2013 Executive Compensation HighlightsKate Mitchell
(Committee Chair) | | | | | | | Jeff Maggioncalda | | John Robinson | | Garen Staglin | | | | | | H I G H L I G H T S
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¿ Strong 2013 Company Financial Performance | PRIMARY EXECUTIVE COMPENSATION ELEMENTSFOR 2016 - SUMMARY¿ Performance in Excess of Incentive Plan Targets¿ |
Continued Pay for Performance Alignment¿ | | | | | | | | | | | | | | | | | Base Salary | | Incentive Compensation Continued Emphasis of Performance-Based and Long-Term Pay¿ Strong Support for 2013 Say on Pay Vote
Plan (ICP) | | Performance-Based Restricted Stock Units (PRSUs) | | Stock Options | | Restricted Stock Units (RSUs) | Form of Compensation | | | | -------------------- Cash -------------------- | | ------------------------------- Equity------------------------------- | | | ---- Fixed ---- | | -------------------------- Performance-Based ----------------------- | | -----Fixed^----- | | | | | Performance Timing | | | | --------- Short-Term Emphasis --------- | | ----------------------- Long-Term Emphasis ----------------------- | Measurement Period | | | | Ongoing | | 1 Year | | 3 Years | | 4 Year Vesting | | | | | | |
Key Performance Metrics Applicable | | | | --- | | | • | | Continued pay for performance --- strong incentive compensation and performance alignment. In 2013, the key elements of our executive incentive compensation continued to be tied to: (i) annual return on average equity (“ROE”) and annual total stockholder return (“TSR”), and (ii) our company stock price.
ROE^^ (budgeted and relative) | |
| | | | | | | | | | | Element of Incentive
Compensation
| | Earnings Opportunity | | Relevant Performance
Metric | | 2013 Outcomes | | | | | | | Cash | | Annual Cash Incentives (“ICP”) | | Executive pool subject to
maximum aggregate funding of 200% of corporate target
__________________
| | Relative TSR^^; ROE; Selected Fee Income | | Stock Price Appreciation Actual payout dependent on company/individual performance
| | ROE
against our corporate
target and against peer
performance
| | 151% of executive pool
funded based on ROE
performance
________________
Individual payouts
varied
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Above-Target Performance
| | | | | | | Equity | | Performance-Based Restricted Stock Units (“PRSUs”)* | | 0% to 150% of target award | | TSR
against peer performance
Company stock price**
| | 150% of target award
earned based on TSR
performance
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Above-Target Performance
| | Restricted-Stock Units (“RSUs”)* | | Fixed award | | Company stock price** | | Value subject to
company stock price
performance
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87% Increase
in Stock Price in One Year (2013)
| | | Stock Options*
| | | | | Determination ofPerformance-Based Payouts | | | | --- | | Formulaic + Discretion | | Formulaic + Negative Discretion | | --- |
| * | On January 26, 2017, we announced plans to appoint Mr. Descheneaux as the President of Silicon Valley Bank, to become effective upon the hiring of a new Chief Financial Officer (a search for which is currently underway). | |
| ** | As of February 6, 2017, Ms. Parsons transitioned from her former role as Head of Specialty Banking to thenon-executive role of Credit Risk Manager, focusing on the Company’s global banking activities. | |
| ^ | Any incremental value realized above the grant value of time-based RSUs, as well as PRSUs, is based on stock price appreciation. | |
| ^^ | ROE – Return on Average Equity; TSR – Total Stockholder Return. | |
27 | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
| 2016 CEO COMPENSATIONAND OTHER HIGHLIGHTS |
| CEO PAY ALIGNMENTWITH COMPANY PERFORMANCE |
| * Subject
The Compensation Committee takes into consideration a variety of factors in determining actual CEO compensation. For illustrative purposes, the graphs above show the general comparison between our CEO’s total actual compensation (as reported in our 2016 Summary Compensation Table) and selected key financial metrics: • Diluted Earnings per Common Share (“EPS”) and Net Income — both core financial metrics are generally used to multi-year vestingevaluate overall Company performance. ** Earnings opportunity¡ The metrics are also taken into consideration, in particular, for the determination of the CEO’s ICP award.
¡ Net income includes fee income from our foreign exchange and credit card-based businesses. Such selected fee income is generally basedone of the performance metrics applicable to executive PRSU awards. • Relative Return on economic benefit derived from Company stock priceEquity (“ROE”) Performance — one of the metrics used to measure performance against our relevant peer group for purposes of determining the funding of our ICP. |
| EMPHASISON PERFORMANCE-BASED, LONG TERM CEO PAY (COMPETITIVEWITH PEERS) |
| | | | | | | | | Fixed v. Performance-Based CEO Target Pay (Compared to 2016 Peer Group) | | Short-Term v. Long-Term CEO Target Pay (Compared to 2016 Peer Group) | | |
| | | | | | | | | Fixed Pay: • Base Salary • RSUs Performance-Based: • ICP • PRSUs • Stock Options | | | | | | | | Short-Term Pay: • Base Salary • ICP Long-Term Pay: • PRSUs • RSUs • Stock Options |
| BALANCED CEO TARGET PAY MIX |
CEO Target Pay Mix | | | 81%OF CEO TARGET PAYIS AT-RISK. | | |
| In 2016, we maintained an annual equity burn rate of 1.7% under our 2006 Equity Incentive Plan. We continue to stay below our long-standing commitment to keep our annual equity burn rate below 2.5% of our total number of shares outstanding as of the beginning of each fiscal year. |
28 | | | | | EXECUTIVE OFFICERS & COMPENSATION
| • | | Correlated relationship between CEO pay and Company performance. The graphs below illustrate the general directional relationship between our CEO’s total compensation (as reported in our 2013 Summary Compensation Table) and two of our key financial performance measures, earnings per share (“EPS”) and ROE.
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| * | Excludes a special one-time equity grant for the CEO for his promotion to that position in 2011, which was then valued at $1.1 million.Compensation Discussion & Analysis
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| • | | Continued emphasis of target performance-based pay and balance of short-term/long-term pay amongst our CEO and other NEOs. As compared to our Compensation Peer Group, we generally allocate more target pay on performance-based and long-term pay for our CEO and our other NEOs.
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| | EXECUTIVE COMPENSATIONAND PRACTICES |
| | | COMPENSATION OVERSIGHTAND GOVERNANCE |
| | | • | * | Based on estimated average target pay mix of Compensation Peer Group. Other NEOs do not include Mr. Jones.
| | Independent Board oversight of CEO compensation. The independent members of our Board of Directors (acting as a committee) oversee and approve the compensation of our CEO, based on recommendations made by the Compensation Committee. |
| | | • | | | | | | | Performance-Based:
Annual cash incentives, PRSUs and
stock options
| | Fixed Pay:
Base salary and
RSUs
| | Long-Term Pay:
PRSUs, RSUs and stock options
| | Short-Term Pay:
Base salary and annual cash
incentives
| | Independent committee oversight ofnon-CEO executive compensation. Our Compensation Committee (comprised of all independent directors) oversees and approves the compensation of allnon-CEO executive officers. |
| • | | Refinement of Incentive Payout Formula. We refined the payout formulas for our ICP and PRSU awards relative to peer performance. These payout formulas are based on our corporate performance ranking within four quartile or five quintile groups of our peers. In 2013, we continued to cap payouts for ranking within the top group and to withhold any payouts for falling within the bottom group, but we modified the payout formula for the middle groups on a more linear basis to incentivize incremental performance.
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| | • | | Continued emphasis of long-term incentives on equity-based awards. To align with stockholder interests, we have continued to grant long-term incentives in the form of equity awards.
| | Independent compensation consultant to the Compensation Committee. The Compensation Committee’s independent compensation consulting firm does not provide any other services to the Company. |
| • | | Strong stockholder support of 2013 Say on Pay vote. We received 94% of the votes cast in approval of our 2012 executive compensation program (as described in last year’s proxy statement). We submit an advisory Say on Pay vote to our stockholders on an annual basis.
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| Executive Compensation Governance and Practices•
| | Active Compensation Committee engagement. In 2016, the Compensation Committee held twelve (12) meetings to discuss compensation matters, including an extended annual compensation strategy session. |
| • | | Independent oversight of executive compensation. Our Board of Directors (comprised of all independent directors except for our CEO) oversees and approves the compensation of our CEO. (Our CEO does not participate in the Board’s discussions or decisions regarding his compensation.) Our Compensation Committee (comprised of all independent directors) makes recommendations to the Board about our CEO’s compensation, and oversees and approves the compensation of all other executive officers.
| | FOCUSON STOCKHOLDER INTERESTS |
| | | | • | | Our incentives are subject to certain minimums and maximum limits.1 We establish minimum thresholds for certain incentives where awards/payouts may not be earned or made unless actual performance meets or exceeds thresholds,
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• Say on Pay. We conduct a “Say on Pay” advisory vote on an annual basis. Our Board of Directors values the opinions of our stockholders and believes an annual advisory vote allows our stockholders to provide us with their input on our executive compensation program. 29
• EXECUTIVE OFFICERS & COMPENSATIONRobust executive equity ownership guidelines. Our executives are subject to robust equity ownership guidelines, which are regularly reviewed. In particular, our CEO’s minimum requirement is equal to six (6) times his annual base salary. (No changes were made in 2016.)
• Active stockholder engagement. In addition to our active investor outreach activities throughout the year, as part of our annual proxy statement preparation process, we routinely and proactively reach out to our key stockholders to solicit their feedback about our executive compensation program, including our equity compensation practices. • Focus on stockholder return. Our performance metrics for our executives’ PRSUs and the funding of our ICP include our relative TSR performance and the Company’s relative ROE performance, respectively, which in both cases include performance as measured against our peers. | | | | SAYON PAY FREQUENCY We are conducting our “Say on Pay” frequency vote this year, and similar to 2011, the Board has recommended that stockholders vote in favor of an annual frequency. (See Proposal No. 4 on page 54.) | |
| COMPENSATION RISK MITIGATIONAND MANAGEMENT |
| | | • | | Compensation risk management. The Compensation Committee, together with its compensation consultant, conducts annual risk assessments of our compensation program, which include process, tone and culture. Based on those assessments, we do not believe that our compensation program creates risks that are reasonably likely to have a material adverse effect on the Company. Our compensation program is also reviewed by our internal audit function, as well as discussed as part of our Risk Appetite Statement and enterprise risk management efforts. Moreover, our compensation programs and risks are routinely discussed at the Board-level beyond the Compensation Committee. In particular, the chairperson of our Compensation Committee reports to and discusses compensation risk issues with the full Board and the Risk Committee. Compensation matters are also reviewed with the Audit Committee, particularly as it relates to exclusions under our ICP funding. | | | • | | Our incentives are subject to certain minimums and maximum limits. We establish minimum thresholds for certain incentives where awards/payouts may not be earned or made unless actual performance meets or exceeds thresholds, such as our PRSUs. We also establish maximum limits such as for our executive PRSU awards, our annual cash incentives funding, and our broad-based profit sharingemployee stock ownership plan. | | | • | | No hedging or pledging. Pursuant to our Insider Trading Policy, our directors, executive officers and employees are not permitted to “hedge” ownership by selling puts in or selling short any of our publicly-traded securities at any time. Additionally, we have not permitted any of our executive officers to pledge, or use as collateral, our securities to secure personal loans or other obligations. |
| • | | Our executives’ equity awards are made under our equity plan and have the following features/practices:
29 | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
| EXECUTIVE COMPENSATION FEATURES |
| ¡ | | No evergreen provision | | | • | | Competitive benchmarking against peers. In making compensation decisions, we consider compensation and performance data from our benchmarking reference peer group and other relevant and comparable industry sources. Additionally, we routinely review, on at least an annual basis, the composition of the companies within the peer group. See “Competitive Benchmarking Against Peers” below. | | | • | | Double trigger change in control severance. Our executive Change in Control Plan encourages continued dedication and alignment with stockholders’ interests through a potential change in control event, and is subject to a double trigger feature. | | | • | | No 280G excise tax gross-ups. Our executives are not entitled to any Section 280G excise tax gross-up payments under our executive Change in Control Plan or otherwise. | | | • | | No employment agreements. We do not have any individual employment agreements with any of our named executive officers. | | | • | | No executive perquisite or benefit programs. We do not have any executive perquisite programs. Other than our executive Change in Control Plan, we do not have any special executive programs that offer benefits exclusively to our executives. Our executives receive the same retirement, health, welfare and other benefits that are generally available to our employees, and may also participate in certain programs that are available to members of senior management, such as our Deferred Compensation Plan. From time to time and on a limited basis, we may provide individual benefits deemed to be perquisites, which we believe serve, or are related to, a reasonable business purpose. | | | • | | No special executive retirement benefits. Our executives are eligible to participate in our 401(k) plan (or other employee-funded retirement plan) that is broadly available to all employees. We do not provide any other pension, excess retirement, or supplemental executive retirement (“SERP”) plans to any executive. |
| ¡ | | No repricingOur executives’ equity awards are made under our 2006 Equity Incentive Plan and have the following features/practices: General Features/Practices: | ¡ | | No recycling of shares used to pay for the exercise price of stock options |
| ¡ | | Annual burn rate maximum of 2.5% |
| ¡ | | No single-trigger vesting upon change in control |
| ¡ | | No tax gross-ups for plan awards |
| ¡ | | Ability to qualify performance-based equity awards for 162(m) tax deductibility, where appropriate |
Stock Options: | ¡ | | No stock option repricing/exchange without stockholder approval |
| ¡ | | Annual burn rate maximum of 2.5% | ¡ | | Each full value award share counted as 2 | ¡ | | Minimum 100% fair market value exercise price for options |
| ¡ | | Maximum 7-year term for options |
| ¡ | | Minimum 1-year vesting for stock options awards |
Our typical practice for executives is vesting over 4 years Full Value Awards: | ¡ | | Each full value award share counted as two shares |
| ¡ | | Minimum 100% fair market value exercise price for options |
| ¡ | | Minimum 3 year | ¡ | | Minimum 3-year time-based vesting for full value awards | |
| ¡ | | Minimum 1 yearOur typical practice for executives is vesting over 4 years | ¡ | | Minimum 1-year vesting for performance-based full value awards | |
| ¡ | | Additional 2 year time-based vesting requirement on earned performance-based equity awards for NEOs | |
| ¡ | | Maximum seven-year term for options | |
Our typical practice for executives is vesting over 3 years | • | | Robust executive equity ownership guidelines. Our executives are subject to robust equity ownership guidelines. The minimum requirement applicable to the CEO was established based on a multiple of over five (5) times his annual base salary at the time the standard was adopted.
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| • | | No hedging or pledging. Pursuant to our Insider Trading Policy, our directors, executive officers (including our NEOs) and employees are not permitted to “hedge” ownership by selling puts in or selling short any of our publicly-traded securities at any time. Additionally, we have not permitted any of our executive officers to pledge, or use as collateral, our securities to secure personal loans or other obligations.
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| • | | No employment agreements. We do not have any individual employment contracts with any of our executive officers.
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| • | | Competitive benchmarking against peers. In making compensation decisions, we consider compensation and performance data from our benchmarking reference peer groups and routinely review the composition of the companies within the peer groups. To enhance our peer benchmarking, we have separate compensation and performance peer groups.
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| • | | Compensation risk management. The Committee, together with its compensation consultant and our Chief Risk Officer, conduct annual compensation risk assessments. Based on those assessments, we do not believe that our compensation program creates risks that are reasonably likely to have a material adverse effect on the Company. In addition, our compensation program is regularly reviewed as part of our enterprise-wide risk management and internal audit programs.
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| • | | Double trigger change in control severance. Our executive Change in Control Plan encourages continued commitment and alignment with stockholders’ interests through a potential change in control event.
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| • | | No 280G excise tax gross-ups. In 2012, we eliminated a Section 280G excise tax gross-up provision under our Change in Control Plan for executives and as a result, no executives are entitled to any such gross-ups.
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| • | | No executive perquisite program. We do not have any executive perquisite programs or special executive benefits. As typical for global companies, we provided certain benefits to Mr. Jones primarily relating to his international assignment and relocation to China, which may be deemed perquisites for purposes of disclosure under the Summary Compensation Table under the “Compensation for Named Executive Officers” section.
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| • | | No executive benefit programs. We do not have any programs that offer benefits exclusively to our executives, except our executive Change in Control Plan. Our executives receive the same retirement, health, welfare and other benefits that are generally available to our employees, and may also participate in certain programs that are available to members of senior management, such as our Deferred Compensation Plan.
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| • | | No pensions or SERPs. We do not provide any pension, excess retirement, or supplemental executive retirement (“SERP”) plans to any executive. Executives are eligible to participate in our broadly-available 401(k) plan.
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| • | | Active stockholder engagement. As part of our proxy statement preparation process, we routinely and proactively reach out to our larger stockholders to solicit their feedback about our executive compensation program, including our equity incentive plan.
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| • | | Independent compensation consultant to the Committee. The Committee utilizes an independent compensation consulting firm that does not provide any other services to the Company.
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* * * * 1 Subject to the Committee’s sole discretion.
30 | | | | | EXECUTIVE OFFICERS & COMPENSATION
Compensation Discussion & Analysis |
| EXECUTIVE COMPENSATION PHILOSOPHYAND OBJECTIVES |
The key compensation philosophy and objectives of our executive compensation program and practices are as follows: | • | | EXECUTIVE COMPENSATION PHILOSOPHY
Our executive compensation practices continue to be grounded byAligning the interests of our overarching compensation philosophy, the key principles of which are:
| • | | Align compensation with business objectives and stockholder interests. Our executive compensation plans are designed to:stockholders, our Company and employees;
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| • | | Tying pay to Company and individual performance through appropriate performance metrics and consideration of market and business environment dynamics; | ¡ | | Tie pay to Company and individual performance through appropriate performance metrics.
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| • | | Maintaining an appropriate pay mix, with an emphasis on performance-based pay and long-term incentive compensation; | |
| • | | Paying competitively based on external market standards, while considering internal parity; | |
| • | | Recruiting and maintaining a cohesive,top-talent executive management team; and | |
| • | | Focusing on strong governance and risk management practices. | |
| ¡Our compensation philosophy and program take into consideration our business objectives (including our long-term global growth); the relative complexity our business diversity represents in an organization of our size; stockholder interests; appropriate risk management practices; emerging trends in executive compensation (particularly for financial institutions); applicable regulatory requirements; and market practices. | COMPENSATION GOVERNANCE | | Provide for executive equity ownership to align economic interests with stockholders.
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| ¡ | | Provide the opportunity for compensation based upon stockholder returns and key financial measures.
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| ¡ | | Take into account the dynamics of the market and business environment within which the Company and management operate.
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| • | | Establishan appropriate mix of pay between performance-based and non-performance-based pay, as well as long-term and short-term compensation, with emphases on performance-based pay and long-term incentive compensation.
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| • | | Design incentive compensation on Company and individual performancewithout encouraging undue risk-taking.
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| • | | Pay competitively, relying primarily on external market standards while also considering internal parity and the importance of recruiting and maintaining a cohesive, top-talent executive management team.
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| • | | Maintain strong governance practices over our program, including independent Board-level oversight.
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Our compensation philosophy and program take into consideration our business objectives, the relative complexity this business diversity represents in an organization of our size, stockholder interests, appropriate risk management practices, emerging trends in executive compensation (particularly for financial institutions), applicable regulatory requirements, and market practices.
Compensation Governance
The Company’s executive compensation program is supported by strong corporate governance and Board oversight:
Role of Compensation Committee; Committee Meetings | • | | Role of Compensation Committee. All members of the Committee are “independent” under applicable Nasdaq rules. The Committee has primary oversight of our executive compensation program as provided in its charter, including the design and administration of executive compensation plans in a manner consistent with the executive compensation philosophy described above. The Committee reviews and approves the compensation of all executive officers (except for the CEO), and recommends the compensation of the CEO for the approval of the independent members of the Board. In carrying out its oversight responsibilities, the Committee routinely reports to the Board on the actions it has taken, as well as confers with the Board on compensation matters, as necessary. The Committee also makes recommendations for all other compensation-related matters that require Board approval. During 2013, the Board did not reject or modify in any material way any action of or recommendation by the Committee.
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Committee members hold meetings on a regular basis (8 meetings in 2013), and routinely meet
All members of the Compensation Committee are “independent” under applicable NASDAQ rules. The Compensation Committee has primary oversight of our executive compensation program as provided in its charter, including the design and administration of executive compensation plans in a manner consistent with the executive compensation philosophy described above. The committee: (i) reviews and recommends for independent Board approval the compensation of the CEO, and (ii) reviews and approves the compensation of all othernon-CEO executive officers. In carrying out its oversight responsibilities, the committee regularly reports to the Board on the actions it has taken, as well as confers with the Board on compensation matters, as necessary. The Compensation Committee also makes recommendations for all other compensation-related matters that require full Board approval. Additionally, the committee coordinates with other Board committees, as appropriate, including discussing: (i) compensation risk management with the Risk Committee, and (ii) financial items proposed for exclusion from the funding of our ICP with the Audit Committee. Membership of the Risk Committee includes the chairperson of the Compensation Committee, as well as one other member of the Compensation Committee who also serves as the chairperson of the Audit Committee. The Compensation Committee meets on a regular basis, and routinely meets in executive session without management present. During 2016, the Compensation Committee held twelve (12) meetings, including an extended annual session where the Compensation Committee met with the Board Chair, as well as key members of executive management, including the CEO, the Chief Financial Officer, the Head of Human Resources and the General Counsel, to discuss considerations for reviewing and enhancing compensation strategy in light of the Company’s strategic objectives, as well as relevant market trends. Role of the Independent Board Members | • | | Role of the Board. All members of the Board, except the CEO, are “independent” under applicable Nasdaq rules. Subject to the recommendation of the Committee, the Board (except for the CEO) reviews and approves the compensation for the CEO. Such review and approval are typically conducted during the executive session portion of the Board’s meetings,
Subject to the recommendation of the Compensation Committee, all of the independent directors of the Board (all Board members except the CEO, acting as a committee) review and approve the compensation for the CEO. Such review and approval are conducted during the executive sessions, where neither the CEO nor any other member of management is present. Role of Chief Executive Officer |
| • | | Role of Compensation Committee Consultant. The Committee has retained Pay Governance LLC, an independent executive compensation consultant, to provide advice and recommendations on all compensation matters under its oversight responsibilities as defined in the Committee’s charter. The Committee in its sole discretion selects the consultant, and determines its compensation and the scope of its responsibilities.
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In 2013, Pay Governance assisted the Committee with advice and recommendations regarding the Company’s compensation philosophy and strategies; advice on executive and director compensation levels and practices, including
At the Compensation Committee’s request, our CEO will attend portions of the Compensation Committee’s meetings and executive sessions to discuss the Company’s performance and compensation-related matters. While he does not participate in any deliberations relating to his own compensation, he shares his assessment of the performance of the other executive officers with the Compensation Committee. Based on his assessment and the Company’s overall performance, our CEO makes recommendations to the Compensation Committee on any compensation decisions or changes for the other executive officers. The committee considers the CEO’s recommendations, as well as data and analyses provided by the Compensation Committee’s independent consultant (and to a lesser extent, management), but retains full discretion to approve, or recommend for the independent members of the Board to approve, all executive compensation. 31 | | | | | EXECUTIVE OFFICERS & COMPENSATION
review and recommendations on CEO compensation and evaluation of CEO pay and realizable pay and Company performance; advice on the Company’s Compensation and Performance Peer Groups; guidance on the design of our compensation plans and executive/director stock ownership guidelines; evaluation of performance metrics and peer performance; assistance with the Committee’s periodic review of potential risks associated with our compensation programs; analysis of Company equity utilization; recommendations regarding our equity incentive plan; and periodic reports to the Committee on market and industry compensation trends and regulatory developments. The Committee did not engage Pay Governance for any additional services outside of executive and director compensation consulting during 2013. In addition, the Committee does not believe there were any potential conflicts of interest that arose from any work performed by Pay Governance during 2013.Discussion & Analysis
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Role of Compensation Committee Consultant | • | | Role of Chief Executive Officer. At the Committee’s request, our CEO will attend portions of the Committee’s meetings and executive sessions to discuss the Company’s performance and compensation-related matters. While he does not participate in any deliberations relating to his own compensation, he shares his performance reviews for the other executive officers with the Committee. Based on these reviews and the Company’s overall performance, our CEO makes recommendations to the Committee on any compensation changes for the other executive officers. The Committee considers the CEO’s recommendations, as well as data and analyses provided by management, but retains full discretion to approve or recommend for the independent members of the Board to approve all executive compensation.
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The Compensation Committee has continued to retain Pay Governance LLC, an independent executive compensation consultant, to provide advice and recommendations on all compensation matters under its oversight responsibilities as defined in the Compensation Committee’s charter. The Compensation Committee in its sole discretion selects the consultant, and determines its compensation and the scope of its responsibilities. In 2016, Pay Governance assisted the Compensation Committee with: advice and recommendations regarding the Company’s compensation philosophy and strategies; advice on executive and director compensation levels and practices, including review and recommendations on CEO and other executive compensation and evaluation of CEO pay and Company performance; advice on the Company’s 2016 Peer Group; guidance on the design of our compensation plans and executive/director stock ownership guidelines; evaluation of performance metrics and peer performance; assistance with the Compensation Committee’s annual review of potential risks associated with our compensation programs; recommendations regarding our 2006 Equity Incentive Plan; and periodic reports to the Compensation Committee on market and industry compensation trends and regulatory developments. The Compensation Committee did not engage Pay Governance for any additional services outside of executive and director compensation consulting during 2016. In addition, the Compensation Committee does not believe there were any potential conflicts of interest that arose from any work performed by Pay Governance during 2016. 2013 Advisory Vote on 2012 Executive Compensation (Say on Pay)
We submit an advisory vote on executive compensation, or Say on Pay, to our stockholders on an annual basis. In 2013, we received 94% of the votes cast in approval of our 2012 executive compensation program (as described in our 2013 proxy statement). (This level of support was consistent with the prior two years, where we received 94% and 95% of the votes cast in 2012 and 2011, respectively.) In light of the strong support and other feedback we solicited from our stockholders last year, the Committee made no material changes to our compensation philosophy, policies or overall program. Nevertheless, the Committee continues to pursue its pay-for-performance approach in determining executive compensation. The Committee will continue to consider changes to the program on an ongoing basis, as appropriate, in light of evolving factors such as business environment and competition for talent.
We submit an advisory vote on executive compensation, or Say on Pay, to our stockholders on an annual basis. In 2016, over 98.5% of the votes cast approved our 2015 executive compensation program (as described in our 2016 proxy statement). In light of the strong support and other feedback we have solicited from our stockholders, the Compensation Committee made no material changes to our compensation philosophy, policies or overall program. Nevertheless, we continue to carry out our executive compensation program based on our key philosophy and objectives as described above. The Compensation Committee will continue to consider changes to the program on an ongoing basis, as appropriate, in light of evolving factors such as our corporate strategy, the business environment and competition for talent, as well as stockholder feedback. 32 | | | | | EXECUTIVE OFFICERS & COMPENSATION
Compensation Discussion & Analysis |
Competitive Benchmarking Against Peers
Consistent with 2012, the Committee continued to utilize two peer benchmarking groups to compare our compensation and performance to the market:
| COMPETITIVE BENCHMARKING AGAINST PEERS |
For 2016, the Compensation Committee benchmarked and compared our compensation and performance with our peer companies, in a manner consistent with prior years. Our2016Peer Group companies are companies that are similarly sized, have certain business model similarities and compete with us for our talent. (See below for a list of our 15 peer group companies for 2016.) In making compensation decisions, the Committee considers competitive compensation data from itsCompensation Peer Group, which includes companies that are similarly-sized, have some business model similarities and compete with us for our talent.
In measuring performance for purposes of compensation decisions, the Committee considers performance data from itsPerformance Peer Group, which includes companies with similar business models and some larger companies.
| | | | • | | We measure our relative performance against our peers for funding our Incentive Compensation Plan and PRSU awards. (See “Annual Cash Incentives – ICP Funding – ROE Against Performance Peer Group” and “Equity Incentive – TSR Against Compensation Peer Group.”
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The Compensation Committee, with the Committee’sits compensation consultant and management, reviews on at least an annual basis, the composition of companies for boththe peer groups.group. In determining the composition, of each peer group, the Compensation Committee considers various factors and characteristics including, but not limited to, business model, complexity of the business, market capitalization, asset size, assets under management, number of employees, business model and complexity of the platform, and performance on financial and market-based measures. For 2013, they determined that The 2016 Peer Group reflects the namedremoval of two companies continuedfrom our 2015 Peer Group: (i) City National Corp., which was acquired during 2015; and (ii) MB Financial, Inc., due to be appropriate and did not make any changesthe lower total asset level relative to either group.the Company. No new companies were added to the 2016 Peer Group. | | | | | Company | | Peer Group | | Compensation | | Performance | Associated Banc-Corp | | ü | | ü | Bank of Hawaii Corp | | ü | | ü | BOK Financial Corp | | ü | | ü | CapitalSource Inc. | | ü | | | City National Corporation | | ü | | ü | Comerica Incorporated | | | | ü | Commerce Bancshares, Inc. | | ü | | ü | Cullen/Frost Bankers, Inc. | | ü | | ü | CVB Financial Corp. | | ü | | | East West Bancorp, Inc. | | ü | | ü | First Citizens Bancshares, Inc. | | ü | | | FirstMerit Corporation | | ü | | ü | First Republic Bancorp | | ü | | ü | Huntington Bancshares | | | | ü | Investors Bancorp, Inc. | | ü | | | MB Financial, Inc. | | ü | | ü | Prosperity Bancshares, Inc. | | ü | | ü | Raymond James Financial, Inc. | | ü | | | Signature Bank | | ü | | ü | TCF Financial Corporation | | ü | | ü | UMB Financial Corporation | | ü | | ü | Umpqua Holdings Corporation | | ü | | ü | Valley National Bancorp | | ü | | ü | Webster Financial Corp. | | ü | | ü | Zions Bancorporation | | | | ü | Total Companies | | 22 | | 20 |
It is important to note that in determining executive compensation, the Compensation Committee does not solely rely on comparative data from thesethe 2016 Peer Group. Such comparative data provides helpful market information about our peer groups.companies, but the Compensation Committee does not target any specific positioning or percentile, nor does it use a formulaic approach, in determining executive pay levels. The Compensation Committee also utilizes other resources, including published compensation surveys (from Towers Watson and McLagan) and other proxy data. All such comparative peer data and supplemental resources are considered, along with the Company’s pay for performance and internal parity objectives. All applicable information is reviewed and considered in aggregate, and the Compensation Committee does not place any particular weighting on any one factor. | | | | 2016 Peer Group | | | Associated Banc-Corp BOK Financial Corp Comerica Incorporated Commerce Bancshares, Inc. Cullen/Frost Bankers, Inc. East West Bancorp, Inc. FirstMerit Corporation* First Republic Bancorp Huntington Bancshares Investors Bancorp, Inc. Prosperity Bancshares, Inc. Signature Bank Umpqua Holdings Corporation Webster Financial Corp. Zions Bancorporation | | | * Acquired during 2016; for performance benchmarking purposes, we replaced this company with the performance average of the applicable metric of the other peer companies at the end of 2016. | |
33 | | | | | EXECUTIVE OFFICERS & COMPENSATION
Compensation Discussion & Analysis |
| ELEMENTSOF EXECUTIVE COMPENSATION |
| | | | | | | | | | | | | | | | | Component and Purpose | | 2013 Executive Compensation
2016 Key Highlights | | | | | | General | | NEOs | | | | | | | | | | | | | | | | | | Base Salary Provides ongoing fixed cash pay. | | --- | | Annual base salary stayed at prior year’s level or was increased between 1.6-6.0% | | | | | | Annual Cash Incentives Provides short-term (annual) performance-based cash incentive compensation opportunity under our ICP. | | No material changes to funding methodology for 2016: ¡ 2/3 of the pool based on ROE performance against our annual target ROE; and ¡ 1/3 of the pool based on relative ROE performance against peer performance. Based on the Company’s ROE performance above its annual target and its ranking against its peers, as well as the Company’s overall performance, 135% of the 2016 total ICP pool was funded. | | Annual ICP targets stayed at prior year’s level or was increased by 11.1 to 16.7%. For 2016, actual ICP awarded ranged from 124% to 167% of individual target payout. | | | | | | | | | | | | | | | | Performance-Based Restricted Stock Units (“Summary of 2013 Executive Compensation ComponentsPRSUs”) | Provides incentives to motivate and retain executives and to reward for our performance relative to peers based on certain specific metrics. | | PRSUs granted in 2016 vest subject to performance over a3-year period based on (each 50% of the award): (i) the Company’s TSR performance relative to peers; and (ii) the Company’s ROE and Selected Fee Income performance. | | 2016 allocation represented 50% of the target value of each executive’s total equity compensation | | | | | Stock Options Provides incentives for long-term creation of stockholder value over a 4-year period. | | All stock options and RSU awards are subject to standard annual vesting over a4-year period | | 2016 allocation of stock options and RSU awards each represented 25% of the target value of each executive’s total equity compensation | | | | | Restricted Stock Units (“RSUs”) Provides incentives for retention and long-term creation of stockholder value over a 4-year period. | | | | | | | | | | | | | | | | Component and Purpose | | 2013 Key Highlights | Annual Cash Compensation |
34 | | | | | Base Salary
Provides ongoing fixed cash pay.
| | • Each NEO received a limited merit increase.
• Mr. Jones received a merit increase and a promotion increase in connection with his new role as President of Asia.
| | Annual Cash Incentives
Provides short-term (annual) performance-based cash incentive compensation opportunity under our ICP.
| | Funding of 2013 ICP Pool
• Funding of our annual ICP pool is determined and approved by the Committee and is subject to:
¡ ROE performance against our annual target ROE (2/3 of the pool); and
¡ Relative ROE performance against Performance Peer Group performance (1/3 of the pool)
• Annual ICP funding accruals are made and monitored by the Committee on a quarterly basis, and adjusted for non-recurring or other extraordinary items, to the extent determined by the Committee (in consultation with the Audit Committee).
• Based on the Company’s ROE performance above its annual target and within the fourth quintile of the Performance Peer Group, 151% of the 2013 executive incentive pool was funded. This funding is also based on the Company’s overall performance in 2013.
Individual 2013 ICP Awards
• Individual ICP awards were determined subject to the extent of pool funding, and overall Company and individual performance.
• For 2013, each NEO and Mr. Jones received between 157% to 180% of his or her target payout.
| Long-Term Equity Incentive Compensation | | Stock Options
Provides incentives for long-term creation of stockholder value over a four-year period.
| | • No material changes in our executive equity compensation practices from prior year.
• Continued to emphasize long-term incentives on equity to align executives with stockholder interests.
• Continued to use a mix of equity awards which included PRSUs, RSUs, and stock options.
• 2013 PRSUs were subject to TSR performance relative to peer performance. Based on the Company’s 2013 TSR ranking within the top quartile of the Compensation Peer Group, the Committee deemed 150% of the PRSUs earned, which then are subject to further time-based vesting through December 20, 2015.
| | Performance-Based Restricted Stock Units(“PRSUs”)
Provides incentives to motivate and retain executives and to reward for our TSR performance relative to peer performance.
| | | Restricted Stock Units(“RSUs”)
Provides incentives for retention and long-term creation of stockholder value over a four-year period.
| | Benefits / Perks | | Health/Welfare and Retirement Programs; Perquisites
As further discussed below, executives receive health, welfare and retirement benefits that are generally available to employees.(See also “Other Post-Employment Benefits” below.)
We do not have any executive perquisite programs or special executive benefits.
|
34
EXECUTIVE OFFICERS & COMPENSATION
Compensation Discussion & Analysis |
Elements
We pay base salaries in order to provide executives with a reasonable level of fixed short-term compensation. Executive base salary levels are typically reviewed at least annually by the Compensation Committee and adjusted as appropriate. Such adjustments generally consist of merit increases, promotions or changes in responsibilities, or market adjustments. Base salaries are determined on an individual basis. When determining any base salary increases, the Compensation Committee considers an individual’s total compensation package, his or her performance, Company performance, comparative peer and market compensation data, internal parity, and other relevant factors, including the scope of the executive’s responsibilities relative to peers and other executives, and retention concerns. | | | | | | | | | | | | | | | | | | | | | | | NEO | | | | Percentage Increase from 2015 | | | | 2016 Annual Base Salary | | | | | | | | | Greg Becker | | | | | | 1.6 | % | | | | | $ | 925,000 | | | | | | | | | Michael Descheneaux | | | | — | | | | | | | 600,000 | | | | | | | | | | Marc Cadieux | | | | | | 5.9 | | | | | | | 450,000 | | | | | | | | | | John China | | | | | | 4.2 | | | | | | | 500,000 | | | | | | | | | | Joan Parsons | | | | | | 4.2 | | | | | | | 500,000 | | | |
In 2016, each NEO, except our Chief Financial Officer, received merit increase adjustments to their base salaries based on individual performance, salary market positioning relative to peers, and internal parity, as appropriate. Base Salary
We provide base salaries in order to provide executives with a reasonable level of fixed short-term compensation. Executive base salary levels are typically reviewed at least annually by the Committee and adjusted as appropriate. When determining any base salary increases, the Committee considers an individual’s total compensation package, his or her performance, Company performance, comparative peer and market compensation data, internal parity, and other relevant factors, including the scope of the executive’s responsibilities relative to peers and other executives, and retention concerns.
In 2013, each NEO received merit increase adjustments to their base salaries based on individual performance, salary market positioning relative to peers, and internal parity, as appropriate. None of Messrs. Becker, Descheneaux and Jones and Ms. Parsons had any changes to base salary during the prior year 2012. Moreover, half of the increase to Mr. Jones’s salary reflected his promotion to the President of Asia position in September 2013.
| | | | | NEO/Other Executive | | Percentage Increase | | 2013 Annual Base Salary | Greg Becker * | | 5.0% | | $ 840,000 | Michael Descheneaux* | | 3.1 | | 500,000 | John China | | 7.1 | | 375,000 | Joan Parsons * | | 3.9 | | 400,000 | Bruce Wallace | | 6.7 | | 400,000 | David Jones* | | 12.5 | | 450,000 |
* No base salary increases were made in 2012.
| | | | | | | | | | | | | | | | | | | | | | | NEO | | | | Percentage Increase from 2015 | | | | 2016 Annual ICP Target (% of Annual Base Salary) | | | | | | | | | Greg Becker | | | | | | 11.1 | % | | | | | | 100 | % | | | | | | | | Michael Descheneaux | | | | 16.7 | | | | | | | 70 | | | | | | | | | | Marc Cadieux | | | | | | — | | | | | | | 50 | | | | | | | | | | John China | | | | | | 16.7 | | | | | | | 70 | | | | | | | | | | Joan Parsons | | | | | | 16.7 | | | | | | | 70 | | | |
Our executives, including our NEOs, participate in the Company’s Incentive Compensation Plan (“ICP”), an annual cash incentive plan that rewards performance against individual and Company objectives. Each executive participant is assigned an incentive target, stated as a percentage of the individual’s annual base salary. Based on the Compensation Committee’s annual compensation review, in 2016, ICP targets for NEOs, except for our Chief Credit Officer, were increased to align targets with peer and market compensation and to continue to balance overall total target pay mix. Annual Cash Incentives
Our executives participate in the Company’s Incentive Compensation Plan (“ICP”), an annual cash incentive plan that rewards performance against individual and Company objectives.
| | | NEO/Other Executive
| | Annual ICP Target | Greg Becker* | | 70% | Michael Descheneaux** | | 50 | John China* | | 80 | Joan Parsons** | | 50 | Bruce Wallace* | | 50 | David Jones** | | 50 |
* No changes were made in 2013 or 2012.
** No changes were made in 2012.
Each executive participant is assigned an incentive target, stated as a percentage of the individual’s annual base salary. In 2013, annual ICP targets for Messrs. Descheneaux and Jones increased from 40% to 50%, and Ms. Parsons increased from 45% to 50%. These increases were made in order to align targets with their scope of job responsibilities and to maintain internal parity among the executive team, as appropriate.
ICP Funding Each year, the Committee establishes one or more metrics that it will use to measure Company performance for ICP funding purposes. Based on those metrics and overall Company performance, the Committee will also determine the extent to which the Company will fund the incentive pool. For 2013, the Committee continues to believe that ROE is an appropriate indicator of financial performance that is directly related to the creation of stockholder value, especially if the Company measures performance against its own objectives as well as peer performance. Accordingly, the Committee established the following two performance metrics:
| | | | | Each year, the Compensation Committee establishes one or more metrics that it will use to measure Company performance for ICP funding purposes. These metrics measure the Company’s performance on an absolute basis, as well as relative to peers. Based on those metrics and overall Company performance, the Compensation Committee will also determine the extent to which the Company will fund the incentive pool for the broad employee base, including executive officers. For 2016, the Compensation Committee utilized the same methodology for funding the ICP as in prior years in all material respects. The committee continued to believe that return on equity (“ROE”) is an appropriate indicator of financial performance that drives stockholder value, especially if performance is measured against the Company’s target objectives, as well as peer performance. Accordingly, the Compensation Committee continued to apply the following two performance metrics:(See graphs below.) | ¡ | |
Performance Metrics for ICP Funding • ROE Against our Annual Target ROE (Two-Thirds (2/3) of Pool) - Similar to prior years, for 2013, the Committee establishedmeasured against budget • ROE relative to our Board-approved annual target ROE as an ICP performance metric. Two-thirds (2/3) of the total incentive pool is funded based on performance against this metric. The graph below illustrates the relationship in 2013 between (i) achieved ROE as a percentage of the annual plan,2016 Peer Group |
•ROE Performance Against Annual ROE Target(Two-Thirds (2/3) of Pool) -Two-thirds (2/3) of the total incentive pool is funded based on the Company’s ROE performance relative to our Board-approved annual target ROE. The graph below illustrates the relationship in 2016 between: (i) achieved (but adjusted for the exclusions discussed below) ROE of 10.53% as a percentage of our annual target ROE (which was budgeted for 2016 at 9.91%), and (ii) the percentage of the target incentive pool accrued for the NEOs. There is a maximum funding amount of 200% of target payment for achievement of 150% or over of our target ROE under our annual plan. |
The Committee retains discretion to fund up to 50% of the target ICPincentive pool for performance below the 90% threshold, if and when it believes that making partial ICP payments are in the Company’s interests. The Committee decides whether and to what extent it will fundaccrued. There is a funding maximum of 200% of target (for achievement of 150% or spend the provisional pool and in no way does this pool represent a formover of guaranteed
35
EXECUTIVE OFFICERS & COMPENSATION
incentive payments. The Committee did not approve any provisional funding pool for 2013 because of the Company’s above-target ROE performance.our target ROE).
In addition, the Compensation Committee retains discretion to determine the extent to which the Company met its ICP performance target, including discretion to consider adjustments for certain out of the ordinary items, such as ornon-recurring accounting items. During 2013, per management’s recommendation andAdjustments are determined by the Compensation Committee, in consultationcoordination with the Audit Committee, the Committee continued to make adjustments, as appropriate. For 2013 and consistent with prior years, the Committee excluded 50% of the gains on non-marketable securities over budget (net of noncontrolling interests) and the sale of certain available-for-sale securities.Committee. | ¡ | | ROE Against Performance Peer Group (One-Third (1/3) of Pool) - For 2013, the Committee also established ROE relative to the Performance Peer Group as an additional ICP performance metric to fund 1/3 of the total pool. As illustrated in the graph below, there is no payout if our performance falls in the bottom quintile and a payout maximum in the top quintile. In 2013, the Committee modified the payout formula for the middle groups on a more linear basis to incentivize incremental performance.
|
35 | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
For 2016, excluded items included: (i) certain gains or losses of the Company’s investment securities (includingnon-marketable securities, warrant securities andavailable-for-sale securities), largely because performance of such securities are subject to market performance beyond the Company’s control; (ii) any impact from changes in Federal Reserve interest rates (other than any changes already included in the annual budget); and (iii) certain expense adjustments due to refinements and enhancements to our allowance for loan and lease losses methodology as well as changes to our deferred tax balances. The net impact of these exclusions resulted in a lower adjusted ROE metric that reduced the overall funding of the ICP pool. • ROE Performance Against 2016 Peer Group(One-Third (1/3) of Pool) - For 2016, the Compensation Committee also established ROE relative to the 2016 Peer Group as an additional ICP performance metric to fund 1/3 of the total pool. As illustrated in the graph below to the right, there is no payout if our performance falls in the bottom four positions, and a payout maximum in the top three positions. The extent of funding earned is subject to straight-line interpolation based on ROE performance between the third and thirteenth ranked companies. | | | | | | | | | | | 2016 Results: | Achieved 106.3% of our Annual ROE Target | | | | Ranked in the 5th position against our 2016 Peer Group. |
* | While the Compensation Committee retains discretion to fund a portion of the bonus pool if performance thresholds are not achieved, this discretion was not exercised in 2016. |
For 2013,2016, the Compensation Committee determined that: (i) 2/3 of the executivetotal ICP pool would be funded at 151%113% of target, based on the Company’s ROE performance, as adjusted, after taking into account the adjustments as discussed above; and (ii) 1/3 of the executivetotal ICP pool would be funded at 150%180% of target, based on the Company’s relative ROE performance, ranking withinin the fourth quintile offifth position against the Performance2016 Peer Group. In addition to these two ROE metrics, the Committee took into consideration the overall strong performance of the Company and the executive team in 2013. In particular, they took into consideration: overall strong executive leadership as a team, outstanding annual financial performance, strong progress towards global expansion efforts, significant efforts towards long-term strategic planning, and continued focus on risk management. As a result, the Compensation Committee approved the funding of the overall executivetotal ICP pool at 151%135% of total target. 20132016 NEO ICP Awards
The Compensation Committee (or in the case of the CEO, the independent members of the Board) determines actual annual cash incentive awards for the NEOs based upon the individual’s target incentive level, the Company’s performance, and the NEO’s individual performance. ICP awards for NEOs may be at, above, or below the target incentive and are determined byincentive. For 2016, each NEO was awarded the Committee (orICP amounts set forth in the case oftable to the CEO, by the Board).right. | | | | | | | | | | | | | NEO | | | | 2016 ICP Award | | | | Greg Becker | | $ | 1,148,750 | | | | Michael Descheneaux | | | 625,000 | | | | Marc Cadieux | | | 375,000 | | | | John China | | | 525,000 | | | | Joan Parsons | | | 475,000 | | | |
In determining each NEO’s performance,such 2016 awards, the CommitteeBoard considered a variety of factors that it believed to be relevant, including each NEO’s contributions to (i) the Company’s business and financial results, (ii) the Company’s successful execution of its 2013 corporate initiatives, and (iii) broader leadership within the organization. For Mr. Becker, the Committee considered theBecker’s performance assessment conducted by the independent members of the Board. ForBoard, and the other NEOs, theCompensation Committee considered the performance assessments of each of the other NEOs as conducted by Mr. Becker. In addition to these management assessments, the Committee considered its direct observations and assessments of each NEO’s performance, withBecker, as well as input from the independent members of the Board. (See “Corporate Governance Principles and Board Matters — Oversight of CEO — Annual CEO Performance Evaluation” above.) TheIn addition, the independent members of the Board had determined that the CEO,(with respect to Mr. Becker) and the Compensation Committee determined that(with respect to the other NEOs, had earnedNEOs) considered a variety of factors that they believed to be relevant, including: (i) the following incentive awards for 2013:
overall strong 36 EXECUTIVE OFFICERS & COMPENSATION
| | | Greg Becker | | ICP Amount: $925,000EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
performance of the Company and the respective areas of oversight of each NEO, and (ii) each NEO’s contributions to our business and financial results, execution of our 2016 corporate initiatives, corporate risk management, and broader leadership within the organization. Specifically for Mr. Becker, key factors considered included: Continued 2016 profitability: Annual EPS increase by 10% Annual net income available to common stockholders increase by 11% Healthy Company growth: Total average asset growth by 8% Total average loan balances (net of unearned income) increase by 24% Total average client funds (deposits and total client investment funds) balance growth by 9% | • | | Continued growth innon-GAAP core fee income of 19% (see Appendix A) |
Continued stability of credit performance Demonstrated leadership in the Company’s long-term strategic planning Continued global growth, including expansion into the European and Canadian markets Strong client focus; growth in market share — 16% increase in net client count Corporate focus on enterprise risk management and regulatory compliance Ongoing development of executive leadership team | Primary factors considered in determining award:
• Profitable 2013:
¡LONG-TERM EQUITY INCENTIVES Earnings per diluted common share of $4.70 (up 20.2% from 2012)
¡ Annual consolidated net income available to common stockholders of $215.9 million (up 23.3% from 2012)
¡ Strong fee income growth
• Continued Company growth
¡ All-time high average total assets of $23.2 billion
¡ All-time high average loan, deposit and total client investment fund balances
• Continued strong credit quality --- disciplined credit underwriting and loan portfolio management
• Growth in market share; positive client satisfaction survey results
• Continued global focus, including the growth of our U.K. branch and the progress of our joint venture bank in China
• Business growth, including our Private Bank, our new wealth management business and our payments initiative
• Continued focus on enterprise-wide risk management, including regulatory compliance
• Development and recruitment of strong executive team
• Being named by a nationally-recognized financial publication as a top 10 bank in the U.S.
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| | | | | Michael DescheneauxThe Company believes that equity-based awards, particularly in combination with the Company’s equity ownership guidelines as discussed below, tie each of the NEOs’ compensation to the Company’s long-term financial performance and align the interests of the NEOs and our stockholders. The Compensation Committee typically makes equity awards to each NEO at the time the individual is hired or promoted, and annually thereafter. The size of the awards reflects the overall number of shares available to the Company under our equity incentive plan, the Compensation Committee’s determination of an appropriate annual equity burn rate (the percentage of total shares outstanding that the Company has issued during the year in the form of equity compensation), the NEO’s role and performance, and the market compensation data for the NEO’s external peers. In 2016, the Compensation Committee continued to focus on long-term, performance-based equity compensation, keeping consistent with the equity mix from the prior year. The committee determined a target equity award total value for each NEO based on peer benchmarking comparisons, and granted a mix of 50% performance-based RSUs, and 25% each of stock options and time-based vesting RSUs. | | ICP Amount: $450,000 | | Primary factors considered in determining award:Allocation of Total Equity Award for NEOs
• Excellent execution of our overall financial management, including continued strong capital and liquidity
• Strong leadership in capital stress testing initiative
• Effective management of our available-for-sale investment portfolio
• Continued enhancements of finance operations to increase efficiencies
• Proactive management of relations with investors, credit ratings agencies and other key constituents
• Significant contribution towards long-term strategic planning
• Strong global expansion efforts
• Joint oversight of SVB Capital operations
|
| | | John China | | ICP Amount: $475,000 | Primary factors considered in determining award:
• Strong leadership of our Private Bank, including outstanding Private Bank loan growth and formation of new wealth advisory business
• Strengthening of client relationships, especially within our venture capital and private equity client base
• Continued expansion of our private equity services practice
• Continued focus on SVB Capital, including on profitability and fundraising
• Significant contribution towards long-term strategic planning and global expansion efforts
|
| | | Joan Parsons | | ICP Amount: $350,000 | Primary factors considered in determining award:
• Continued growth in market share
• Strong loan and deposit growth
• Positive client satisfaction survey results
• Continued focus on improving client experience
• Effective cross–selling; growth in core fee income
• Significant contribution towards long-term strategic planning and global expansion efforts
| Stock Options and Restricted Stock Units (RSUs)37
EXECUTIVE OFFICERS & COMPENSATION
| | | Bruce Wallace | | ICP Amount: $350,000 | Primary factors considered in determining award:
• Growth in core fee income
• Expanded products and services, including mobile deposit solution, client onboarding systems, and online banking enhancements
• Outstanding leadership of our payments initiative
• Enhancements of our global treasury capabilities
• Effective oversight of our information technology function
• Significant contribution towards long-term strategic planning and global expansion efforts
|
| | | David Jones | | ICP Amount: $375,000 | Primary factors considered in determining award:
• Strong credit quality and maintenance of our disciplined credit underwriting and loan portfolio management*
• Growth in loan portfolio*
• Significant contribution towards long-term strategic planning and global expansion efforts
• Strong start in his new position as President of Asia and progress made thus far on our Asia strategy and the continued buildout of our Chinese joint venture bank (from September 1, 2013)
* Through September 1, 2013
|
Equity Incentives
The Company believes that equity-based awards, particularly in combination with the Company’s equity ownership guidelines as discussed below, tie each of the NEOs’ compensation to the Company’s long-term financial performance and align the interests of the NEOs and our stockholders.
| | | | | | | NEO/Other Executive | | Allocation of Total Long-Term Equity Award | | Restricted Stock Units | | Performance- Based Restricted Stock Units (Target) | | Stock Options | CEO | | 27% | | 31% | | 42% | Other NEOs* | | 29% | | 30% | | 41% |
* Excluding Mr. Jones
In 2013, the Committee continued to focus on long-term, sustainable performance and alignment with stockholders. As a result, it continued its emphasis on long-term equity compensation. The Committee determined a target equity award total value for each NEO, and granted a mix of performance-based and non-performance based equity awards based on the allocation as set forth to the left. Grants were made effective as of April 30, 2013. See “Compensation for Named Executive Officers – Outstanding Equity Awards at Fiscal Year End.”
ThestockStock options and restricted stock units (RSUs) are subject to annual vesting over a four-year period. The stock options have a maximum term of seven years. The Committee did not establishNo performance-based criteria was established, as the increase in the value of these stock options, and any increase in the value of the RSUs, are inherently tied to the future performance of the Company’s common stock.
Theperformance-based restricted 2016 annual stock unitsoption and RSU grants were made effective as of May 2, 2016.
Performance-based Restricted Stock Units (PRSUs) are subject to performance-based vesting over a one-year period and to the extent earned, additional time-based vesting. The Committee determines the performance conditions upon which the awards are earned, which for 2013 was the Company’s TSR performance as measured against the Compensation Peer Group (“Relative TSR”).
38
EXECUTIVE OFFICERS & COMPENSATION
| | | | | | | | | Relative TSR
Performance (AgainstPerformance-based restricted stock units are earned based on the achievement of certain performance metrics, as determined by the Compensation Committee. These metrics typically measure the Company’s performance on an absolute basis, as well as relative to peers. After the end of the specified performance period, the Compensation Committee will determine whether (and to what extent) the NEOs earned the PRSUs, subject to a maximum total payout of 150% of target award.
Peer Group)
For 2016 (and consistent with the prior year), the NEOs were granted, effective as of February 16, 2016, PRSUs that were subject to performance-based vesting over a three-year period (from 2016 through 2018) and certain designated performance metrics. To the extent earned, these awards are subject to additional time-based vesting through January 30, 2019. The PRSUs are designed to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. 2016 represents the first year of a three-year performance period, hence none of the PRSUs granted in 2016 have been earned. | | Bottom Quartile
(0-25% of 2013
Compensation Peer
Group Performance)
| | Second Quartile
(26-50% of 2013
CompensationPerformance Metrics for
PRSUs • TSR relative to 2016 Peer Group Performance) • ROE (as funding threshold) • Selected Fee Income |
37 | | | | | Third QuartileEXECUTIVE OFFICERS & COMPENSATION
(51-75% of 2013 Compensation Peer
Group Performance)
| | Top Quartile
(>75% of 2013
Compensation Peer
Group Performance)
| Extent of PRSUs Earned
| | 0% of Target | | 50% to 100%
of Target
| | 110% to 130%
of Target
| | 150% of Target
(Maximum)Discussion & Analysis
|
After
The performance metrics for the end2016 PRSUs are described below: • Relative TSR Against 2016 Peer Group (50% of Award). Fifty percent of the year, the Committee determined whether (andPRSU award is funded at a maximum payout of 150% of target, and earned (subject to what extent) the NEOs had earned the PRSUs,additional time-based vesting) based on the Company’s Relative TSR. For 2013, as calculated for purposes of the PRSUs, the Company’s TSR1 ranked within the top quartile of the Compensation Peer Group. Accordingly, the Board and the Committee did not exercise any discretion, and approved the actual performance which resulted in the CEO and the other NEOs, respectively, earning 150% of their respective target PRSUs. The earned PRSUs are subject to additional time-based vesting and will all vest on December 20, 2015, subject to each respective NEO’s continued employment or other service to the Company.
The Committee typically makes equity awards to each NEO at the time the individual is hired or promoted, and annually thereafter. The size of the awards reflects the overall number of shares available to the Company under our equity incentive plan, the Committee’s determination of an appropriate annual equity burn rate (the percentage of total shares outstanding that the Company has issued during the year in the form of equity compensation), the NEO’s role and performance, and the market compensation data for the NEO’s external peers.
Long-Term Cash Retention Award for John China
In 2010, the Company awarded Mr. China a special one-time long-term cash retention program. He received a target award of $500,000 to be earned over a three-year performance period from 2011 through 2013. Payouts underas ranked against the 2016 Peer Group(“Relative TSR”). (The Compensation Committee may apply negative discretion to reduce the actual award, were not guaranteed and wereas it deems appropriate.) The committee selected Relative TSR as a key PRSU performance metric because it correlates directly with the Company’s stock price performance, which aligns with stockholder interests. No payout is made atif the discretionCompany ranks in any of the Company. At the time Mr. China was granted the award in 2010, he was not an executive officerbottom four positions.
• ROE Funding Threshold and Selected Fee Income Target(50% of the Company.Award). The award is funded based on two performance metrics over a three-year period. Of the award: (i) 50% is measured by the extent of achievement of the Company’s annual book value targets established for the 2011-2013 Performance Period, and (ii) 50% is measured by the Company’s total shareholder return as compared to the total shareholder return of the Compensation Peer Group. The Company established the following payout range, based on the extent achievement of two performance metrics.
| ¡ | | The other fifty percent of the PRSU award is funded at a maximum payout of 150% of target and earned (subject to additional time-based vesting) based on the Company’s achievement of a three-year annual average ROE performance threshold of 5% or higher. (No funding if ROE falls below 5%.) (The Compensation Committee may apply negative discretion to reduce the actual funding, as it deems appropriate.) For 2016, the Company’s actual ROE exceeded the 5% funding threshold. |
| ¡ | | If the ROE performance threshold is achieved and funding has been established, the Compensation Committee will, as it deems appropriate, determine the extent of the award earned based on the Company’s performance against the three-year annual average of its budgeted annual income from foreign exchange fees and credit card fees (“Selected Fee Income”). The budgeted income targets shall be specified in the Company’s overall annual budget as approved by the Board of Directors. The Compensation Committee determined Selected Fee Income as an additional PRSU performance metric mainly due to the desire to diversify the Company’s sources of income, in particular,non-interest income. Our foreign exchange and credit card-based businesses are key parts of our business targeted for growth. For 2016, the Company achieved $172.4 million in Selected Fee Income, or 98% of the budgeted total. |
| | | | | | | | | | | 2016Results-to-date (Year 1 of3-Year Performance Period): | Ranked in the 9th position against our 2016 Peer Group. | | | | Achieved 98% of our Budgeted Selected Fee Income. |
| | | | | Previously Granted PRSU Awards for Performance Period Ended in 2016 In 2014, our NEOs were granted PRSU awards subject to a single performance metric of relative TSR performance over a three-year performance period (2014-2016). Upon completion of the performance period, the Compensation Committee determined that the Company’s relative TSR performance ranked 5th against the applicable 2014 peer group (of 20 companies) and consequently, that the maximum award of 150% of the target PRSU awards were earned. The awards were subject to a brief time-based vesting requirement, and were fully vested as of January 30, 2017. | | Award Payment | | 75% of Target Award | | 100% |
1 | TSR is measured based on the average closing stock price for the last two months of Target Awardthe applicable performance period and the average closing stock price for the two months immediately preceding the performance period, with dividends reinvested. |
38 | | | | | 125% of Target AwardEXECUTIVE OFFICERS & COMPENSATION
(Maximum Payment)
| Book Value Growth* (50%)
| | 90% of Book Value Growth
Target
| | 100% of Book Value Growth Target | | 110% of Book Value Growth Target | Relative Company TSR (50%)
| | Lower 35% of Compensation Peer Group TSR | | Middle 30% of Compensation Peer Group TSR | | Upper 35% of Compensation Peer Group TSRDiscussion & Analysis |
* Based
| OTHER COMPENSATIONFOR MARC CADIEUX |
In 2012 (before he was appointed as an executive officer), Mr. Cadieux was awarded a specialone-time, long-term cash retention award of $300,000 (“Special Long-Term Cash Award”), which was subject to: (i) cliff vesting on June 30, 2016; (ii) continued employment and (iii) other minimum performance conditions. During the average annual book value growth rate over2012-2016 vesting period, the three year performance period;award was invested under the calculationDeferred Compensation Plan (“DCP”) in accordance with the terms of the actual award is intended to be calculated onplan. On June 30, 2016, Mr. Cadieux earned a linear basis based ontotal of $364,972, including his earnings under the achievement against established book value goals. To the extent deemed earned based on our performance of those metrics and on Mr. China’s individual performance, payouts are made after the performance period.
The Company: (i) achieved 99% of its average annual book value target over the three year performance period, and (ii) ranked within the upper 35% of the Compensation Peer Group. Based on that, and on its review of Mr. China’s individual performance, the Committee decided to award Mr. China a payment of $597,500 (120% of his target award.)DCP.
1 Based on the differential between the average daily closing stock prices over the last two months of each of years 2012 and 2013.
39
EXECUTIVE OFFICERS & COMPENSATION
| EXECUTIVE BENEFITSAND OTHER EXECUTIVE COMPENSATION-RELATED MATTERS |
Executive Benefits Employee Retirement Benefits Our NEOs are eligible to participate in our SVB Financial Group 401(k) (“401(k) Plan”) and Employee Stock Ownership Plan (“ESOP”), our combined qualified retirement and profit sharing plan that is generally available to all of the Company’s U.S. employees. Our NEOs participate in the plan on the same terms as all other eligible employees. Other than our 401(k) Plan, we do not provide any pension, excess retirement or SERPs to our NEOs. Under our 401(k) Plan, our U.S. employees, including our NEOs, may make voluntarypre-tax and/or Rothpost-tax deferrals up to the maximum provided for by IRS regulations. The Company providesdollar-for-dollar matching contributions up to a maximum of 5% of cash compensation or the Internal Revenue Section 401(a) compensation limit, whichever is less. Company 401(k) matching contributions vest immediately upon deposit into the individual’s 401(k) account. The plan also includes a profit sharing component. Under the ESOP, we may make discretionary annual contributions for U.S. employees, as determined by the Compensation Committee. ESOP contributions may be in the form of cash, the Company’s common stock or a combination of both, and are subject to certain vesting conditions. Contributions are determined based on the Company’s performance and are not adjusted to reflect individual performance. For 2016, the Compensation Committee established performance criteria based on the Company’s adjusted ROE against budget (same as the calculation of 2/3 of the total ICP pool) to fund the ESOP contribution, and set the funding level to 1.25% (reduced by 50% from the prior year as part of our ongoing initiatives to reduce non-interest expenses) of eligible compensation based on target ROE performance. Despite a higher allowable maximum under the ESOP, the Compensation Committee has committed to a funding maximum of 5%. Based on the Company’s 2016 above-target ROE performance, the Compensation Committee approved a contribution of 1.4% of eligible compensation in cash (50%) and the Company’s common stock (50%) for all eligible participants. Deferred Compensation We do not provide NEOs with any Company-funded deferred compensation benefits. However, in order to help them achieve their retirement objectives, we offer each NEO the opportunity totax-defer a portion of their income, beyond what is allowed to be deferred in the Company’s qualified retirement plan. Specifically, under our Deferred Compensation Plan (“DCP,”), each individual may defer 5% to 50% of their base pay and 5% to 100% of eligible incentive payments during each plan year. The DCP is an unfunded plan, and participating executives bear the risk of forfeiture in the event that we cannot fund DCP liabilities. We do not match executive deferrals to the DCP, nor do we make any other contributions to the DCP. See “Compensation “Compensation for Named ExecutiveOfficers—Non-Qualified Deferred CompensationCompensation”” below.below. 39 | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
We establish and maintain a bookkeeping account for each participant whichthat reflects compensation deferrals made by the executive along with any associated earnings, expenses, gains and losses. The amount in a participant’s account is adjusted for hypothetical investment earnings or losses in an amount equivalent to the gains or losses reported by the investment options selected by the participant from among the investment options designated for this purpose by the Company. A participant may, in accordance with rules and procedures we establish, change the investments to be used for the purpose of calculating future hypothetical investment adjustments to the participant’s account. The account of each participant is adjusted each business day to reflect: (a) the hypothetical investment earnings and/or losses described above; (b) participant deferrals; and (c) distributions or withdrawals from the account. Distributions or withdrawals from the DCP shall be made in full accordance with the requirements of Internal Revenue Code Section 409A. No Except in connection with Mr. Cadieux’s Special Long-Term Cash Award (see above), no NEOs participated in the DCP in 2013.2016. Among the NEOs, only Mr.Messrs. Becker holds a balance due to deferrals madeand Cadieux held balances under the plan in 2005.
Employee Retirement Benefits
Our NEOs are eligible to participate in our SVB Financial Group 401(k) and Employee Stock Ownership Plan, our qualified retirement plan that is generally available to all of the Company’s U.S. employees. Our NEOs participate in the plan on the same terms as all other eligible employees. Other than our 401(k) plan, SVB Financial Group does not provide any pension, excess retirement, or SERPs to our NEOs.
Under our 401(k) plan, our U.S. employees, including our NEOs, may make voluntary pre-tax deferrals up to the maximum provided for by IRS regulations. The Company provides dollar-for-dollar matching contributions up to a maximum of 5% of cash compensation or the Internal Revenue Section 401(a) compensation limit, whichever is less. Company 401(k) matching contributions vest immediately upon deposit into the individual’s 401(k) account.
The plan also includes an Employee Stock Ownership Plan (“ESOP”). Under the plan, we may make discretionary annual contributions for U.S. employees, as determined by the Committee. ESOP contributions may be in the form of cash, the Company’s common stock, or a combination of both, and are subject to certain vesting conditions. Contributions are determined based on the Company’s performance and are not adjusted to reflect individual performance.
For 2013, the Committee established performance criteria based on the Company’s ROE, similar to the ICP, to fund the ESOP contribution, and set the funding level to a 2.5% (of eligible compensation) funding level based on target ROE performance, up to a maximum funding of 5%. Based on the Company’s 2013 above-target ROE performance, the Committee approved a contribution of 3.78% of eligible compensation in cash (50%) and the Company’s common stock (50%).during 2016.
Health and Welfare BenefitsBenefits/Time Away From Work Our U.S. employees, including our NEOs are eligible to participate in our standard health and welfare benefits program, which provides insured medical, dental, life, accident and disability coverage to all of our eligible U.S.-based employees. We do not provide executives with any health and welfare benefits that are not generally available to other Company employees. Time Away From Work
Under Additionally, under our “time away from work” policy, U.S. exempt employees, including our NEOs, do not accrue vacation benefits. Rather, such employees are expected to manage their time away from work, subject to the demands and needs of their jobs.Non-exempt U.S. employees and othernon-U.S. employees continue to accrue vacation sick and other paid time off benefits formulaically.
Executive Termination Benefits See “Compensation “Compensation for Named Executive Officers—Other Post-Employment PaymentsPayments”” below.below. 40
EXECUTIVE OFFICERS & COMPENSATION
Perquisites We do not have any executive perquisite programs. From time to time, on a limited or exception basis, we may provide other benefits that we believe are related to, or serve, a business purpose that may otherwise be considered perquisites, and wepurpose. We disclose those benefits as required by applicable rules. Stock Option and Other Equity Grant Practices Grant Practices for Executive Officers The Compensation Committee approved all equity grants in 20132016 made to executive officers of the Company, except that the independent members of the Board approved equity grants made to the Chief Executive Officer. Typically,Except for certain awards that we believe qualify as performance-based compensation under Section 162(m) of the Code (as defined below), annual equity compensation grants to executives are approvedtypically made effective during the second quarter of the year, and grantsyear. Grants are made effective during an open trading window pursuant to our Insider Trading Policy.Policy, with limited exceptions. The exercise price for stock option grants is equal to the closing market price on the grant’s effective date and time-based grants typically have an annual vesting period of four years, subject to continued employment or service. All 20132016 grants to our NEOs were made in accordance with this practice. For newly-hired executive officers, the Compensation Committee approves an equity grant amount prior to, or shortly after, the executive’s start of employment, and the effective grant date is typically set during an open trading window after they commence employment. This approach ensures that the exercise price of stock options reflects a fair market price, since the exercise price for stock option grants is equal to the closing market price on the grant’s effective date. Grant Practices for Other Employees The Board has delegated authority to the Equity Awards Committee to make equity grants tonon-executive employees under our 2006 Equity Incentive Plan. The Equity Awards Committee is a committee of two, comprised of our Chief Executive Officer and the Chair of our Board. The Equity Awards Committee may not make equity grants to executives or anynon-executive employee that reports directly to the Chief Executive Officer. The Equity Awards Committee may make grants only within established individual employee and aggregate share limits and in accordance with established requirements regarding the term, vesting period, exercise price and other terms and conditions for the grant. In addition, all grants of stock options, stock appreciation rights, and restricted stock units made by the Equity Awards Committee must be made (or become effective) on the first Monday of eachthe month following approval or, where the first Monday is a Company-observed U.S. holiday, on the first 40 | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
Tuesday of such month. The Equity Awards Committee approves grants on a quarterly basis, and must approve all grants in writing on or before the date of grant, subject to the respective employee remaining an employee as of the date of grant. Finally, management updates the Compensation Committee regarding all grants made by the Equity Awards Committee on a regular basis. Any grant that does not meet the requirements established for the Equity Awards Committee must be made by the Board, the Compensation Committee or other authorized committee. The Compensation Committee typically approves annual grants to all eligible employees, as well as any other grants that the Equity Awards Committee is not authorized to approved.approve. Prohibitions Against Hedging Pursuant to our Insider Trading Policy, our directors, executive officers (including our NEOs) and employees are not permitted to “hedge” ownership by selling puts in or selling short any of the Company’s publicly-traded securities at any time. Additionally, we discourage, and have not permitted, any of our executive officers to pledge, or use as collateral, our securities to secure personal loans or other obligations. Compensation Recovery Policies 41Except as noted below, our Compensation Committee has not yet adopted a policy with respect to whether we will make retroactive adjustments to any cash or equity based incentive compensation paid to our NEOs or other employees where the payment was based on the achievement of financial results that were subsequently revised. Our Compensation Committee intends to adopt a general compensation recovery policy after the SEC adopts final rules implementing the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In 2015, our Compensation Committee approved an amendment to our 2006 Equity Incentive Plan to provide that equity awards granted under the 2006 Equity Incentive Plan will be subject to the terms and conditions of any compensation recovery policy adopted by the Company and as may be in effect from time to time. The committee also approved a similar amendment to the Incentive Compensation Plan as it relates to incentive awards under the plan.
EXECUTIVE OFFICERS & COMPENSATION
Section 162(m) Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) limits our deductibility of compensation paid to our CEO and each of the next three most highly compensated executive officers (excluding the Chief Financial Officer) in excess of $1,000,000, but excludes “performance-based compensation” from this limit. StockWe believe our stock options, as well as beginning for the year 2015, our executives’ PRSU awards, are designed to qualify for this tax deductibility.as “performance-based compensation.” However, in order to maintain flexibility and promote simplicity in the Compensation Committee’s administration of and oversight over executive compensation arrangements, other compensation arrangements, such as time-based restricted stock units that vest based solely on continued service and performance-based restricted stock units that vest solely upon achievement of performance goals (as determined by the Committee), and ICP payments, doare not designed to qualify for tax deductibility.as “performance-based compensation.” This design allows the Compensation Committee to balance tax deductibility with other business priorities that affect stockholder value. Compensation that we intend to qualify as “performance-based” under Section 162(m) is also reviewed and approved by an independent committee of the Board of Directors, comprised of Mr. Dunbar, our Board Chair, and Mr. Robinson, our Audit Committee Chair and member of the Compensation Committee (the “162(m) Committee”). 41 | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
Equity Ownership Guidelines for Executive Officers The Company maintains stock ownership guidelines for the Company’s executive officers, including the NEOs. These stock ownership guidelines reflect the Board’s belief in the importance of aligning the economic interests of stockholders and management. The Compensation Committee is responsible for setting and periodically reviewing at least on an annual basis, the guidelines. Guidelines for each executive position are determined based on factors including the executive role, scope of responsibilities, base salary levels, Company stock price performance and market data. The current equity ownership guidelines applicable to executive officers are based on the value of the Company’s common stock as a percentage of annual base salary, as follows: | | | | | Minimum Equity Ownership of SIVB shares* | Chief Executive Officer
| | 80,000 shares | Chief Financial Officer
Chief Credit Officer
General Counsel
Head of U.S. Banking
| | 20,000 shares | Chief Operations Officer
Chief Risk Officer
Head of Relationship Management
| | 14,000 shares | Head of Marketing
Head of Human Resources
Head EMEA India & President UK Branch
| | 9,500 shares |
| | | | | | | Stock Value as Percentage of Annual Base Salary | 600% | | 300% | | 200% | Chief Executive Officer | | Chief Credit Officer Chief Digital Officer Chief Financial Officer Chief Operations Officer | | Chief Risk Officer Head of EMEA/President UK Branch Head of Technology Banking | | Chief Information Officer Chief Marketing Officer General Counsel Head of Human Resources |
* The minimum equity ownership standards forAll executive officers under these guidelines are based on a position-specific multiple of current salary, calculated using a trailing twelve-month average share price. For example, the 80,000 shares requirement applicable for the Chief Executive Officer is based on a multiple of over 5 times his annual base salary at the time the standards were adopted.
Under the revised guidelines, if any current executive officer (as ofhave five years from the date of adoption) has not yet attained the minimum requirement, he or she is expectedon which they become an executive officer to attain the minimum level of ownership by May 23, 2017. New executive officers will be expected to attain the minimum level of ownership by the fifth anniversary of the date of his or her assumption of the applicable position.ownership.
The Governance Committee monitors compliance with these guidelines and reviews executive equity holdings on a quarterly basis. In evaluating whether executives are meeting the ownership guidelines, the Governance Committee considers the following as shares owned: (1) shares privatelyactually held, (2) shares owned through investment in the Company’s stock fund in the SVB Financial Group 401(k) and Employee Stock Ownership Plan, and (3) earned but unvested awards of restricted stock awards and restricted stock units. The Committee does not countunits (subject to either time-based or performance-based vesting). Neither vested ornor unvested stock options count towards the ownership guidelines. Exceptions to meeting the guidelines due to personal financial or other reasons are reviewed and determined by the Governance Committee. As of December 31, 2013,2016, all of our NEOs executive officers were in compliance with the applicable ownership guidelines or have made significant progress towards meetingotherwise expected to achieve the guidelines, as determined byrequisite ownership levels within the Governance Committee.designated five year time-frame. 42 | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
EXECUTIVE OFFICERS & COMPENSATION
COMPENSATION FOR NAMED EXECUTIVE OFFICERS Summary Compensation Table The following table sets forth the compensation paid to our NEOs for the years ended December 31, 2011, 20122016, 2015 and 2013.2014, respectively. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($) (1) | | | Bonus ($) (2) | | | Stock Awards ($) (3) | | | Stock Option Awards ($) (3) | | | Non-Equity Incentive Plan Compensation ($) | | | Changes in Pension Value and Nonqualified Deferred Plan Compensation ($) (4) | | | All Other Compensation ($) (5) | | | Total ($) | | Greg Becker, | | | 2013 | | | | 835,613 | | | | 925,000 | | | | 1,336,868 | | | | 867,018 | | | | - | | | | - | | | | 22,389 | (6) | | | 3,986,889 | | President and Chief Executive Officer | | | 2012 2011 | | |
| 932,713
781,696 | (7)
(10) | |
| 820,119
1,183,780 | (8)
(11) | |
| 901,180
1,992,210 |
(12) | | | 766,556 618,929 | | | | - - | | | | - - | | |
| 27,699
24,500 | (9)
(13) | | | 3,448,267 4,601,115 | | | | | | | | | | | | Michael Descheneaux, | | | 2013 | | | | 499,780 | | | | 450,000 | | | | 739,544 | | | | 474,665 | | | | - | | | | - | | | | 23,094 | (14) | | | 2,187,083 | | Chief Financial Officer | | | 2012 | | | | 576,198 | (15) | | | 335,907 | (16) | | | 540,708 | | | | 474,664 | | | | - | | | | - | | | | 25,608 | (17) | | | 1,953,085 | | | | | 2011 | | | | 488,749 | | | | 532,340 | (18) | | | 543,330 | | | | 412,619 | | | | - | | | | - | | | | 24,500 | (19) | | | 2,001,538 | | | | | | | | | | | | John China, | | | 2013 | | | | 373,113 | | | | 1,072,500 | (20) | | | 412,438 | | | | 235,961 | | | | - | | | | - | | | | 23,028 | (21) | | | 2,117,040 | | Head of Relationship | | | 2012 | | | | 404,109 | (22) | | | 375,000 | | | | 205,984 | | | | 180,045 | | | | - | | | | - | | | | 61,063 | (23) | | | 1,226,201 | | Banking | | | 2011 | | | | 325,013 | | | | 500,000 | | | | 131,030 | | | | 60,034 | | | | - | | | | - | | | | 121,563 | (24) | | | 1,137,640 | | | | | | | | | | | | Joan Parsons, | | | 2013 | | | | 399,780 | | | | 350,000 | | | | 405,327 | | | | 257,910 | | | | - | | | | - | | | | 22,389 | (25) | | | 1,435,407 | | Head of Specialty | | | 2012 | | | | 443,146 | (26) | | | 332,548 | (27) | | | 296,102 | | | | 250,972 | | | | - | | | | - | | | | 27,047 | (28) | | | 1,349,814 | | Banking | | | 2011 | | | | 380,640 | | | | 454,450 | (29) | | | 301,850 | | | | 180,521 | | | | - | | | | - | | | | 24,500 | (30) | | | 1,341,961 | | | | | | | | | | | | Bruce Wallace, | | | 2013 | | | | 398,113 | | | | 350,000 | | | | 398,216 | | | | 257,910 | | | | - | | | | - | | | | 22,389 | (31) | | | 1,426,629 | | Chief Operations | | | 2012 | | | | 403,017 | (32) | | | 230,000 | | | | 276,791 | | | | 245,516 | | | | - | | | | - | | | | 54,335 | (33) | | | 1,209,659 | | Officer | | | 2011 | | | | 338,450 | | | | 400,000 | | | | 181,110 | | | | 154,732 | | | | - | | | | - | | | | 121,773 | (34) | | | 1,196,066 | | | | | | | | | | | | David Jones, | | | 2013 | | | | 431,447 | | | | 375,000 | | | | 504,881 | | | | 323,760 | | | | - | | | | - | | | | 187,501 | (35) | | | 1,822,589 | | President of Asia | | | 2012 | | | | 466,547 | (36) | | | 334,750 | (37) | | | 379,783 | | | | 324,627 | | | | - | | | | - | | | | 56,764 | (38) | | | 1,562,471 | | | | | 2011 | | | | 404,631 | | | | 445,000 | (39) | | | 362,220 | | | | 257,887 | | | | - | | | | - | | | | 24,500 | (40) | | | 1,494,238 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($) | | | Bonus ($) (1) | | | Stock Awards ($) (2) | | | Stock Option Awards ($) (2) | | | Non-Equity Incentive Plan Compensation ($) (3) | | | All Other Compensation ($)(4) | | | Total ($) | | Greg Becker | | | 2016 | | | | 925,904 | | | | - | | | | 2,225,746 | | | | 807,501 | | | | 1,148,750 | | | | 17,879 | | | | 5,125,780 | | President and Chief | | | 2015 | | | | 912,333 | | | | - | | | | 2,092,890 | | | | 670,964 | | | | 1,225,000 | | | | 25,947 | | | | 4,927,134 | | Executive Officer | | | 2014 | | | | 869,167 | | | | - | | | | 1,175,470 | | | | 1,070,211 | | | | 935,000 | | | | 22,924 | | | | 4,072,772 | | | | | | | | | | | Michael Descheneaux | | | 2016 | | | | 602,308 | | | | - | | | | 861,541 | | | | 312,566 | | | | 625,000 | | | | 53,977 | | | | 2,455,392 | | Chief Financial Officer | | | 2015 | | | | 592,885 | | | | - | | | | 837,104 | | | | 268,394 | | | | 575,000 | | | | 22,508 | | | | 2,295,891 | | | | | 2014 | | | | 520,833 | | | | 600 | | | | 517,225 | | | | 470,896 | | | | 425,000 | | | | 21,347 | | | | 1,955,901 | | | | | | | | | | | Marc Cadieux | | | 2016 | | | | 447,308 | | | | 364,972 | | | | 430,727 | | | | 156,283 | | | | 375,000 | | | | 17,093 | | | | 1,791,383 | | Chief Credit Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John China | | | 2016 | | | | 498,385 | | | | - | | | | 538,395 | | | | 195,346 | | | | 525,000 | | | | 19,424 | | | | 1,776,550 | | Head of Technology | | | 2015 | | | | 479,308 | | | | - | | | | 456,520 | | | | 146,366 | | | | 525,000 | | | | 24,383 | | | | 1,631,577 | | Banking (5) | | | 2014 | | | | 437,500 | | | | 600 | | | | 282,044 | | | | 256,837 | | | | 380,000 | | | | 21,890 | | | | 1,378,871 | | | | | | | | | | | Joan Parsons | | | 2016 | | | | 498,385 | | | | - | | | | 466,652 | | | | 169,293 | | | | 475,000 | | | | 19,149 | | | | 1,628,479 | | Credit Risk Manager | | | 2015 | | | | 479,308 | | | | - | | | | 456,520 | | | | 146,366 | | | | 425,000 | | | | 23,680 | | | | 1,530,874 | | (Former Head of Specialty Banking) (5) | | | 2014 | | | | 441,667 | | | | 600 | | | | 282,044 | | | | 256,837 | | | | 380,000 | | | | 24,117 | | | | 1,385,265 | |
(1) | Includes charitable donationsFor Messrs. Descheneaux and China, and Ms. Parsons, the amounts reflect the value of vacation time. Also includesa cash gift card given to each such executive in 2014. In addition, for Mr. Cadieux, the amount reflects aone-time deferred retention incentive of $300,000 plus accrued interest of $64,972. The award was granted to Mr. Cadieux in 2012 one-time payouts for unused and accrued vacation timebecame payable in light of the adoption of our time away from work policy and our elimination of vacation accruals for exempt employees (“Accrued Vacation Payout”). See“Executive Benefits – Time Away From Work” below.June 2016.
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(2) | We have reflected values for the Company’s ICP, Long-Term Cash Retention Award and Long-Term Cash incentive (“Cash LTIP”) programs under the “Bonus” column because these programs provide for the Committee’s discretion to make final determinations on individual incentive payments. We therefore have reported these payments as part of a discretionary incentive plan under “Bonus” (as opposed to “Non-Equity Incentive Plan Compensation”). See“Elements of Compensation – Annual Cash Incentives” under“Compensation Discussion and Analysis” above. Our Cash LTIP was a long-term cash incentive plan for executives, which was terminated in early 2013. Only Mr. China received a Long-Term Cash Retention Award in 2013.
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(3) | Values indicated for equity awards reflect the fair value of grants made during the fiscal year. Such values were computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718.718 (“ASC 718”). The amounts disclosed may never be realized. Assumptions used in calculating these amounts are included in the note entitled “Share-Based“Share-based Compensation” in our audited financial statements included in our Annual Report on Form10-K for the applicable year. The amounts disclosed under the “Stock Awards” column also include the fair value of grants of certain performance-based restricted stock unit awards reported based on achievement at target level. The aggregate maximum fair value of such awards, assuming the highest level of achievement of the performance conditions, is 150% of the target level. For details of 2016 grants, see “Grants of Plan-Based Awards” below. |
(3) | Non-Equity Incentive Plan Compensation includes ICP Payments for each executive. |
(4) | The following table provides the amounts of other compensation, including perquisites, paid to, or on behalf of, our NEOs during 2016 included in the “All Other Compensation” column. Perquisites and other personal benefits are valued on the basis of the aggregate incremental cost to the Company. |
(4) | We do not provide NEOs with any Company-funded deferred compensation benefits but do offer each NEO the opportunity to tax-defer a portion of their income. Among the NEOs, only Mr. Becker participates in the Deferred Compensation Plan. There was no above-market or preferential earnings on compensation deferred by Mr. Becker under the Deferred Compensation Plan during 2011, 2012 or 2013. Amounts previously reported in our past proxy statements (2012 and earlier) under this table were actual changes in value of the underlying assets and not required to be disclosed in the Summary Compensation Tables. For more information about the Deferred Compensation Plan, see“Executive Benefits – Deferred Compensation” under“Compensation Discussion and Analysis” above and the table below entitled“Non-Qualified Deferred Compensation.”
| | | | | | | | | | | | | | | | | | | | | | | Greg Becker | | | Michael Descheneaux | | | Marc Cadieux | | | John China | | | Joan Parsons | | Imputed Income Tax Reimbursement (a) | | $ | 703 | | | $ | 12,206 | | | $ | - | | | $ | 2,325 | | | $ | 2,050 | | ESOP Contribution | | | 3,737 | | | | 3,737 | | | | 3,737 | | | | 3,737 | | | | 3,737 | | 401(k) Match | | | 13,439 | | | | 13,365 | | | | 13,356 | | | | 13,362 | | | | 13,362 | | Other (b) | | | - | | | | 24,669 | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 17,879 | | | $ | 53,977 | | | $ | 17,093 | | | $ | 19,424 | | | $ | 19,149 | | | | | | | | | | | | | | | | | | | | | | |
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(5) | (a) | Included in this column for 2013 areAmounts represent reimbursement payments of income taxes incurred by theour NEOs on imputed income (“Imputed Income Tax Reimbursements”).income. For 2013,2016, such imputed income was primarily associated with spousal travel and attendance to our business events where our NEOs’ spouses or significant others were invited, and expected, to attend. For Mr. Descheneaux, such imputed income was also associated with personal security expenses incurred during international travel.
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| (b) | Amounts for Mr. Descheneaux represent personal security expenses incurred during international travel in an amount of $23,832 and the cost of guest attendance at SVB events of $837. |
(6)(5) | Other compensationIn February 2017, Mr. China’s title changed from Head of Relationship Banking to Head of Technology Banking. In addition, Ms. Parsons served as Head of Specialty Banking during 2016 and was appointed to thenon-executive position of Credit Risk Manager for Mr. Becker in 2013 is comprised of: (a) ESOP contribution of $9,639; and (b) 401(k) plan matching contribution of $12,750.
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(7) | Salary compensation for Mr. Becker in 2012 includes a one-time Accrued Vacation Payout of $124,615.
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(8) | Bonus compensation for Mr. Becker in 2012 is comprised of: (a) Cash LTIP payment of $120,119; and (b) ICP payment of $700,000.
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(9) | Other compensation for Mr. Becker in 2012 is comprised of: (a) ESOP contribution of $12,500; (b) 401(k) plan matching contribution of $12,500; and (c) an Imputed Income Tax Reimbursement of $2,699.
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(10) | Salary compensation for Mr. Becker in 2011 includes his salary increase in connection with his promotion to CEO.the Company’s global banking activities, effective February 2017.
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43 EXECUTIVE OFFICERS & COMPENSATION
(11) | | | | | Bonus compensationEXECUTIVE OFFICERS & COMPENSATION
Compensation for Mr. Becker in 2011 is comprised of: (a) Cash LTIP payment of $63,780; and (b) ICP payment of $1,120,000.NEOs |
(12) | Stock compensation for Mr. Becker in 2011 includes his one-time CEO promotional grant of 19,000 restricted stock units (subject to four-year cliff vesting).
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(13) | Other compensation for Mr. Becker in 2011 is comprised of: (a) ESOP contribution of $12,250; and (b) 401(k) plan matching contribution of $12,250.
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(14) | Other compensation for Mr. Descheneaux in 2013 includes: (a) ESOP contribution of $9,639; (b) 401(k) plan matching contribution of $12,750; and (c) an Imputed Income Tax Reimbursement of $336.
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(15) | Salary compensation for Mr. Descheneaux in 2012 includes a one-time Accrued Vacation Payout of $70,283.
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(16) | Bonus compensation for Mr. Descheneaux in 2012 is comprised of: (a) Cash LTIP payment of $60,907; and (b) ICP payment of $275,000.
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(17) | Other compensation for Mr. Descheneaux in 2012 is comprised of: (a) ESOP contribution of $12,500; (b) 401(k) plan matching contribution of $12,500; and (c) an Imputed Income Tax Reimbursement of $608.
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(18) | Bonus compensation for Mr. Descheneaux in 2011 is comprised of: (a) Cash LTIP payment of $32,340; and (b) ICP payment of $500,000.
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(19) | Other compensation for Mr. Descheneaux in 2011 is comprised of: (a) ESOP contribution of $12,250; and (b) 401(k) plan matching contribution of $12,250.
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(20) | Bonus compensation for Mr. China in 2013 is comprised of: (a) Cash long-term retention program payment of $597,500; and (b) ICP payment of $475,000.
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(21) | Other compensation for Mr. China in 2013 includes: (a) ESOP contribution of $9,639; (b) 401(k) Savings Plan matching contribution of $12,750; and (c) an Imputed Income Tax Reimbursement of $240.
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(22) | Salary compensation for Mr. China in 2012 includes a one-time Accrued Vacation Payout of $57,885.
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(23) | Other compensation for Mr. China in 2012 is comprised of: (a) Retention Plan (“RP”) payment of $34,815 (Mr. China is no longer a participant under the RP); (b) ESOP contribution of $12,500; (c) 401(k) plan matching contribution of $12,500; and (d) an Imputed Income Tax Reimbursement of $1,248.
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(24) | Other compensation for Mr. China in 2011 is comprised of: (a) RP payment of $46,193; (b) special retention program payment of $50,000; (c) ESOP contribution of $12,250; (d) 401(k) plan matching contribution of $12,250; and (e) a business referral bonus of $870.
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(25) | Other compensation for Ms. Parsons in 2013 is comprised of: (a) ESOP contribution of $9,639; and (b) 401(k) plan matching contribution of $12,750.
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(26) | Salary compensation for Ms. Parsons in 2012 includes a one-time Accrued Vacation Payout of $66,638.
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(27) | Bonus compensation for Ms. Parsons in 2012 is comprised of: (a) Cash LTIP payment of $102,548; and (b) ICP payment of $230,000.
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(28) | Other compensation for Ms. Parsons in 2012 is comprised of: (a) ESOP contribution of $12,500; and (b) 401(k) plan matching contribution of $12,500; and (c) an Imputed Income Tax Reimbursement of $2,047.
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(29) | Bonus compensation for Ms. Parsons in 2011 is comprised of: (a) Cash LTIP payment of $54,450; and (b) ICP payment of $400,000.
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(30) | Other compensation for Ms. Parsons in 2011 is comprised of: (a) ESOP contribution of $12,250; and (b) 401(k) plan matching contribution of $12,250.
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(31) | Other compensation for Mr. Wallace in 2013 is comprised of: (a) ESOP contribution of $9,639; and (b) 401(k) plan matching contribution of $12,750.
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(32) | Salary compensation for Mr. Wallace in 2012 includes a one-time Accrued Vacation Payout of $34,484.
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(33) | Other compensation for Mr. Wallace in 2012 is comprised of: (a) RP payment of $29,182 (Mr. Wallace is no longer a participant under the RP); (b) ESOP contribution of $12,500; (c) 401(k) plan matching contribution of $12,500; and (d) an Imputed Income Tax Reimbursement of $153.
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(34) | Other compensation for Mr. Wallace in 2011 is comprised of: (a) RP payment of $32,273; (b) special retention program payment of $65,000; (c) ESOP contribution of $12,250; and (d) 401(k) plan matching contribution of $12,250.
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(35) | Other compensation for Mr. Jones in 2013 includes: (a) ESOP contribution of $9,639; and (b) 401(k) plan matching contribution of $12,750. In addition, other compensation includes costs of $165,112, primarily associated with his assignment to China, comprised of (i) $99,418 associated with housing; (ii) $52,448 primarily associated with relocation and (iii) an Imputed Income Tax Reimbursement of $13,245.
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(36) | Salary compensation for Mr. Jones in 2012 includes a one-time Accrued Vacation Payout of $66,154.
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(37) | Bonus compensation for Mr. Jones in 2012 includes: (a) Cash LTIP payment of $84,750; and (b) ICP payment of $250,000.
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(38) | Other compensation for Mr. Jones in 2012 includes: (a) ESOP contribution of $12,500; and (b) 401(k) plan matching contribution of $12,500. In addition, other compensation includes $31,764, representing: (i) $21,266 in costs primarily associated with spousal travel and attendance to our business events or for business trips, where Mr. Jones’s spouse was invited, and expected to, attend, and (ii) an Imputed Income Tax Reimbursement of $10,498.
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(39) | Bonus compensation for Mr. Jones in 2011 is comprised of: (a) Cash LTIP payment of $45,000; and (b) ICP payment of $400,000.
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(40) | Other compensation for Mr. Jones in 2011 is comprised of: (a) ESOP contribution of $12,250; and (b) 401(k) plan matching contribution of $12,250.
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44
EXECUTIVE OFFICERS & COMPENSATION
Grants of Plan-Based Awards The following table sets forth all plan-based awards, including both equity awards andnon-equity incentive awards, under plans, made to our NEOs during the year ended December 31, 2013.2016. | | | Grant Date | | | Compensation Committee or Board Approval Date | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | | All Other Stock Awards; Number of Shares of Stock or Units (2) | | | All Other Option Awards; Number of Securities Underlying Options | | | Exercise or Base Price of Option Awards (3) | | | Grant Date Fair Value of Stock and Option Awards (4) | | | | | Compensation Committee or Board Approval Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | All Other Stock Awards; Number of Shares of Stock or Units (3) | | All Other Option Awards; Number of Securities Underlying Options | | Exercise or Base Price of Option Awards | | Grant Date Fair Value of Stock and Option Awards(4) | Name | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | Greg Becker | | | April 30, 2013 | | | | April 25, 2013 | | | | | | | | | | | | | | | | 15,000 | | | | - | | | $ | - | | | $ | 1,066,650 | | | February 16, 2016 | | February 16, 2016 | | | - | | | | 925,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Greg Becker | | | April 30, 2013 | | | | April 25, 2013 | | | | | | | | | | | | | | | | 8,800 | | | | - | | | | - | | | | 625,768 | | | February 16, 2016 | | February 16, 2016 | | | - | | | | - | | | | - | | | | 8,333 | | | | 16,666 | | | | 24,999 | | | | - | | | | - | | | | - | | | | 1,456,775 | | Greg Becker | | | April 30, 2013 | | | | April 25, 2013 | | | | | | | | | | | | | | | | - | | | | 31,600 | | | | 71.11 | | | | 867,018 | | | May 2, 2016 | | February 16, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,311 | | | | - | | | | - | | | | 768,971 | | Greg Becker | | | May 2, 2016 | | February 16, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 24,951 | | | | 105.18 | | | | 807,501 | | Michael Descheneaux | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 8,250 | | | | - | | | | - | | | | 586,658 | | | February 9, 2016 | | February 9, 2016 | | | - | | | | 420,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Michael Descheneaux | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 4,900 | | | | - | | | | - | | | | 348,439 | | | February 16, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | 3,225 | | | | 6,451 | | | | 9,676 | | | | - | | | | - | | | | - | | | | 563,882 | | Michael Descheneaux | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | - | | | | 17,300 | | | | 71.11 | | | | 474,665 | | | May 2, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,830 | | | | - | | | | - | | | | 297,659 | | Michael Descheneaux | | | May 2, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 9,658 | | | | 105.18 | | | | 312,566 | | Marc Cadieux | | | February 9, 2016 | | February 9, 2016 | | | - | | | | 225,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Marc Cadieux | | | February 16, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | 1,612 | | | | 3,225 | | | | 4,837 | | | | - | | | | - | | | | - | | | | 281,897 | | Marc Cadieux | | | May 2, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,415 | | | | - | | | | - | | | | 148,830 | | Marc Cadieux | | | May 2, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,829 | | | | 105.18 | | | | 156,283 | | John China | | | February 9, 2016 | | February 9, 2016 | | | - | | | | 350,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | John China | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 4,050 | | | | - | | | | - | | | | 287,996 | | | February 16, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | 2,016 | | | | 4,032 | | | | 6,048 | | | | - | | | | - | | | | - | | | | 352,437 | | John China | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 3,100 | | | | - | | | | - | | | | 220,441 | | | May 2, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,768 | | | | - | | | | - | | | | 185,958 | | John China | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | - | | | | 8,600 | | | | 71.11 | | | | 235,961 | | | May 2, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 6,036 | | | | 105.18 | | | | 195,346 | | Joan Parsons | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 4,500 | | | | - | | | | - | | | | 319,995 | | | February 9, 2016 | | February 9, 2016 | | | - | | | | 350,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Joan Parsons | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 2,700 | | | | - | | | | - | | | | 191,997 | | | February 16, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | 1,747 | | | | 3,494 | | | | 5,241 | | | | - | | | | - | | | | - | | | | 305,411 | | Joan Parsons | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | - | | | | 9,400 | | | | 71.11 | | | | 257,910 | | | May 2, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,533 | | | | - | | | | - | | | | 161,241 | | Bruce Wallace | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 4,500 | | | | - | | | | - | | | | 319,995 | | | Bruce Wallace | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 2,600 | | | | - | | | | - | | | | 184,886 | | | Bruce Wallace | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | - | | | | 9,400 | | | | 71.11 | | | | 257,910 | | | David Jones | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 5,550 | | | | - | | | | - | | | | 394,661 | | | David Jones | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | 3,400 | | | | - | | | | - | | | | 241,774 | | | David Jones | | | April 30, 2013 | | | | April 24, 2013 | | | | | | | | | | | | | | | | - | | | | 11,800 | | | | 71.11 | | | | 323,760 | | | Joan Parsons | | | May 2, 2016 | | February 9, 2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5,231 | | | | 105.18 | | | | 169,293 | |
(1) | The ICP amounts represent target levels. There are no individual thresholds or maximum amounts. |
(2) | For the performance-based restricted stock unit grants to the NEOs made in 2013,2016, the performance achievement waswill be determined as of December 31, 20132018 for the 2016-2018 performance period based upon the performance criteria presented under “Compensation Discussion and Analysis – EquityAnalysis-Equity Incentives” above. Since the achievement under this performance-based restricted stock grant was determined as of December 31, 2013, there are no estimated future payouts to be disclosed in the table above. See“Compensation Discussion and Analysis – Equity Incentives” above. |
(2)(3) | The stock awards reported above reflect performance-based restricted stock unit awards granted to each NEO. The Committee determined in January 2014 that 150% of the target for these awards had been earned for 2013. The target payout of the awards to Mr. Becker, Mr. Descheneaux, Mr. China, Ms. Parsons, Mr. Wallace and Mr. Jones were 10,000, 5,500, 2,700, 3,000, 3,000 and 3,700 shares, respectively. The achievement resulted in a 150% payout of target, which is subject to further time-based vesting until December 20, 2015. |
(3) | Only the exercise price of the stock option awards is reported in the table above.
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(4) | The fair values reported above are also reported in the “Summary“Summary Compensation Table”Table” under the “Stock Awards” and “Stock Option Awards” columns, except that performance-based restricted stock unit awards are reported at 150% of target.columns. Amounts shown represent the grant date fair values of awards of stock options and stock awards granted in the fiscal year indicated, which were computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718,Compensation (“ASC Topic 718”).718. The amounts disclosed may never be realized. Assumptions used in calculating these amounts are included in the note entitled “Stockholders’ EquityShare-based Compensation” of our audited financial statements included in our Annual Report on Form10-K for the applicable year. |
Option Exercises and Stock Vested The following table sets forth the number of securities underlying equity awards that vested (in the case of restricted shares)stock) or were exercised (in the case of stock options) by the NEOs during the year ended December 31, 2013,2016, and the value realized upon such vesting or exercise. | | | OPTION AWARDS | | | STOCK AWARDS | | | OPTION AWARDS | | | STOCK AWARDS | | Name | | Number of Shares Acquired on Exercise | | | Value Realized on Exercise | | | Number of Shares Acquired on Vesting | | | Value Realized on Vesting | | | Number of Shares Acquired on Exercise | | | Value Realized on Exercise | | | Number of Shares Acquired on Vesting | | | Value Realized on Vesting | | Greg Becker | | | 32,066 | | | $ | 1,439,844 | | | | 7,050 | | | $ | 646,895 | | | | - | | | $ | - | | | | 5,851 | | | $ | 614,501 | | Michael Descheneaux | | | 28,950 | | | | 1,223,073 | | | | 4,525 | | | | 418,994 | | | | 6,500 | | | | 308,366 | | | | 2,981 | | | | 313,142 | | Marc Cadieux | | | | 4,000 | | | | 348,345 | | | | 2,060 | | | | 218,112 | | John China | | | 1,750 | | | | 26,985 | | | | 1,363 | | | | 109,018 | | | | 8,572 | | | | 668,015 | | | | 1,610 | | | | 169,122 | | Joan Parsons | | | 4,830 | | | | 140,128 | | | | 4,056 | | | | 347,059 | | | | - | | | | - | | | | 1,635 | | | | 171,752 | | Bruce Wallace | | | 7,000 | | | | 234,639 | | | | 2,480 | | | | 208,477 | | | David Jones | | | 31,544 | | | | 1,181,954 | | | | 3,050 | | | | 281,638 | | |
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| | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation for NEOs |
EXECUTIVE OFFICERS & COMPENSATION
Outstanding Equity Awards at Fiscal Year End The following tables set forth all outstanding equity awards to the NEOs as of December 31, 2013.2016. The exercise price for each of the stock option grants reported below is equal to the closing market price on the applicable grant date. The vesting schedule for each outstanding equity award is provided in the footnotes to the tablestable below. Outstanding stock awards are valued based upon the closing market price of our stock as of December 31, 2013,30, 2016, which was $104.86$171.66 per share. | | | OPTION AWARDS | | STOCK AWARDS | | | OPTION AWARDS | | STOCK AWARDS | | Name | | Number of Securities Underlying Unexercised Options (# Exercisable) | | Number of Securities Underlying Unexercised Options (# Unexercisable) | | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options | | Option Exercise Price (per option) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested | | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested | | | Number of Securities Underlying Unexercised Options (# Exercisable) | | Number of Securities Underlying Unexercised Options (# Unexercisable) | | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options | | Option Exercise Price (per option) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested | | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested | | Greg Becker | | | 16,450 | | | | - | | | | - | | | $ | 48.76 | | | | April 29, 2015 | | | | | | | | | | | | 13,894 | | | | - | | | | - | | | $ | 60.37 | | | | April 27, 2018 | | | | - | | | | - | | | | 2,200 | (1) | | $ | 377,652 | | | | | 4,450 | | | | - | | | | - | | | | 27.84 | | | | May 12, 2016 | | | | | | | | | | | | 19,511 | | | | - | | | | - | | | | 64.37 | | | | May 1, 2019 | | | | - | | | | - | | | | 2,016 | (2) | | | 346,067 | | | | | 12,784 | | | | 4,261 | (1) | | | - | | | | 45.19 | | | | July 27, 2017 | | | | | | | | | | | | 20,928 | | | | 7,900 | (1) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | - | | | | - | | | | 4,028 | (3) | | | 691,446 | | | | | 12,000 | | | | 12,000 | (2) | | | - | | | | 60.37 | | | | April 27, 2018 | | | | | | | | | | | | 12,172 | | | | 12,171 | (2) | | | - | | | | 107.98 | | | | April 29, 2021 | | | | - | | | | - | | | | 7,311 | (4) | | | 1,255,006 | | | | | 7,025 | | | | 21,075 | (3) | | | - | | | | 64.37 | | | | May 1, 2019 | | | | | | | | | | | | 4,060 | | | | 12,177 | (3) | | | - | | | | 129.81 | | | | May 1, 2022 | | | | - | | | | - | | | | 10,281 | (5) | | | 1,764,836 | | | | | - | | | | 31,600 | (4) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | | | | | | | | | - | | | | 24,951 | (4) | | | - | | | | 105.18 | | | | May 2, 2023 | | | | - | | | | - | | | | 16,500 | (6) | | | 2,832,390 | | | | | | | | | | | | | | | | | | | 2,500 | (5) | | $ | 262,150 | | | | | | | | | | | | | | | | | | 24,999 | (7) | | | 4,291,328 | | Michael Descheneaux | | | | 6,000 | | | | - | | | | - | | | $ | 60.37 | | | | April 27, 2018 | | | | - | | | | - | | | | 1,225 | (1) | | $ | 210,284 | | | | | | | | | | | | | | | | | | | 19,000 | (6) | | | 1,992,340 | | | | 11,400 | | | | - | | | | - | | | | 64.37 | | | | May 1, 2019 | | | | - | | | | - | | | | 886 | (2) | | | 152,091 | | | | | | | | | | | | | | | | | | | 3,900 | (7) | | | 408,954 | | | | 10,975 | | | | 4,325 | (1) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | - | | | | - | | | | 1,611 | (3) | | | 276,544 | | | | | | | | | | | | | | | | | | | 8,800 | (8) | | | 922,768 | | | | 5,356 | | | | 5,355 | (2) | | | - | | | | 107.98 | | | | April 29, 2021 | | | | - | | | | - | | | | 2,830 | (4) | | | 485,798 | | | | | | | | | | | | | | | | | | | 8,800 | (9) | | | 922,768 | | | | 1,624 | | | | 4,871 | (3) | | | - | | | | 129.81 | | | | May 1, 2022 | | | | - | | | | - | | | | 4,524 | (5) | | | 776,590 | | | | | | | | | | | | | | | | | | | 15,000 | (10) | | | 1,572,900 | | | | - | | | | 9,658 | (4) | | | - | | | | 105.18 | | | | May 2, 2023 | | | | - | | | | - | | | | 6,600 | (6) | | | 1,132,956 | | | | | | | | | | | | | | | | | | | | 9,676 | (7) | | | 1,660,982 | | Marc Cadieux | | | | 2,600 | | | | - | | | | - | | | $ | 49.18 | | | | April 30, 2017 | | | | - | | | | - | | | | 445 | (1) | | $ | 76,389 | | | | | | 2,260 | | | | - | | | | - | | | | 60.37 | | | | April 27, 2018 | | | | - | | | | - | | | | 755 | (8) | | | 129,603 | | | | | | 3,600 | | | | - | | | | - | | | | 64.37 | | | | May 1, 2019 | | | | - | | | | - | | | | 370 | (2) | | | 63,514 | | | | | | 2,663 | | | | 887 | (1) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | - | | | | - | | | | 673 | (3) | | | 115,527 | | | | | | 2,240 | | | | 2,239 | (2) | | | - | | | | 107.98 | | | | April 29, 2021 | | | | - | | | | - | | | | 1,415 | (4) | | | 242,899 | | | | | | 679 | | | | 2,037 | (3) | | | - | | | | 129.81 | | | | May 1, 2022 | | | | - | | | | - | | | | 1,891 | (5) | | | 324,609 | | | | | | - | | | | 4,829 | (4) | | | - | | | | 105.18 | | | | May 2, 2023 | | | | - | | | | - | | | | 2,760 | (6) | | | 473,782 | | | | | | | | | | | | | | | | | | | | 4,837 | (7) | | | 830,319 | | John China | | | | 152 | | | | - | | | | - | | | $ | 54.88 | | | | January 3, 2018 | | | | - | | | | - | | | | 775 | (1) | | $ | 133,037 | | | | | | 6,600 | | | | - | | | | - | | | | 64.37 | | | | May 1, 2019 | | | | - | | | | - | | | | 483 | (2) | | | 82,912 | | | | | | 6,450 | | | | 2,150 | (1) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | - | | | | - | | | | 878 | (3) | | | 150,717 | | | | | | 2,922 | | | | 2,920 | (2) | | | - | | | | 107.98 | | | | April 29, 2021 | | | | - | | | | - | | | | 1,768 | (4) | | | 303,495 | | | | | | 886 | | | | 2,656 | (3) | | | - | | | | 129.81 | | | | May 1, 2022 | | | | - | | | | - | | | | 2,467 | (5) | | | 423,485 | | | | | | - | | | | 6,036 | (4) | | | - | | | | 105.18 | | | | May 2, 2023 | | | | - | | | | - | | | | 3,600 | (6) | | | 617,976 | | | | | | | | | | | | | | | | | | | | 6,048 | (7) | | | 1,038,200 | | Joan Parsons | | | | 171 | | | | - | | | | - | | | $ | 45.53 | | | | October 26, 2017 | | | | - | | | | - | | | | 675 | (1) | | $ | 115,871 | | | | | | 1,750 | | | | - | | | | - | | | | 60.37 | | | | April 27, 2018 | | | | - | | | | - | | | | 483 | (2) | | | 82,912 | | | | | | 4,600 | | | | - | | | | - | | | | 64.37 | | | | May 1, 2019 | | | | - | | | | - | | | | 878 | (3) | | | 150,717 | | | | | | 4,700 | | | | 2,350 | (1) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | - | | | | - | | | | 1,533 | (4) | | | 263,155 | | | | | | 2,922 | | | | 2,920 | (2) | | | - | | | | 107.98 | | | | April 29, 2021 | | | | - | | | | - | | | | 2,467 | (5) | | | 423,485 | | | | | | 886 | | | | 2,656 | (3) | | | - | | | | 129.81 | | | | May 1, 2022 | | | | - | | | | - | | | | 3,600 | (6) | | | 617,976 | | | | | | - | | | | 5,231 | (4) | | | - | | | | 105.18 | | | | May 2, 2023 | | | | - | | | | - | | | | 5,241 | (7) | | | 899,670 | |
(1) | 4,261 options will vest on July 27, 2014.
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(2) | 6,000 options will vest on April 27, 2014;Options and 6,000 options will vest on April 27, 2015.
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(3) | 7,025 options will vest on May 1, 2014; 7,025 options will vest on May 1, 2015; and 7,025 options will vest on May 1, 2016.
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(4) | 7,900 options will vest on April 30, 2014; 7,900 options will vest on April 30, 2015; 7,900 options will vest on April 30, 2016; and 7,900 options willrestricted stock unit awards scheduled to vest on April 30, 2017.
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(2) | Options and restricted stock unit awards scheduled to vest with respect toone-half of the underlying shares on each of April 29, 2017 and 2018, respectively. |
(3) | Options and restricted stock unit awards scheduled to vest with respect toone-third of the underlying shares on each of May 1, 2017, 2018 and 2019, respectively. |
(4) | Options and restricted stock unit awards scheduled to vest with respect toone-fourth of the underlying shares on each of May 2, 2017, 2018, 2019 and 2020, respectively. |
(5) | 1,250Performance-based restricted stock units will vestvested at 150% of target on April 27, 2014; and 1,250January 30, 2017.
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(6) | Performance-based restricted stock units willscheduled to vest on April 27, 2015.January 30, 2018 and reported at 150% of target assuming the highest level of achievement of the performance conditions. |
(6)(7) | 19,000Performance-based restricted stock units willscheduled to vest on April 27, 2015.January 30, 2019 and reported at 150% of target assuming the highest level of achievement of the performance conditions.
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(7) | 1,300 restricted stock units will vest on May 1, 2014; 1,300 restricted stock units will vest on May 1, 2015; and 1,300 restricted stock units will vest on May 1, 2016.
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(8) | 2,200 restrictedRestricted stock units willscheduled to vest on April 30, 2014; 2,200 restricted stock units will vest on April 30, 2015; 2,200 restricted stock units will vest on April 30, 2016; and 2,200 restricted stock units will vest on April 30,September 3, 2017.
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(9) | 8,800 performance-based restricted stock units will vest on December 20, 2014.
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(10) | 15,000 performance-based restricted stock units will vest on December 20, 2015.
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46
EXECUTIVE OFFICERS & COMPENSATION
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | Name | | Number of Securities Underlying Unexercised Options (# Exercisable) | | | Number of Securities Underlying Unexercised Options (# Unexercisable) | | | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options | | | Option Exercise Price (per option) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested | | | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested | | Michael Descheneaux | | | 2,000 | | | | - | | | | - | | | $ | 48.76 | | | | April 29, 2015 | | | | | | | | | | | | | | | | | 6,400 | | | | - | | | | - | | | | 27.84 | | | | May 12, 2016 | | | | | | | | | | | | | | | | | 5,301 | | | | 3,267 | (1) | | | - | | | | 45.19 | | | | July 27, 2017 | | | | | | | | | | | | | | | | | 8,000 | | | | 8,000 | (2) | | | - | | | | 60.37 | | | | April 27, 2018 | | | | | | | | | | | | | | | | | 4,350 | | | | 13,050 | (3) | | | - | | | | 64.37 | | | | May 1, 2019 | | | | | | | | | | | | | | | | | - | | | | 17,300 | (4) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,500 | (5) | | $ | 157,290 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,325 | (6) | | | 243,800 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,900 | (7) | | | 513,814 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,300 | (8) | | | 555,758 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,250 | (9) | | | 865,095 | |
45 (1) | | | | | 3,267 options will vest on July 27, 2014.EXECUTIVE OFFICERS & COMPENSATION
Compensation for NEOs |
(2) | 4,000 options will vest on April 27, 2014; and 4,000 options will vest on April 27, 2015.
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(3) | 4,350 options will vest on May 1, 2014; 4,350 options will vest on May 1, 2015; and 4,350 options will vest on May 1, 2016.
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(4) | 4,325 options will vest on April 30, 2014; 4,325 options will vest on April 30, 2015; 4,325 options will vest on April 30, 2016; and 4,325 options will vest on April 30, 2017.
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(5) | 750 restricted stock units will vest on April 27, 2014; and 750 restricted stock units will vest on April 27, 2015.
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(6) | 775 restricted stock units will vest on May 1, 2014; 775 restricted stock units will vest on May 1, 2015; and 775 restricted stock units will vest on May 1, 2016.
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(7) | 1,225 restricted stock units will vest on April 30, 2014; 1,225 restricted stock units will vest on April 30, 2015; 1,225 restricted stock units will vest on April 30, 2016; and 1,225 restricted stock units will vest on April 30, 2017.
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(8) | 5,300 performance-based restricted stock units will vest on December 20, 2014.
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(9) | 8,250 performance-based restricted stock units will vest on December 20, 2015.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | Name | | Number of Securities Underlying Unexercised Options (# Exercisable) | | | Number of Securities Underlying Unexercised Options (# Unexercisable) | | | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options | | | Option Exercise Price (per option) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested | | | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested | | John China | | | 2,000 | | | | - | | | | - | | | $ | 48.15 | | | | April 2, 2014 | | | | | | | | | | | | | | | | | 1,890 | | | | - | | | | - | | | | 48.76 | | | | April 29, 2015 | | | | | | | | | | | | | | | | | 174 | | | | - | | | | - | | | | 45.11 | | | | July 7, 2015 | | | | | | | | | | | | | | | | | 3,704 | | | | - | | | | - | | | | 19.48 | | | | April 28, 2016 | | | | | | | | | | | | | | | | | 1,875 | | | | 625 | (1) | | | - | | | | 49.18 | | | | April 30, 2017 | | | | | | | | | | | | | | | | | 152 | | | | - | | | | - | | | | 54.88 | | | | January 3, 2018 | | | | | | | | | | | | | | | | | 1,108 | | | | 1,260 | (2) | | | - | | | | 54.88 | | | | January 3, 2018 | | | | | | | | | | | | | | | | | 1,650 | | | | 4,950 | (3) | | | - | | | | 64.37 | | | | May 1, 2019 | | | | | | | | | | | | | | | | | - | | | | 8,600 | (4) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 250 | (5) | | $ | 26,215 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 624 | (6) | | | 65,433 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 900 | (7) | | | 94,374 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,100 | (8) | | | 325,066 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,000 | (9) | | | 209,720 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,050 | (10) | | | 424,683 | |
(1) | 625 options will vest on April 30, 2014.
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(2) | 630 options vested on January 3, 2014; and 630 options will vest on January 3, 2015.
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(3) | 1,650 options will vest on May 1, 2014; 1,650 options will vest on May 1, 2015; and 1,650 options will vest on May 1, 2016.
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47
EXECUTIVE OFFICERS & COMPENSATION
(4) | 2,150 options will vest on April 30, 2014; 2,150 options will vest on April 30, 2015; 2,150 options will vest on April 30, 2016; and 2,150 options will vest on April 30, 2017.
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(5) | 250 restricted stock units will vest on April 30, 2014.
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(6) | 312 restricted stock units vested on January 3, 2014; and 312 restricted stock units will vest on January 3, 2015.
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(7) | 300 restricted stock units will vest on May 1, 2014; 300 restricted stock units will vest on May 1, 2015; and 300 restricted stock units will vest on May 1, 2016.
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(8) | 775 restricted stock units will vest on April 30, 2014; 775 restricted stock units will vest on April 30, 2015; 775 restricted stock units will vest on April 30, 2016; and 775 restricted stock units will vest on April 30, 2017.
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(9) | 2,000 performance-based restricted stock units will vest on December 20, 2014.
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(10) | 4,050 performance-based restricted stock units will vest on December 20, 2015.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | Name | | Number of Securities Underlying Unexercised Options (# Exercisable) | | | Number of Securities Underlying Unexercised Options (# Unexercisable) | | | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options | | | Option Exercise Price (per option) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested | | | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested | | Joan Parsons | | | 920 | | | | - | | | | - | | | $ | 48.15 | | | | April 2, 2014 | | | | | | | | | | | | | | | | | 1,926 | | | | - | | | | - | | | | 48.76 | | | | April 29, 2015 | | | | | | | | | | | | | | | | | 824 | | | | - | | | | - | | | | 48.76 | | | | April 29, 2015 | | | | | | | | | | | | | | | | | 624 | | | | - | | | | - | | | | 23.16 | | | | January 27, 2016 | | | | | | | | | | | | | | | | | 1,876 | | | | - | | | | - | | | | 23.16 | | | | January 27, 2016 | | | | | | | | | | | | | | | | | 2,625 | | | | - | | | | - | | | | 19.48 | | | | April 28, 2016 | | | | | | | | | | | | | | | | | 1,206 | | | | - | | | | - | | | | 42.45 | | | | October 27, 2016 | | | | | | | | | | | | | | | | | 1,294 | | | | - | | | | - | | | | 42.45 | | | | October 27, 2016 | | | | | | | | | | | | | | | | | 2,727 | | | | - | | | | - | | | | 49.18 | | | | April 30, 2017 | | | | | | | | | | | | | | | | | 1,023 | | | | 1,250 | (1) | | | - | | | | 49.18 | | | | April 30, 2017 | | | | | | | | | | | | | | | | | 511 | | | | - | | | | - | | | | 43.53 | | | | October 26, 2017 | | | | | | | | | | | | | | | | | 1 | | | | 170 | (2) | | | - | | | | 43.53 | | | | October 26, 2017 | | | | | | | | | | | | | | | | | 3,500 | | | | 3,500 | (3) | | | - | | | | 60.37 | | | | April 27, 2018 | | | | | | | | | | | | | | | | | 2,300 | | | | 6,900 | (4) | | | - | | | | 64.37 | | | | May 1, 2019 | | | | | | | | | | | | | | | | | - | | | | 9,400 | (5) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 500 | (6) | | $ | 52,430 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 194 | (7) | | | 20,343 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,000 | (8) | | | 104,860 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,275 | (9) | | | 133,697 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,700 | (10) | | | 283,122 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,900 | (11) | | | 304,094 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,500 | (12) | | | 471,870 | |
(1) | 1,250 options will vest on April 30, 2014.
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(2) | 170 options will vest on October 26, 2014.
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(3) | 1,750 options will vest on April 27, 2014; and 1,750 options will vest on April 27, 2015.
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(4) | 2,300 options will vest on May 1, 2014; 2,300 options will vest on May 1, 2015; and 2,300 options will vest on May 1, 2016.
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(5) | 2,350 options will vest on April 30, 2014; 2,350 options will vest on April 30, 2015; 2,350 options will vest on April 30, 2016; and 2,350 options will vest on April 30, 2017.
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(6) | 500 restricted stock units will vest on April 30, 2014.
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(7) | 194 restricted stock units will vest on October 26, 2014.
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(8) | 500 restricted stock units will vest on April 27, 2014; and 500 restricted stock units will vest on April 27, 2015.
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(9) | 425 restricted stock units will vest on May 1, 2014; 425 restricted stock units will vest on May 1, 2015; and 425 restricted stock units will vest on May 1, 2016.
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(10) | 675 restricted stock units will vest on April 30, 2014; 675 restricted stock units will vest on April 30, 2015; 675 restricted stock units will vest on April 30, 2016; and 675 restricted stock units will vest on April 30, 2017.
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(11) | 2,900 performance-based restricted stock units will vest on December 20, 2014.
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(12) | 4,500 performance-based restricted stock units will vest on December 20, 2015.
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48
EXECUTIVE OFFICERS & COMPENSATION
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | Name | | Number of Securities Underlying Unexercised Options (# Exercisable) | | | Number of Securities Underlying Unexercised Options (# Unexercisable) | | | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options | | | Option Exercise Price (per option) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested | | | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested | | Bruce Wallace | | | 525 | | | | - | | | | - | | | $ | 19.48 | | | | April 28, 2016 | | | | | | | | | | | | | | | | | 1,025 | | | | 1,000 | (1) | | | - | | | | 49.18 | | | | April 30, 2017 | | | | | | | | | | | | | | | | | 1,500 | | | | 3,000 | (2) | | | - | | | | 60.37 | | | | April 27, 2018 | | | | | | | | | | | | | | | | | 2,250 | | | | 6,750 | (3) | | | - | | | | 64.37 | | | | May 1, 2019 | | | | | | | | | | | | | | | | | - | | | | 9,400 | (4) | | | - | | | | 71.11 | | | | April 30, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 437 | (5) | | $ | 45,824 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 500 | (6) | | | 52,430 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,200 | (7) | | | 125,832 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,600 | (8) | | | 272,636 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,700 | (9) | | | 283,122 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,500 | (10) | | | 471,870 | |
(1) | 1,000 options will vest on April 30, 2014.
|
(2) | 1,500 options will vest on April 27, 2014; and 1,500 options will vest on April 27, 2015.
|
(3) | 2,250 options will vest on May 1, 2014; 2,250 options will vest on May 1, 2015; and 2,250 options will vest on May 1, 2016.
|
(4) | 2,350 options will vest on April 30, 2014; 2,350 options will vest on April 30, 2015; 2,350 options will vest on April 30, 2016; and 2,350 options will vest on April 30, 2017.
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(5) | 437 restricted stock units will vest on April 30, 2014.
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(6) | 250 restricted stock units will vest on April 27, 2014; and 250 restricted stock units will vest on April 27, 2015.
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(7) | 400 restricted stock units will vest on May 1, 2014; 400 restricted stock units will vest on May 1, 2015; and 400 restricted stock units will vest on May 1, 2016.
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(8) | 650 restricted stock units will vest on April 30, 2014; 650 restricted stock units will vest on April 30, 2015; 650 restricted stock units will vest on April 30, 2016; and 650 restricted stock units will vest on April 30, 2017.
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(9) | 2,700 performance-based restricted stock units will vest on December 20, 2014.
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(10) | 4,500 performance-based restricted stock units will vest on December 20, 2015.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | Name | | Number of Securities Underlying Unexercised Options (# Exercisable) | | Number of Securities Underlying Unexercised Options (# Unexercisable) | | | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options | | Option Exercise Price (per option) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested | | | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested | | David Jones | | - | | | 2,272 | (1) | | - | | $ | 45.19 | | | | July 27, 2017 | | | | | | | | | | | | | | | | - | | | 5,000 | (2) | | - | | | 60.37 | | | | April 27, 2018 | | | | | | | | | | | | | | | | - | | | 8,925 | (3) | | - | | | 64.37 | | | | May 1, 2019 | | | | | | | | | | | | | | | | - | | | 11,800 | (4) | | - | | | 71.11 | | | | April 30, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,000 | (5) | | $ | 104,860 | | | | | | | | | | | | | | | | | | | | | | | | | 1,650 | (6) | | | 173,019 | | | | | | | | | | | | | | | | | | | | | | | | | 3,400 | (7) | | | 356,524 | | | | | | | | | | | | | | | | | | | | | | | | | 3,700 | (8) | | | 387,982 | | | | | | | | | | | | | | | | | | | | | | | | | 5,550 | (9) | | | 581,973 | |
(1) | 2,272 options will vest on July 27, 2014.
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(2) | 2,500 options will vest on April 27, 2014; and 2,500 options will vest on April 27, 2015.
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(3) | 2,975 options will vest on May 1, 2014; 2,975 options will vest on May 1, 2015; and 2,975 options will vest on May 1, 2016.
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(4) | 2,950 options will vest on April 30, 2014; 2,950 options will vest on April 30, 2015; 2,950 options will vest on April 30, 2016; and 2,950 options will vest on April 30, 2017.
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(5) | 500 restricted stock units will vest on April 27, 2014; and 500 restricted stock units will vest on April 27, 2015.
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(6) | 550 restricted stock units will vest on May 1, 2014; 550 restricted stock units will vest on May 1, 2015; and 550 restricted stock units will vest on May 1, 2016.
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(7) | 850 restricted stock units will vest on April 30, 2014; 850 restricted stock units will vest on April 30, 2015; 850 restricted stock units will vest on April 30, 2016; and 850 restricted stock units will vest on April 30, 2017.
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(8) | 3,700 performance-based restricted stock units will vest on December 20, 2014.
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(9) | 5,550 performance-based restricted stock units will vest on December 20, 2015.
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49
EXECUTIVE OFFICERS & COMPENSATION
Pension Benefits We do not maintain any defined benefit pension plans.plans in which any of our executive officers participate. Non-Qualified Deferred Compensation The following table sets forth information about executive contributions to, earnings from, and distributions ofnon-qualified deferred compensation under our Deferred Compensation Plan. There were no above-market or preferential earnings on any compensation that was deferred. We do not maintain any othernon-qualified deferred compensation program for our NEOs. | Name | | Executive Contributions in Last FY | | Registrant Contributions in Last FY | | Aggregate Earnings in Last FY | | | Aggregate Withdrawals/ Distributions | | Aggregate Balance at Last December 31, 2013 | | | Executive Contributions in Last FY | | | Registrant Contributions in Last FY | | | Aggregate Earnings in Last FY | | | Aggregate Withdrawals/ Distributions | | | Aggregate Balance at Last December 31, 2016 | | Greg Becker (1) | | | | | | $ | 38,446 | | | | | $ | 166,121 | | | $ | - | | | $ | - | | | $ | 14,692 | | | $ | - | | | $ | 186,582 | | Michael Descheneaux | | | | | | | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | Marc Cadieux | | | | - | | | | - | | | | - | | | | - | | | | - | | John China | | | | | | | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | Joan Parsons | | | | | | | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | Bruce Wallace | | | | | | | | | | | | David Jones | | | | | | | | | | | |
| (1) | Mr. Becker participatedelected to participate in the Deferred Compensation Plan in 2005. No additional contributions were made during 2013.2016. The amounts in the above table are not required to be, and are not, reflected in the Summary Compensation Table above. | |
Other Post-Employment Payments There are certain circumstances in which our NEOs may be entitled to post-employment payments, which are discussed in further detail below: Change in Control Severance Plan Our Change in Control Severance Plan (the “Change in Control Plan”), as adopted in 2006 and amended from time to time, provides a specified severance benefit to our executive officers in the event their employment is involuntarily terminated (oror they resign from such employment for a good reason, as defined by the plan)“good reason” following a change in control of the Company. Generally under the plan, “good reason” is defined as the occurrence of any of the following events without the covered employee’s written consent: (i) a material, involuntary reduction in responsibilities, authorities or functions, except in connection with a termination of employment for death, disability, retirement, fraud, misappropriation, embezzlement and other exclusions; (ii) a material reduction in base salary; (iii) a reduction in total compensation to less than 85% of the amount provided for the last full calendar year; or (iv) a relocation of more than 50 miles. We adopted this plan in order to ensure that itsour executives remain incented to consider and, whereif it is determined by the Board or stockholders as appropriate,(as appropriate) to be in our best interests, to act diligently to promote a change in the control of the Company. In 2012, we amended our Change in Control Plan to eliminate a The plan does not provide for any 280G excise taxgross-up provision, which provided coverage for an individual executive’s excise taxes if the total change-in-control benefits to that individual exceeded the Internal Revenue Code Section 280G limit by more than 10%. provisions.
We did not make any amendments or changes to the planChange in 2013.Control Plan in 2016. The planChange in Control Plan provides for a cash severance payment equal to 300% of base salary and target ICP incentive for the Chief Executive Officer, 200% of base salary and target ICP incentive for the chief financial officer,Chief Financial Officer, the Bank’s presidentPresident and the chief strategy officer,Chief Strategy Officer, as applicable, and 100% of base salary and target ICP incentive for the other executive officers. In addition, it provides for up to 12 months of Company-paid COBRA medical, dental and vision coverage, full vesting of Company contributions totax-qualified retirement plans and certain outplacement services. The circumstances that constitute a “Change“change in Control”control” are set forth in the Change in Control Plan. Generally, speaking, a Changechange in Controlcontrol includes a merger or consolidation, other than a merger or consolidation in which the owners of our voting securities own fifty percent (50%)50% or more of the voting securities of the surviving entity; a liquidation or dissolution or the closing of the sale or other disposition of all or substantially all of our assets; an acquisition by any person, directly or indirectly, of 50% or more of our voting securities; and an acquisition by any person, directly or indirectly, of 25% or more of our voting securities and, within twelve (12)12 months of the occurrence of such event, a change in the composition of the Board occurs as a result of which sixty percent (60%)60% or fewer of the directors are incumbent directors. 46 | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation for NEOs |
Our Change in Control Plan includes a number of restrictive covenants that govern the executives’ rights to receive benefits under the plan. Specifically,Generally, unless we provide otherwise in writing, the executive must not directly or indirectly engage in, have any ownership in or participate in the financing, operation, management or control of any person, firm, corporation or business that competes with us or our affiliates, or any of our customers or ourtheir affiliates for a period of (i) 18 months, with respect toin the chief executive officer, 50
EXECUTIVE OFFICERS & COMPENSATION
case of the Chief Executive Officer (ii) 12 months, forin the chief financial officer,case of the Chief Financial Officer, the Bank’s presidentPresident and chief strategy officer,Chief Strategy Officer, as applicable and (iii) six months, forin the case of other covered executives. In addition, unless we provide otherwise in writing, the executive may not directly or indirectly solicit, recruit, or otherwise hire or attempt to hire any of our employees or cause any such person to leave his or her employment during the periods described in the previous sentence. Finally, the executive must execute a general release of claims in our favor covering all claims arising out of the executive’s involuntary termination of employment (as defined in the Change in Control Plan) and employment with us and our affiliates. Any benefits payable to an executive under this Planplan are reduced by any severance benefits we may pay to that executive under any other policy, plan, program or arrangement, including our Group Severance Benefit Policy. SVB Financial Group Severance Benefit Policy
Our Severance Benefit Policy provides severance pay and benefits to eligible employees who are involuntarily terminated from employment due to staff reduction, position elimination, closure of a business unit, organization restructuring or such other circumstances, as we deem appropriate for the payment of severance benefits. The policy is intended to promote our ability to modify itsour workforce and structure, while providing a reasonable level of certainty and job security to our employees. The policy covers all regular full-time or regularand part-time employees, including the NEOs. The policySeverance Benefit Policy provides for a cash severance payment based on level of job.job-level. For NEOs, this benefit is equal to 6six weeks’ pay per year of service including apro-rata amount for each partial year worked, with a minimum benefit of 6six months’ pay and a maximum benefit of 1one year’s pay. In addition, under the policy, we continue to makeco-payments for COBRA medical, dental, and vision coverage during the severance pay period and pays for certainpay designated outplacement services provided by a Company-selected external vendor. Any benefits payable to an executive under this Policypolicy are reduced by any severance benefits we pay to that executive under any other policy, plan, program, or arrangement, including our Change in Control Plan discussed above. 2006 Equity Incentive Plan Our 2006 Equity Incentive Plan, in which the NEOs participate, provides for full vesting of outstanding awards in the event of a change in control (as defined in the plan) of the Company in the event that a successor corporation does not assume or substitute an equivalent option or right for the original equity awards under the plans.plan. In addition, effective as of January 7, 2015, we amended the equity awards agreements under the plan to provide for certain vesting of outstanding awards upon the termination of a participant’s employment due to death or disability as follows: (i) full vesting of any outstanding stock option awards, restricted stock unit awards subject to time-based vesting, restricted stock awards and stock appreciation rights awards; and(ii) pro-rated vesting for any outstanding restricted stock unit awards subject to performance conditions based on the level of achievement of the applicable performance conditions as of the date of termination. These changes apply to all outstanding awards on a retrospective basis, as well as to any new grants made under the applicable amended form of award agreement on a prospective basis. 5147
| | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation for NEOs |
EXECUTIVE OFFICERS & COMPENSATION
Payments Uponupon Termination Ofof Employment The following tables summarize the payments whichthat would be payable to our NEOs, as of December 31, 2016, in the event of various termination scenarios, including voluntary resignation, involuntary termination for cause, involuntary termination (not for cause), involuntary termination for good reason or after a change in control, death and disability. | | | GREG BECKER, PRESIDENT AND CHIEF EXECUTIVE OFFICER | | | GREG BECKER, PRESIDENT AND CHIEF EXECUTIVE OFFICER | | Compensation and Benefits | | Voluntary Resignation (including Retirement) | | Involuntary Termination for Cause | | Involuntary Termination (Not for Cause) | | Involuntary or for Good Reason After Change-in- Control | | Death | | Disability | | | Voluntary Resignation (including Retirement) | | Involuntary Termination for Cause | | Involuntary Termination (Not for Cause) (1) | | Involuntary or for Good Reason After Change-in-Control (2) | | Death | | Disability | Cash severance pay | | $ | - | | | $ | - | | | $ | 840,000 | | | $ | 4,284,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 925,000 | | | $ | 5,550,000 | | | $ | - | | | $ | - | | Market value of vested, exercisable stock options (1)(3) | | | 2,846,728 | | | | - | | | | 2,846,728 | | | | 2,846,728 | | | | 2,846,728 | | | | 2,846,728 | | | | 6,688,933 | | | | - | | | | 6,688,933 | | | | 6,688,933 | | | | 6,688,933 | | | | 6,688,933 | | Market value of unvested stock options which would vest (2)(4) | | | - | | | | - | | | | - | | | | 2,707,961 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 3,737,744 | | | | 3,737,744 | | | | 3,737,744 | | Market value of unvested restricted stock which would vest (3)(4) | | | - | | | | - | | | | - | | | | 5,557,580 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 9,184,153 | (5) | | | 6,649,593 | (6) | | | 6,649,593 | (6) | Company-paid health benefits | | | - | | | | - | | | | 17,977 | | | | 26,879 | | | | - | | | | - | | | | - | | | | - | | | | 13,258 | | | | 13,502 | | | | - | | | | - | | Accelerated retirement plan vesting | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Company-paid outplacement benefits | | | - | | | | - | | | | 20,000 | | | | 20,000 | | | | - | | | | - | | | | - | | | | - | | | | 20,000 | | | | 20,000 | | | | - | | | | - | | Deferred Compensation Plan balance payable (4)(7) | | | 166,121 | | | | 166,121 | | | | 166,121 | | | | 166,121 | | | | 166,121 | | | | 166,121 | | | | 186,582 | | | | 186,582 | | | | 186,582 | | | | 186,582 | | | | 186,582 | | | | 186,582 | | Long-Term Cash Retention Award | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | $ | 3,012,849 | | | $ | 166,121 | | | $ | 3,890,826 | | | $ | 15,609,269 | | | $ | 3,012,849 | | | $ | 3,012,849 | | | $ | 6,875,515 | | | $ | 186,582 | | | $ | 7,833,773 | | | $ | 25,380,914 | | | $ | 17,262,852 | | | $ | 17,262,852 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The market valueCash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary Termination (Not for Cause)” are calculated based on the terms of vested, exercisable stock options is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013).our U.S. Severance Benefit Policy.
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(2) | Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary or for Good Reason AfterChange-in-Control” are calculated based on the terms of our Change in Control Severance Plan for Executives. Consistent with that plan, amounts reported are calculated assuming no tax adjustment. Under our 2006 Equity Incentive Plan, if outstanding equity awards are not assumed or substituted by the successor of the Company upon a change of controlchange-in-control event, all such awards will fully vest and all restrictions thereon will lapse. The amounts reported in this table assume that such equity awards haveare not been assumed or substituted. |
(3) | The market value of these unvestedvested, exercisable stock options is calculated assuming a market value of $104.86$171.66 per share (the closing sharestock price as of December 31, 2013)30, 2016). |
(3)(4) | Similar to footnote (2) above, the amounts reported in this table assume that awards have not been assumed or substituted. The market value of unvested restricted stockequity that would vest is calculated assuming a market value of $104.86$171.66 per share (the closing sharestock price as of December 31, 2013) and30, 2016).
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(5) | The amount reported is comprised of (a)(i) the market value of unvested restricted stock of $3,586,212$2,670,171 and (b)(ii) the market value of performance-based restricted stock unit awards of $1,971,368$6,513,982 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above. |
(4)(6) | The amount reported is comprised of (i) the market value of unvested restricted stock of $2,670,171 and (ii) the market value of performance-based restricted stock unit awards of $3,979,422 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above. |
(7) | Deferred Compensation Plan balance for Mr. Becker reflects account balance as of December 31, 2013.2016. Mr. Becker is entitled to receive his account balance under each of the termination scenarios, to be paid in accordance with the plan and Mr. Becker’s payment election. |
| | | MICHAEL DESCHENEAUX, CHIEF FINANCIAL OFFICER | | | MICHAEL DESCHENEAUX, CHIEF FINANCIAL OFFICER | | Compensation and Benefits | | Voluntary Resignation (including Retirement) | | Involuntary Termination for Cause | | Involuntary Termination (Not for Cause) | | Involuntary or for Good Reason After Change-in- Control | | Death | | Disability | | | Voluntary Resignation (including Retirement) | | Involuntary Termination for Cause | | Involuntary Termination (Not for Cause) (1) | | Involuntary or for Good Reason After Change-in- Control (2) | | Death | | Disability | Cash severance pay | | $ | - | | | $ | - | | | $ | 412,540 | | | $ | 1,500,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 600,000 | | | $ | 2,040,000 | | | $ | - | | | $ | - | | Market value of vested, exercisable stock options (1)(3) | | | 1,453,490 | | | | - | | | | 1,453,490 | | | | 1,453,490 | | | | 1,453,490 | | | | 1,453,490 | | | | 3,403,417 | | | | - | | | | 3,403,417 | | | | 3,403,417 | | | | 3,403,417 | | | | 3,403,417 | | Market value of unvested stock options which would vest (2)(4) | | | - | | | | - | | | | - | | | | 1,663,131 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,621,800 | | | | 1,621,800 | | | | 1,621,800 | | Market value of unvested restricted stock which would vest (3)(4) | | | - | | | | - | | | | - | | | | 2,047,392 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 3,763,989 | (5) | | | 2,774,712 | (6) | | | 2,774,712 | (6) | Company-paid health benefits | | | - | | | | - | | | | 14,480 | | | | 25,403 | | | | - | | | | - | | | | - | | | | - | | | | 20,628 | | | | 21,007 | | | | - | | | | - | | Accelerated retirement plan vesting | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Company-paid outplacement benefits | | | - | | | | - | | | | 7,500 | | | | 7,500 | | | | - | | | | - | | | | - | | | | - | | | | 7,500 | | | | 7,500 | | | | - | | | | - | | Deferred Compensation Plan balance payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Long-Term Cash Retention Award | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | $ | 1,453,490 | | | $ | - | | | $ | 1,888,010 | | | $ | 6,696,916 | | | $ | 1,453,490 | | | $ | 1,453,490 | | | $ | 3,403,417 | | | $ | - | | | $ | 4,031,545 | | | $ | 10,857,713 | | | $ | 7,799,929 | | | $ | 7,799,929 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The market valueCash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary Termination (Not for Cause)” are calculated based on the terms of vested, exercisable stock options is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013).our U.S. Severance Benefit Policy.
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(2) | Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary or for Good Reason AfterChange-in-Control” are calculated based on the terms of our Change in Control Severance Plan for Executives. Consistent with that plan, amounts reported are calculated assuming no tax adjustment. Under our 2006 Equity Incentive Plan, if outstanding equity awards are not assumed or substituted by the successor of the Company upon a change of controlchange-in-control event, all such awards will fully vest and all restrictions thereon will lapse. The amounts reported in this table assume that such equity awards haveare not been assumed or substituted. The market value of these unvested stock options is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013). |
(3) | Similar to footnote (2) above, the amounts reported in this table assume that awards have not been assumed or substituted. The market value of unvested restricted stock is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013) and is comprised of (a) the market value of unvested restricted stock of $914,904 and (b) the market value of performance-based restricted stock unit awards of $1,132,488 (performance-based restricted stock unit awards are deemed to be achieved at target level).
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52
EXECUTIVE OFFICERS & COMPENSATION
| | | | | | | | | | | | | | | | | | | | | | | | | | | JOHN CHINA, HEAD OF RELATIONSHIP BANKING | | Compensation and Benefits | | Voluntary Resignation (including Retirement) | | | Involuntary Termination for Cause | | | Involuntary Termination (Not for Cause) | | | Involuntary or for Good Reason After Change-in- Control | | | Death | | | Disability | | Cash severance pay | | $ | - | | | $ | - | | | $ | 375,000 | | | $ | 675,000 | | | $ | - | | | $ | - | | Market value of vested, exercisable stock options (1) | | | 780,276 | | | | - | | | | 780,276 | | | | 780,276 | | | | 780,276 | | | | 780,276 | | Market value of unvested stock options which would vest (2) | | | - | | | | - | | | | - | | | | 588,450 | | | | - | | | | - | | Market value of unvested restricted stock which would vest (3) | | | - | | | | - | | | | - | | | | 1,003,930 | | | | - | | | | - | | Company-paid health benefits | | | - | | | | - | | | | 17,551 | | | | 25,403 | | | | - | | | | - | | Accelerated retirement plan vesting | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Company-paid outplacement benefits | | | - | | | | - | | | | 7,500 | | | | 7,500 | | | | - | | | | - | | Deferred Compensation Plan balance payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Long-Term Cash Retention Award (4) | | | 597,500 | | | | - | | | | 597,500 | | | | - | | | | 597,500 | | | | 597,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | $ | 1,377,776 | | | $ | - | | | $ | 1,777,827 | | | $ | 3,080,559 | | | $ | 1,377,776 | | | $ | 1,377,776 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The market value of vested, exercisable stock options is calculated assuming a market value of $104.86$171.66 per share (the closing sharestock price as of December 31, 2013)30, 2016). |
48 | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation for NEOs |
(4) | The market value of unvested equity that would vest is calculated assuming a market value of $171.66 per share (the closing stock price as of December 30, 2016). |
(5) | The amount reported is comprised of (i) the market value of unvested restricted stock of $1,124,716 and (ii) the market value of performance-based restricted stock unit awards of $2,639,273 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above. |
(6) | The amount reported is comprised of (i) the market value of unvested restricted stock of $1,124,716 and (ii) the market value of performance-based restricted stock unit awards of $1,649,996 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | MARC CADIEUX, CHIEF CREDIT OFFICER | | Compensation and Benefits | | Voluntary Resignation (including Retirement) | | | Involuntary Termination for Cause | | | Involuntary Termination (Not for Cause) (1) | | | Involuntary or for Good Reason AfterChange-in- Control (2) | | Death | | Disability | Cash severance pay | | $ | - | | | $ | - | | | $ | 450,000 | | | $ | 675,000 | | | $ | - | | | $ | - | | Market value of vested, exercisable stock options (3) | | | 1,395,031 | | | | - | | | | 1,395,031 | | | | 1,395,031 | | | | 1,395,031 | | | | 1,395,031 | | Market value of unvested stock options which would vest (4) | | | - | | | | - | | | | - | | | | 638,048 | | | | 638,048 | | | | 638,048 | | Market value of unvested restricted stock which would vest (4) | | | - | | | | - | | | | - | | | | 1,821,999 | (5) | | | 1,347,874 | (6) | | | 1,347,874 | (6) | Company-paid health benefits | | | - | | | | - | | | | 21,142 | | | | 21,532 | | | | - | | | | - | | Accelerated retirement plan vesting | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Company-paid outplacement benefits | | | - | | | | - | | | | 7,500 | | | | 7,500 | | | | - | | | | - | | Deferred Compensation Plan balance payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | $ | 1,395,031 | | | $ | - | | | $ | 1,873,673 | | | $ | 4,559,110 | | | $ | 3,380,953 | | | $ | 3,380,953 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary Termination (Not for Cause)” are calculated based on the terms of our U.S. Severance Benefit Policy. |
(2) | Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary or for Good Reason AfterChange-in-Control” are calculated based on the terms of our Change in Control Severance Plan for Executives. Consistent with that plan, amounts reported are calculated assuming no tax adjustment. Under our 2006 Equity Incentive Plan, if outstanding equity awards are not assumed or substituted by the successor of the Company upon a change of controlchange-in-control event, all such awards will fully vest and all restrictions thereon will lapse. The amounts reported in this table assume that such equity awards haveare not been assumed or substituted. The market value of these unvested stock options is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013). |
(3) | Similar to footnote (2) above, the amounts reported in this table assume that awards have not been assumed or substituted. The market value of unvested restricted stock is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013) and is comprised of (a) the market value of unvested restricted stock of $511,088 and (b) the market value of performance-based restricted stock unit awards of $492,842 (performance-based restricted stock unit awards are deemed to be achieved at target level).
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(4) | Earned cash long-term retention program award is payable as a result of termination without cause, death, and disability, and will be paid when other participants in the plan are paid.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | JOAN PARSONS, HEAD OF SPECIALTY BANKING | | Compensation and Benefits | | Voluntary Resignation (including Retirement) | | | Involuntary Termination for Cause | | | Involuntary Termination (Not for Cause) | | | Involuntary or for Good Reason After Change-in- Control | | | Death | | | Disability | | Cash severance pay | | $ | - | | | $ | - | | | $ | 400,000 | | | $ | 600,000 | | | $ | - | | | $ | - | | Market value of vested, exercisable stock options (1) | | | 1,354,596 | | | | - | | | | 1,354,596 | | | | 1,354,596 | | | | 1,354,596 | | | | 1,354,596 | | Market value of unvested stock options which would vest (2) | | | - | | | | - | | | | - | | | | 832,372 | | | | - | | | | - | | Market value of unvested restricted stock which would vest (3) | | | - | | | | - | | | | - | | | | 1,213,125 | | | | - | | | | - | | Company-paid health benefits | | | - | | | | - | | | | 17,551 | | | | 25,403 | | | | - | | | | - | | Accelerated retirement plan vesting | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Company-paid outplacement benefits | | | - | | | | - | | | | 7,500 | | | | 7,500 | | | | - | | | | - | | Deferred Compensation Plan balance payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Long-Term Cash Retention Award | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | $ | 1,354,596 | | | $ | - | | | $ | 1,779,647 | | | $ | 4,032,996 | | | $ | 1,354,596 | | | $ | 1,354,596 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The market value of vested, exercisable stock options is calculated assuming a market value of $104.86$171.66 per share (the closing sharestock price as of December 30, 2016). |
(4) | The market value of unvested equity that would vest is calculated assuming a market value of $171.66 per share (the closing stock price as of December 30, 2016). |
(5) | The amount reported is comprised of (i) the market value of unvested restricted stock of $627,932 and (ii) the market value of performance-based restricted stock unit awards of $1,194,067 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2013)2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above. |
(6) | The amount reported is comprised of (i) the market value of unvested restricted stock of $627,932 and (ii) the market value of performance-based restricted stock unit awards of $719,942 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | JOHN CHINA, HEAD OF TECHNOLOGY BANKING | | Compensation and Benefits | | Voluntary Resignation (including Retirement) | | | Involuntary Termination for Cause | | | Involuntary Termination (Not for Cause) (1) | | | Involuntary or for Good Reason AfterChange-in- Control (2) | | Death | | Disability | Cash severance pay | | $ | - | | | $ | - | | | $ | 500,000 | | | $ | 850,000 | | | $ | - | | | $ | - | | Market value of vested, exercisable stock options (3) | | | 1,597,564 | | | | - | | | | 1,597,564 | | | | 1,597,564 | | | | 1,597,564 | | | | 1,597,564 | | Market value of unvested stock options which would vest (4) | | | - | | | | - | | | | - | | | | 914,555 | | | | 914,555 | | | | 914,555 | | Market value of unvested restricted stock which would vest (4) | | | - | | | | - | | | | - | | | | 2,197,763 | (5) | | | 1,599,357 | (6) | | | 1,599,357 | (6) | Company-paid health benefits | | | - | | | | - | | | | 20,628 | | | | 21,007 | | | | - | | | | - | | Accelerated retirement plan vesting | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Company-paid outplacement benefits | | | - | | | | - | | | | 7,500 | | | | 7,500 | | | | - | | | | - | | Deferred Compensation Plan balance payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | $ | 1,597,564 | | | $ | - | | | $ | 2,125,692 | | | $ | 5,588,389 | | | $ | 4,111,476 | | | $ | 4,111,476 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary Termination (Not for Cause)” are calculated based on the terms of our U.S. Severance Benefit Policy. |
(2) | Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary or for Good Reason AfterChange-in-Control” are calculated based on the terms of our Change in Control Severance Plan for Executives. Consistent with that plan, amounts reported are calculated assuming no tax adjustment. Under our 2006 Equity Incentive Plan, if outstanding equity awards are not assumed or substituted by the successor of the Company upon a change of controlchange-in-control event, all such awards will fully vest and all restrictions thereon will lapse. The amounts reported in this table assume that such equity awards have not been assumed or substituted. The market value of these unvested stock options is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013). |
(3) | Similar to footnote (2) above, the amounts reported in this table assume that awards have not been assumed or substituted. The market value of unvested restricted stock is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013) and is comprised of (a) the market value of unvested restricted stock of $594,451 and (b) the market value of performance-based restricted stock unit awards of $618,674 (performance-based restricted stock unit awards are deemed to be achieved at target level).
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53
EXECUTIVE OFFICERS & COMPENSATION
| | | | | | | | | | | | | | | | | | | | | | | | | | | BRUCE WALLACE, CHIEF OPERATIONS OFFICER | | Compensation and Benefits | | Voluntary Resignation (including Retirement) | | | Involuntary Termination for Cause | | | Involuntary Termination (Not for Cause) | | | Involuntary or for Good Reason After Change-in- Control | | | Death | | | Disability | | Cash severance pay | | $ | - | | | $ | - | | | $ | 265,796 | | | $ | 600,000 | | | $ | - | | | $ | - | | Market value of vested, exercisable stock options (1) | | | 259,734 | | | | | | | | 259,734 | | | | 259,734 | | | | 259,734 | | | | 259,734 | | Market value of unvested stock options which would vest (2) | | | - | | | | - | | | | - | | | | 779,708 | | | | - | | | | - | | Market value of unvested restricted stock which would vest (3) | | | - | | | | - | | | | - | | | | 1,094,424 | | | | - | | | | - | | Company-paid health benefits | | | - | | | | - | | | | 8,664 | | | | 19,740 | | | | - | | | | - | | Accelerated retirement plan vesting | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Company-paid outplacement benefits | | | - | | | | - | | | | 7,500 | | | | 7,500 | | | | - | | | | - | | Deferred Compensation Plan balance payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Long-Term Cash Retention Award | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | $ | 259,734 | | | $ | - | | | $ | 541,694 | | | $ | 2,761,106 | | | $ | 259,734 | | | $ | 259,734 | | | | | | | | | | | | | | | | | | | | | | | | | | |
49 (1) | | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation for NEOs |
(3) | The market value of vested, exercisable stock options is calculated assuming a market value of $104.86$171.66 per share (the closing sharestock price as of December 30, 2016). |
(4) | The market value of unvested equity that would vest is calculated assuming a market value of $171.66 per share (the closing stock price as of December 30, 2016). |
(5) | The amount reported is comprised of (i) the market value of unvested restricted stock of $670,161 and (ii) the market value of performance-based restricted stock unit awards of $1,527,602 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2013)2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above. |
(6) | The amount reported is comprised of (i) the market value of unvested restricted stock of $670,161 and (ii) the market value of performance-based restricted stock unit awards of $929,196 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | JOAN PARSONS, CREDIT RISK MANAGER (FORMER HEAD OF SPECIALTY BANKING) | | Compensation and Benefits | | Voluntary Resignation (including Retirement) | | | Involuntary Termination for Cause | | | Involuntary Termination (Not for Cause) (1) | | | Involuntary or for Good Reason AfterChange-in- Control (2) | | Death | | Disability | Cash severance pay | | $ | - | | | $ | - | | | $ | 500,000 | | | $ | 850,000 | | | $ | - | | | $ | - | | Market value of vested, exercisable stock options (3) | | | 1,405,939 | | | | - | | | | 1,405,939 | | | | 1,405,939 | | | | 1,405,939 | | | | 1,405,939 | | Market value of unvested stock options which would vest (4) | | | - | | | | - | | | | - | | | | 881,149 | | | | 881,149 | | | | 881,149 | | Market value of unvested restricted stock which would vest (4) | | | - | | | | - | | | | - | | | | 2,047,904 | (5) | | | 1,510,952 | (6) | | | 1,510,952 | (6) | Company-paid health benefits | | | - | | | | - | | | | 15,110 | | | | 15,389 | | | | - | | | | - | | Accelerated retirement plan vesting | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Company-paid outplacement benefits | | | - | | | | - | | | | 7,500 | | | | 7,500 | | | | - | | | | - | | Deferred Compensation Plan balance payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | $ | 1,405,939 | | | $ | - | | | $ | 1,928,549 | | | $ | 5,207,881 | | | $ | 3,798,040 | | | $ | 3,798,040 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary Termination (Not for Cause)” are calculated based on the terms of our U.S. Severance Benefit Policy. |
(2) | Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under Involuntary or for Good Reason AfterChange-in-Control are calculated based on the terms of our Change in Control Severance Plan for Executives. Consistent with that plan, amounts reported are calculated assuming no tax adjustment. Under our 2006 Equity Incentive Plan, if outstanding equity awards are not assumed or substituted by the successor of the Company upon a change of controlchange-in-control event, all such awards will fully vest and all restrictions thereon will lapse. The amounts reported in this table assume that such equity awards have not been assumed or substituted. The market value of these unvested stock options is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013). |
(3) | Similar to footnote (2) above, the amounts reported in this table assume that awards have not been assumed or substituted. The market value of unvested restricted stock is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013) and is comprised of (a) the market value of unvested restricted stock of $496,722 and (b) the market value of performance-based restricted stock unit awards of $597,702 (performance-based restricted stock unit awards are deemed to be achieved at target level).
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| | | | | | | | | | | | | | | | | | | | | | | | | | | DAVID JONES, PRESIDENT OF ASIA | | Compensation and Benefits | | Voluntary Resignation (including Retirement) | | | Involuntary Termination for Cause | | | Involuntary Termination (Not for Cause) | | | Involuntary or for Good Reason After Change-in- Control | | | Death | | | Disability | | Cash severance pay | | $ | - | | | $ | - | | | $ | 300,000 | | | $ | - | | | $ | - | | | $ | - | | Market value of vested, exercisable stock options (1) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Market value of unvested stock options which would vest (2) | | | - | | | | - | | | | - | | | | 1,117,643 | | | | - | | | | - | | Market value of unvested restricted stock which would vest (3) | | | - | | | | - | | | | - | | | | 1,410,367 | | | | - | | | | - | | Company-paid health benefits | | | - | | | | - | | | | 8,335 | | | | - | | | | - | | | | - | | Accelerated retirement plan vesting | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Company-paid outplacement benefits | | | - | | | | - | | | | 7,500 | | | | - | | | | - | | | | - | | Deferred Compensation Plan balance payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Long-Term Cash Retention Award | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | $ | - | | | $ | - | | | $ | 315,835 | | | $ | 2,528,010 | | | $ | - | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The market value of vested, exercisable stock options is calculated assuming a market value of $104.86$171.66 per share (the closing sharestock price as of December 31, 2013)30, 2016). |
(2)(4) | Under our 2006 Equity Incentive Plan, if outstanding equity awards are not assumed or substituted by the successor of the Company upon a change of control event, all such awards will fully vest and all restrictions will lapse. The amounts reported in this table assume that awards have not been assumed or substituted. The market value of these unvested stock optionsequity that would vest is calculated assuming a market value of $104.86$171.66 per share (the closing sharestock price as of December 31, 2013)30, 2016).
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(3)(5) | Similar to footnote (2) above, the amountsThe amount reported in this table assume that awards have not been assumed or substituted. The market value of unvested restricted stock is calculated assuming a market value of $104.86 per share (the closing share price as of December 31, 2013) and is comprised of (a)(i) the market value of unvested restricted stock of $634,403$612,655 and (b)(ii) the market value of performance-based restricted stock unit awards of $775,964$1,435,249 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above.
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(6) | The amount reported is comprised of (i) the market value of unvested restricted stock of $612,655 and (ii) the market value of performance-based restricted stock unit awards of $898,297 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2016 are deemed to be achieved at target level). See “Other Post-Employment Payments – 2006 Equity Incentive Plan” above. |
5450
| | | | | EXECUTIVE OFFICERS & COMPENSATION Compensation for NEOs |
EXECUTIVE OFFICERS & COMPENSATION
SECURITY OWNERSHIP INFORMATION SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth information regarding beneficial ownership as of the Record Date of our Common Stock by: (i) each of our directors and director nominees, (ii) each of the executive officers named in the “Summary“Summary Compensation Table” below,Table” above, and (iii) all directors, director nominees and executive officers as a group. Unless otherwise noted and subject to applicable community property laws, the respective nominees have sole voting and investment power with respect to the shares shown in the table as beneficially owned. | | | | | | | | | | | Shares Beneficially Owned | | Name of Beneficial Owner | | Number of Shares | | | Percent of Class Owned | | Eric Benhamou (1) | | | 21,029 | | | | *% | | David Clapper (1) | | | 13,029 | | | | *% | | Roger Dunbar (2) | | | 12,752 | | | | *% | | Joel Friedman (1) | | | 18,029 | | | | *% | | C. Richard Kramlich (1) | | | 17,029 | | | | *% | | Lata Krishnan (3) | | | 9,767 | | | | *% | | Jeffrey Maggioncalda (1) | | | 3,024 | | | | *% | | Kate Mitchell (3) | | | 5,660 | | | | *% | | John Robinson (1) | | | 5,334 | | | | *% | | Garen Staglin (1) | | | 6,729 | | | | *% | | Greg Becker (4) | | | 106,031 | | | | *% | | Michael Descheneaux (5) | | | 31,203 | | | | *% | | John China (6) | | | 19,976 | | | | *% | | Joan Parsons (7) | | | 43,012 | | | | *% | | Bruce Wallace (8) | | | 6,349 | | | | *% | | David Jones | |
| 108,010
|
| | | *% | | All directors, director nominees and executive officers as a group (21 persons) (9) | | | 507,566 | | | | 1.10% | |
| | | | | | | | | | | Shares Beneficially Owned | | Name of Beneficial Owner | | Number of Shares | | | Percent of Class Owned | | Eric Benhamou (1) | | | 10,882 | | | | * | % | David Clapper (1) | | | 15,691 | | | | * | | Roger Dunbar (2) | | | 16,995 | | | | * | | Joel Friedman (1) | | | 20,691 | | | | * | | Lata Krishnan (3) | | | 12,793 | | | | * | | Jeffrey Maggioncalda (1) | | | 5,686 | | | | * | | Mary Miller (1) | | | 2,722 | | | | * | | Kate Mitchell (3) | | | 7,949 | | | | * | | John Robinson (1) | | | 6,456 | | | | * | | Garen Staglin (1) | | | 12,391 | | | | * | | Greg Becker (4) | | | 130,287 | | | | * | | Michael Descheneaux (5) | | | 38,680 | | | | * | | Marc Cadieux (6) | | | 30,697 | | | | * | | John China (7) | | | 33,218 | | | | * | | Joan Parsons | | | 29,477 | | | | * | | All directors, director nominees and executive officers as a group (22 persons) (8) | |
| 384,257
|
| | | * | |
* | Represents beneficial ownership of less than 1%. |
(1) | Includes 1,349985 shares whichthat may be acquired pursuant to the releasevesting of restricted stock units within 60 days of the Record Date. |
(2) | Includes 2,6981,970 shares whichthat may be acquired pursuant to the releasevesting of restricted stock units within 60 days of the Record Date. |
(3) | Does not include 1,349985 shares underlying restricted stock units, receipt of which the director has elected to defer. |
(4) | Includes 52,70970,565 shares whichthat may be acquired pursuant to the exercise of stock options within 60 days of the Record Date. |
(5) | Includes 26,05123,980 shares whichthat may be acquired pursuant to the exercise of stock options within 60 days of the Record Date. |
(6) | Includes 11,18311,442 shares whichthat may be acquired pursuant to the exercise of stock options within 60 days of the Record Date. |
(7) | Includes 21,31217,010 shares whichthat may be acquired pursuant to the exercise of stock options within 60 days of the Record Date. |
(8) | Includes 1,800141,926 shares whichthat may be acquired pursuant to the exercise of stock options within 60 days of the Record Date. |
(9) | Includes 159,820 shares which may be acquired pursuant to the releasevesting of restricted stock units or the exercise of stock options within 60 days of the Record Date.
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5551
| | | | | SECURITY OWNERSHIP INFORMATION Principal Stockholders |
SECURITY OWNERSHIP INFORMATION
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS The following table sets forth information regarding the beneficial ownership of our Common Stock as of December 31, 20132016 by those we know to own more than 5% of our outstanding Common Stock, and is based upon Schedules 13D and 13G filed with the SEC. Applicable percentages are based on 45,800,41852,254,074 shares outstanding as of December 31, 2013.2016. We know of no persons other than those entities described below which beneficially own more than 5% of our outstanding Common Stock. Unless otherwise noted, the respective nominees have sole voting and investment power with respect to the shares shown in the table as beneficially owned. | | | | | | | | | | | Shares Beneficially Owned | | Name and Address of Beneficial Owner | | Number of Shares | | | Percent of Class Owned | | T. Rowe Price Associates, Inc. (1) 100 E. Pratt Street Baltimore, MD 21202 | | | 2,860,925 | | | | 6.25 | % | | | | BlackRock, Inc. (2) 40 East 52nd Street New York, NY 10022 | | | 2,850,930 | | | | 6.22 | % | | | | The Vanguard Group (3) 100 Vanguard Blvd. Malvern, PA 19355 | | | 2,654,737 | | | | 5.80 | % |
| | | | | | | | | | | Shares Beneficially Owned | | Name and Address of Beneficial Owner | | Number of Shares | | | Percent of Class Owned | | BlackRock, Inc. (1) 55 East 52nd Street New York, NY 10055 | | | 4,267,100 | | | | 8.17 | % | | | | The Vanguard Group (2) 100 Vanguard Blvd. Malvern, PA 19355 | | | 3,930,352 | | | | 7.52 | % | | | | Harding Loevner LP (3) 400 Crossing Blvd. Bridgewater, NJ 08807 | | | 2,659,081 | | | | 5.09 | % | | | | T. Rowe Price Associates, Inc. (4) 100 E. Pratt Street Baltimore, MD 21202 | | | 2,647,195 | | | | 5.07 | % |
(1) | Information is based on figures set forth in a Schedule 13G/A filed by T. Rowe Price Associates, Inc. (“Price Associates”) on February 13, 2014. According to such 13G/A, Price Associates, an investment adviser, has sole voting power with respect to 795,564 shares and sole dispositive power with respect to 2,860,925 shares. |
(2) | Information is based on figures set forth in athe Schedule 13G/A filed by BlackRock, Inc., on January 30, 2014.27, 2017. According to suchthe Schedule 13G/A, of the total shares reported, BlackRock, Inc., an investment adviser, has sole voting power with respect to 2,665,2044,061,737 shares and sole dispositive power with respect to 2,850,9304,267,100 shares.
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(2) | Information is based on figures set forth in the Schedule 13G/A filed by The Vanguard Group (“Vanguard Group”) on February 10, 2017. According the Schedule 13G/A, of the total shares reported, Vanguard Group, an investment advisor, has sole voting power with respect to 30,520 shares and sole dispositive power with respect to 3,896,872 shares. |
(3) | Information is based on figures set forth the in athe Schedule 13G/A13G filed by the Vanguard GroupHarding Loevner LP (“Vanguard GroupHarding Loevner”) filed on February 12, 2014.January 9, 2017. According to such 13G/A, Vanguard Group, an investment adviser,the Schedule 13G, Harding Loevner has sole voting power with respect to 28,2442,659,081 shares. |
(4) | Information is based on figures set forth in the Schedule 13G filed by T. Rowe Price Associates, Inc. (“T. Rowe Price”) filed on February 7, 2017. According to the Schedule 13G, T. Rowe Price, an investment advisor, has sole voting power with respect to 650,161 shares and sole dispositive power with respect to 2,629,293 shares and shared dispositive power with respect to 25,4442,647,195 shares. |
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SECURITY OWNERSHIP INFORMATION
Proposal No. 2
APPROVAL OF THE 2006 EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED
The Board of Directors Recommends a Vote “For” Approval of
the Amended and Restated 2006 Equity Incentive Plan
52 | | | | EXECUTIVE SUMMARY OF PROPOSAL AND SELECTED PLAN AND FINANCIAL INFORMATION | | | Summary of Proposal:
| | We are proposing to increase the share reserve of our 2006 Equity Incentive Plan (the “Equity Plan”) by 2,000,000 shares of Common Stock
| | | Number of Shares Available for Grant: | | 1,749,744*
| | | Number of Shares Subject to Outstanding Options and Unvested RSUs: | | 2,196,506* (of which 1,514,159* shares are subject to outstanding options and 682,347* are subject to unvested restricted stock units)
| | | Number of Total Shares of Common Stock Outstanding: | | 45,800,418
| | | Burn Rate Limit: | | We have committed to limit our burn rate such that the total number of shares subject to outstanding equity awards granted under the Equity Plan during a fiscal year may not exceed two and one-half percent (2.5%) of the total number of shares of common stock outstanding as of the beginning of such fiscal year. For these purposes, Full Value Awards count as two (2) shares for every one (1) share subject to an Award.SECURITY OWNERSHIP INFORMATION
In 2013, we granted below our annual 2.5% burn rate limit. We granted equity awards covering a total of 971,282 shares under the Equity Plan (with Full Value Awards counted as two (2) shares for every one (1) share). Based on the total number of shares of common stock outstanding of 44,627,182 shares as of the beginning of 2013 (or as of December 31, 2012), our burn rate for 2013 was 2.18%.
| | | Certain Equity Plan Highlights:
| | ¡ No evergreen provision
¡ Minimum 100% fair market value exercise price for options and stock appreciation rights
¡ No repricing or other option exchange without stockholder approval
¡ Each share subject to a Full Value Award counts against our share reserve as two (2) shares
¡ Minimum 3 year time-based vesting for Full Value Awards (subject to certain exceptions in the Equity Plan)
¡ Minimum 1 year performance period for Full Value Awards that vest upon achievement of performance objectives (subject to certain exceptions in the Equity Plan)
¡ Annual grants of Full Value Awards to a member of the Board of Directors vest no earlier than the last day of the director’s last day of the applicable annual term to which the award relates (subject to certain exceptions in the Equity Plan)
¡ Non-employee directors may not be granted in any fiscal year Awards covering shares having an initial value greater than $500,000 in any fiscal year
¡ Maximum seven (7) year term for options and stock appreciation rights
| | | Date of Plan Expiration:
| | April 24, 2024
Principal Stockholders |
* As of December 31, 2013 (as disclosed under Note 4 (Share-Based Compensation) in the “Notes to Consolidated Financial Statements” under Part II, Item 8 in our 2013 Annual Report on Form 10-K).
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We are asking our stockholders to approve the amendment and restatement of our 2006 Equity Incentive Plan (the “Equity Plan”) so that we can continue to use it to achieve our goals and also continue to receive a federal income tax deduction for certain compensation paid under the Equity Plan. The Compensation Committee (the “Committee”) of our Board of Directors has approved the amended and restated Equity Plan, subject to approval from our stockholders at the Annual Meeting. Approval of the amended Equity Plan requires the affirmative vote of a majority of the Votes Cast. Our named executive officers and directors have an interest in this proposal.
We are requesting approval to amend the Equity Plan to increase the number of shares of our common stock (“shares”) that may be issued under the Equity Plan by 2,000,000. We are additionally requesting approval of the Equity Plan so that Awards granted under it can continue to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code (discussed in greater detail below).
We believe strongly that the increase in shares issuable under the amended Equity Plan is essential to our continued success and therefore is in the best interests of the Company and our stockholders. Our employees are our most valuable assets. The Committee believes that grants of stock options and other equity awards available under the Equity Plan help create long-term equity participation in the Company and thereby assist us in attracting, retaining, motivating and rewarding employees, directors, and consultants.
Additionally, approval of the Equity Plan will allow us to continue to deduct in full for federal income tax purposes the compensation recognized by our executive officers in connection with certain awards granted under the plan. Section 162(m) generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to the chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance. However, certain types of compensation, including performance-based compensation, are generally excluded from this deductibility limit. By approving the material terms of the Equity Plan, we will be able to grant awards under the Equity Plan that qualify as “performance based compensation” and that will allow us to fully deduct the compensation recognized by the covered employee from such awards for federal income tax purposes. If our stockholders approve the Equity Plan, our Compensation Committee may (but is not required to) approve awards under the Equity Plan that qualify as “performance-based compensation” under Section 162(m).
The amended Equity Plan does not differ in any other material respect from the current version of the Equity Plan.
Background
Our Equity Plan is administered by the Committee. The Committee reviewed the amended Equity Plan and discussed in detail management’s recommendations of the proposed plan changes, feedback from the Committee’s outside compensation consultant, the extent of feedback received from key stockholders of the Company regarding the plan, and a review of certain Institutional Shareholder Services policies. The Committee subsequently approved the amended Equity Plan, subject to approval by our stockholders. In determining the number of shares reserved for issuance under the amended Equity Plan, the Committee considered a number of factors, including:
| • | | Historical Grant Practices. The Committee considered the historical amounts of equity awards that the Company has granted in the past three years. As noted above, we have committed to limit our burn rate such that the total number of shares subject to outstanding equity awards granted under the Equity Plan during a fiscal year may not exceed two and one-half percent (2.5%) of the total number of shares of common stock outstanding as of the beginning of such fiscal year. For these purposes, Full Value Awards count as two (2) shares for every one (1) share subject to an Award. Our 2013 burn rate is below industry guidelines recommended by Institutional Shareholder Services. Historically, including during 2011 and 2012, we have granted close to, but not above, our 2.5% annual burn rate. In 2013, to help manage our burn rate and compensation expense, we made affirmative efforts to reduce the number of grants down to an annual burn rate of 2.18% in 2013, representing 971,282 shares subject to Awards.
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| • | | Forecasted Grant Practices. We currently forecast granting options and Full Value Awards (in the form of restricted stock units) coveringup to approximately 1,000,000 shares over each of the next two years, which is equal to approximately 2.2% of our common shares outstanding as of December 31, 2013. (The actual number of shares granted will depend on a variety of factors, including but not limited to, our stock price, the extent of new hires or promotions and market grant practices. Nevertheless, we do not expect that it will exceed our 2.5% annual burn rate limit.) As noted above, we made affirmative efforts to lower our annual burn rate in 2013 to 2.18%, and we intend to continue to make similar efforts in 2014.
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| • | | Awards Outstanding Under Existing Grants. The Company has outstanding, as of December 31, 2013, stock options covering 1,514,159 shares and 682,347 unvested restricted stock units. Accordingly, the 2,196,506 shares subject to outstanding Awards (commonly referred to as the “overhang”) represent approximately 4.8% of our outstanding shares. In addition, the 2,196,506 shares subject to outstanding Awards, the 1,749,744 shares available for issuance and the 2,000,000 shares subject to our proposed increase, represent approximately 13.0% of our outstanding shares (referred to as the dilution rate).
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| • | | Expected Utilization. With the proposed increase of 2,000,000 shares, we expect that we will have sufficient shares for future Awardsat least through the year 2015, and we would expect that we would not have to seek stockholder approval of an additional increase until 2016 at the earliest.
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Summary of the Amended and Restated 2006 Equity Incentive Plan
The following is a summary of the principal features of the Equity Plan, as amended, and its operation. The summary is qualified in its entirety by reference to the Equity Plan itself set forth in Appendix B.
The Equity Plan provides for the grant of the following types of incentive awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance shares and performance units, and (vi) other cash or stock awards. Each of these is referred to individually as an “Award.” Those who will be eligible for Awards under the Equity Plan include employees, directors and consultants who provide services to the Company and its affiliates. As of December 31, 2013: (i) approximately 297 employees and directors were eligible to participate in the Equity Plan, and (ii) 293 current employees and directors actually received grants during 2013. No consultants received any grants under the Equity Plan in 2013.
Number of Shares of Common Stock Available Under the Amended Equity Plan. Subject to the provisions of the Equity Plan, the maximum aggregate number of shares of our common stock that may be awarded and sold under the Equity Plan is 7,543,321 shares. Included in this total is our proposed increase of 2,000,000 shares of our common stock for issuance under the Equity Plan which has been approved by the Compensation Committee, but is subject to receipt of stockholders’ approval.
Pursuant to the commitment letters we entered into with certain stockholders in 2006, we are subject to an annual equity burn rate limit. The total number of shares of our common stock subject to Awards granted under the Equity Plan during a fiscal year may not exceed two and one-half percent (2.5%) of the total number of shares of common stock outstanding as of the beginning of such fiscal year. We may, in the future, amend these commitments to increase the burn rate limit.
Shares subject to Awards granted with an exercise price, if any, less than the fair market value on the date of grant, which would include Awards of restricted stock, restricted stock units, performance shares and performance units (“Full Value Awards”), count against the share reserve as two (2) shares for every one (1) share subject to such an Award. To the extent that a share that was subject to a Full Value Award that counted as two (2) shares against the Equity Plan reserve pursuant to the preceding sentence is returned to the Equity Plan, the Equity Plan reserve will be credited with two (2) shares that will thereafter be available for issuance under the Equity Plan.
If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to restricted stock, restricted stock units, performance shares and performance units, is forfeited to or repurchased by the Company, the unpurchased shares (or for Awards other than options or stock appreciation rights, the forfeited shares) which were subject thereto will become available for future grant or sale under the Equity Plan (unless the Equity Plan has terminated). With respect to stock appreciation rights, all of the shares covered by the Award (that is, shares actually issued pursuant to a stock appreciation right, as well as the shares that represent payment of the exercise price) will cease to be available under the Equity Plan. Shares that have actually been issued under the Equity Plan under any Award will not be returned to the Equity Plan and will not become available for future distribution under the Equity Plan; except that if shares issued pursuant to restricted stock, restricted stock units, performance shares or performance units are repurchased by the Company or are forfeited to the Company, such shares will become available for future grant under the Equity Plan. Shares used to pay the exercise price of an Award will not become available for future grant or sale under the Equity Plan. Shares used to satisfy the tax withholding obligations related to an Award (other than an option or stock appreciation right) will become available for future grant or sale under the Equity Plan. To the extent an Award under the Equity Plan is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares available for issuance under the Equity Plan.
If we declare a stock dividend or engage in a reorganization or other change in our capital structure, including a merger, the Administrator (as defined below) will adjust the number and class of shares available for issuance under the Equity Plan, and/or the number, class and price of shares covered by each outstanding Award, and the specified as per-person limits on Awards.
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Administration of the Amended Equity Plan. Under the terms of the Equity Plan, the Board, or a committee of directors or of other individuals satisfying applicable laws and appointed by the Board, administers the Equity Plan. Subject to the terms of the Equity Plan, the Board or its committee has the sole discretion to select the employees, consultants, and directors who will receive Awards, determine the terms and conditions of Awards, and interpret the provisions of the Equity Plan and outstanding Awards. Notwithstanding the foregoing, the Board or committee may not modify or amend an option or stock appreciation right to reduce the exercise price of that Award after it has been granted (except for certain adjustments made pursuant to the Equity Plan) or cancel any outstanding option or stock appreciation right and replace it with a new option or stock appreciation right with a lower exercise price without first obtaining stockholder approval. Further, subject to the terms of the Equity Plan, the Board or committee may accelerate certain vesting provisions. The Board or other committee administering the Equity Plan is referred to below as the “Administrator.” The Board has delegated its authority to the Committee to administer the Equity Plan.
Options. The Administrator is able to grant nonstatutory stock options and incentive stock options under the Equity Plan. The Administrator determines the number of shares subject to each option, although the Equity Plan provides that a participant may not receive options for more than 250,000 shares in any fiscal year.
The Administrator determines the exercise price of options granted under the Equity Plan, provided the exercise price must be at least equal to the fair market value of our common stock on the date of grant. In addition, the exercise price of an incentive stock option granted to any participant who owns more than 10% of the total voting power of all classes of our outstanding stock must be at least 110% of the fair market value of the common stock on the grant date.
The term of an option may not exceed seven (7) years, except that, with respect to any participant who owns 10% of the voting power of all classes of our outstanding capital stock, the term of an incentive stock option may not exceed five (5) years.
After a termination of service with the Company, a participant will be able to exercise the vested portion of his or her option for the period of time stated in the Award agreement. If no such period of time is stated in the participant’s Award agreement, the participant will generally be able to exercise his or her option for (i) three (3) months following his or her termination for reasons other than death or disability, and (ii) twelve (12) months following his or her termination due to death or disability. If a participant is terminated for cause, the option will immediately terminate. In no event may an option be exercised later than the expiration of its term.
Stock Appreciation Rights. The Administrator is able to grant stock appreciation rights, which are the rights to receive the appreciation in fair market value of common stock between the exercise date and the date of grant. The Company can pay the appreciation in cash, shares of common stock or a combination thereof. Stock appreciation rights will become exercisable at the times and on the terms established by the Administrator, subject to the terms of the Equity Plan. The Administrator, subject to the terms of the Equity Plan, will have complete discretion to determine the terms and conditions of stock appreciation rights granted under the Equity Plan, provided, however, that the exercise price may not be less than 100% of the fair market value of a share on the date of grant. No participant will be granted stock appreciation rights covering more than 250,000 shares during any fiscal year.
The term of a stock appreciation right may not exceed seven (7) years. After termination of service with the Company, a participant will be able to exercise the vested portion of his or her stock appreciation right for the period of time stated in the Award agreement. If no such period of time is stated in a participant’s Award agreement, a participant generally will be able to exercise his or her stock appreciation right for (i) three (3) months following his or her termination for reasons other than cause, death, or disability, and (ii) twelve (12) months following his or her termination due to death or disability. If a participant is terminated for cause, the stock appreciation right will immediately terminate. In no event will a stock appreciation right be exercised later than the expiration of its term.
Restricted Stock. Awards of restricted stock are rights to acquire or purchase shares of Company common stock, which vest in accordance with the terms and conditions established by the Administrator, subject to the terms and conditions of the Equity Plan. For example, the Administrator may set restrictions based on the achievement of specific performance goals. Subject to the terms of the Equity Plan, the restrictions will lapse at a rate determined by the Administrator; provided, however, that with respect to restricted stock granted to employees and consultants, and except in the event of a change in control or a termination due to retirement, death or disability, Awards of restricted stock will not vest more rapidly than 1/3 of the shares of restricted stock subject to the Award each year from the date of grant (or the date of the participant’s employment or service, as applicable), unless the Administrator determines that the Award is to vest upon the achievement of performance criteria and the period for measuring such performance will cover at least twelve (12) months. However, the Administrator may provide at the time of or following the grant of the Award for accelerated vesting for an Award of restricted stock. The Award agreement will generally grant the Company a right to repurchase or reacquire the shares upon the termination of the participant’s service with the Company. The Administrator
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will determine the number of shares granted pursuant to an Award of restricted stock, but no participant will be granted a right to purchase or acquire more than 125,000 shares of restricted stock during any fiscal year.
Restricted Stock Units. Awards of restricted stock units result in a payment to a participant only if the vesting criteria the Administrator establishes, subject to the terms and conditions of the Equity Plan, is satisfied. For example, the Administrator may set restrictions based on the achievement of specific performance goals. Subject to the terms of the Equity Plan, the restricted stock units will vest at a rate determined by the Administrator; provided, however, that except in the event of a change in control or a termination due to retirement, death or disability, Awards of restricted stock units to employees or consultants will not vest more rapidly than 1/3 of the restricted stock units subject to the Award each year from the date of grant (or the date of the participant’s employment or service, as applicable), unless the Administrator determines that the Award is to vest upon the achievement of performance criteria and the period for measuring such performance will cover at least twelve (12) months. Notwithstanding the foregoing, the Administrator, in its sole discretion, may provide at the time of or following the date of grant for accelerated vesting for an Award of restricted stock units. Upon satisfying the applicable vesting criteria, the participant will be entitled to the payout specified in the Award agreement. The Administrator, in its sole discretion, may pay earned restricted stock units in cash, shares, or a combination thereof. Restricted stock units that are fully paid in cash will not reduce the number of shares available for grant under the Equity Plan. On the date set forth in the Award agreement, all unearned restricted stock units will be forfeited to the Company. The Administrator determines the number of restricted stock units granted to any participant, but during any fiscal year of the Company, no participant may be granted more than 125,000 restricted stock units during any fiscal year.
Performance Units and Performance Shares. The Administrator will be able to grant performance units and performance shares, which are Awards that will result in a payment to a participant only if the performance goals or other vesting criteria the Administrator may establish in accordance with the terms and conditions of the Equity Plan are achieved or the Awards otherwise vest. The Administrator will establish performance or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to participants. Subject to the terms of the Equity Plan, the performance units and performance shares will vest at a rate determined by the Administrator; provided, however, that except in the event of a change in control or a termination due to retirement, death or disability, performance units and performance shares to employees or consultants will not vest more rapidly than 1/3 of the performance units and performance shares subject to the Award each year from the date of grant (or the date of the participant’s employment or service, as applicable), unless the Administrator determines that the Award is to vest upon the achievement of performance criteria and the period for measuring such performance will cover at least twelve (12) months. Notwithstanding the foregoing, the Administrator, in its sole discretion, may provide at the time of or following the date of grant for accelerated vesting for an Award of performance units or performance shares. During any fiscal year, no participant will receive more than 125,000 performance shares and no participant will receive performance units having an initial value greater than $4,000,000. Performance units will have an initial dollar value established by the Administrator on or before the date of grant. Performance shares will have an initial value equal to the fair market value of a share of the Company’s common stock on the grant date.
Limitation on Vesting of Full Value Awards. Up to 5% of the maximum aggregate number of shares authorized for issuance under the Equity Plan may be granted without respect to any minimum vesting provisions under the Plan.
Limitation on Awards to Non-Employee Directors. No non-employee director may be granted, in any fiscal year of the Company, Awards covering shares having an initial value greater than $500,000. Awards granted to an individual while he or she was an employee or consultant of the Company (but not a non-employee director) will not count against the foregoing limitation.
Performance Goals. Awards of restricted stock, restricted stock units, performance shares, performance units and other incentives under the Equity Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) of the Code and may provide for a targeted level or levels of achievement including: assets; bond rating; cash flow; cash position; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; economic profit; economic value added; equity or stockholder’s equity; earnings; market share; net income; net profit; net sales; noninterest income as percent of total income; operating earnings; operating income; profit before tax; ratio of debt to debt plus equity; ratio of operating earnings to capital spending; return on equity; results of regulatory reviews and examinations; return on net assets; return on sales; revenues; sales; total return to stockholders; book value; ratio of nonperforming assets to performing assets; credit quality; loan balances; deposit balances; or measures of regulatory capital. With respect to the Company as a whole or a business unit of the Company, any performance goals may be: (i) used to measure specific performance levels or growth over certain performance periods, and (ii) may be measured relative to a peer group or index. The Administrator may in its discretion grant Awards that are not intended to qualify as “performance-based compensation” under 162(m) of the Code, including Awards that are based on performance goals or other specific criteria or goals but do not satisfy the requirements of 162(m) of the Code.
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Transferability of Awards. Awards granted under the Equity Plan are generally not transferable, and all rights with respect to an Award granted to a participant generally will be available during a participant’s lifetime only to the participant.
Change of Control. In the event of a merger of the Company with or into another company or change of control of the Company, each outstanding Award will be assumed or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation. In the event that the successor corporation, or the parent or subsidiary of the successor corporation, refuses to assume or substitute for the Award, the participant will fully vest in and have the right to exercise all of his or her outstanding options or stock appreciation rights, including shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on restricted stock will lapse, and, with respect to restricted stock units, performance shares and performance units, all performance goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an option or stock appreciation right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a change of control, the Administrator will notify the participant in writing or electronically that the option or stock appreciation right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the option or stock appreciation right will terminate upon the expiration of such period.
Amendment and Termination of the Equity Plan. The Administrator will have the authority to amend, alter, suspend or terminate the Equity Plan, except that stockholder approval will be required for any amendment to the Equity Plan to the extent required by any applicable laws. No amendment, alteration, suspension or termination of the Equity Plan will impair the rights of any participant, unless mutually agreed otherwise between the participant and the Administrator and which agreement must be in writing and signed by the participant and the Company. The Equity Plan will terminate on April 24, 2024, unless the Board or Committee terminates it earlier.
Equity Plan Information
The following table provides certain information as of December 31, 2013 with respect to our 2006 Equity Incentive Plan:
| | | | | | | | | | | | | Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans (2) | | Equity compensation plans approved by stockholders | | | 1,514,159 | | | $ | 55.27 | | | | 2,446,053 | | Equity compensation plans not approved by stockholders | | | N/A | | | | N/A | | | | N/A | | | | | | | | | | | | | | | Total | | | 1,514,159 | | | $ | 55.27 | | | | 2,446,053 | | | | | | | | | | | | | | |
(1) | Represents options granted under our 2006 Equity Incentive Plan. This number does not include securities to be issued for unvested restricted stock units of 682,347 shares.
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(2) | Includes shares available for issuance under our 2006 Equity Incentive Plan and 696,309 shares available for issuance under the 1999 Employee Stock Purchase Plan. This amount excludes securities already granted under our 2006 Equity Incentive Plan (as discussed above).
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Number of Awards Granted to Employees, Consultants, and Directors
The number of Awards that an employee or consultant may receive, or that an outside director may receive, under the Equity Plan is in the discretion of the Administrator and therefore cannot be determined in advance. The following table sets forth (a) the aggregate number of shares of common stock subject to options or other awards (if any) granted under the Equity Plan during the last fiscal year, (b) the average per share exercise price of such options (or other awards (if any), and (c) the dollar value of such shares based on $104.86 per share, the fair market value as of December 31, 2013:
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| | | | | | | | | | | | | Name of Individual or Group | | Number of Shares Granted | | | Average Per Share Exercise Price | | | Dollar Value of Shares Granted | | Greg Becker | | | | | | | | | | | | | Options | | | 31,600 | | | $ | 71.11 | | | $ | 3,313,576 | | Restricted Stock Units and Performance Restricted Stock Units | | | 23,800 | | | | N/A | | | | 2,495,668 | | Michael Descheneaux | | | | | | | | | | | | | Options | | | 17,300 | | | $ | 71.11 | | | $ | 1,814,078 | | Restricted Stock Units and Performance Restricted Stock Units | | | 13,150 | | | | N/A | | | | 1,378,909 | | John China | | | | | | | | | | | | | Options | | | 8,600 | | | $ | 71.11 | | | $ | 901,796 | | Restricted Stock Units and Performance Restricted Stock Units | | | 7,150 | | | | N/A | | | | 749,749 | | Joan Parsons | | | | | | | | | | | | | Options | | | 9,400 | | | $ | 71.11 | | | $ | 985,684 | | Restricted Stock Units and Performance Restricted Stock Units | | | 7,200 | | | | N/A | | | | 754,992 | | Bruce Wallace | | | | | | | | | | | | | Options | | | 9,400 | | | $ | 71.11 | | | $ | 985,684 | | Restricted Stock Units and Performance Restricted Stock Units | | | 7,100 | | | | N/A | | | | 744,506 | | David Jones | | | | | | | | | | | | | Options | | | 11,800 | | | $ | 71.11 | | | $ | 1,237,348 | | Restricted Stock Units and Performance Restricted Stock Units | | | 8,950 | | | | N/A | | | | 938,497 | | All executive officers, as a group: | | | | | | | | | | | | | Options | | | 110,910 | | | $ | 71.50 | | | $ | 11,630,023 | | Restricted Stock Units and Performance Restricted Stock Units | | | 86,070 | | | | N/A | | | | 9,025,300 | | All directors who are not executive officers, as a group: | | | | | | | | | | | | | Options | | | | | | | | | | | | | Restricted Stock Units | | | 14,839 | | | | N/A | | | $ | 1,556,017 | | All employees who are not executive officers, as a group: | | | | | | | | | | | | | Options | | | 202,562 | | | $ | 71.78 | | | $ | 21,240,651 | | Restricted Stock Units | | | 227,996 | | | | N/A | | | | 23,907,660 | |
Federal Tax Aspects
The following paragraphs are a summary of the general federal income tax consequences to U.S. taxpayers and use of Awards granted under the Equity Plan. Tax consequences for any particular individual may be different.
Nonstatutory Stock Options. No taxable income is reportable when a nonstatutory stock option with an exercise price at least equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the option. Any taxable income recognized in connection with an option exercise by an employee of the Company is subject to tax withholding by us. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.
Incentive Stock Options. No taxable income is reportable when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax, in which case taxation is the same as for nonstatutory stock options). If the participant exercises the option and then later sells or otherwise disposes of the shares more than two (2) years after the grant date and more than one (1) year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two (2)- or one (1)-year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option.
Stock Appreciation Rights. No taxable income is reportable when a stock appreciation right with an exercise price equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.
Restricted Stock, Restricted Stock Units, Performance Units and Performance Shares. A participant generally will not have taxable income at the time an Award of restricted stock, restricted stock units, performance shares or performance units, are granted. Instead, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the Award becomes either (i) freely transferable, or (ii) no longer subject to substantial risk of forfeiture. However, the
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OTHER PROXY PROPOSALS
recipient of a restricted stock Award may elect to recognize income at the time he or she receives the Award in an amount equal to the fair market value of the shares underlying the Award (less any cash paid for the shares) on the date the Award is granted.
Tax Effect for Us. We generally will be entitled to a tax deduction in connection with an Award under the Equity Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Special rules limit the deductibility of compensation paid to our Chief Executive Officer and to “covered employees” within the meaning of Section 162(m). Under Section 162(m), the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000. However, we can preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met. These conditions include stockholder approval of the Equity Plan, setting limits on the number of Awards that any individual may receive and for Awards other than certain stock options, establishing performance criteria that must be met before the Award actually will vest or be paid. The Equity Plan has been designed to permit the Administrator to grant Awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m), thereby permitting us to continue to receive a federal income tax deduction in connection with such Awards.
Section 409A. Section 409A of the Internal Revenue Code, or Section 409A, which was added by the American Jobs Creation Act of 2004, provides certain requirements on non-qualified deferred compensation arrangements. These include requirements with respect to an individual’s election to defer compensation and the individual’s selection of the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual’s separation from service, a predetermined date, or the individual’s death). Section 409A imposes restrictions on an individual’s ability to change his or her distribution timing or form after the compensation has been deferred. For certain individuals who are officers, subject to certain exceptions, Section 409A requires that such individual’s distribution commence no earlier than six (6) months after such officer’s separation from service.
Awards granted under the Equity Plan with a deferral feature will be subject to the requirements of Section 409A. If an Award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that Award may recognize ordinary income on the amounts deferred under the Award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an Award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as possible interest charges and penalties. In addition, certain states such as California have adopted similar provisions. It is the Company’s intention to structure all Awards to comply with, or be exempt from, Section 409A.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECTS OF FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO AWARDS UNDER THE AMENDED EQUITY PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
Our Board of Directors recommends that stockholders vote “FOR” the approval of the 2006 Equity Incentive Plan, as amended and restated, to increase the number of shares reserved for issuance thereunder.
64
OTHER PROXY PROPOSALS
Proposal No. 32 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors Recommends a Vote “For”“FOR” the Ratification of the Appointment of KPMG LLP as the Company’s Independent Registered Public Accounting Firm The Audit Committee has appointed the firm of KPMG LLP (“KPMG”) to be our independent registered public accounting firm for our 20142017 fiscal year. KPMG LLP has audited our financial statements since November 1994. While neither our bylawsBylaws nor other governing documents require stockholder ratification of the selection of KPMG LLP as our independent registered public accounting firm, the Board is, based on the recommendation of the Audit Committee, submitting the appointment of KPMG LLP to the stockholders for ratification as a matter of good corporate practice. If theour stockholders do not ratify suchthe selection by the affirmative vote of the holders ofKPMG by a majority of the Votes Cast,votes present and entitled to vote on the matter, then the Audit Committee may reconsider its selection. RepresentativesWe expect a representative from the firm of KPMG LLP willto be present at the Meeting andAnnual Meeting. The representative will be afforded the opportunity to make a statement if they desire to do so. They will alsoso and is expected to be available to respond to stockholders’stockholder questions.
PRINCIPAL AUDIT FEES AND SERVICES The following table sets forth fees billed for services billedrendered by or expected to be billed by KPMG LLP for the fiscal years 20132016 and 2012,2015, all of which were approved by the Audit Committee in conformity with itspre-approval process: | | | | | | | | | | | 2013 | | | 2012 | | Audit fees | | $ | 4,771,482 | | | $ | 4,361,548 | | Audit-related fees (1) | | | 223,031 | | | | 191,993 | | Tax fees (2) | | | 609,361 | | | | 557,412 | | All other fees (3) | | | 120,000 | | | | 398,985 | | | | | | | | | | | Total | | $ | 5,723,874 | | | $ | 5,509,938 | | | | | | | | | | |
| | | | | | | | | | | 2016 | | | 2015 | | Audit fees | | $ | 5,678,821 | | | $ | 5,852,555 | | Audit-related fees (1) | | | 288,443 | | | | 208,000 | | Tax fees (2) | | | 1,228,565 | | | | 551,328 | | All other fees (3) | | | - | | | | 15,371 | | | | | | | | | | | Total | | $ | 7,195,829 | | | $ | 6,627,254 | | | | | | | | | | |
| (1) | Consists principally of fees billed or expected to be billed as incurred on a time and material basis related to reviews of internal controls attestation for selected information systems and business units (SSAE 16 audits), and services related to proposed accounting standards.. | |
| (2) | Represents fees for services provided in connection with the Company’s tax compliance and tax advice. | |
| (3) | Represents fees for advisory services relating to the Company’s global banking initiatives, analysis of certain accounting standards and processes, and analysis of outsourcing initiatives.ALLL vendor selection project. | |
In accordance with its charter, the Audit Committee must explicitly approve the engagement of theour independent auditor for all audit and permissiblenon-audit related services, as required by law. The charter also provides that, toTo the extent permitted by applicable law, the charter also permits the Audit Committee maythe authority to adoptpre-approval policies and procedures as well asand/or delegate authority to grant approvals to one or more members of the Audit Committee.its members. During the fiscal years 20132016 and 2012,2015, all suchaudit andnon-audit related services providedperformed by KPMG LLP were approved orpre-approved by the Audit Committee. Additionally, the Audit Committee reviewed allnon-audit related services provided by KPMG. In considering the nature of the services provided by KPMG, LLP were reviewed with the Audit Committee which concludeddetermined that such services are compatible with the provision of such services did not compromiseindependent audit services. KPMG LLP’s independence in the conduct of its auditing function. KPMG LLP also confirmed theirits independence to the Audit Committee. 6553
| | | | | OTHER PROXY PROPOSALS Proposal 2 — Ratification of Auditor |
OTHER PROXY PROPOSALS
Proposal No. 43 ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION The Board of Directors Recommends a Vote “FOR”“FOR” the Approval of the Compensation of our Named Executive Officers, as Disclosed in this Proxy Statement InAt the 2011 pursuant to the recommendationannual meeting of our Board,stockholders, our stockholders approved the frequency ofvoted that our advisory vote to approve ouron executive compensation (otherwise known as “Say on Pay”) to be on an annual basis. Pursuant to Section 14A of the Exchange Act, we are submitting thisheld annually. Our Say on Pay vote to provideprovides our stockholders with the opportunity to vote to approve, on an advisory basis, the compensation of our NEOs as further described in the “Compensation“Compensation Discussion and Analysis”Analysis” section of this Proxy Statement, including the accompanying compensation tables and narrative discussion.discussion therein. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement.
We ask our stockholders to indicate their support for our executive compensation program for our NEOs and vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.” Because your vote is advisory, it will not be binding upon the Board or the Compensation Committee and may not be construed as overruling any decision by the Board or the Compensation Committee. However, the Board and Compensation Committee may, in eachvalue the opinion of their sole discretion,our stakeholders and will take into accountconsideration the outcome of thethis advisory vote when considering future executive compensation arrangements. Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” and “Compensation for Named Executive Officers” sections of this Proxy Statement for a detailed discussion of our executive compensation program for our NEOs. 66Proposal No. 4
ADVISORY VOTE ON THE FREQUENCY OF FUTURE “SAY ON PAY” VOTES OTHER PROXY PROPOSALSThe Board of Directors Recommends a Vote “FOR” the Frequency of our “Say on Pay” votes on an ANNUAL Basis
The Dodd-Frank Wall Street Reform and Consumer Protection Act provides stockholders with the opportunity to vote on how frequently we should seek an advisory vote, or Say on Pay, on the compensation of our NEOs, as disclosed pursuant to applicable SEC rules. Stockholders may indicate on anon-binding, advisory basis whether they prefer an advisory vote on NEO compensation on an annual (every one year), biennial (every two years) or triennial (every three years) basis. After consideration of this proposal, our Board of Directors has determined that an annual Say on Pay advisory vote remains the most appropriate for the stockholders of the Company. Our Board values the opinions of our stockholders and believes that an annual advisory vote will continue to allow our stockholders to provide us with their direct input on our executive compensation program for our NEOs. Accordingly, we ask our stockholders to indicate their preferred voting frequency by choosing the option of an annual advisory vote (every year), a biennial advisory vote (every two years) or a triennial advisory vote (every three years) or by choosing to abstain from voting on this proposal. Because your vote is advisory, it will not be binding upon the Board and may not be construed as overruling any decision by the Board. However, the Board will take into account the outcome of the vote when considering how frequently to submit an advisory “Say on Pay” proposal for stockholder approval. 54 | | | | | OTHER PROXY PROPOSALS Say on Pay Proposals |
MEETING AND OTHER INFORMATION INFORMATION ABOUT VOTING AND PROXY SOLICITATION Voting Stockholders
Holders of our Common Stockcommon stock are entitled to one vote for each share held on all matters covered by this Proxy Statement, except for the election of directors. With respect to the election of directors, each stockholder has the right to invoke cumulative voting, which entitles each stockholder to as many votes as shall equal the number of shares held by such stockholder, multiplied by the number of directors to be elected. A stockholderAccordingly, you may cast all of his or heryour votes for a single candidate or distribute suchyour votes among as many of the candidates as he or she chooses (upyou choose, up to a maximum of the number of directors to be elected).elected. However, no stockholder shallwill be entitled to cumulate votes for a candidate unless such candidate’s namecandidate has been properly placed in nominationnominated prior to the voting in accordance with Article Fifth of the Restated Certificate of Incorporation of the Company and the stockholder (or any other stockholder) has given notice at the meeting prior to the voting of the stockholder’s intention to cumulate votes. If any stockholder has given such notice, all stockholders may cumulate their votes for candidates properly placed in nomination. If cumulative voting is properly invoked, the Proxy holders (the individuals named on the Proxy Card) are given discretionary authority under the terms of the Proxy to cumulate votes represented by shares for which they are named Proxy holders as they see fit among the nominees in order to assure the election of as many of such nominees as possible. Whether you hold shares in your name or through a broker, bank or other nominee, you may vote without attending the meeting.Annual Meeting. You may vote by granting a Proxy or, for shares held through a broker, bank or other nominee, by submitting voting instructions to that nominee. Instructions for voting by telephone, by using the Internet or by mail are on your Proxy Card or “Notice“Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting,” as applicable. For shares held through a broker, bank or other nominee, follow the voting instructions included with your materials. If you provide specific voting instructions, your shares will be voted as you have instructed for any item on which you provide instructionseach proposal enumerated in this Proxy Statement and as the Proxy holdersHolders may determine within their discretion for any other matters including any additional matters, whichthat properly come before the meeting. If you hold shares in your name and you sign and return a Proxy Card without giving specific voting instructions, your shares will be voted as recommended by our Board on all matters set forth in this Proxy Statement and as the Proxy holders may determine in their discretion with respect to any other matters that properly come before the meeting. If you hold your shares through a broker, bank or other nominee and you do not provide instructions on how to vote, your broker or other nominee may have authority to vote your shares on certain matters. SeeSee “Quorum; Abstentions; Broker Non-Votes” below. “Quorum; Abstentions; BrokerNon-Votes”below. Quorum; Abstentions; BrokerNon-Votes The required quorum for the transaction of business at the Annual Meeting is a majority of the shares of Common Stock issued and outstanding on the Record Date. Shares voted are treated as being present at the meetingAnnual Meeting for purposes of establishing a quorum and are also treated as shares “represented and voting”present at the Annual Meeting (the “Votes Cast”) with respect to such matter. We count abstentionsExcept in the case of the election of directors and the advisory approval on Say on Pay frequency as described above, adoption of the proposals requires the affirmative vote the holders of a majority of the Common Stock represented and entitled to vote on the matter. This means that of the shares represented at the Annual Meeting and entitled to vote, a majority of them must be voted “for” the proposal for it to be approved. Abstentions will be deemed present for purposes of determining both (i) the presence or absence of a quorum for the transaction of business and (ii) the total number of Votes Cast with respect to a proposal (other than Proposal No. 1 regarding the election of directors). Accordingly, in cases other than the election of directors, abstentions will have the same effect as a vote against the proposal.proposal, except for the election directors and the advisory approval on Say on Pay frequency.
Brokernon-votes occur on a matter when a broker, bank or other nominee is not permitted to vote on that matter without instructions from the beneficial owner and the beneficial owner does not give instructions. Without such voting instructions, for example, your broker or other nominee cannot vote your shares on “non-routine”“non-routine” matters such as the election of directors, approval of the amended and restated 2006 Equity Incentive Plan and the advisory votevotes on Say on Pay.Pay and Say on Pay Frequency. Your broker or other nominee may, however, have discretion to vote your shares on “routine” matters, such as the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for our 20142017 fiscal year. Brokernon-votes will be counted for purposes of determining the presence or absence of a quorum for the transaction of business but will not be counted for purposes of determining the number of Votes Castthe votes represented and entitled to vote with respect to proposals on which brokers, banks or other nominees are prohibited from exercising their discretionary authority. 6755
| | | | | MEETING & OTHER INFORMATION Voting And Proxy Solicitation |
MEETING & OTHER INFORMATION
Voting Required The vote required for each proposal and the effect of uninstructed shares and abstentions on each proposal is as follows: | | | | | | | | | Proposal | | Vote Required | | Vote Required | | Broker Non- Votes Allowed | | Votes AllowedAbstentions
| | You May Vote | | | | | | Proposal No. 1 –- Election of Directors | | Plurality of Votes Cast* | | No | | No Effect | | FOR or WITHHOLD | | | | | | Proposal No. 2 – Approval- Ratification of Amended and Restated 2006 Equity Incentive PlanAuditors | | Majority of Votes CastPresent and Entitled to Vote | | NoYes | | Vote Against | | FOR, AGAINST or ABSTAIN | | | | | | Proposal No. 3 – Ratification of Auditors- Advisory Vote on Say on Pay | | Majority of Votes CastPresent and Entitled to Vote | | YesNo | | Vote Against | | FOR, AGAINST or ABSTAIN | | | | | | Proposal No. 4 - – Advisory Voteapproval on Say on Pay Frequency | | Majority ofMost FOR Votes Cast | | No | | FOR, AGAINSTNo Effect | | 1, 2, or 3 YEARS or ABSTAIN |
* See “Majority Voting Policy” under “Proposal No. 1 – ElectionsElection of Directors.” Revocability of Proxies Any person giving a Proxy in the form accompanying this Proxy Statement has the power to revoke the Proxy at any time prior to its use. A Proxy is revocable prior to the Annual Meeting by delivering either a written instrument revoking it or a duly executed Proxy bearing a later date to our Corporate Secretary or Assistant Corporate Secretary. A Proxy is also automatically revoked if the stockholder is present at the Annual Meeting and votes in person. Solicitation This solicitation of Proxies is made by, and on behalf of, our Board. We will bear the entire cost of preparing, assembling, printing, mailing and otherwise making available Proxy materials furnished by the Board to stockholders. Copies of Proxy materials will be furnished to brokerage houses, fiduciaries and custodians to be forwarded to the beneficial owners of our Common Stock, as requested. In addition to the solicitation of Proxies by mail, some of our officers, directors and employees may (without additional compensation) solicit Proxies by telephone or personal interview, the costs of which we will bear. Unless otherwise instructed, each valid returned Proxy that is not revoked will be voted: “FOR” each of our nominees to the Board of Directors, “FOR” approval of the amended and restated 2006 Equity Incentive Plan, to reserve an additional 2,000,000 shares of common stock for issuance thereunder, “FOR” ratification of the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2014,2017,
| • | | “FOR” approval, on an advisory basis, of our executive compensation (“Say on Pay”), and |
Approval, on an advisory basis, of the frequency of future Say on Pay votes to be held ANNUALLY, and At the Proxy holders’ discretion on such other matters, if any, as may properly come before the Annual Meeting (including any proposal to adjourn the Annual Meeting). Delivery of Proxy Materials In accordance with the rules adopted by the Securities and Exchange Commission (the “SEC,”), commonly referred to as “Notice and Access,” we have decided to provide access to our Proxy materials over the internetInternet instead of mailing a printed copy of the materials to every stockholder. StockholdersWe believe this helps to promote more cost-effective and efficient delivery of our Proxy materials to stockholders while reducing our environmental impact. As a result, you will not receive printed copies of the Proxy materials unless theyyou request them. Instead, a Notice Regarding the Availability of Proxy Materials (the “Notice”) was mailed to stockholders of record (other than stockholders 56 | | | | | MEETING & OTHER INFORMATION Voting And Proxy Solicitation |
who previously requested electronic or paper delivery of proxy materials) on or about March 12, 2014.9, 2017. The Notice explains the process to access and review the information contained in the Proxy materials and how to vote their proxies over the internet.Internet. In addition, the Notice will provide you the option to instruct us to send our future Proxy materials to you electronically by email. All stockholders will have the ability toYou may also access the Proxy materials on athe website referred to in the Notice or request to receive a printed set of the Proxy materials. 68
MEETING & OTHER INFORMATION
For those stockholders whoIf you will receive printed copies of the Proxy materials, upon request or otherwise, you may receive more than one set of materials, including multiple copies of this Proxy Statement and multiple Proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one Proxy Card. Please follow the instructions on your Proxy Card(s) and vote accordingly.
How to Obtain a Separate Set of Proxy Materials Stockholders
You may request to receive Proxy materials in printed form by mail or electronically by email on an ongoing basis. Stockholders whoIf you sign up to receive Proxy materials electronically, you will receive an email with links to the materials, which may give them faster delivery of the materials and will help save printing and mailing costs and conserve natural resources.materials. If you choose to receive future Proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy votingproxy-voting site. Your election to receive Proxy materials by email will remain in effect until you terminate it. For those stockholders whoIf you share an address with another stockholder, you may receive only one set of Proxy materials (including our 20132016 Annual Report onForm 10-K, Proxy Statement or Notice Regarding the Availability of Proxy Materials, as applicable) unless you have provided contrary instructions. If you wish to receive a separate set of Proxy materials now or in the future, you may write or call us to request a separate copy of these materials from:
SVB Financial Group 3003 Tasman Drive Santa Clara, California 95054 Attention: Kristi GilbaughCorporate Secretary Telephone:(408) 654-7400 Facsimile: 408-969-6500(408)969-6500 Email: kgilbaugh@svb.combod@svb.com Similarly, if you share an address with another stockholder and have received multiple copies of our Proxy materials, you may write or call us at the above address and phone number to request delivery of a single copy of these materials. 6957
| | | | | MEETING & OTHER INFORMATION Voting And Proxy Solicitation |
MEETING & OTHER��INFORMATION
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS You may submit proposals, including director nominations, for consideration at future stockholder meetings. Stockholder Proposals For a stockholder proposal to be considered for inclusion in our Proxy Statement for the annual meeting next year, the written proposal must be received by our Corporate Secretary at our principal executive offices no later than November 14, 2014.9, 2017. If the date of next year’s annual meeting is moved more than 30 days before or after the anniversary date of this year’s annual meeting, the deadline for inclusion of proposals in the Company’s Proxy Statement is instead a reasonable time before SVB Financial Group begins to print and mail its Proxy materials for the annual meeting next year. Such proposals will need to comply with the SEC regulations underRule 14a-8 regarding the inclusion of stockholder proposals in Company-sponsored proxy materials. Proposals should be addressed to: Corporate Secretary SVB Financial Group 3003 Tasman Drive Santa Clara, California 95054 Facsimile: (408)969-6500 For a stockholder proposal that is not intended to be included in our Proxy Statement underRule 14a-8, the stockholder must deliver a Proxy Statement and form of Proxy to holders of a sufficient number of shares of our Common Stock to approve that proposal, provide the information required by our bylawsBylaws and give timely notice to our Corporate Secretary in accordance with our bylaws.Bylaws. In general, our bylawsBylaws require that the notice be received by our Corporate Secretary: Not earlier than the close of business on December 24, 2014,2017, and Not later than the close of business on January 24, 2015.23, 2018. However, if the date of the stockholder meeting is moved more than 30 days before or 60 days after the first anniversary of our annual meeting for the prior year, then notice of a stockholder proposal that is not intended to be included in our Proxy Statement underRule 14a-8 must be received no earlier than the close of business 120 days prior to the meeting and no later than the close of business on the later of the following two dates: 90 days prior to the meeting, and 10 days after public announcement of the meeting date. Nomination of Director Candidates You may propose director candidates for consideration by the Board’s Governance Committee. Any such recommendations should include the nominee’s name and qualifications for Board membership and should be directed to our Corporate Secretary at the address of our principal executive offices set forth above. In addition, our bylawsBylaws permit stockholders to nominate directors for election at an annual stockholder meeting. To nominate a director, the stockholder must deliver a Proxy Statement and form of Proxy to holders of a sufficient number of shares of our Common Stock to elect such nominee and provide the information required by our bylaws,Bylaws, as well as a statement by the nominee acknowledging that he or she will owe a fiduciary obligation to us and its stockholders. In addition, the stockholder must give timely notice to our Corporate Secretary in accordance with our bylaws,Bylaws, which, in general, require that the notice be received by our Corporate Secretary within the time period described above under “Stockholder Proposals.” 7058
| | | | | MEETING & OTHER INFORMATION Stockholder Proposals and Nominations |
MEETING & OTHER INFORMATION
COPY OF BYLAW PROVISIONS You may contact our Corporate Secretary at our principal executive offices for a copy of the relevant bylawBylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. Our bylawsBylaws also are available through the SEC’s website atwww.sec.gov. 20132016 ANNUAL REPORT
Stockholders who wish to obtain copies of our Annual Report onForm 10-K for the year ended December 31, 2013,2016, without charge, should address a written request to Kristi Gilbaugh,Attention: Corporate Secretary, SVB Financial Group, 3003 Tasman Drive, Santa Clara, California 95054 (Facsimile: (408)969-6500). The report is also available electronically atwww.svb.com/proxy. OTHER MATTERS The Board knows of no other matters to be presented for stockholder action at the Annual Meeting. However, if other matters do properly come before the Annual Meeting, the Board intends that the persons named in the proxies will vote upon such matters in accordance with their best judgment. 7159
| | | | | MEETING & OTHER INFORMATION Bylaw Provisions and Annual Report |
MEETING & OTHER INFORMATION
APPENDIX A SVB FINANCIAL GROUP RECONCILIATIONOF CERTAINGAAPTO NON-GAAP FINANCIAL INFORMATION The following table provides a summary ofnon-GAAP net gains on investment securities, net of noncontrolling interests, core fee income, for the year ended December 31, 2013:2016: | | | | | (Dollars in thousands) | | Year ended December 31, 2016 | | GAAP noninterest income | | $ | 456,552 | | Less: gains on investment securities, net | | | 51,740 | | Less: gains on derivative instruments, net | | | 48,581 | | Less: other noninterest income | | | 40,061 | | | | | | | Non-GAAP core fee income (1) | | $ | 316,170 | | | | | | | Non-GAAP core fee income (1): | | | | | Foreign exchange fees | | $ | 104,183 | | Credit card fees | | | 68,205 | | Deposit service charges | | | 52,524 | | Lending related fees | | | 33,395 | | Client investment fees | | | 32,219 | | Letters of credit and standby letters of credit fees | | | 25,644 | | | | | | | Total non-GAAP core fee income (1) | | $ | 316,170 | | | | | | |
(1) | Thisnon-GAAP measure represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control. |
In discussing our financial performance, we use certainnon-GAAP measures. These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures by other companies in our industry.Non-GAAP financial measures are not in accordance with or an alternative for, GAAP. Generally, anon-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Anon-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirement. Specifically in this Proxy Statement, we report ournon-GAAP core fee income, which is a part of our noninterest income, as reported in accordance with GAAP. We believe thisnon-GAAP financial measure, when taken together with the corresponding GAAP financial measures (as applicable), provides meaningful supplemental information regarding our performance by excluding from our noninterest income certain line items where performance is typically subject to market or other conditions beyond our control, such as gains (losses) on investment securities, net, gains (losses) on derivative instruments, net, and other noninterest income items. We use, and believe our investors benefit from referring to, ournon-GAAP core fee income in assessing our overall operating results, forecasting and analyzing future periods. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP. A-1 | | | | | (Dollars in thousands)
| | 2013 | | GAAP net gains on investment securities
| | $ | 419,408 | | | | Less: income attributable to noncontrolling interests, including carried interest
| | | 342,128 | | | | APPENDIX | | | | | Net gains on investment securities, net of noncontrolling interests
| | | 77,280 | | | | Less: gains on sales of certain available-for-sale securities
| | | - | | | | | | | | | Non-GAAP net gains on investment securities, net of noncontrolling interests and excluding gains on sales of certain available-for-sale securities | | $ | 77,280 | | | | | | |
72
APPENDICES
APPENDIX B
SVB FINANCIAL GROUP
2006 EQUITY INCENTIVE PLAN
Adopted by the Board of Directors as of February 21, 2006
Approved by Shareholders as of May 11, 2006, April 21, 2011 and April 26, 2012
Amended by the Compensation Committee of the Board of Directors as of June 29, 2006, April 26, 2007, October 22, 2008, March 7, 2011, December 15, 2011 and January 8, 2014, and
by the Board of Directors as of February 22, 2011, February 21, 2012
| 1. | Purposes of the Plan. The purposes of this Plan are:Reconciliation Table
|
to attract and retain the best available personnel for positions of substantial responsibility,
to provide incentives to individuals who perform services to the Company,
to align with stockholder interests, and
to promote the success of the Company’s business.
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine.
| 2. | Definitions. As used herein, the following definitions will apply:
|
| (a) | “Administrator” means the Board or any of its Committees, including its Compensation Committee, as will be administering the Plan, in accordance with Section 4 of the Plan.
|
| (b) | “Affiliate” means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company.
|
| (c) | “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.
|
| (d) | “Award” means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine.
|
| (e) | “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
|
| (f) | “Board” means the Board of Directors of the Company.
|
| (i) | An act of embezzlement, fraud, dishonesty, or breach of fiduciary duty to the Company; or
|
| (ii) | A deliberate disregard of the rules of the Company which results in loss, damage or injury to the Company, or
|
| (iii) | Any unauthorized disclosure of any of the secrets or confidential information of the Company, or
|
73
APPENDICES
| (iv) | Inducing any client or customer of the Company to break any contract with the Company or inducing any principal for whom the Company acts as agent to terminate such agency relations; or
|
| (v) | Engaging in any conduct which constitutes unfair competition with the Company; or
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| (vi) | Any act which results in the Participant being removed from any office of the Company by any bank regulatory agency.
|
| (h) | “Change in Control” means the consummation of any of the following transactions:
|
| (i) | A merger or consolidation of Silicon Valley Bank (the “Bank”) or the Company with any other corporation, other than a merger or consolidation which would result in beneficial owners of the total voting power in the election of directors represented by the voting securities (“Voting Securities”) of the Bank or the Company (as the case may be) outstanding immediately prior thereto continuing to beneficially own securities representing (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total Voting Securities of the Bank or the Company, or of such surviving entity, outstanding immediately after such merger or consolidation;
|
| (ii) | The filing of a plan of liquidation or dissolution of the Bank or the closing of the sale, lease, exchange or other transfer or disposition by the Bank or the Company of all or substantially all of the Bank’s assets;
|
| (iii) | Any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, other than (A) a trustee or other fiduciary holding securities under an employee benefit plan of the Bank or the Company, (B) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their beneficial ownership of stock in the Company, or (C) the Company (with respect to the Company’s ownership of the stock of the Bank), is or becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of the securities of the Bank or the Company representing fifty percent (50%) or more of the Voting Securities; or
|
| (iv) | Any person (as such term is used in Sections 13(d) or 14(d) of the Exchange Act), other than (A) a trustee or other fiduciary holding securities under an employee benefit plan of the Bank or the Company, (B) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock in the Bank, or (C) the Company (with respect to the Company’s ownership of the stock of the Bank) is or becomes the beneficial owner (within the meaning or Rule 13d-3 under the Exchange Act), directly or indirectly, of the securities of the Bank or the Company representing twenty-five percent (25%) or more of the Voting Securities of such corporation, and within twelve (12) months of the occurrence of such event, a change in the composition of the Board occurs as a result of which sixty percent (60%) or fewer of the Directors are Incumbent Directors. For purposes of this definition, Incumbent Directors will mean Directors who either (A) are Directors as of the date hereof, (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Directors who are Incumbent Directors described in (A) above at the time of such election or nomination, or (C) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Directors who are Incumbent Directors described in (A) or (B) above at the time of such election or nomination. Notwithstanding the foregoing, “Incumbent Directors” will not include an individual whose election or nomination to the Board occurs in order to provide representation for a person or group of related persons who have initiated or encouraged an actual or threatened proxy contest relating to the election of Directors.
|
| (i) | “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.
|
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| (j) | “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.
|
| (k) | “Common Stock” means the common stock of the Company.
|
| (l) | “Company” means SVB Financial Group, a Delaware corporation, or any successor thereto.
|
| (m) | “Consultant” means any person, including an advisor, engaged by the Company or its Affiliates to render services to such entity.
|
| (n) | “Covered Employee” has the meaning given to such term in Section 12(c).
|
| (o) | “Determination Date” means the latest possible date that will not jeopardize the qualification of an Award granted under the Plan as “performance-based compensation” under Section 162(m) of the Code.
|
| (p) | “Director” means a member of the Board.
|
| (q) | “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.
|
| (r) | “Employee” means any person, including Officers and Directors, employed by the Company or its Affiliates. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
|
| (s) | “Exchange Act” means the Securities Exchange Act of 1934, as amended.
|
| (t) | “Fair Market Value” means, as of any date, the value of Common Stock as the Administrator may determine in good faith by reference to the price of such stock on any established stock exchange or a national market system on the day of determination if the Common Stock is so listed on any established stock exchange or a national market system. If the Common Stock is not listed on any established stock exchange or a national market system, the value of the Common Stock will be determined by the Administrator in good faith.
|
| (u) | “Fiscal Year” means the fiscal year of the Company.
|
| (v) | “Full Value Award” means an Award granted with an exercise price, if any, less than the Fair Market Value on the date of grant of such Award and generally will be in the form of Awards of Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units.
|
| (w) | “Incentive Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
|
| (x) | “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
|
| (y) | “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
|
| (z) | “Option” means a stock option granted pursuant to the Plan.
|
| (aa) | “Outside Director” means a Director who is not an Employee.
|
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| (bb) | “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
|
| (cc) | “Participant” means the holder of an outstanding Award.
|
| (dd) | “Performance Goals” will have the meaning set forth in Section 12 of the Plan.
|
| (ee) | “Performance Period” means any Fiscal Year of the Company or such other period as determined by the Administrator in its sole discretion.
|
| (ff) | “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine pursuant to Section 11.
|
| (gg) | “Performance Unit” means an Award which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 11.
|
| (hh) | “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.
|
| (ii) | “Plan” means this 2006 Equity Incentive Plan.
|
| (jj) | “Restricted Stock” means Shares issued pursuant to an Award of Restricted Stock under Section 9 of the Plan, or issued pursuant to the early exercise of an Option.
|
| (kk) | “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 10. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.
|
| (ll) | “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.
|
| (mm) | “Section 16(b)” means Section 16(b) of the Exchange Act.
|
| (nn) | “Service Provider” means an Employee, Director or Consultant.
|
| (oo) | “Share” means a share of the Common Stock, as adjusted in accordance with Section 16 of the Plan.
|
| (pp) | “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 8 is designated as a Stock Appreciation Right.
|
| (qq) | “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
|
| (rr) | “Successor Corporation” has the meaning given to such term in Section 16(c) of the Plan.
|
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APPENDICES
| 3. | Stock Subject to the Plan.
|
| (a) | Stock Subject to the Plan. Subject to the provisions of Section 16 of the Plan, the maximum aggregate number of Shares that may be awarded and sold under the Plan is 7,543,321 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.
|
| (b) | Full Value Awards. Any Shares subject to Full Value Awards will be counted against the numerical limits of this Section 3 as two Shares for every one Share subject thereto. Further, if Shares acquired pursuant to any such Award are forfeited or repurchased by the Company and would otherwise return to the Plan pursuant to Section 3(c), two times the number of Shares so forfeited or repurchased will return to the Plan and will again become available for issuance.
|
| (c) | Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, is forfeited to or repurchased by the Company, the unpurchased Shares (or for Awards other than Options and Stock Appreciation Rights, the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, all of the Shares covered by the Award (that is, Shares actually issued pursuant to a Stock Appreciation Right, as well as the Shares that represent payment of the exercise price) will cease to be available under the Plan. However, Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if unvested Shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price of an Award will not become available for future grant or sale under the Plan. Shares used to satisfy the tax withholding obligations related to an Award (other than an Option or Stock Appreciation Right) will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment provided in Section 16, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code, any Shares that become available for issuance under the Plan under this Section 3(c).
|
| 4. | Administration of the Plan.
|
| (i) | Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.
|
| (ii) | Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code.
|
| (iii) | Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.
|
| (iv) | Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.
|
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APPENDICES
| (b) | Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:
|
| (i) | to determine the Fair Market Value;
|
| (ii) | to select the Service Providers to whom Awards may be granted hereunder;
|
| (iii) | to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder;
|
| (iv) | to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
|
| (v) | to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;
|
| (vi) | to modify or amend each Award (subject to Section 6(c) and 21(c) of the Plan);
|
| (vii) | to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
|
| (viii) | to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award pursuant to such procedures as the Administrator may determine; and
|
| (ix) | to make all other determinations deemed necessary or advisable for administering the Plan.
|
| (c) | Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.
|
| (d) | Limitations on Vesting and Acceleration. Full Value Awards that result in issuing up to 5% of the maximum aggregate number of Shares authorized for issuance under the Plan (the “5% Limit”) may be granted to any one or more Service Providers without respect to any minimum vesting provisions included in the Plan. Further, all Full Value Awards that have their vesting discretionarily accelerated by the Administrator other than upon or in connection with a Change in Control or upon or in connection with a Participant’s termination of service due to death, Disability or retirement, are subject to the 5% Limit. Notwithstanding the foregoing, the Administrator may, in its discretion, accelerate the vesting of Full Value Awards such that the Plan minimum vesting requirements still must be met, without such vesting acceleration counting toward the 5% Limit. The 5% Limit shall be considered as one aggregate limit applying to the granting of Full Value Awards to Service Providers without respect to Plan minimum vesting requirements and to the discretionary vesting acceleration of Full Value Awards.
|
| (e) | Vesting of Full Value Awards Granted to Directors. Full Value Awards that are granted on an annual basis to Directors following the Company’s Annual Meeting of Stockholders, shall become fully vested no earlier than the last day of the Director’s then current annual term of service as a member of the Board. Notwithstanding the foregoing, Full Value Awards granted pursuant to the 5% Limit or Full Value Awards that accelerate in connection with a Change in Control or upon or in connection with a Director’s termination of service due to death, Disability or retirement are not subject to the vesting provisions contained in this Section 4(e).
|
5. Eligibility. Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares and such other cash or stock awards as the Administrator determines may be granted to Service Providers. Incentive Stock Options may be granted only to employees of the Company or any Parent or Subsidiary of the Company.
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APPENDICES
| (a) | Incentive Stock Option $100,000 Rule. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.
|
| (b) | Section 162(m) Limitations. The following limitations shall apply to Awards under the Plan: during any Fiscal Year, no Employee will be granted: (i) Options to purchase more than 250,000 Shares; (ii) Stock Appreciation Rights covering more than 250,000 Shares; (iii) more than an aggregate of 125,000 Shares of Restricted Stock; (iv) more than an aggregate of 125,000 Restricted Stock Units; and (v) Performance Units having an initial value greater than $4,000,000, and more than 125,000 Performance Shares.
|
| (c) | Repricings/Modifications. The Administrator may not, without first obtaining stockholder approval: (A) modify or amend an Option or Stock Appreciation Right to reduce the exercise price of such Option or Stock Appreciation Right after it has been granted (except for adjustments made pursuant to Section 16), or (B) cancel any outstanding Option or Stock Appreciation Right and immediately replace it with a new Option or Stock Appreciation Right with a lower exercise price. This will include, without limitation, a repricing of the Option or Stock Appreciation Right as well as an exchange program whereby the Participant agrees to cancel an existing Option or Stock Appreciation Right in exchange for an Option, Stock Appreciation Right or other Award.
|
| (d) | Outside Director Award Limitations. No Outside Director may be granted, in any Fiscal Year, Awards covering Shares having an initial value greater than $500,000. Awards granted to an individual while he or she was an Employee or Consultant, but not an Outside Director, shall not count for purposes of these limitations. The foregoing limitations will be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 16.
|
| (a) | Term of Option. The Administrator will determine the term of each Option in its sole discretion. Any Option granted under the Plan will not be exercisable after the expiration of seven (7) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
|
| (b) | Option Exercise Price and Consideration.
|
| (i) | Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, but will be no less than 100% of the Fair Market Value per Share on the date of grant. In addition, in the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing provisions of this Section 7(b), Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.
|
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APPENDICES
| (ii) | Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.
|
| (iii) | Form of Consideration. The Administrator will determine the acceptable form(s) of consideration for exercising an Option, including the method of payment, to the extent permitted by Applicable Laws.
|
| (i) | Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.
|
| | An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Administrator specifies from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with an applicable withholding taxes). No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 16 of the Plan.
|
| (ii) | Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination for Cause or as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
|
| (iii) | Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
|
| (iv) | Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the
|
80
APPENDICES
| Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
|
| (v) | Termination for Cause. If a Participant’s status as a Service Provider is terminated for Cause, then the Option will immediately terminate, and the Shares covered by such Option will revert to and again become available for issuance under the Plan.
|
| (vi) | Other Termination. A Participant’s Award Agreement may also provide that if the exercise of the Option following the termination of Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would result in liability under Section 16(b), then the Option will terminate on the earlier of (A) the expiration of the term of the Option set forth in the Award Agreement, or (B) the 10th day after the last date on which such exercise would result in such liability under Section 16(b). Finally, a Participant’s Award Agreement may also provide that if the exercise of the Option following the termination of the Participant’s status as a Service Provider (other than upon the Participant’s death or disability) would be prohibited at any time solely because the issuance of Shares would violate the registration requirements under the Securities Act, then the Option will terminate on the earlier of (A) the expiration of the term of the Option, or (B) the expiration of a period of three (3) months after the termination of the Participant’s status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements.
|
| 8. | Stock Appreciation Rights.
|
| (a) | Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.
|
| (b) | Number of Shares. Subject to the provisions of Section 6(b), the Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Participant.
|
| (c) | Exercise Price and Other Terms. The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan, provided, however, that the exercise price will be not less than 100% of the Fair Market Value of a Share on the date of grant.
|
| (d) | Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
|
| (e) | Expiration of Stock Appreciation Rights. The Administrator will determine the term of each Stock Appreciation Right in its sole discretion. Any Stock Appreciation Right granted under the Plan will not be exercisable after the expiration of seven (7) years from the date of grant or such shorter term as may be provided in the Award Agreement. Notwithstanding the foregoing, the rules of Section 7(c) also will apply to Stock Appreciation Rights.
|
| (f) | Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:
|
| (i) | The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times
|
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APPENDICES
| (ii) | The number of Shares with respect to which the Stock Appreciation Right is exercised.
|
| | At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.
|
| (a) | Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.
|
| (b) | Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held by the Company as escrow agent until the restrictions on such Shares have lapsed.
|
| (c) | Transferability. Except as provided in this Section 9, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.
|
| (d) | Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.
|
| (e) | Removal of Restrictions. Except as otherwise provided in this Section 9, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction. The restrictions will lapse at a rate determined by the Administrator; provided, however, that, with respect to Restricted Stock granted to Employees or Consultants, and except as otherwise provided in Section 15(c), Shares of Restricted Stock will not vest more rapidly than one-third (1/3rd) of the total number of Shares of Restricted Stock subject to an Award each year from the date of grant (or, if applicable, the date an Employee or Consultant begins his or her employment or service with the Company or any Parent or Subsidiary of the Company), unless the Administrator determines that the Award is to vest upon the achievement of performance criteria and the period for measuring such performance will cover at least twelve (12) months. Notwithstanding the foregoing sentence, the Administrator, in its sole discretion, may provide at the time of or following the date of grant for accelerated vesting for an Award of Restricted Stock.
|
| (f) | Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.
|
| (g) | Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.
|
| (h) | Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.
|
| (i) | Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock which is intended to
|
82
APPENDICES
| qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).
|
| 10. | Restricted Stock Units.
|
| (a) | Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. Each Restricted Stock Unit grant will be evidenced by an Award Agreement that will specify such other terms and conditions as the Administrator, in its sole discretion, will determine, including all terms, conditions, and restrictions related to the grant, the number of Restricted Stock Units and the form of payout, which, subject to Section 10(d), may be left to the discretion of the Administrator.
|
| (b) | Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will specify the vesting criteria, and such other terms and conditions as the Administrator, in its sole discretion, will determine; provided, however, that, with respect to Restricted Stock Units granted to Employees or Consultants, and except as otherwise provided in Section 15(c), an Award of Restricted Stock Units will not vest more rapidly than one-third (1/3rd) of the total number of Restricted Stock Units subject to an Award each year from the date of grant (or, if applicable, the date an Employee or Consultant begins his or her employment or service with the Company or any Parent or Subsidiary of the Company), unless the Administrator determines that the Award is to vest upon the achievement of performance criteria and the period for measuring such performance will cover at least twelve (12) months. Notwithstanding the foregoing sentence, the Administrator, in its sole discretion, may provide at the time of or following the date of grant for accelerated vesting for an Award of Restricted Stock Units.
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| (c) | Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as specified in the Award Agreement.
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| (d) | Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) set forth in the Award Agreement. The Administrator, in its sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof. Shares represented by Restricted Stock Units that are fully paid in cash again will be available for grant under the Plan.
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| (e) | Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.
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| (f) | Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock Units which are intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).
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| 11. | Performance Units and Performance Shares.
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| (a) | Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. Subject to the provisions of Section 6(b), the Administrator will have complete discretion in determining the number of Performance Units/Shares granted to each Participant.
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APPENDICES
| (b) | Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.
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| (c) | Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Participant. The Administrator may set performance objectives based upon the achievement of Company wide, divisional, or individual goals, or any other basis determined by the Administrator in its discretion. Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine; provided, however, that, with respect to Performance Units/Shares granted to Employees or Consultants, and except as otherwise provided in Section 15(c), Performance Units/Shares will not vest more rapidly than one-third (1/3rd) of the total number of Performance Units/Shares subject to an Award each year from the date of grant (or, if applicable, the date an Employee or Consultant begins his or her employment or service with the Company or any Parent or Subsidiary of the Company), unless the Administrator determines that the Award is to vest upon the achievement of performance criteria and the period for measuring such performance will cover at least twelve (12) months. Notwithstanding the foregoing sentence, the Administrator, in its sole discretion, may provide at the time of or following the date of grant for accelerated vesting for an Award of Performance Units/Shares.
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| (d) | Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved.
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| (e) | Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.
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| (f) | Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.
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| (g) | Section 162(m) Performance Restrictions. For purposes of qualifying grants of Performance Units/Shares as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Performance Units/Shares which are intended to be qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).
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| 12. | Performance Based Compensation Under Section 162(m).
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| (a) | General. If the Administrator, in its discretion, decides to grant an Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the provisions of this Section 12 will control over any contrary provision in the Plan; provided, however, that the Administrator may in its discretion grant Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code to such Participants that are based on Performance Goals or other specific criteria or goals but that do not satisfy the requirements of this Section 12.
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84
APPENDICES
| (b) | Performance Goals. Awards of Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units and other incentives under the Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) of the Code and may provide for a targeted level or levels of achievement (“Performance Goals”) including assets; bond rating; cash flow; cash position; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per Share; economic profit; economic value added; equity or stockholder’s equity; earnings; revenue; market share; net income; net profit; net sales; noninterest income as percent of total income; operating earnings; operating income; profit before tax; ratio of debt to debt plus equity; ratio of operating earnings to capital spending; results of regulatory reviews and examinations; return on equity; return on net assets; return on sales; sales; total return to stockholders; book value; ratio of nonperforming assets to performing assets; credit quality; loan balances; deposit balances; or measures of regulatory capital. With respect to the Company as a whole or a business unit of the Company, any Performance Goals may be: (i) used to measure specific performance levels or growth over certain performance periods, and (ii) may be measured relative to a peer group or index. The Performance Goals may differ from Participant to Participant and from Award to Award. Prior to the Determination Date, the Administrator, will determine whether any significant element(s) will be included in or excluded from the calculation of any Performance Goal with respect to any Participant. In all other respects, Performance Goals will be calculated in accordance with the Company’s financial statements, generally accepted accounting principles, or under a methodology established by the Administrator prior to the issuance of an Award, which is consistently applied and identified in the financial statements, including footnotes, or the management discussion and analysis section of the Company’s annual report.
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| (c) | Procedures. To the extent necessary to comply with the performance-based compensation requirements of Section 162(m) of the Code, with respect to any Award granted subject to Performance Goals, no later than the Determination Date, the Administrator will, in writing, (a) designate one or more Service Providers who would be considered a “covered employee” within the meaning of Section 162(m) of the Code (hereinafter a “Covered Employee”), (b) select the Performance Goals applicable to the Performance Period, (c) establish the Performance Goals, and amounts or methods of computation of such Awards, as applicable, which may be earned for such Performance Period, and (d) specify the relationship between Performance Goals and the amounts or methods of computation of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period. Following the completion of each Performance Period, the Administrator will certify in writing whether the applicable Performance Goals have been achieved for such Performance Period. In determining the amounts earned by a Covered Employee, the Administrator will have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Administrator may deem relevant to the assessment of individual or corporate performance for the Performance Period. A Participant will be eligible to receive payment pursuant to an Award for a Performance Period only if the Performance Goals for such period are achieved.
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| (d) | Additional Limitations. Notwithstanding any other provision of the Plan, any Award which is granted to a Participant and is intended to constitute qualified performance based compensation under Section 162(m) of the Code will be subject to any additional limitations set forth in the Code (including any amendment to Section 162(m) of the Code) or any regulations and ruling issued thereunder that are requirements for qualification as qualified performance-based compensation as described in Section 162(m) of the Code, and the Plan will be deemed amended to the extent necessary to conform to such requirements.
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13. Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the Code such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A of the Code, except as otherwise determined in the sole discretion of the Administrator. Each payment or benefit under this Plan and under each Award Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Section 409A of the Code and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A of
85
APPENDICES
the Code the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A of the Code.
14. Leaves of Absence. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant who is an Employee will not cease to be an Employee in the case of (i) any leave of absence approved by the Company of the Affiliate employing the Participant or (ii) transfers between locations of the Company or between the Company and its Affiliates.
For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months and one day following the commencement of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.
15. Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.
| 16. | Adjustments; Dissolution or Liquidation; Merger or Change in Control.
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| (a) | Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits set forth in Sections 3, 6, 7, 8, 9, 10, and 11.
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| (b) | Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.
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| (c) | Change in Control. In the event of a merger of the Company with or into another company or Change in Control, each outstanding Award will be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation (the “Successor Corporation”). In the event that the Successor Corporation refuses to assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock will lapse, and, with respect to Restricted Stock Units, Performance Shares and Performance Units, all Performance Goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.
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| | For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines to pay cash or a Restricted Stock Unit, Performance Share or Performance Unit which the
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86
APPENDICES
| Administrator can determine to pay in cash, the fair market value of the consideration received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Share or Performance Unit, for each Share subject to such Award (or in the case of Performance Units, the number of implied shares determined by dividing the value of the Performance Units by the per share consideration received by holders of Common Stock in the Change in Control), to be solely common stock of the Successor Corporation equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.
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| | Notwithstanding anything in this Section 16(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more Performance Goals will not be considered assumed if the Company or its successor modifies any of such Performance Goals without the Participant’s consent; provided, however, a modification to such Performance Goals only to reflect the Successor Corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.
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| | Notwithstanding anything in this Section 16(c) to the contrary, if a payment under an Award Agreement is subject to Section 409A of the Code and if the change in control definition contained in the Award Agreement does not comply with the definition of “change of control” for purposes of a distribution under Section 409A of the Code, then any payment of an amount that is otherwise accelerated under this Section 16 will be delayed until the earliest time that such payment would be permissible under Section 409A of the Code without triggering any penalties applicable under Section 409A of the Code.
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| (a) | Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).
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| (b) | Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the amount required to be withheld, (c) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld, or (d) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld. The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.
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18. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.
87
APPENDICES
19. Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
20. Term of Plan. Subject to Section 24 of the Plan, the Plan will become effective upon its adoption by the Administrator. It will continue in effect until April 24, 2024, unless terminated earlier under Section 21 of the Plan.
| 21. | Amendment and Termination of the Plan.
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| (a) | Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan.
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| (b) | Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
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| (c) | Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
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| 22. | Conditions Upon Issuance of Shares.
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| (a) | Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.
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| (b) | Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
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23. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.
24. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
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APPENDICES
svb SVB FINANCIAL GROUP 3003 TASMAN DRIVE SANTA CLARA, CA 95054 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m.P.M. Eastern Time the day before thecut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE -1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m.P.M. Eastern Time the day before thecut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: M67044-P45792E17091-P85507
KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY SVB FINANCIAL GROUP The Board of Directors recommends you vote FOR the following: For All Withhold All For All Except
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees: 01) Greg W. Becker 07) Lata KrishnanJeffrey N. Maggioncalda 02) Eric A. Benhamou 08) Jeffrey N. MaggioncaldaMary J. Miller 03) David M. Clapper 09) Kate D. Mitchell 04) Roger F. Dunbar 10) John F. Robinson 05) Joel P. Friedman 11) Garen K. Staglin 06) C. Richard KramlichLata Krishnan The Board of Directors recommends you vote FOR the following proposals:Proposals 2 and 3: For Against Abstain 2. To approve our 2006 Equity Incentive Plan, as amended and restated, to reserve an additional 2,000,000 shares of common stock for issuance thereunder. 3. To ratify the appointment of KPMG LLP as ourthe Company’s independent registered public accounting firm for ourits fiscal year ending December 31, 2014.2017.
3. To approve, on an advisory basis, our executive compensation (“Say on Pay”). The Board of Directors recommends you vote 1 YEAR on Proposal 4: 1 Year 2 Years 3 Years Abstain 4. To approve, on an advisory basis, our executive compensation. 5. To transact such other business as may properly come before the meeting and any postponements or adjournments thereof, according to the Proxy Holders’ decision and in their discretion.frequency of future Say on Pay votes.
To cumulate votes as to a particular nominee as explained in the Proxy Statement, check box to the right then indicate the name(s) and the number of votes to be given to such nominee(s) on the reverse side of this card. Please do not check box unless you want to exercise cumulative voting. Please indicate if you plan to attend this meeting. Yes No Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
V.1.1
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement Annual Letter to Stockholders from the Chief Executive Officer and Board Chairman, and 20132016 Form10-K Annual Report are available at www.proxyvote.com. M67045-P45792E17092-P85507
SVB FINANCIAL GROUP THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING ON APRIL 24, 201427, 2017 The undersigned appoints GREG W. BECKER and MICHAEL R. DESCHENEAUX,S. ZUCKERT, or either of them, with full power of substitution for himself, as the proxy holder of the undersigned to vote and otherwise represent all of the shares registered in the name of the undersigned at the Annual Meeting of Stockholders of SVB Financial Group to be held on Thursday, April 24, 2014,27, 2017, at 4:30 p.m. local time, at the Company’s offices located at 3005 Tasman Drive, Santa Clara, California 95054 and any postponements or adjournments thereof, with the same effect as if the undersigned were present and voting such shares, on the following matters and inmanner listed on the following manner.reverse side. If the undersigned holds shares in its name, and signs and returns this proxy card without giving specific voting instructions, the undersigned’s shares will be voted as recommended by the Company’s Board on each of the matters set forth belowlisted on the reverse side and as the proxy holders may determine in their discretion with respect to any other matters that properly come before the meeting. Cumulative voting (Complete only if applicable) 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 NAME OF CANDIDATE # OF VOTES CAST 1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
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(If you exercised cumulative voting, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side
SVB Financial Group
Letter to our stockholders
and partners
YEAR IN REVIEW: 2013
SVB Financial Group made 2013 — our 30th year — our most
successful ever, with record earnings, strong growth across
the business and continued global expansion. We delivered
exceptional financial results while significantly expanding
our relationships and deepening our market position as the
bank of choice for the world’s most innovative companies.
V.1.1
2013 Financial highlights
AVERAGE LOAN letter to our stockholders and partners
BALANCES:
$9.4 BILLION
NET INTEREST
INCOME:
$697
MILLION
AVERAGE
DEPOSIT
BALANCES:
$19.6
BILLION
EARNINGS
PER DILUTED
SHARE: $4.70
GAINS ON
INVESTMENT
SECURITIES: 1
$419.4
MILLION*
GAINS ON
EQUITY
WARRANTS:
$46.1
MILLION
AVERAGE
TOTAL
ASSETS:
$23.2
BILLION
SVB sustained growth and profitability through
another year of low interest rates and intensifying
competition. We grew average loans by 24% and
average total client funds 2 by 15% in 2013, while
also maintaining high credit quality.
We experienced strong performance in our stock
price, which increased 87% from 2012 year-end
to 2013 year-end. We are also proud of the
recognition we received this year, which included
earning a place among Forbes Magazine’s “Best
Banks in America.”3
Our strong performance was driven by a single-minded
pursuit of one goal: to be the bank of the
global innovation economy. To achieve our goal, we
start by forging strong connections with the most
innovative companies early in their development,
as well as their investors, and deepen those
relationships by providing expertise, networks
and solutions that support their long-term growth.
For our success, we owe thanks to our employees,
whose exceptional client focus, enterprising spirit
and drive enable us to maintain our position as the
premier financial partner for innovators worldwide.
Connect
Connecting an innovation economy
across borders
For three decades, we’ve served clients whose ideas and inventions are
literally changing the world. Our reputation and relationships give us
unique opportunities to help forge new and stronger links among leading
players in the global innovation economy, and our ability to help them
grow continues to drive significant revenue for SVB. In 2013, we added
more than 2,000 new early-stage clients, continuing to fuel our pipeline
of growing companies we can serve as they expand. We also increased
our investments in products and services designed to meet the needs of
larger companies, which are typically 10 to 20 times more profitable than
early-stage companies. As a result, we grew our ranks of new larger clients
(those with more than $75 million in annual revenue) and drove $600
million in new loans outstanding in 2013 from this group alone. 4
Innovation is a global phenomenon. More than ever, we are connecting
entrepreneurs, multinational companies, investors and partners across
borders as a normal course of our business. Our global expansion efforts to
date have garnered new, non-U.S. clients that contributed $800 million in
loans from our international locations. More than 700 of these companies
also leverage our U.S. banking services.
The London branch of Silicon Valley Bank, which celebrated its first full
year of operation in June, was named service provider of the year for the
second year in a row by investors at the annual Investor AllStars awards in
the United Kingdom. 5 This year also marked the first anniversary of SPD-
Silicon Valley Bank, our joint-venture bank in China, where we are forming
relationships to support innovation and our long-term growth in Asia.
Champion
Championing innovation through insights
and influence
Using the knowledge, networks and solutions we have built by being the
banking partner of choice for technology and life science companies of all
sizes, we can truly help innovators grow and succeed.
As a champion of innovation, we have made strides in helping our high-growth
clients get an audience with some of the world’s largest companies
as a result of our relationships with corporate venture funds, corporate
development teams and innovation groups. For example, early in 2013, we
hosted an event that brought together a large educational toy company and
several online gaming startup clients to explore partnership opportunities.
Another of our events gave emerging media clients the chance to meet
with a global broadcasting entity and discuss the future of media. Our
deep portfolio of clients and our understanding of their offerings helped
facilitate these meetings, resulting in new, valuable relationships for both
established corporations and startups. This is exactly what we mean when
we say we help increase our clients’ probability of success.
We also strive to increase our clients’ chances of success by speaking
out on issues that significantly influence innovation companies’ growth,
Q2
Completed rollout of new business-to-business payment
platform for small and midsize companies
Excellence Award for international
service to midsize companies from
Greenwich Associates
Released mobile
banking app
Average loans broke the
$9 billion threshold
Q1
including immigration reform, science/technology/engineering/math (STEM)
education and the medical-device tax provision of the Affordable Care Act
in the United States. We have an opportunity to ensure our government
representatives consider the impact of their decisions on high-growth,
innovative companies in particular and on the future of business overall.
To that end, we conduct annual research to share with the public and
government officials, and in 2013 led delegations of CEOs to speak directly
with policymakers in Washington, D.C.
Guide
Guiding clients from idea to innovation
As a valued partner to the global innovation ecosystem, we must innovate
ourselves — continually working to anticipate and resolve our clients’
challenges more effectively and to make it easy for companies to do
business with us. We expanded our products and services in 2013 as part
of our long-term strategy to be the bank of choice for innovation companies
of all sizes worldwide. Simplicity and scalability remain high priorities as
we continue to invest in expertise, technology and solutions that improve
our clients’ experience.
These efforts included improving our digital and mobile banking systems
so clients can bank with us from any platform. We also introduced a digital
client on boarding system that improved a historically painful process. We
now provide single-point entry of client information and have reduced the
time required to open accounts from weeks to days.
Our investments in products that growing companies require, such as trade
finance and foreign exchange, has fueled our success in retaining early-stage
clients and winning the business of larger companies. Today, we have a wide
range of solutions to serve high-performance companies wherever they do
business, and we are continually developing new products and services.
For example, we are creating new solutions that meet the needs of emerging
payments businesses, generate high payment volumes and in turn deliver
new revenue streams for SVB.
Achieve
Realizing success when our clients succeed
The global innovation economy is growing, and we are growing with it. Our
performance is directly tied to the success of our clients, who seek us out
for our decades of experience, extensive connections and proven ability to
increase their chances of success.
Our long-standing commitment to these companies has allowed us to increase
our share of the most promising and best performers among them. In 2013,
64% of U.S.-based venture capital-backed technology and life science
companies that went public were SVB clients.
The success of our clients creates additional long-term growth opportunities
for us and solidifies our market position as the banking partner of choice for
high-growth companies.
2013 accomplishments
92%
We continued our
global expansion
in 2013, growing
global loans
outstanding
by 92%.
600M
We increased the
number of new larger
clients (those with
more than $75 million
in annual revenue) and
drove $600 million in
new loans outstanding
from this group alone.
64%
64% of U.S.-based
venture capital–
backed technology
and life science
companies that went
public were SVB clients.
2 K+
We added more than
2,000 early-stage
companies.
Launched 30 Years | 30 Causes
global community service initiative
First anniversary of U.K. branch and
joint-venture bank in China
Received the European Investor
AllStars Service Provider of the Year
award for second straight year5
Celebrated 30th year
in business
Listed among America’s
biggest banks by Forbes6
Named one of America’s
best banks by Forbes3
Letter to our stockholders and partners
Share MIX Paper from responsible sources FSC® C101537 FSC www.fsc.org
Sharing our success
Our continued success and dedicated employees afford us greater
opportunities to give back to the communities in which we operate.
To celebrate our 30th anniversary, we launched the “30 Years | 30
Causes” initiative, which united our employees around the world
in performing volunteer projects to benefit local not-for-profit
organizations. In all, nearly 1,400 employees and their families gave
more than 6,000 hours of volunteer service at events in five countries.
The initiative was the brainchild of our employees, reflecting the same
dedication and spirit of service they bring to our clients.
Our employees support many other fundraising and community
service projects annually. In 2013, SVB was selected yet again as one
of the top corporate philanthropists in the San Francisco Bay Area.
Our employees worldwide raised $42,000 for men’s health during
the global Movember campaign, $140,000 for the Leukemia and
Lymphoma Society and $830,000 for Best Buddies International.
Also, the SVB Foundation awarded grants totaling nearly $200,000
to 85 organizations for which our employees volunteer.
Outlook for 2014 and beyond
After years of strong performance, we see abundant opportunities
ahead and believe we are well positioned for continued growth. The
pace of new company formation remains strong, and startups and
established companies alike are bringing exceptional products and
intellectual property to market at a healthy pace. With new industries
and technologies emerging every day, the pie is getting bigger for the
innovation sector.
We remain committed to supporting our clients of all sizes, especially
early-stage companies and their investors. We will continue to nurture
and maintain those relationships to help our startup clients grow.
At the same time, we will cultivate new relationships with larger
innovation companies, private equity firms and the people who drive
them. And we will support our clients wherever they are by continuing
to expand our global presence and international capabilities.
Like all businesses, we face some familiar challenges. More banks are
competing to do business with the best companies, and interest rates
are expected to remain low in the near term despite an improving
economic outlook.
SVB is well positioned to meet these challenges. Our focus and
commitment to the innovation sector, and our history of helping clients
succeed, give us a significant competitive advantage with companies
at all stages. We are off to a strong start in 2014. Moreover, the
stellar performance we achieved in 2013, and the dedication of our
outstanding employees to advance our strategic plans, make us even
more optimistic for the long term.
Sincerely,
Roger F. Dunbar
Chairman of the Board of Directors
Greg Becker
President and CEO
1 For the year ended December 31, 2013, we had net gains on investment securities of $419.4 million with $342.1 million of net gains attributable to noncontrolling interests,
including carried interests, resulting in non-GAAP net gains on investment securities, net of noncontrolling interests, of $77.3 million.
2 Total client funds consist of on-balance sheet deposits and off-balance sheet client investment funds.
3 “Full List: America’s Best and Worst Banks 2014,” December 19, 2013, www.forbes.com/sites/kurtbadenhausen/2013/12/19/full-list-americas-best-and-worst-banks-2014.
4 All monetary figures are U.S. dollars.
5 “Investor AllStars 2013,” September 2013, www.investorallstars.com/IAS/winners.html.
6 “America’s Biggest Banks,” November 21, 2013, www.forbes.com/sites/halahtouryalai/2013/11/21/americas-biggest-banks-jpmorgan-wells-fargokeep-
growing-while-bofa-citi-shrink.
Letter to our stockholders and partners
CORPORATE HEADQUARTERS
3003 Tasman Drive, Santa Clara, CA 95054 U.S.A., Phone 408.654.7400 svb.com
This letter contains forward-looking statements within the meaning of applicable federal securities laws. Such statements are predictions and actual
results may differ materially. Information about factors that could cause actual results to differ materially from our forward-looking statements is provided
in our 2013 Annual Report on Form 10-K.
© 2014 SVB Financial Group. All rights reserved. Member Federal Reserve System. SVB>, SVB> Find a way,
SVB Financial Group and Silicon Valley Bank are registered trademarks.
FG-14-13259. Rev 02-27-14.
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