proposal suggests State Street take actions that arecourse of preparing such a report would generally be inconsistent with our fiduciary obligations.obligations and that preparation of the report is therefore not an efficient use of State Street's resources. Moreover, our shareholders rejected a similar proposal from the same proponent at our 2022 annual meeting of shareholders, with less than 9% of votes cast in favor of the proposal. Accordingly, the Board recommends that shareholders vote AGAINST the proposal. We take very seriously our fiduciary obligation to clients inherent in our asset management business. SSGA is a long-term investor on behalf of clients in portfolio companies. SSGA has a fundamental fiduciary duty to act in the best interests of clients. This duty includes an obligation to vote proxies in a manner consistent with clients’ interests to maximize the long-term returns of their investments and placing clients’place these interests before the interest of SSGA or others. The fiduciary duty to act in the interests of clients is not only required by federal and state law, but it is also fundamental to the success of our asset management business. For these and many other reasons, we take this obligation very seriously. We believe implementation of potential changes identified in the underlying purposecourse of preparing the proposalrequested report would cause SSGA to violate itsgenerally be inconsistent with our fiduciary obligations. Notwithstanding that the proposal purports to seek a report only and that the proposal says the report should account for legal limitations, we believe a clear underlying objective of the proposal is to seek a change in the way we conduct business, specifically in how SSGA conducts its corporate engagement with portfolio companies and proxy voting. In this regard, we believe the proposal is premised on an assumption that it would be permissible for SSGA to conduct those engagement and voting activities with a goal of improving “overall stock market performance”“the value of the overall economy” by “ensuring that corporations do not seek profit“stewarding companies away from activitiespractices that degrade the global commons.” This assumption fundamentally conflicts with SSGA’s obligations as a fiduciary, to the extent it suggests SSGA can or should, in its engagement and voting activities on behalf of clients, place the interests of the “global commons” before the interests of clients in the specific investments those clients have made. Ultimately, we believe the proposal would seek to have us urgeMaterial social and environmental issues can present risks and/or opportunities that impact long-term value creation. However, urging portfolio companies to act in ways that are harmful to their individual economic performance, potentially causing economic harm to clients, in the hope that such actions would improve the “global commons” which may, in turn, positively influence the global financial markets“broader economy” and then, perhaps, indirectly benefit clients in the future. Acting in suchfuture, would prioritize excessive risk-taking over a way would bemore disciplined approach to social and environmental practice initiatives, in direct conflict with ourSSGA’s fiduciary obligation to put ourits clients’ best interests first. We remain focusedalso believe the statement supporting the proposal is misleading in suggesting that SSGA’s current disciplined approach to analyzing and supporting social and environmental practice initiatives does nothing to address what the proposal suggests is a “conflict…whenever [a portfolio company’s] executives must choose between maximizing their own company’s value or preserving the broader economy.” Rather, we believe SSGA's stewardship activities shine a light on social and environmental risks that influence the long-term value of portfolio companies in which it invests on behalf of its clients. SSGA then engages with company management and directors to understand how a company is responding to these inherently broad categories of risk. By focusing on the importancelong-term effects of ESG matters.these risks to portfolio companies’ value, we believe our efforts mitigate any theoretical conflict. We have a track record of engaging with portfolio companies on topics we believe are valuable to their long-term performance, including relevant social and environmental topics. Our opposition to this proposal in no way reflects a lack of concern by the Board of Directors or State Street about ESGsocial and environmental practices or portfolio company engagement on those topics, or implementing ESG-focused voting and engagement policies. On the contrary, we remain focusedwhere SSGA believes them to be relevant to long-term performance. The impact of our Fearless Girl initiative to encourage improved gender representation on advocating for ESG practices intended to improve the long-term valuepublic company boards of the companies in which State Street invests on behalf of clients, and we intend to continue to prioritize these initiatives in our voting and engagement policies.directors is an enduring example. In furtherance of the obligation to enhanceengage on the basis of enhancing value and mitigatemitigating risk SSGA has devoted significant resources and attention to corporate engagement activities, positioning itself as a thought leader at the forefront of sustainable investing principles: SSGA is a signatory to the Principles of Responsible Investing (PRI) and was recognized as part of PRI’s Leaders Group for their efforts to advance corporate disclosure on the impact of climate change.
SSGA is a founding member and signatory to the Investor Stewardship Group, an explicit proponent of the Sustainability Accounting Standards Board (SASB), and has also recently joined Climate Action 100+.
SSGA provides detailed reporting to clients and the public, including through an annual Stewardship Report and quarterly Asset Stewardship Activity Reports, which describe SSGA’s approach and insights regarding material ESG matters that could impactover the long-term, value of portfolio companies.
83 2022 Notice of MeetingSSGA annually reviews and Proxy Statement / State Street Corporation
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Item 4: Shareholder Proposal
Moreover, SSGA has publicly announced plans to further elevate the priority of ESG initiatives inupdates its engagement and voting and engagement policies:
SSGA’s CEO Letter on Our 2022 Proxy Voting Agenda focuses on accelerating the systematic transformations underway in climate change, as well as the diversity of corporate boards and workforces.
SSGA’s CEO Letter on Our 2021 Proxy Voting Agenda emphasizes the importance of transparency and reporting on the critical topics of climate change and racial and ethnic diversity.
SSGA’s CEO Letter on Our 2020 Proxy Voting Agenda describes our decision to take appropriate voting action beginning in 2022 against companies that have been consistently underperforming their peers on operations and governance as it relates to financially material ESG issues for multiple years and that cannot articulate an improvement plan.policies.
Despite the foregoing, we believe the proposal ultimately aims to have us promote ESGsocial and environmental initiatives in a manner, relative to client interests, in a way that we do not believe we can implementwould be consistent with our fiduciary obligation to clients. In light of this, we do not believe undertaking to prepare the requested report is an efficient use of State Street's resources. For the foregoing reasons, the Board believes the proposal is neither necessary nor in the best interests of our shareholders and therefore recommends that shareholders vote AGAINST the proposal. Accordingly, while acknowledging and agreeing with the importance of the proposal’s objective to promote racial equity,promoting reductions in social and environmental costs, the Board recommends that shareholders vote AGAINST this proposal. 20222023 Notice of Meeting and Proxy Statement / State Street Corporation 84 103
TABLE OF CONTENTS General Information About the Annual Meeting Questions and Answers About Voting Why am I receiving these materials? State Street’s Board of Directors is soliciting your vote by proxy at the 20222023 annual meeting of shareholders. This proxy statement includes information that we are required to provide to you under the rules of the SEC and is designed to assist you in voting your shares. Can I access State Street’s proxy materials and annual report electronically? This proxy statement and our annual report, including our audited consolidated financial statements for the year ended December 31, 2021,2022, are available to our shareholders on the Internet. On April 6, 2022,5, 2023, we mailed to our U.S. shareholders as of March 22, 2022,21, 2023, the record date for the annual meeting, a notice containing instructions on how to access these proxy materials online and how to vote. Also, on April 6, 2022,5, 2023, we began mailing printed copies of these proxy materials to shareholders that have requested printed copies and to shareholders outside the United States. If you received a notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. Instead, the notice instructs you on how to access and review online all of the important information contained in the proxy statement and annual report. The notice also instructs you on how you may submit your vote over the Internet. If you received a notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the notice. How do I request a printed copy of the proxy materials? To request a printed copy of the proxy statement, annual report and form of proxy relating to this shareholder meeting or future shareholder meetings, visit www.proxyvote.com, call 1-800-579-1639 or send an email to sendmaterial@proxyvote.com. You must have available the 16-digit control number from the notice described above. How do I change my preference and only receive materials electronically? If you currently receive printed copies of the proxy materials and 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, annual reports and related materials electronically via email or the Internet visit www.proxyvote.com, call 1-800-579-1639 or send an email to sendmaterial@proxyvote.com. You must have available the 16-digit control number from the notice described above. To sign up for electronic delivery, please follow the instructions on the proxy card using the Internet and, when prompted, indicate that you agree to receive or access proxy and related materials electronically in future years. What is the record date for the meeting? Our Board of Directors has fixed the record date for the annual meeting as of the close of business on March 22, 2022.21, 2023. How many votes can be cast by all shareholders? As of the record date, 367,444,318336,458,439 shares of our common stock were outstanding and entitled to be voted at the meeting. Each share of common stock is entitled to one vote on each matter. How do I vote? If your shares are registered in your name, you may vote online while virtually attending the annual meeting by visiting www.virtualshareholdermeeting.com/STT2022STT2023 or by proxy without attending the meeting. Registered shareholders may also vote by telephone or on the Internet prior to the meeting by following the instructions included with your proxy card or the notice we mailed to you on April 6, 2022.5, 2023. In addition, if you received a printed proxy card, you may mark, sign, date and mail the proxy card you received from State Street in the postage-paid return envelope. If you vote in accordance with any of the available methods, your shares will be voted at the meeting pursuant to your instructions. If you sign and return the proxy card or vote by telephone or on the Internet but do not provide voting instructions on some or all of the proposals, your shares will be voted by the persons named in the proxy card on all uninstructed proposals in accordance with the recommendations of the Board of Directors given below. If your shares are held in “street name” by a broker, bank or other nominee, that person, as the record holder of your shares, is required to vote your shares according to your instructions. Your bank, broker or other nominee will send you directions on how to vote those shares, which may include the ability to instruct the voting of your shares by telephone or on the Internet prior to the meeting.Internet. 85 2022104 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS General Information About the Annual Meeting
If your shares are registered in your name or if your shares are held by a broker, bank or other nominee and you wish to vote online while virtually attending at the meeting, you will need to access the live audio webcast of the meeting at www.virtualshareholdermeeting.com/STT2022STT2023 and follow the instructions for shareholder voting. What are the Board’s recommendations on how to vote my shares? The Board of Directors recommends a vote: • | Item 1— FOR election of the 1312 nominees named herein as directors (page 2223) |
• | Item 2— FOR approval of the advisory proposal on executive compensation (page 7881) |
• | Item 3— for ANNUAL on the frequency of future advisory proposals in executive compensation (page 82) |
• | Item 4—FOR approval of the Amended and Restated 2017 Stock Incentive Plan (page 83) |
• | Item 5—FOR ratification of the selection of the independent registered public accounting firm (page 81100) |
• | Item 4—6—AGAINST the shareholder proposal (page 82101) |
Additionally, if other matters are presented at the annual meeting, the persons named in the proxy card as proxy holders are authorized to vote on the additional matters as they determine. Who pays the cost for soliciting proxies by State Street? State Street will pay the cost for the solicitation of proxies by the Board. The solicitation of proxies will be made primarily by mail and electronic means. State Street has retained Morrow Sodali, LLC to aid in the solicitation of proxies for a fee of $17,500, plus expenses. Proxies may also be solicited by employees of State Street and its subsidiaries personally, or by mail, telephone, fax or email, without any remuneration to such employees other than their regular compensation. State Street will reimburse brokers, banks, custodians, other nominees and fiduciaries for forwarding these materials to their principals to obtain authorization for the execution of proxies. What is householding? Some banks, brokers and other nominee record holders may be “householding” our proxy statements, annual reports and related materials. “Householding” means that only one copy of these documents may have been sent to multiple shareholders in one household. If you would like to receive your own set of State Street’s proxy statements, annual reports and related materials, or if you share an address with another State Street shareholder and together both of you would like to receive only a single set of these documents, please contact your bank, broker or other nominee. May I change my vote? If you are a registered shareholder, you may change your vote or revoke your proxy at any time before it is voted by notifying the Secretary in writing, by returning a signed proxy with a later date, by submitting an electronic proxy as of a later date or by virtually attending the meeting and voting online during the meeting. If your shares are held in “street name,” you must contact your bank, broker or other nominee for instructions on changing your vote. What constitutes a quorum? A majority of the votes entitled to be cast on a matter constitutes a quorum for action on that matter. A share represented for any purpose at the annual meeting will be deemed present for determination of a quorum for the entire meeting and for any adjournment of the meeting; unless (1) a shareholder attends solely to object to lack of notice, defective notice or the conduct of the meeting on other grounds and the shareholder does not vote the shares or otherwise consent that they are to be deemed present or (2) in the case of an adjournment, a new record date is set for that adjourned meeting. Shares present virtually during the annual meeting will be considered shares represented in person at the meeting. What vote is required to approve each item? Since it is an uncontested election of directors at the annual meeting, a nominee for director will be elected to the Board of Directors if the votes cast “for” the nominee’s election exceed the votes cast “against” the nominee’s election (Item 1). If the votes cast “against” the nominee’s election exceed the votes cast “for” the nominee’s election, the nominee will not be elected to the Board of Directors. However, under Massachusetts law, if a nominee that is an incumbent director is not elected to the Board of Directors, that incumbent director will “hold 2023 Notice of Meeting and Proxy Statement / State Street Corporation 105
TABLE OF CONTENTS General Information About the Annual Meeting
“hold over” in office as a director until his or her successor is elected or until there is a decrease in the number of directors. Under our Corporate Governance Guidelines, in an uncontested election of directors, any incumbent director who does not receive more votes cast “for” 2022 Notice of Meeting and Proxy Statement / State Street Corporation 86
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his or her election than votes cast “against” his or her election will submit to the Board a letter of resignation for consideration by the Nominating and Corporate Governance Committee. After consideration, that Committee would make a recommendation to the Board on action to be taken regarding the resignation. No such tendered resignation will be deemed effective unless and until it is accepted by action of the Board. The actions concerning the advisory proposal on executive compensation (Item 2), the approval of the Amended and Restated 2017 Stock Incentive Plan (Item 4), the ratification of the selection of the independent registered public accounting firm (Item 3)5) and the shareholder proposal (Item 4)6) will be approved if the votes cast “for” the action exceed the votes cast “against” the action. The proposal on the frequency of future advisory proposals on executive compensation (Item 3) asks shareholders to indicate their preference for the frequency of future advisory proposals on executive compensation. Shareholders may choose from the frequency intervals of annual (every year), biennial (every two years) or triennial (every three years), or may abstain on this matter. Our Board of Directors will consider the frequency interval that receives the greatest level of support from our shareholders to be the frequency preferred by shareholders. Items 2, 3, 5 and 46 are non-binding proposals. How is the vote counted? Votes cast by proxy or at the annual meeting will be counted by the persons appointed by State Street to act as tellers for the meeting. “Abstentions” and “broker non-votes” are not counted as votes with respect to any of the items to be voted on at the annual meeting. Stock exchange rules permit a broker to vote shares held in a brokerage account on certain proposals if the broker does not receive voting instructions from you. Stock exchange and SEC rules, however, prohibit brokers from voting uninstructed shares in the case of election of directors, executive compensation matters and shareholder proposals. Accordingly, of the matters to be voted on at the annual meeting, we believe the only proposal on which brokers will have discretionary voting authority is the ratification of the selection of the independent registered public accounting firm (Item 3)5). Where is the meeting held? The annual meeting will be conducted via live audio webcast at: at www.virtualshareholdermeeting.com/STT2022STT2023. Due to concerns for the health and safety of our shareholders, employees and directors amidst the continued unpredictability of the COVID-19 pandemic, the annual meeting of shareholders will be conducted online via live audio webcast. You will be able to participate, submit questions and vote your shares electronically. To do so, you will need to visit www.virtualshareholdermeeting.com/STT2022 and use the 16-digit control number provided with the voting instructions.
Please allow ample time for the online check-in process. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the login page hosting the virtual meeting. How do I submit a question at the annual meeting? If you wish to submit a question on the day of the annual meeting, beginning at 9:00 a.m.am Eastern Time on May 18, 2022,17, 2023, you may login using the 16-digit control number provided with the voting instructions. You will be able to participate, submit questions and ask a questionvote electronically at www.virtualshareholdermeeting.com/STT2022. STT2023. The annual meeting will be governed by our meeting guidelines posted at www.virtualshareholdermeeting.com/STT2022STT2023 in advance of the meeting. The meeting guidelines will address the ability of shareholders to ask questions during the meeting, including rules on permissible topics, and rules for how questions and comments will be recognized and disclosed to meeting participants. What happens if the meeting is postponed or adjourned? Your proxy may be voted at the postponed or adjourned meeting. You will still be able to change your proxy until it is voted. May I see a list of shareholders entitled to notice of the meeting as of the record date? A list of our registered shareholders as of the close of business on the record date will be made available to shareholders during the meeting at www.virtualshareholdermeeting.com/STT2022STT2023. To access such list of registered holders at our principal offices beginning April 8, 20227, 2023 and until the meeting, shareholders should email State Street Investor Relations at IR@statestreet.com. 106 2023 Notice of Meeting and Proxy Statement / State Street Corporation
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What are my rights as a participant in the Salary Savings Program? As part of its employee benefits program, State Street maintains a 401(k) plan called the Salary Savings Program, or SSP. If you participate in the SSP and have invested part or all of your account in the Employee Stock Ownership Plan fund, you are considered a named fiduciary and may direct the voting of the State Street Corporation common stock allocated to your account as of the record date. You may give direction on the Internet, by telephone or by mail. If you do not provide timely direction as to how to vote your allocated share, your allocated share will be voted on the same proportional basis as the shares that are directed by other participants. If a matter arises at 87 2022 Notice of Meeting and Proxy Statement / State Street Corporation
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General Information About the Annual Meeting
the meeting, or such other time as affords no practical means for securing participant direction, the trustee will follow the direction of the Committee designated by the Plan Sponsor, or its designee. Voting of your allocated share will occur as described above unless the trustee or plan administrator (or its designee), as applicable, determines that doing so would result in a breach of its fiduciary duty. You must direct your vote in advance of the annual meeting so that the trustee, the registered owner of all of the shares held in the SSP, can vote in a timely manner. Regardless of what method you use to direct the trustee, the trustee must receive your direction no later than 11:59 p.m. Eastern Time on May 16, 202215, 2023 for your direction to be counted. Your direction will be held in confidence by the trustee. You may not provide this direction at the annual meeting. You may change your direction to the trustee by timely submitting a new direction. The last direction the trustee receives by 11:59 p.m. Eastern Time on May 16, 2022,15, 2023, will be the only one counted. If your direction by mail is received on the same day as the one received electronically, the electronic direction will be followed. The trustee is providing the annual report, the notice of annual meeting and the proxy statement electronically to SSP participants with State Street stock in the SSP who are active employees and have a State Street-provided email account and Internet access. Instead of receiving these materials in paper form mailed to your home, you will have online access to these materials over the Internet, thus expediting the delivery of materials and reducing printing and mailing costs. An email will be sent to all such participants with detailed instructions to access materials and give your direction to the trustee. You may request that paper copies be sent to you, thereby permitting you to send in your direction by mail if you prefer that method. All other participants will receive their materials in the mail. The Board of Directors does not know of any other matters that may be presented for action at the annual meeting. Under our by-laws, the deadline for shareholders to notify us of any proposals or director nominations to be presented for action at the 20222023 annual meeting has passed. Should any other business properly come before the meeting, the persons named on the enclosed proxy will, as stated therein, have discretionary authority to vote the shares represented by such proxies in accordance with their judgment. See the discussion in this proxy statement under the heading “General Information About the Annual Meeting—Questions and Answers About Voting.” Proposals and Nominations by Shareholders Shareholders who wish to present proposals for inclusion in State Street’s proxy materials for the 20232024 annual meeting of shareholders may do so by following the procedures prescribed in Rule 14a-8 under the Exchange Act and State Street’s by-laws. To be eligible for inclusion in State Street’s proxy materials, the shareholder proposals must be received by the Secretary on or before December 7, 2022.2023. State Street’s proxy access provision permits a shareholder, or a group of up to 20 shareholders, to include director nominees in State Street’s proxy materials; provided that: (1) the nominating shareholder(s) own a number of shares representing 3% or more of the total voting power of State Street’s outstanding shares of capital stock entitled to vote on the election of directors; (2) the nominating shareholder(s) have owned that number of shares continuously for at least 3 years; and (3) the nominating shareholder(s) and their director nominee(s) satisfy the requirements of Article I, Section 7(c) of the by-laws, including its requirement of timely written notice. To be timely, a proxy access notice with respect to the 20232024 annual meeting must be delivered to the Secretary no earlier than December 19, 20222023 and no later than January 18, 20232024 unless the date of the 20232024 annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the 20222023 annual meeting, in which event Article I, Section 7(c) of the by-laws provides different notice requirements. Under State Street’s by-laws as amended and restated on December 15, 2022, nominations for directors and proposals of business other than those to be included in State Street’s proxy materials as described above may be made by shareholders entitled to vote at the meeting if notice is timely given, contains the information required by the by-laws, including information required by Rule 14a-19 under the Exchange Act, and such business is within the purposes specified in our notice of meeting. Except as noted below, to be timely, a notice with respect to the 20232024 annual meeting must be delivered to the Secretary no earlier than February 17, 2023January 18, 2024 and no later than March 19, 2023February 17, 2024 unless the date of the 20232024 annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the 20222023 annual meeting, in which event the by-laws provide different notice requirements. State Street’s by-laws specify requirements relating to the content of the notice that shareholders must provide to the Secretary, including a shareholder nomination for director, to be properly presented at a shareholder meeting. 2023 Notice of Meeting and Proxy Statement / State Street Corporation 107
TABLE OF CONTENTS General Information About the Annual Meeting
Any proposal of business or nomination should be mailed to: Office of the Secretary
State Street Corporation
One Lincoln Street
Boston, Massachusetts 02111
(or, after May 6, 2023, One Congress Street, Boston, Massachusetts 02111.02114)
Proposals can also be submitted by email to: corporatesecretary@statestreet.com Notice of Amendment of By-Laws On December 15, 2022, State Street’s Board of Directors amended State Street’s by-laws to amend the procedures and requirements related to shareholder nominations of directors and proposals of business in the advance notice by-law provisions. The full text of State Street’s by-laws, as amended, is filed as Exhibit 3.1 to State Street’s Current Report on Form 8-K filed with the SEC on December 16, 2022. 2022108 2023 Notice of Meeting and Proxy Statement / State Street Corporation88
TABLE OF CONTENTS Security Ownership of Certain Beneficial Owners and Management The table below sets forth the number of shares of common stock of State Street beneficially owned as of the close of business on December 31, 2021, by each person or entity known to State Street to beneficially own five percent or more of our outstanding common stock. | The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355 | | | 34,264,02944,353,381(1)
| | | 9.37%12.71%
| | | BlackRock, Inc.
55 East 52nd Street
New York, NY 10055 | | | 27,647,57327,697,906(2)
| | | 7.60%7.50%
| | | Dodge & Cox
555 California Street, 40th Floor
San Francisco, CA 94104 | | | 22,356,49921,943,754(3)
| | | 6.10%
| | | T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202
| | | 21,916,832(4)
| | | 5.90%6.00%
| | | State Street Corporation
1 Lincoln Street
Boston, MA 02111 | | | 18,574,44318,771,173(5)(4)
| | | 5.08%5.12%
| |
(1)
| This information is based solely on a Schedule 13G filed with the SEC on February 9, 202210, 2023 by The Vanguard Group, in which it reported, as of January 31, 2023, shared voting power of 580,156513,298 shares, sole dispositive power of 32,761,64342,794,254 shares and shared dispositive power of 1,502,3861,559,127 shares. |
(2)
| This information is based solely on a Schedule 13G filed with the SEC on February 7, 20222023 by BlackRock, Inc., in which it reported, as of December 31, 2022, sole voting power of 23,676,79924,889,789 shares and sole dispositive power of 27,647,57327,697,906 shares. |
(3)
| This information is based solely on a Schedule 13G filed with the SEC on February 14, 20222023 by Dodge & Cox, in which it reported, as of December 31, 2022, sole voting power of 21,128,14920,786,754 shares and sole dispositive power of 22,356,49921,943,754 shares. |
(4)
| This information is based solely on a Schedule 13G filed with the SEC on February 14, 2022 by T. Rowe Price Associates, Inc., in which it reported sole voting power of 9,719,795 shares and sole dispositive power of 21,916,832 shares. |
(5)
| This information is based solely on a Schedule 13G filed with the SEC on February 14, 202210, 2023 by State Street Corporation, in which it reported, as of December 31, 2022, shared voting power of 16,915,91817,186,511 shares and shared dispositive power of 18,572,23718,769,238 shares. |
89 20222023 Notice of Meeting and Proxy Statement / State Street Corporation 109
TABLE OF CONTENTS Security Ownership of Certain Beneficial Owners and Management
The table below sets forth the number of shares of State Street common stock beneficially owned as of the close of business on March 1, 20222023 by (1) each director, (2) the named executive officers as identified in the Summary Compensation Table of this proxy statement and (3) all directors and executive officers as a group. For this purpose, beneficial ownership is determined under the rules of the SEC. As of March 1, 2022,2023, there were 367,444,318336,409,656 shares of State Street common stock outstanding. On March 1, 2022,2023 each named executive officer and director listed below individually, and those individualsthe directors and executive officers as a group, owned beneficially less than 1% of the outstanding shares of common stock. | Eric W. Aboaf | | | 85,217113,918
| | | Francisco Aristeguieta | | | 22,29941,212
| | | Marie A. Chandoha | | | 7,82910,900
| | | DonnaLee DeMaio | | | 3,177 | | | Patrick de Saint-Aignan | | | 31,45334,365
| | | Andrew J. Erickson | | | 93,158145,012
| | | Amelia C. Fawcett | | | 45,96850,356
| | | William C. Freda | | | 19,45123,101
| | | Sara Mathew | | | 11,07014,258
| | | Louis D. Maiuri | | | 74,622107,659(2)
| | | William L. Meaney | | | 11,55114,933
| | | Ronald P. O’Hanley | | | 160,050219,013(3)
| | | Sean O’Sullivan | | | 13,52916,978
| | | Julio A. Portalatin | | | 2,7805,787
| | | John B. Rhea | | | 4,0648,726
| | | Richard P. Sergel | | | 66,76771,094(3)(4)
| | | Gregory L. Summe | | | 96,025101,803(4)(5)
| | | Cyrus Taraporevala | | | 82,973 | | | All directors and executive officers as a group (22(24 persons) | | | 929,6181,145,459 (2)(3)(4)(5)(6)
| |
(1)
| Information in this table includes shares that the individual or group has the right to acquire within 60 days of March 1, 2022.2023. Shares granted to non-management directors vest immediately and are included in the total amounts above, and are not subject to a vesting schedule, even if deferred. |
(2)
| Includes 35,36331,863 shares held in trust for which Mr. Maiuri disclaims beneficial ownership except to the extent of his pecuniary interest therein. |
(3)
| Includes 83,681 shares held in trust for which Mr. O’Hanley disclaims beneficial ownership except to the extent of his pecuniary interest therein. |
(4)
| Includes 3,111 shares held by a family member. |
(4) (5)
| Includes 3,000 shares held in trust for which Mr. Summe disclaims beneficial ownership except to the extent of his pecuniary interest therein. |
(5) (6)
| Includes 561580 shares held by a domestic partner of an executive officer. |
(6)
| This table does not include first time nominee for director, Ms. DeMaio, who was elected to the Board of Directors on March 28, 2022. |
Delinquent Section 16(a) ReportsSection 16(a) of the Exchange Act requires State Street’s directors, executive officers and any beneficial owners of more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. State Street is not aware of any 10% beneficial owners. On May 21, 2021, Ronald P. O’Hanley filed an amended Form 4 to correct the number of shares disposed in connection with quarterly vesting of cash settled restricted stock units and the amount of securities beneficially owned following the reported transaction. Based on State Street’s review, it believes that all of its directors and officers have otherwise complied with all Section 16(a) reporting requirements applicable to them with respect to transactions in 2021.
2022110 2023 Notice of Meeting and Proxy Statement / State Street Corporation90
TABLE OF CONTENTS STATE STREET CORPORATION AMENDED AND RESTATED 2017 STOCK INCENTIVE PLAN The purpose of this Amended and Restated 2017 Stock Incentive Plan (the “Plan”) of State Street Corporation, a Massachusetts corporation (the “Company”), is to advance the interests of the Company’s shareholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s shareholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”). The Company’s 2017 Stock Incentive Plan was approved by the Board on February 16, 2017 and was approved by the Company’s shareholders on May 17, 2017. The Plan amends and restates in its entirety the Company’s 2017 Stock Incentive Plan. All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company (as the terms consultants and advisors are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933, as amended (the “Securities Act”), or any successor form) are eligible to be granted Awards (as defined below) under the Plan. Each person who is granted an Award under the Plan is deemed a “Participant.” The Plan provides for the following types of awards, each of which is referred to as an “Award”: Options (as defined in Section 5), SARs (as defined in Section 6), Restricted Stock (as defined in Section 7), RSUs (as defined in Section 7) and Other Stock-Based Awards (as defined in Section 8). Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly. 3.
| Administration and Delegation |
(a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award. All actions and decisions by the Board with respect to the Plan and any Awards shall be made in the Board’s discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. (b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee. During such time as the common stock, $1.00 par value per share, of the Company (the “Common Stock”) is registered under the Securities Exchange Act of 1934 (the “Exchange Act”), the Board shall appoint one such Committee of not less than two members, each member of which shall be an independent director under applicable stock exchange rules and a “non-employee director” as defined in Rule 16b-3 under the Exchange Act. (c) Delegation of Granting and Other Authority. The Board or a Committee may delegate to (1) one or more of its members such of its duties, powers and responsibilities as it may determine; (2) to one or more officers of the Company the power and authority to grant or to allocate, consistent with the requirements of Chapter 156D of the Massachusetts General Laws and subject to such limitations under the Plan or as the Board or the Committee may impose, Awards among such persons (other than to any “executive officer” of the Company (as defined by Rule 3b-7 under the Exchange Act) or to any “officer” of the Company (as defined by Rule 16a-1(f) under the Exchange Act)) eligible to receive Awards under the Plan as such delegated member or members of the Board or the Committee or officer or officers of the Company determine consistent with such delegation; and (3) to such employees or other persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, references in the Plan to the “Board” shall mean the delegate to the extent that the Board’s powers or authority under the Plan have been delegated to such person. 2023 Notice of Meeting and Proxy Statement / State Street Corporation A-1
TABLE OF CONTENTS (d) Awards to Non-Employee Directors. Awards to non-employee directors will be granted and administered by a Committee, all of the members of which are independent directors as defined by Section 303A.02 of the New York Stock Exchange Listed Company Manual (or any successor rule or any rule under any applicable stock exchange on which shares of Common Stock are traded). 4.
| Stock Available for Awards |
(a)
| Number of Shares; Share Counting. |
(1)
| Authorized Number of Shares. Subject to adjustment under Section 10, Awards may be made under the Plan (any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)) for such number of shares of Common Stock as is equal to the sum of: |
(A)
| 15,075,000 shares of Common Stock; plus |
(B)
| such additional number of shares of Common Stock (up to 28,500,000 shares) as is equal to the sum of (x) the number of shares of Common Stock reserved for issuance under the Company’s 2006 Equity Incentive Plan, as amended (the “2006 Plan”) that remained available for grant under the 2006 Plan immediately prior to the Company’s 2017 Annual Meeting of Shareholders and (y) the number of shares of Common Stock subject to awards granted under the 2006 Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject, however, in the case of Incentive Stock Options to any limitations of the Code). |
| Shares of Common Stock issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. |
(2)
| Share Counting. For purposes of counting the number of shares available for the grant of Awards under the Plan under this Section 4(a) and under the sublimits contained in Section 4(b): |
(A)
| all shares of Common Stock covered by SARs shall be counted against the number of shares available for the grant of Awards under the Plan and against the sublimits contained in Section 4(b); provided, however, that (i) SARs that may be settled only in cash shall not be so counted and (ii) if the Company grants an SAR in tandem with an Option for the same number of shares of Common Stock and provides that only one such Award may be exercised (a “Tandem SAR”), only the shares covered by the Option, and not the shares covered by the Tandem SAR, shall be so counted, and the expiration of one in connection with the other’s exercise will not restore shares to the Plan; |
(B)
| if any Award (i) expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right), or (ii) results in any Common Stock not being issued (including as result of an SAR that was settleable either in cash or in stock actually being settled in cash), the unused Common Stock covered by such Award shall again be available for the grant of Awards. Further, shares of Common Stock delivered (either by actual delivery, attestation or net exercise) to the Company by a Participant to exercise an Award or to satisfy any tax withholding obligations in accordance with Section 11(d) (including shares retained by the Company from the Award to address such tax obligation) with respect to an Award shall (i) in the case of Awards that are Options or SARs, not be added back to the number of shares of Common Stock available for the future grant of Awards and (ii) in the case of all other types of Awards, be added back to the number of shares of Common Stock available for the future grant of Awards, provided that no more than the number of shares used to satisfy the statutory minimum tax withholding obligation shall be added back to the Plan pursuant to this section 4(a)(2)(B). However, (1) in the case of Incentive Stock Options, the foregoing shall be subject to any limitations under the Code, (2) in the case of the exercise of an SAR, the number of shares counted against the shares available under the Plan and against the sublimits contained in Section 4(b) shall be the full number of shares subject to the SAR multiplied by the percentage of the SAR actually exercised, regardless of the number of shares actually used to settle such SAR upon exercise and (3) the shares covered by a Tandem SAR shall not again become available for grant upon the expiration or termination of such Tandem SAR; and |
(C)
| shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grant of Awards. |
A-2 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS (b)
| Sublimits. Subject to adjustment under Section 10, the following sublimits on the number of shares subject to Awards shall apply: |
(1)
| Per-Participant Limits. The maximum number of shares of Common Stock with respect to which Options may be granted to any person in any calendar year and the maximum number of shares of Common Stock subject to SARs granted to any person in any calendar year shall each be 2,000,000, and the maximum number of shares of Common Stock subject to other Awards granted to any person in any calendar year shall be 2,000,000. |
(2)
| Limit Applicable to Non-Employee Directors. In any calendar year, the sum of cash compensation paid to any non-employee director for service as a director (“Director Cash Compensation”) and the value of Awards under the Plan made to such non-employee director (calculated based on the grant date fair value of such Awards for financial reporting purposes) (“Director Equity Compensation”) shall not exceed $1,500,000. The Board may make exceptions to this limit for individual non-employee directors in extraordinary circumstances, as the Committee may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation. For purposes of this Section 4(b)(2), Director Cash Compensation and Director Equity Compensation in any calendar year shall include any amounts or grants that would have been paid or made, as applicable, to a particular non-employee director absent such director’s election to defer such compensation pursuant to any arrangement or plan of the Company permitting deferral of such compensation. |
(c)
| Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4(a)(1) or any sublimits contained in the Plan, except as may be required by reason of Section 422 and related provisions of the Code. |
(a)
| General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as the Board considers necessary or advisable. |
(b)
| Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of State Street Corporation, any of State Street Corporation’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. An Option that is not intended to be an Incentive Stock Option shall be designated a “Nonstatutory Stock Option.” The Company shall have no liability to a Participant, or any other person, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory Stock Option. |
(c)
| Exercise Price. The Board shall establish the exercise price of each Option or the formula by which such exercise price will be determined. The exercise price shall be specified in the applicable Option agreement. The exercise price shall not be less than 100% of the Grant Date Fair Market Value (as defined below) of the Common Stock on the date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Grant Date Fair Market Value on such future date. “Grant Date Fair Market Value” of a share of Common Stock for purposes of the Plan will be determined as follows: |
(1)
| if the Common Stock trades on a national securities exchange, the closing sale price (for the primary trading session) on the date of grant; or |
(2)
| if the Common Stock does not trade on any such exchange, the average of the closing bid and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB website (otcbb.com) on the date of grant; or |
2023 Notice of Meeting and Proxy Statement / State Street Corporation A-3
TABLE OF CONTENTS (3)
| if the Common Stock is not publicly traded, the Board will determine the Grant Date Fair Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals) in a manner consistent with the valuation principles under Section 409A of the Code or any successor provision thereto, and the regulations thereunder (“Section 409A”), except as the Board may expressly determine otherwise. |
For any date that is not a trading day, the Grant Date Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the immediately preceding trading day and with the timing in the formulas above adjusted accordingly. The Board can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either on a daily basis or such longer period as complies with Section 409A. The Board has sole discretion to determine the Grant Date Fair Market Value for purposes of the Plan, and all Awards are conditioned on the Participant’s agreement that the Board’s determination is conclusive and binding even though others might make a different determination. (d)
| Duration of Options. Subject to the provisions of the Plan, each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable Option agreement; provided, however, that no Option will be granted with a term in excess of 10 years. |
(e)
| Exercise of Options. Options may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with payment in full (in the manner specified in Section 5(f)) of the exercise price for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise. |
(f)
| Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows: |
(1)
| in cash or by check, payable to the order of the Company; |
(2)
| except as may otherwise be provided in the applicable Option agreement or approved by the Board, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding; |
(3)
| to the extent provided for in the applicable Option agreement or approved by the Board, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value (valued in the manner determined by (or in a manner approved by) the Board), provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements; |
(4)
| to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (i) the number of shares underlying the portion of the Option being exercised, less (ii) such number of shares as is equal to (A) the aggregate exercise price for the portion of the Option being exercised divided by (B) the fair market value of the Common Stock (valued in the manner determined by (or in a manner approved by) the Board) on the date of exercise; |
(5)
| to the extent permitted by applicable law and provided for in the applicable Option agreement or approved by the Board, by payment of such other lawful consideration as the Board may determine; or |
(6)
| by any combination of the above permitted forms of payment. |
(g)
| Limitation on Repricing. Unless such action is approved by the Company’s shareholders, the Company may not (except as provided for under Section 10): (1) amend any outstanding Option granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option, (2) cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(c)) covering the same or a different number of shares of Common Stock and having an exercise price per share lower |
A-4 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS than the then-current exercise price per share of the canceled option, (3) cancel in exchange for a cash payment any outstanding Option with an exercise price per share above the then-current fair market value of the Common Stock (valued in the manner determined by (or in a manner approved by) the Board), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the New York Stock Exchange (or any applicable stock exchange on which shares of Common Stock are traded). (h)
| No Reload Options. No Option granted under the Plan shall contain any provision entitling the Participant to the automatic grant of additional Options in connection with any exercise of the original Option. |
6.
| Stock Appreciation Rights |
(a)
| General. The Board may grant Awards consisting of stock appreciation rights (“SARs”) entitling the holder, upon exercise, to receive an amount of Common Stock or cash or a combination thereof (such form to be determined by the Board) determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of Common Stock (valued in the manner determined by (or in a manner approved by) the Board) over the measurement price established pursuant to Section 6(b). The date as of which such appreciation is determined shall be the exercise date. |
(b)
| Measurement Price. The Board shall establish the measurement price of each SAR and specify it in the applicable SAR agreement. The measurement price shall not be less than 100% of the Grant Date Fair Market Value of the Common Stock on the date the SAR is granted; provided that if the Board approves the grant of an SAR effective as of a future date, the measurement price shall be not less than 100% of the Grant Date Fair Market Value on such future date. |
(c)
| Duration of SARs. Subject to the provisions of the Plan, each SAR shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable SAR agreement; provided, however, that no SAR will be granted with a term in excess of 10 years. |
(d)
| Exercise of SARs. SARs may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with any other documents required by the Board. |
(e)
| Limitation on Repricing. Unless such action is approved by the Company’s shareholders, the Company may not (except as provided for under Section 10): (1) amend any outstanding SAR granted under the Plan to provide a measurement price per share that is lower than the then-current measurement price per share of such outstanding SAR, (2) cancel any outstanding SAR (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(c)) covering the same or a different number of shares of Common Stock and having a measurement price per share lower than the then-current measurement price per share of the cancelled SAR, (3) cancel in exchange for a cash payment any outstanding SAR with a measurement price per share above the then-current fair market value of the Common Stock (valued in the manner determined by (or in a manner approved by) the Board), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the New York Stock Exchange (or any applicable stock exchange on which shares of Common Stock are traded). |
(f)
| No Reload SARs. No SAR granted under the Plan shall contain any provision entitling the Participant to the automatic grant of additional SARs in connection with any exercise of the original SAR. |
(a)
| General. The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. The Board may also grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered at the time such Award vests or is settled by the Company (“RSUs”). |
(b)
| Terms and Conditions for Restricted Stock and RSUs. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of Restricted Stock and RSUs, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any. |
(c)
| Stock Certificates; Dividends. The Company may require that any stock certificates issued in respect of shares of Restricted Stock, as well as dividends or distributions paid on such Restricted Stock, shall be deposited in escrow by the Participant, together with a |
2023 Notice of Meeting and Proxy Statement / State Street Corporation A-5
TABLE OF CONTENTS stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable vesting, forfeiture and / or restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to his or her Designated Beneficiary. “Designated Beneficiary” means (i) the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death or (ii) in the absence of an effective designation by a Participant, the Participant’s estate. Any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Stock (“Unvested Dividends”) shall be paid to the Participant (or if the Participant has died, to his or her Designated Beneficiary) only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. Each payment of Unvested Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock. No interest will be paid on Unvested Dividends. (d)
| Additional Provisions Relating to RSUs. |
(1)
| Settlement. Upon the vesting of and/or lapsing of any other restrictions with respect to each RSU, the Participant shall be entitled to receive from the Company (i.e., settlement) the number of shares of Common Stock specified in the Award agreement or (if so provided in the applicable Award agreement or otherwise determined by the Board) an amount of cash equal to the fair market value (valued in the manner determined by (or in a manner approved by) the Board) of such number of shares or a combination thereof. The Board may provide that settlement of RSUs shall be deferred, on a mandatory basis or at the election of the Participant, in a manner that complies with Section 409A. |
(2)
| Voting Rights. A Participant shall have no voting rights with respect to any RSUs. |
8.
| Other Stock-Based Awards |
(a)
| General. The Board may grant other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine. |
(b)
| Terms and Conditions. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto. |
(a)
| Grants. Any Award granted under the Plan may be made subject to the achievement of performance goals pursuant to this Section 9 (“Performance Awards”). |
(b)
| Performance Measures. For any Performance Award, the Board shall specify that the degree of granting, vesting and/or payout of such Award shall be subject to the achievement of one or more objective performance measures established by the Board, which shall be based on the relative or absolute attainment of specified levels of one or any combination of the following, which may be determined pursuant to generally accepted accounting principles (“GAAP”) or on a non-GAAP basis, as determined by the Board (the “Performance Measures”): |
| i) earnings or earnings per share
ii) return on equity
iii) return on assets
iv) return on capital
v) cost of capital
vi) total stockholder return
vii) revenue
viii) market share
ix) quality/service
x) organizational development
xi) strategic initiatives (including acquisitions or dispositions) | | | xii) risk control
xiii) expense
xiv) operating leverage
xv) operating fee leverage
xvi) capital ratios
xvii) liquidity ratios
xviii) income
xix) comprehensive capital analysis and review (CCAR)
xx) other regulatory-related metric
xxi) margin
xxii) any other measure selected by the Board. | |
A-6 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Such goals may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The Performance Measures: (x) may vary by Participant and may be different for different Awards; and (y) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Board. (c)
| Adjustments to Performance Measures. The Board may provide that one or more of the Performance Measures applicable to an Award or Awards for such year will be adjusted to reflect events (for example, but without limitation, acquisitions, dispositions, joint ventures or restructurings, expenses associated with acquisitions, dispositions, joint ventures or restructurings, amortization of purchased intangibles associated with acquisitions, impact (dilution and expenses) of securities issuances (debt or equity) to finance, or in contemplation of, acquisitions or ventures, merger and integration expenses, changes in accounting principles or interpretations, changes in tax law or financial regulatory law, impairment charges, fluctuations in foreign currency exchange rates, charges for restructuring or rationalization programs (e.g., cost of workforce reductions, facilities or lease abandonments, asset impairments), one-time insurance claims payments, extraordinary and/or non-recurring items, litigation, regulatory matter or tax rate changes) that affect the applicable Performance Measure. |
(d)
| Adjustments to Performance Awards. At any time, the Board may adjust the number of shares payable pursuant to such Performance Award and waive the achievement of the applicable performance measures. |
(e)
| Other. The Board shall have the power to impose such other restrictions on Performance Awards as it may deem necessary or appropriate. |
10.
| Adjustments for Changes in Common Stock and Certain Other Events |
(a)
| Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the share counting rules and sublimits set forth in Sections 4(a) and 4(b), (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share and per-share provisions and the measurement price of each outstanding SAR, (v) the number of shares subject to and the repurchase price per share subject to each outstanding award of Restricted Stock and (vi) the share and per-share-related provisions and the purchase price, if any, of each outstanding RSU and each Other Stock-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend. |
(b)
| Covered Transactions and Change in Control. |
(i)
| A “Covered Transaction” shall mean: |
(A)
| a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then outstanding Common Stock by a single person or entity or by a group of persons and/or entities acting in concert; |
(B)
| a sale or transfer of all or substantially all the Company’s assets; or |
(C)
| a dissolution or liquidation of the Company. |
Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (A) (as determined by the Board), the Covered Transaction shall be deemed to have occurred upon consummation of the tender offer. 2023 Notice of Meeting and Proxy Statement / State Street Corporation A-7
TABLE OF CONTENTS (ii)
| A “Change in Control “ shall mean: |
(A)
| the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of either (I) the then-outstanding shares of Common Stock (the “Outstanding Company Common Stock”) or (II) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, the following acquisitions of Outstanding Company Common Stock and Outstanding Company Voting Securities: (W) any acquisition directly from the Company, (X) any acquisition by the Company, (Y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (Z) any acquisition by any Person pursuant to a transaction which complies with clauses (I), (II) and (III) of subsection (C) of this definition; |
(B)
| individuals who, as of the effective date of the Plan, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a member of the Board subsequent to such effective date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or |
(C)
| consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”); excluding, however, such a Business Combination pursuant to which (I) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (II) no Person (other than any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed with respect to the Company prior to the Business Combination and (III) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or |
(D)
| the approval by the shareholders of the Company of a complete liquidation or dissolution of the Company; |
provided that to the extent necessary to ensure compliance with the requirements of Section 409A, where applicable, an event described above shall be treated as a Change in Control only if it also constitutes or results in a change in ownership or control of the Company, or a change in ownership of assets of the Company, described in Section 409A. (A)
| If the Participant is party to an employment or similar agreement with the Company that contains a definition of “Cause,” that definition shall apply for purposes of the Plan. |
A-8 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS (B)
| Otherwise, “Cause” shall mean any (I) willful failure by the Participant, which failure is not cured within 30 days of written notice to the Participant from the Company, to perform his or her material responsibilities to the Company or (II) willful misconduct by the Participant which is materially injurious to the Company. |
For purposes of this definition of “Cause,” references to the “Company” shall include the acquiror or survivor (or an affiliate of the acquiror or survivor) in the applicable Change in Control. (iv)
| “Good Reason” shall mean: |
(A)
| If the Participant is party to an employment or similar agreement with the Company that contains a definition of “Good Reason,” that definition shall apply for purposes of the Plan. |
(B)
| Otherwise, “Good Reason” shall mean any significant diminution in the Participant’s duties, authority, or responsibilities from and after such Change in Control, as the case may be, or any material reduction in the base compensation payable to the Participant from and after such Change in Control, as the case may be, or the relocation of the location at which the Participant principally works to a location that is greater than 50 miles from its location immediately prior to such Change in Control, in each case where such diminution, reduction, or relocation is caused by the Company. Notwithstanding the occurrence of any such event or circumstance, such occurrence shall not be deemed to constitute Good Reason unless (I) the Participant gives the Company the notice of termination no more than 90 days after the initial existence of such event or circumstance, (II) such event or circumstance has not been fully corrected and the Participant has not been reasonably compensated for any losses or damages resulting therefrom within 30 days of the Company’s receipt of such notice and (III) the Participant’s termination of Employment occurs within six months following the Company’s receipt of such notice. |
For purposes of this definition of “Good Reason,” reference to the “Company” shall include the acquiror or survivor (or an affiliate of the acquiror or survivor) in the applicable Change in Control. (v)
| “Employment” shall mean a Participant’s employment or other service relationship with the Company and its subsidiaries. Employment will be deemed to continue, unless the Board expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 2 to the Company or its subsidiaries. If a Participant’s employment or other service relationship is with a subsidiary of the Company and that entity ceases to be a subsidiary, the Participant’s Employment will be deemed to have terminated when the entity ceases to be subsidiary of the Company unless the Participant transfers Employment to the Company or its remaining subsidiaries. |
(i)
| Covered Transactions. Except as otherwise provided in an Award and subject to the provisions of Section 10(b)(2)(ii) in the case of a Covered Transaction that also qualifies as a Change in Control, the following provisions shall apply in the event of a Covered Transaction: |
(A)
| Assumption or Substitution. If the Covered Transaction is one in which there is an acquiring or surviving entity, the Board may provide for the assumption of some or all outstanding Awards or for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor. |
(B)
| Cash-Out of Awards. If the Covered Transaction is one in which holders of Common Stock will receive upon consummation a payment (whether cash, non-cash or a combination of the foregoing), the Board may provide for payment (a “cash-out”), with respect to some or all Awards, equal in the case of each affected Award to the excess, if any, of (A) the fair market value of one share of Common Stock (as determined by the Board in its reasonable discretion) times the number of shares of Common Stock subject to the Award, over (B) the aggregate exercise or purchase price, if any, under the Award (in the case of an SAR, the aggregate base price above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Common Stock) and other terms, and subject to such conditions, as the Board determines. |
(C)
| Acceleration of Certain Awards. If the Covered Transaction (whether or not there is an acquiring or surviving entity) is one in which there is no assumption, substitution or cash-out, each Award requiring exercise will become fully exercisable, each Award of Restricted Stock will become fully vested and the delivery of shares of Common Stock |
2023 Notice of Meeting and Proxy Statement / State Street Corporation A-9
TABLE OF CONTENTS deliverable under each outstanding award of RSUs, Performance Awards (to the extent consisting of RSUs) and Other Stock-Based Awards will be accelerated and such shares will be delivered, prior to the Covered Transaction, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Board, following exercise of the Award or the delivery of the shares, as the case may be, to participate as a shareholder in the Covered Transaction. (D)
| Termination of Awards Upon Consummation of Covered Transaction. Each Award (unless assumed or substituted pursuant to Section 10(b)(2)(i)(A) above), other than outstanding shares of Restricted Stock (which shall be treated in the same manner as other shares of Common Stock, subject to Section 10(b)(2)(i)(E) below), will terminate upon consummation of the Covered Transaction. |
(E)
| Additional Limitations. Any share of Common Stock delivered pursuant to Section 10(b)(2)(i)(A) or Section 10(b)(2)(i)(C) above with respect to an Award may, in the discretion of the Board, contain such restrictions, if any, as the Board deems appropriate to reflect any performance or other vesting conditions to which the Award was subject. In the case of Restricted Stock, the Board may require that any amounts delivered, exchanged or otherwise paid in respect of such Common Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Board deems appropriate to carry out the intent of the Plan. |
(ii)
| Change in Control. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in Control: |
(A)
| Acceleration of Options and SARs; Effect on Other Awards. If, on or prior to the first anniversary of the consummation of the Change in Control, the Participant’s Employment with the Company is terminated for Good Reason by the Participant or is terminated without Cause by the Company, all Options and SARs outstanding as of the date such Change in Control is consummated and which are not then exercisable shall become exercisable to the full extent of the original grant, all shares of Restricted Stock, all RSUs and all Other Stock-Based Awards which are not otherwise vested shall vest, and Performance Awards granted hereunder shall vest to the extent set forth in the applicable Award agreement. |
(B)
| Restriction on Application of Plan Provisions Applicable in the Event of Termination of Employment. After a Change of Control, Options and SARs granted under Section 10(b)(2)(i)(A) as substitution for existing Awards shall remain exercisable following a termination of Employment (other than termination by reason of death, disability (as determined by the Company) or retirement (as defined in the Award)) for the lesser of (I) a period of seven (7) months, or (II) the period ending on the latest date on which such Option or SAR could otherwise have been exercised. |
(C)
| Restriction on Amendment. In connection with or following a Change in Control, the Board may not impose additional conditions upon exercise or otherwise amend or restrict any Award, or amend the terms of the Plan in any manner adverse to the holder thereof, without the written consent of such holder. |
11.
| General Provisions Applicable to Awards |
(a)
| Transferability of Awards. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by a Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however, that, except with respect to Awards subject to Section 409A, the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if the Company would be eligible to use a Form S-8 under the Securities Act for the registration of the sale of the Common Stock subject to such Award to such proposed transferee; provided further, that the Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. For the avoidance of doubt, nothing contained in this Section 11(a) shall be deemed to restrict a transfer to the Company. |
(b)
| Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. |
A-10 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS (c)
| Termination of Status. Unless the Board expressly provides otherwise, immediately upon the cessation of a Participant’s Employment (as defined in Section 10(b)(1)(v)), (i) each Award requiring exercise that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate, and (ii) all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited, except that: |
(1)
| subject to (2) and (3) below, all Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment with the Company, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three months and (ii) the period ending on the latest date on which such Option or SAR could have been exercised without regard to this Section 11(c), and will thereupon terminate; |
(2)
| all Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the Participant’s death, to the extent then exercisable, will remain exercisable for the lesser of (i) the one year period ending with the first anniversary of the Participant’s death and (ii) the period ending on the latest date on which such Option or SAR could have been exercised without regard to this Section 11(c), and will thereupon terminate; and |
(3)
| all Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment with the Company will immediately terminate upon such cessation if the Board in its sole discretion determines that such cessation of Employment has resulted for reasons which cast such discredit on the Participant as to justify immediate termination of the Award. |
(d)
| Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may elect to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an Award or at the same time as payment of the exercise or purchase price, unless the Company determines otherwise. If provided for in an Award or approved by the Board, a Participant may satisfy the tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their fair market value (valued in the manner determined by (or in a manner approved by) the Company); provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), except that, to the extent that the Company is able to retain shares of Common Stock having a fair market value (determined by (or in a manner approved by) the Company) that exceeds the statutory minimum applicable withholding tax without material financial accounting implications or the Company is withholding in a jurisdiction that does not have a statutory minimum withholding tax, the Company may retain such number of shares of Common Stock (up to the number of shares having a fair market value equal to the maximum individual statutory rate of tax (determined by (or in a manner approved by) the Company)) as the Company shall determine in its sole discretion to satisfy the tax liability associated with any Award. Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements. |
(e)
| Amendment of Award. Except as otherwise provided in Section 5(g) and 6(e), the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option. The Board may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration. The Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 10 or the foregoing sentence. |
(f)
| Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously issued or delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and regulations and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations. |
2023 Notice of Meeting and Proxy Statement / State Street Corporation A-11
TABLE OF CONTENTS (g)
| Dividend Equivalents. The Board may provide for the payment of amounts in lieu of cash dividends or other cash distributions (“Dividend Equivalents”) with respect to shares of Common Stock subject to an Award, provided that such Dividend Equivalents shall be subject to the same vesting and forfeiture provisions as the Award with respect to which they may be paid. Any entitlement to dividend equivalents or similar entitlements shall be established and administered consistent either with exemption from, or compliance with the requirements of Section 409A to the extent applicable. |
(a)
| No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award by virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving a Participant the right to continued Employment. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award. |
(b)
| No Rights As Shareholder; Clawback. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any shares of Common Stock to be issued with respect to an Award until becoming the record holder of such shares. In accepting an Award under the Plan, a Participant shall agree to be bound by any clawback policy the Company has adopted or may adopt in the future, or any other compensation recovery requirements that the Company determines are necessary or appropriate to be applicable to such Award. |
(c)
| Effective Date and Term of Plan. The Plan shall become effective on the date the Plan, as amended and restated herein, is approved by the Company’s shareholders (such date on which the Company’s shareholders approve the Plan, as amended and restated herein, the “Effective Date”). No Awards shall be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date. |
(d)
| Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time provided that (i) neither Section 5(g) nor Section 6(e) requiring shareholder approval of any Option or SAR repricing may be amended without shareholder approval; (ii) no amendment that would require shareholder approval under the rules of the national securities exchange on which the Company then maintains its primary listing may be made effective unless and until the Company’s shareholders approve such amendment; and (iii) if the national securities exchange on which the Company then maintains its primary listing does not have rules regarding when shareholder approval of amendments to equity compensation plans is required (or if the Common Stock is not then listed on any national securities exchange), then no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Section 4(c) or 10), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan shall be effective unless and until the Company’s shareholders approve such amendment. In addition, if at any time the approval of the Company’s shareholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 12(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of Participants under the Plan. No Award shall be made that is conditioned upon shareholder approval of any amendment to the Plan unless the Award provides that (i) it will terminate or be forfeited if shareholder approval of such amendment is not obtained within no more than 12 months from the date of grant and (2) it may not be exercised or settled (or otherwise result in the issuance of Common Stock) prior to such shareholder approval. |
(e)
| Authorization of Sub-Plans (including for Grants to non-U.S. Employees). The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to the Plan containing (i) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement. |
(f)
| Compliance with Section 409A of the Code. Except as provided in individual Award agreements initially or by amendment, if and to the extent (i) any portion of any payment, compensation or other benefit provided to a Participant pursuant to the Plan in connection with his or her employment termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A and (ii) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the |
A-12 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A) (the “New Payment Date”), except as Section 409A may then permit. The aggregate of any payments that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule. The Company makes no representations or warranty and shall have no liability to the Participant or any other person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A but do not to satisfy the conditions of that section. (g)
| Limitations on Liability.Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, employee or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, employee or agent of the Company. The Company will indemnify and hold harmless each director, officer, employee or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith. |
(h)
| Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than the Commonwealth of Massachusetts. In accepting an Award under the Plan, a Participant shall agree that the Award is granted by the Company, with respect to Common Stock issued by the Company, and that any claim with respect to the Award may only be raised against the Company in a court of competent jurisdiction in the Commonwealth of Massachusetts, regardless of whether the Participant is or was employed or engaged by the Company or a Subsidiary and regardless of the jurisdiction in which the Participant is or was employed or engaged. |
2023 Notice of Meeting and Proxy Statement / State Street Corporation A-13
TABLE OF CONTENTS Excerpt from State Street’s Corporate Governance Guidelines The Board will have a majority of directors who meet the criteria for independence required by the New York Stock Exchange (NYSE) corporate governance standards. The Board has adopted the following guidelines to assist it in determining director independence in accordance with the NYSE standards. To be considered independent, the Board must determine, after review and recommendation by the Nominating and Corporate Governance Committee, that the director has no direct or indirect material relationship with the Company. The Board has established the following categorical guidelines to assist it in determining independence: a.
| A director will not be independent if he or she does not satisfy any of the bright-line tests set forth in Section 303A.02(b) of the NYSE Listed Company Manual. |
b.
| The following commercial or charitable relationships will not be considered to be material relationships that would impair a director’s independence: (i) if the State Street director or a member of such director’s immediate family (as defined in Section 303A of the NYSE Listed Company Manual) is a director or owner of less than a 10% ownership interest of another company (including a tax-exempt organization) that does business with the Company; provided such State Street director is not involved in negotiating the transaction; (ii) if the State Street director or a member of such director’s immediate family is a current employee, consultant or executive officer of another company (including a tax-exempt organization) that does business with the Company; provided that, (x) where the State Street director is an employee, consultant or executive officer of the other company, neither the director nor any of his or her immediate family members receives any special benefits as a result of the transaction and (y) the annual payments to, or payments from, the Company from, or to, the other company, for property or services in any completed fiscal year in the last three fiscal years are equal to or less than the greater of $1 million, or two percent of the consolidated gross annual revenues of the other company during the last completed fiscal year of the other company; and (iii) if the State Street director or member of such director’s immediate family is a director, trustee, employee or executive officer of a tax-exempt organization that receives discretionary charitable contributions from the Company; provided such State Street director and his or her Immediate Family Members do not receive any special benefits as a result of the transaction; and further provided that, where the director or immediate family member is an executive officer of the tax-exempt organization, the amount of discretionary charitable contributions in any completed fiscal year in the last three fiscal years are not more than the greater of $1 million, or two percent of that organization’s consolidated gross revenues in the last completed fiscal year of that organization (in applying this test, State Street’s automatic matching of employee charitable contributions to a charitable organization will not be included in the amount of State Street’s discretionary contributions). |
c.
| The following commercial relationships will not be considered to be a material relationship that would impair a director’s independence: lending relationships, deposit relationships or other banking relationships (such as depository, transfer, registrar, indenture trustee, trusts and estates, private banking, investment management, custodial, securities brokerage, cash management and similar services) between State Street and its subsidiaries, on the one hand, and a company with which the director or such director’s immediate family member is affiliated by reason of being a director, employee, consultant, executive officer, general partner or an equity holder thereof, on the other, provided that: (i) such relationships are in the ordinary course of the Company’s business and are on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons; (ii) with respect to a loan by the Company to such company or its subsidiaries, such loan has been made in compliance with applicable law, including Regulation O of the Board of Governors of the Federal Reserve and Section 13(k) of the Securities Exchange Act of 1934, such loan did not involve more than the normal risk of collectability or present other unfavorable features, and no event of default has occurred under the loan; and (iii) payments to the Company for property or services (including fees and interest on loans but not including principal repayments) from such company does not exceed the limit provided in (b)(ii) above. |
If a relationship is described by the categorical guidelines contained in both paragraphs b. and c. above, it will not be considered to be a material relationship that would impair a director’s independence if it satisfies all of the applicable requirements of either paragraph b. or c. For relationships not covered by the categorical guidelines (either because they involve a different type of relationship or a different dollar amount), the determination of whether the relationship is material or not, and therefore whether the director would be independent or not, shall be made by the directors who satisfy the independence guidelines set forth above. The Company will explain in the next proxy statement the basis for any Board determination that a relationship was immaterial despite the fact that it did not meet the categorical guidelines of immateriality set forth above. A-1 20222023 Notice of Meeting and Proxy Statement / State Street Corporation B-1
TABLE OF CONTENTS State Street’s Governance Standards Relative to the Investor Stewardship Group’s (ISG) Corporate Governance Framework | Principle 1
Boards are accountable to shareholders | | | • | | | All directors stand for shareholder election annually | | | • | | | Majority voting standard in uncontested director elections, and incumbent directors not receiving majority support must tender their resignation for consideration by the Board | | | • | | | Proxy access for shareholders | | | • | | | Board annually reviews and approves Corporate Governance Guidelines to assist in the exercise of duties and responsibilities. These Guidelines, along with Board committee charters, standards of conduct and other governance information, are posted on State Street’s website | | | Principle 2
Shareholders should be entitled to voting rights in proportion to their economic interest | | | • | | | One class of common stock, with each share carrying equal voting rights (a “one-share, one-vote” standard) | | | Principle 3
Boards should be responsive to shareholders and be proactive in order to understand their perspectives | | | • | | | Process in place for shareholders and interested parties to communicate with independent Lead Director | | | • | | | Proactive annual shareholder engagement with director participation for select meetings, provides feedback to participating directors and relevant Board committees | | | Principle 4
Boards should have a strong, independent leadership structure | | | • | | | Strong independent Lead Director with clearly defined duties that are disclosed to shareholders | | | • | | | Annual public disclosure of the Board’s reasoning underlying its leadership structure and affirmation that the current leadership structure is appropriate | | | • | | | Each of the Board’s Examining and Audit, Human Resources, Nominating and Corporate Governance, Risk and Technology and Operations Committees has an independent chair | | | Principle 5
Boards should adapt structures and practices that enhance their effectiveness | | | • | | | 1211 out of 1312 director nominees are independent
| | | • | | | Directors reflect a diverse mix of industry, regulatory, management, technology, risk and other backgrounds, experience and skills relevant to State Street’s businesses and strategies | | | • | | | 4 of 1312 director nominees are female and 3 out of 1312 directors are racially diverse | | | • | | | Active Board refreshment with 76 new independent directors in the last 5 years | | | • | | | Board committees (Examining and Audit Committee; Human Resources Committee; Nominating and Corporate Governance Committee and Technology and Operations Committee) are fully independent. State Street also has a Risk Committee, on which the Chairman serves along with 4 independent directors | | | • | | | Annual Board-level assessment of each director’s contributions, skills, committee assignments and tenure when analyzing the overall composition and effectiveness of the Board | | | • | | | Board has full and free access to officers and employees | | | • | | | During 2021,2022, each of the incumbent directors attended at least 90%75% of the total of all meetings of the Board and committees on which the director served during his or hertheir service as a director, and each of the 1213 nominees who were then a director attended the 20212022 annual shareholder meeting | | | Principle 6
Boards should develop management incentive structures that are aligned with the long-term strategy of the company | | | • | | | In determining incentive compensation award amounts, the Human ResourceResources Committee evaluates overall company performance as a primary factor and individual performance as a potential modifier. The Committee also considers market compensation levels and expected trends. Overall company performance drives the final incentive compensation award amount unless individual performance and/or market considerations warrant an adjustment, which is limited to an addition to or subtraction from the corporate performance factor of up to thirty percent | | | | | | - | | | The Committee’s evaluation of overall company performance is based on a review of financial, business and risk management performance relative to corporate goals set at the beginning of each year to drive our long-term strategy | | | | | | - | | | The Committee’s evaluation of individual performance is based on a review of financial, business and risk management scorecards derived from the associated corporate goals, and based on each executive’s role and responsibilities | | | • | | | Corporate and individual performance assessments for Named Executive Officers are described under the heading “Compensation Discussion and Analysis” | |
(1)
| ISG is an investor-led effort that includes some of the largest U.S.-based institutional investors and global asset managers, along with several of their international counterparts. State Street Global Advisors, State Street’s investment management line of business, is a member of ISG. The corporate governance framework articulates six principles that ISG believes are fundamental to good corporate governance at U.S. listed companies. The Principles reflect the common corporate governance beliefs of each ISG member and are designed to establish a foundational set of investor expectations about corporate governance practices in U.S. publicly-listed companies. |
B-1 20222023 Notice of Meeting and Proxy Statement / State Street Corporation C-1
TABLE OF CONTENTS Reconciliation of Non-GAAP Financial Information In addition to presenting State Street's financial results in conformity with U.S. generally accepted accounting principles, or GAAP, management also presents certain financial information on a basis that excludes or adjusts one or more items from GAAP. This latter basis is a non-GAAP presentation. In general, our non-GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of revenue and expenses outside of State Street’s normal course of business or other notable items, such as acquisition and restructuring charges, repositioning charges, gains/losses on sales, as well as, for selected comparisons, seasonal items. Management believes that this presentation of financial information facilitates an investor's further understanding and analysis of State Street's financial performance and trends with respect to State Street’s business operations from period-to-period, including providing additional insight into our underlying margin and profitability. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. | (Dollars in millions) | | | 2021 | | 2020 | | % Change
2021 vs. 2020 | | (Dollars in millions) | | | 2022 | | 2021 | | %Change
2022 vs. 2021 | | | Total Revenue:
| | | | | | | | Total Revenue:
| | | | | | | | | Total revenue, GAAP-basis | | $12,027 | | $11,703 | | 2.8% | | Total revenue, GAAP-basis | | $12,148 | | $12,027 | | 1.0% | | | Less: Total other income(1) | | (111) | | — | | nm | | Less: Fee revenue(1) | | (23) | | — | | nm | | | Total revenue, excluding notable items | | $11,916 | | $11,703 | | 1.8% | | Less: Total other income | | — | | (111) | | nm | | | | | Total revenue, excluding notable items | | $12,125 | | $11,916 | | 1.8% | | | Fee Revenue:
| | | | | | | | | | | Total fee revenue, GAAP-basis | | $10,012 | | $9,499 | | 5.4% | | Fee Revenue:
| | | | | | | | | Total fee revenue, excluding notable items | | $10,012 | | $9,499 | | 5.4% | | Total fee revenue, GAAP-basis | | $9,606 | | $10,012 | | (4.1)% | | | | | Less: Fee revenue(1) | | (23) | | — | | nm | | | Servicing Fee Revenue:
| | | | | | | | Total fee revenue, excluding notable items | | $9,583 | | $10,012 | | (4.3)% | | | Servicing fee revenue, GAAP-basis | | $5,549 | | $5,167 | | 7.4% | | | | | Servicing fee revenue, excluding notable items | | $5,549 | | $5,167 | | 7.4% | | Servicing Fees:
| | | | | | | | | | | Servicing fees, GAAP-basis | | $5,087 | | $5,531 | | (8.0)% | | | Management Fee Revenue:
| | | | | | | | Servicing fees, excluding notable items | | $5,087 | | $5,531 | | (8.0)% | | | Management fee revenue, GAAP-basis | | $2,053 | | $1,880 | | 9.2% | | | | | Management fee revenue, excluding notable items | | $2,053 | | $1,880 | | 9.2% | | Management Fees:
| | | | | | | | | | | Management fees, GAAP-basis | | $1,939 | | $2,053 | | (5.6)% | | | Net Interest Income:
| | | | | | | | Management fees, excluding notable items | | $1,939 | | $2,053 | | (5.6)% | | | Net interest income, GAAP-basis | | $1,905 | | $2,200 | | (13.4)% | | | | | Net interest income, excluding notable items | | $1,905 | | $2,200 | | (13.4)% | | Foreign Exchange Trading Services:
| | | | | | | | | | | Total FX trading services, GAAP-basic | | $1,376 | | $1,211 | | 13,6% | | | Expenses:
| | | | | | | | Less: FX litigation resolution(1) | | (23) | | — | | nm | | | Total expenses, GAAP-basis | | $8,889 | | $8,716 | | 2.0% | | Total FX trading services, excluding notable items | | $1,353 | | $1,211 | | 11.7% | | | Less: Notable expense items: | | | | | | | | | | | Acquisition and restructuring costs(2) | | (65) | | (50) | | 30.0% | | Front Office Software and Data:
| | | | | | | | | Repositioning (charges) / release | | 3 | | (133) | | nm | | Front office software & data, GAAP-basis | | $550 | | $484 | | 13.6% | | | Deferred incentive compensation expense acceleration(3) | | (147) | | — | | nm | | Front office software & data, excluding notable items | | $550 | | $484 | | 13.6% | | | Legal and other | | (18) | | 9 | | nm | | | | | Total expenses, excluding notable items | | $8,662 | | $8,542 | | 1.4% | | Net Interest Income:
| | | | | | | | | | | Net interest income, GAAP-basis | | $2,544 | | $1,905 | | 33.5% | | | | Net interest income, excluding notable items | | $2,544 | | $1,905 | | 33.5% | | | | | | | | Expenses:
| | | | | | | | | | Total expenses, GAAP-basis | | $8,801 | | $8,889 | | (1.0)% | | | | Less: Notable expense items: | | | | | | | | | | Acquisition and restructuring costs(2) | | (65) | | (65) | | — | | | | Repositioning (charges) / release(3) | | (70) | | 3 | | nm | | | | Deferred incentive compensation expense acceleration | | — | | (147) | | nm | | | | Legal and other | | — | | (18) | | nm | | | | Total expenses, excluding notable items | | $8,666 | | $8,662 | | — | | | | | |
C-1 20222023 Notice of Meeting and Proxy Statement / State Street Corporation D-1
TABLE OF CONTENTS | Occupancy Expense:
| | | | | | | | | | | | Total occupancy expense, GAAP-basis | | | $444 | | | $489 | | | (9.2)% | | | Less: Repositioning charge | | | (29) | | | (51) | | | nm | | | Total occupancy expense, excluding notable items | | | $415 | | | $438 | | | (5.3)% | | | | | | Average Common Shareholders’ Equity:
| | | | | | | | | | | | Average common shareholders’ equity, GAAP-basis | | | $24,009 | | | $22,481 | | | 6.8% | | | Less: | | | | | | | | | | | | Common share issuance and repurchase suspension(6) | | | (774) | | | — | | | nm | | | Adjusted average common shareholders’ equity - Non-GAAP | | | $23,235 | | | $22,481 | | | 3.4% | | | | |
| Net Income Available to Common Shareholders:
| | | | | | | | | | | | Net income available to common shareholders, GAAP-basis | | | $2,572 | | | $2,257 | | | 14.0% | | | Less: Notable items | | | | | | | | | | | | Total other income(1) | | | (111) | | | — | | | | | | Acquisition and restructuring costs(2) | | | 65 | | | 50 | | | | | | Repositioning charges / (release) | | | (3) | | | 133 | | | | | | Deferred incentive compensation expense acceleration(3) | | | 147 | | | — | | | | | | Legal and other | | | 18 | | | (9) | | | | | | Preferred securities redemption(4)(5) | | | 5 | | | 9 | | | | | | Tax impact of notable items | | | (28) | | | (47) | | | | | | Net income available to common shareholders, excluding notable items | | | $2,665 | | | $2,393 | | | 11.4% | | | | | | Diluted Earnings per Share:
| | | | | | | | | | | | Diluted earnings per share, GAAP-basis | | | $7.19 | | | $6.32 | | | 13.8% | | | Less: Notable items | | | | | | | | | | | | Total other income(1) | | | (0.23) | | | — | | | | | | Acquisition and restructuring costs(2) | | | 0.14 | | | 0.10 | | | | | | Repositioning charges / (release) | | | (0.01) | | | 0.27 | | | | | | Deferred incentive compensation expense acceleration(3) | | | 0.30 | | | — | | | | | | Legal and other | | | 0.04 | | | (0.02) | | | | | | Preferred securities redemption(4)(5) | | | 0.01 | | | 0.03 | | | | | | Diluted earnings per share, excluding notable items | | | $7.44 | | | $6.70 | | | 11.0% | | | | |
| Average Common Shareholders’ Equity:
| | | | | | | | | | | | Average common shareholders’ equity, GAAP-basis | | | $23,910 | | | $24,009 | | | (0.4)% | | | Less: | | | | | | | | | | | | Common share issuance and repurchase suspension(4) | | | (1,900) | | | (774) | | | nm | | | Adjusted average common shareholders’ equity - Non-GAAP | | | $22,010 | | | $23,235 | | | (5.3)% | | | | |
| Net Income Available to Common Shareholders
| | | | | | | | | | | | Net income available to common shareholders, GAAP-basis | | | $2,660 | | | $2,572 | | | 3.4% | | | Less: Notable items | | | | | | | | | | | | Fee revenue(1) | | | (23) | | | — | | | | | | Total other income | | | — | | | (111) | | | | | | Acquisition and restructuring costs(2) | | | 65 | | | 65 | | | | | | Repositioning charges / (release)(3) | | | 70 | | | (3) | | | | | | Deferred incentive compensation expense acceleration | | | — | | | 147 | | | | | | Legal and other | | | — | | | 18 | | | | | | Preferred securities redemption | | | — | | | 5 | | | | | | Tax impact of notable items | | | (29) | | | (28) | | | | | | Net income available to common shareholders, excluding notable items | | | $2,743 | | | $2,665 | | | 2.9% | | | | | | Diluted Earnings per Share:
| | | | | | | | | | | | Diluted earnings per share, GAAP-basis | | | $7.19 | | | $7.19 | | | — | | | Less: Notable items | | | | | | | | | | | | Fee revenue(1) | | | (0.05) | | | — | | | | | | Total other income | | | — | | | (0.23) | | | | | | Acquisition and restructuring costs(2) | | | 0.13 | | | 0.14 | | | | | | Repositioning charges / (release)(3) | | | 0.14 | | | (0.01) | | | | | | Deferred incentive compensation expense acceleration | | | — | | | 0.30 | | | | | | Legal and other | | | — | | | 0.04 | | | | | | Preferred securities redemption | | | — | | | 0.01 | | | | | | Diluted earnings per share, excluding notable items | | | $7.41 | | | $7.44 | | | (0.4)% | | | | |
2022D-2 2023 Notice of Meeting and Proxy Statement / State Street CorporationC-2
TABLE OF CONTENTS | Return on Average Common Equity:
| | | | | | | | | | | | Return on average common equity, GAAP-basis | | | 10.7% | | | 10.0% | | | 70 bps | | | Less: Notable items | | | | | | | | | | | | Total other income(1) | | | (0.5) | | | — | | | | | | Acquisition and restructuring costs(2) | | | 0.3 | | | 0.2 | | | | | | Repositioning charges | | | — | | | 0.6 | | | | | | Deferred incentive compensation expense acceleration(3) | | | 0.6 | | | — | | | | | | Legal and other | | | 0.1 | | | — | | | | | | Preferred securities redemption(4)(5) | | | — | | | — | | | | | | Tax impact of notable items | | | (0.1) | | | (0.2) | | | | | | Return on average common equity, excluding notable items | | | 11.1 | | | 10.6 | | | 50 bps | | | Common share issuance and repurchase suspension(6) | | | 0.4 | | | — | | | | | | Return on average common equity, excluding notable items and security issuance | | | 11.5% | | | 10.6% | | | 90 bps | | | | |
| Total Revenue:
| | | | | | | | | | | | Total revenue, GAAP-basis | | | $12,027 | | | $11,703 | | | 2.8% | | | Less: Total other income(1) | | | (111) | | | — | | | nm | | | Total revenue, excluding notable items | | | 11,916 | | | 11,703 | | | 1.8% | | | | | | | | | | | | | | | Expenses:
| | | | | | | | | | | | Total expenses, GAAP-basis | | | 8,889 | | | 8,716 | | | 2.0% | | | Less: Notable expense items: | | | | | | | | | | | | Acquisition and restructuring costs(2) | | | (65) | | | (50) | | | 30.0 | | | Repositioning (charges) / release | | | 3 | | | (133) | | | nm | | | Deferred incentive compensation expense acceleration(3) | | | (147) | | | — | | | nm | | | Legal and other | | | (18) | | | 9 | | | nm | | | Total expenses, excluding notable items | | | 8,662 | | | 8,542 | | | 1.4% | | | Income before provision for credit losses and income tax expense, excluding notable items | | | $3,254 | | | $3,161 | | | 2.9% | | | Income before provision for credit losses and income tax expense, GAAP-basis | | | $3,138 | | | $2,987 | | | 5.1% | | | | | | | | | | | | | | | Operating margin, excluding notable items | | | 27.3% | | | 27.0% | | | 30 bps | | | Operating margin, GAAP-basis | | | 26.1% | | | 25.5% | | | 60 bps | | | | |
| Return on Average Common Equity:
| | | | | | | | | | | | | | | Return on average common equity, GAAP-basis | | | 11.1% | | | 10.7% | | | 40 bps | | | 10.0% | | | Less: Notable items | | | | | | | | | | | | | | | Fee revenue (1) | | | (0.1) | | | — | | | | | | — | | | Total other income | | | — | | | (0.5) | | | | | | — | | | Acquisition and restructuring costs(2) | | | 0.3 | | | 0.3 | | | | | | 0.2 | | | Repositioning charges(3) | | | 0.3 | | | — | | | | | | 0.6 | | | Deferred incentive compensation expense acceleration | | | — | | | 0.6 | | | | | | — | | | Legal and other | | | — | | | 0.1 | | | | | | — | | | Tax impact of notable items | | | (0.1) | | | (0.1) | | | | | | (0.2) | | | Return on average common equity, excluding notable items | | | 11.5 | | | 11.1 | | | 40 bps | | | 10.6 | | | Common share issuance and repurchase suspension(4) | | | 1.0 | | | 0.4 | | | | | | — | | | Return on average common equity, excluding notable items and security issuance | | | 12.5% | | | 11.5% | | | 100 bps | | | 10.6% | | | | |
| Total Revenue:
| | | | | | | | | | | | Total revenue, GAAP-basis | | | $12,148 | | | $12,027 | | | 1.0% | | | Less: Fee revenue(1) | | | (23) | | | | | | | | | Less: Total other income | | | — | | | (111) | | | nm | | | Total revenue, excluding notable items | | | 12,125 | | | 11,916 | | | 1.8% | | | Provision for credit losses | | | 20 | | | (33) | | | nm | | | Expenses:
| | | | | | | | | | | | Total expenses, GAAP-basis | | | 8,801 | | | 8,889 | | | (1.0)% | | | Less: Notable expense items: | | | | | | | | | | | | Acquisition and restructuring costs(2) | | | (65) | | | (65) | | | — | | | Repositioning (charges) / release(3) | | | (70) | | | 3 | | | nm | | | Deferred incentive compensation expense acceleration | | | — | | | (147) | | | nm | | | Legal and other | | | — | | | (18) | | | nm | | | Total expenses, excluding notable items | | | 8,666 | | | 8,662 | | | — | | | Income before income tax expense, excluding notable items | | | $3,439 | | | $3,287 | | | 4.6% | | | Income before income tax expense, GAAP-basis | | | $3,327 | | | $3,171 | | | 4.9% | | | | | | | | | | | | | | | Pre-tax margin, excluding notable items | | | 28.4% | | | 27.6% | | | 80 bps | | | Pre-tax margin, GAAP-basis | | | 27.4% | | | 26.4% | | | 100 bps | | | | |
C-3 20222023 Notice of Meeting and Proxy Statement / State Street Corporation D-3
TABLE OF CONTENTS | Operating Margin:
| | | | | | | | | | | | Operating margin, GAAP-basis | | | 26.1% | | | 25.5% | | | 60 bps | | | Less: Notable items | | | | | | | | | | | | Total other income(1) | | | (0.7) | | | — | | | | | | Acquisition and restructuring costs(2) | | | 0.5 | | | 0.4 | | | | | | Repositioning charges / (release) | | | — | | | 1.2 | | | | | | Deferred incentive compensation expense acceleration(3) | | | 1.2 | | | — | | | | | | Legal and other | | | 0.2 | | | (0.1) | | | | | | Operating margin, excluding notable items | | | 27.3% | | | 27.0% | | | 30 bps | |
| Total Revenue:
| | | | | | | | | | | | Total revenue, GAAP-basis | | | $12,027 | | | $11,703 | | | 2.8% | | | Less: Total other income(1) | | | (111) | | | — | | | nm | | | Total revenue, excluding notable items | | | 11,916 | | | 11,703 | | | 1.8% | | | Provision for credit losses | | | (33) | | | 88 | | | nm | | | | | | | | | | | | | | | Expenses:
| | | | | | | | | | | | Total expenses, GAAP-basis | | | 8,889 | | | 8,716 | | | 2.0% | | | Less: Notable expense items: | | | | | | | | | | | | Acquisition and restructuring costs(2) | | | (65) | | | (50) | | | 30.0 | | | Repositioning (charges) / release | | | 3 | | | (133) | | | nm | | | Deferred incentive compensation expense acceleration(3) | | | (147) | | | — | | | nm | | | Legal and other | | | (18) | | | 9 | | | nm | | | Total expenses, excluding notable items | | | 8,662 | | | 8,542 | | | 1.4% | | | Income before income tax expense, excluding notable items | | | $3,287 | | | $3,073 | | | 7.0% | | | Income before income tax expense, GAAP-basis | | | $3,171 | | | $2,899 | | | 9.4% | | | | | | | | | | | | | | | Pre-tax margin, excluding notable items | | | 27.6% | | | 26.3% | | | 130 bps | | | Pre-tax margin, GAAP-basis | | | 26.4% | | | 24.8% | | | 160 bps | | | | |
2022 Notice of Meeting and Proxy Statement / State Street Corporation C-4
TABLE OF CONTENTS
| | | | 2021 | | 2020 | | % Change
2021 vs. 2020 | | (Dollars in millions) | | | 2022 | | 2021 | | % Change
2022 vs. 2021 | | | Pre-tax Margin:
| | | | | | | | Pre-tax Margin:
| | | | | | | | | Pre-tax margin, GAAP-basis | | 26.4% | | 24.8% | | 160 bps | | Pre-tax margin, GAAP-basis | | 27.4% | | 26.4% | | 100 bps | | | Less: Notable items | | | | | | | | Less: Notable items | | | | | | | | | Total other income(1) | | (0.7) | | — | | | | Fee revenue(1) | | (0.1) | | — | | | | | Acquisition and restructuring costs(2) | | 0.5 | | 0.4 | | | | Total other income | | — | | (0.7) | | | | | Repositioning charges / (release) | | — | | 1.2 | | | | Acquisition and restructuring costs(2) | | 0.5 | | 0.5 | | | | | Deferred incentive compensation expense acceleration(3) | | 1.2 | | — | | | | Repositioning charges(3) | | 0.6 | | — | | | | | Legal and other | | 0.2 | | (0.1) | | | | Deferred incentive compensation expense acceleration | | — | | 1.2 | | | | | Pre-tax margin, excluding notable items | | 27.6% | | 26.3% | | 130 bps | | Legal and other | | — | | 0.2 | | | | | (Dollars in millions) | | Pre-tax margin, excluding notable items | | 28.4% | | 27.6% | | 80 bps | | | Operating Leverage:
| | | | | | | | | | | Operating leverage, GAAP-basis:
| | | | | | | | Operating Leverage:
| | | | | | | | | Total revenue, GAAP-basis | | $12,027 | | $11,703 | | 2.8% | | Operating Leverage, GAAP-basis:
| | | | | | | | | Total expenses, GAAP-basis | | 8,889 | | 8,716 | | 2.0% | | Total revenue, GAAP-basis | | $12,148 | | $12,027 | | 1.0% | | | Operating leverage, GAAP-basis | | | | | | 80 bps | | Total expenses, GAAP-basis | | 8,801 | | 8,889 | | (1.0)% | | | Operating leverage, excluding notable items: | | | | | | | | Operating leverage, GAAP-basis | | | | | | 200 bps | | | Total revenue, excluding notable items (as reconciled above) | | $11,916 | | $11,703 | | 1.8% | | Operating Leverage, excluding notable items: | | | | | | | | | Total expenses, excluding notable items (as reconciled above) | | 8,662 | | 8,542 | | 1.4% | | Total revenue, excluding notable items (as reconciled above) | | $12,125 | | $11,916 | | 1.8% | | | Operating leverage, excluding notable items | | | | | | 40 bps | | Total expenses, excluding notable items (as reconciled above) | | 8,666 | | 8,662 | | — | | | | | Operating leverage, excluding notable items | | | | | | 180 bps | | | Fee Operating Leverage:
| | | | | | | | | | | Fee operating leverage, GAAP-basis:
| | | | | | | | | | Total fee revenue, GAAP-basis | | $10,012 | | $9,499 | | 5.4% | | | | Total expenses, GAAP-basis | | 8,889 | | 8,716 | | 2.0% | | | | Fee operating leverage, GAAP-basis | | | | | | 340 bps | | | | Fee operating leverage, excluding notable items:
| | | | | | | | | | Total fee revenue, excluding notable items (as reconciled above) | | $10,012 | | $9,499 | | 5.4% | | | | Total expenses, excluding notable items (as reconciled above) | | 8,662 | | 8,542 | | 1.4% | | | | Fee operating leverage, excluding notable items | | | | | | 400 bps | | |
(1)
| Amount in 20212022 consists of $58a $23 million revenue-related recovery related to the sale of investment securities and $53 million gain on the sale ofsettlement proceeds from a majority share of our Wealth Manager Services business.2018 foreign exchange benchmark litigation resolution, which is reflected in foreign exchange trading services revenue. |
(2)
| Acquisition and restructuring costs of approximately $65 million in 2021,2022 related to the BBH Investor Services acquisition transaction that we are no longer pursuing. |
(3)
| Amount in 2022 reflects $50 million of which $52 millioncompensation and benefits expenses primarily related to our acquisitionstreamlining the Investment Services organization, and $20 million of Charles River Development and $13 million to our announced acquisition of BBH Investor Services. |
(3)
| Amount in 2021 reflects $142 millionoccupancy charges related to the acceleration of expenses associated with certain cash settled deferred incentive compensation awards and $5 million related to employee benefits.real estate footprint optimization. |
(4)
| We redeemed all outstanding Series C noncumulative perpetual preferred stock on March 15, 2020 at a redemption price of $500 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends. The difference between the redemption value and the net carrying value of approximately $9 million resulted in an EPS impact of approximately ($.03) per share in 2020. |
(5)
| We redeemed an aggregate of $500 million, or 5,000 of the 7,500 outstanding shares of our noncumulative perpetual preferred stock, Series F, for cash at a redemption price of $100,000 per share (equivalent to $1,000 per depositary share) plus all declared and unpaid dividends on March 15, 2021.The difference between the redemption value and the net carrying value of approximately $5 million resulted in an EPS impact of approximately ($.01) per share in 2021. |
(6)
| Amount in 2022 reflects increase to our average common equity from a temporary suspensionthe 2021 issuance of common share repurchases and common stock issued in connection with our planned acquisition of the BBH Investor Services business. We did not repurchase any common stock during the third and fourth quarters of 2021, and inacquisition transaction that we are no longer pursuing. In September 2021, we completed a public offering of approximately 21.7 million shares of our common stock at an offering price of $87.60 per share for net proceeds totaling approximately $1.9 billion. |
C-5 2022D-4 2023 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS Reconciliation of Non-GAAP 3 year average Return on Equity (ROE) - for the 2019-20212020-2022 Performance-based RSUs 2019-20212020-2022 ROE - 3 year average, GAAP basis
| | | 10.0%10.6%
| Less: Pre-established Performance-based RSU adjustments: | | | | Acquisitions and dispositions/ Other Income | | | (0.1) | Merger and integration expenses | | | 0.2 | Restructuring expenses | | | 0.4 | Common share issuance and repurchase suspension | | | 0.20.4
| Legal and regulatory
| | | 0.3
| 2019-20212020-2022 ROE - 3 year average, Adjusted ROE
| | | 11.011.5%
|
Reconciliation of Non-GAAP 3 year average Pre-Tax Margin - for the 2019-20212020-2022 Performance-based RSUs 2019-20212020-2022 Pre-tax Margin - 3 year average, GAAP basis
| | | 24.7%26.2%
| Less: Pre-established Performance-based RSU adjustments: | | | | Acquisitions and dispositions/ Other Income | | | (0.3) | Merger and integration expenses | | | 0.60.5
| Restructuring expenses | | | 1.11.0
| Legal and regulatory
| | | 0.5
| 2019-20212020-2022 Pre-tax Margin - 3 year average, Adjusted Pre-tax Margin
| | | 26.627.4%
|
20222023 Notice of Meeting and Proxy Statement / State Street Corporation C-6 D-5
TABLE OF CONTENTS State Street Corporation
One Lincoln Street
Boston, MA 02111-2900 |