UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ¨☒
Filed by a Party other than the Registrant ¨☐
Check the appropriate box:
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(as permitted by Rule 14a-6(e)(2)) | |
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SVB FINANCIAL GROUP
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, April 21, 2016
4:30 P.M.
TO THE STOCKHOLDERS:
I am pleased to invite you to attend the 2016 Annual Meeting of Stockholders of SVB Financial Group, a Delaware corporation, which will be held at our offices located at 3005 Tasman Drive, Santa Clara, California 95054, on Thursday, April 21, 2016 at 4:30 p.m., Pacific Time. The purposes of the meeting are to:
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The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. To assure your representation at the meeting, you are encouraged to vote your shares as soon as possible. Voting instructions are included in: (i) for those stockholders receiving printed proxy materials, the enclosed Proxy Card, and (ii) for all other stockholders, the Notice Regarding the Availability of Proxy Materials (as further described in the Proxy Statement). Any stockholder attending the meeting may vote in person even if such stockholder has previously voted by proxy.
Only stockholders of record at the close of business on February 23, 2016 may vote at the meeting or any postponement or adjournment thereof.
Santa Clara, California
March 3, 2016
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD, OR VOTE OVER THE TELEPHONE OR THE INTERNET AS PROMPTLY AS POSSIBLE, IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING. IF YOU HAVE RECEIVED PRINTED PROXY MATERIALS, A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR YOUR CONVENIENCE. EVEN IF YOU HAVE VOTED BY PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. WE ENCOURAGE YOU TO VOTE: (I) FOR THE ELECTION OF ALL ELEVEN (11) NOMINEES FOR DIRECTOR AND (II) IN FAVOR OF THE ABOVE REMAINING PROPOSALS.
PROXY STATEMENT—TABLE OF CONTENTS
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i
SUMMARY PERFORMANCE AND PROXY INFORMATION
This summary highlights our 2015 performance, as well as information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should review this entire Proxy Statement, as well as our Annual Report on Form 10-K for the year 2015.
2015 PERFORMANCE
2015 FINANCIAL PERFORMANCE (COMPAREDTO 2014)
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+ This is a non-GAAP financial metric. See Appendix A for reconciliation.
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SUMMARY INFORMATION
2015 BUSINESS PERFORMANCE
2015 marked another year of robust business growth. We continued to focus on building deep relationships with fast growth, innovation companies and their investors, and continued to leverage our platform and expertise to grow our market leadership. Key 2015 business highlights, compared to 2014, include:
For more information, please see our 2015 Year In Review Letter to Our Stockholders.
SVB BOARDOF DIRECTORS
From left to right: David Clapper, Greg Becker, Lata Krishnan, Joel Friedman, Kate Mitchell, Eric Benhamou, Garen Staglin, John Robinson, Mary Miller, Roger Dunbar, Jeff Maggioncalda, and C. Richard Kramlich.(Mr. Kramlich transitioned into an advisory director role as of January 1, 2016.)
1 “Innovation economy” companies mean those in the hardware, software, life science, and energy and resource innovation industries.
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SUMMARY INFORMATION
ANNUAL MEETINGAND PROXY STATEMENT INFORMATION
ANNUAL MEETING
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PROPOSALSAND VOTING RECOMMENDATIONS
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Board Committee Membership* | ||||||||||||||||||||||||
Name | Age | Year First Elected By Stockholders | Principal Occupation | Independent | Audit | Compensation | Credit | Finance | Governance | Risk | ||||||||||||||
Greg W. Becker | 48 | 2011 | President and Chief Executive Officer, SVB Financial Group and Silicon Valley Bank | — | ||||||||||||||||||||
Eric A. Benhamou | 60 | 2005 | Chairman and Chief Executive Officer, Benhamou Global Ventures, LLC | l | X | C | X | |||||||||||||||||
David M. Clapper | 64 | 2005 | Chief Executive Officer, Minerva Surgical, Inc. | l | X | C | X | |||||||||||||||||
Roger F. Dunbar | 70 | 2005 | Board Chairman SVB Financial Group and Silicon Valley Bank; Retired, Former Global Vice Chairman, Ernst & Young, LLP | l | X | X | X | C | ||||||||||||||||
Joel P. Friedman | 68 | 2005 | Retired, Former President, Business Process Outsourcing, Accenture | l | C | X | X | |||||||||||||||||
Lata Krishnan | 55 | 2008 | Chief Financial Officer, Shah Capital Partners | l | X | X | ||||||||||||||||||
Jeffrey N. Maggioncalda | 47 | 2012 | Former Chief Executive Officer, Financial Engines | l | X | X | ||||||||||||||||||
Mary J. Miller | 60 | — | Former Under Secretary for Domestic Finance, U.S. Department of Treasury | l | X | |||||||||||||||||||
Kate D. Mitchell | 57 | 2010 | Co-Founder and Managing Director, Scale Venture Partners | l | X | C | X | |||||||||||||||||
John F. Robinson | 69 | 2011 | Former Deputy Comptroller of the Currency and former Executive Vice President, Washington Mutual Bank | l | C | X | X | X | ||||||||||||||||
Garen K. Staglin | 71 | 2012 | Proprietor, Staglin Family Vineyard | l | X | X |
* “C” denotes committee chairperson; all memberships are as of the date of this Proxy Statement.
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SUMMARY INFORMATION
CORPORATE GOVERNANCE HIGHLIGHTS
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AUDITOR MATTERS
As a matter of good corporate practice, we are seeking your ratification of KPMG LLP as our independent registered public accounting firm for the 2016 fiscal year.
For 2015, 91% of total 2015 fees represented audit and audit-related fees. (For more information, see page 61.)
EXECUTIVE COMPENSATION
Consistent with our Board’s recommendation and our stockholders’ preference, we submit an advisory vote to approve our executive compensation (otherwise known as “Say on Pay”) on an annual basis. Accordingly, we are seeking your approval, on an advisory basis, of the compensation of our Named Executive Officers, as further described in the “Compensation Discussion and Analysis” section of this Proxy Statement.
For a summary of the highlights of our 2015 executive compensation and key features of our executive compensation programs, please refer to the Executive Summary of the “Compensation Discussion and Analysis” section of this Proxy Statement on page 29.
IMPORTANT DATESFOR 2017 ANNUAL MEETING
Stockholder proposals for inclusion in our 2016 proxy statement pursuant to SEC Rule 14a-8 must be received by us by November 12, 2016. Notice of stockholder proposals for the 2016 annual meeting outside of SEC Rule 14a-8 must be received by us no earlier than December 26, 2016 and no later than January 25, 2017.
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SUMMARY INFORMATION
Mailed to Stockholders on or about March 10, 2016
PROXY STATEMENT
OF
SVB FINANCIAL GROUP
3003
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS
Thursday, April 26, 2018
4:30 P.M. (Pacific Time)
Dear Stockholders:
On behalf of the Board of Directors, I am pleased to invite you to attend the 2018 Annual Meeting of Stockholders of SVB Financial Group, a Delaware corporation, which will be held at our offices located at 3005 Tasman Drive,
Santa Clara, California 95054, on Thursday, April 26, 2018 at 4:30 p.m., Pacific Time. The purposes of the meeting are to:
1. | Elect eleven (11) directors to serve for the ensuing year and until their successors are elected, |
2. | Ratify the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2018, |
3. | Approve, on an advisory basis, our executive compensation (“Say on Pay”), and |
4. | Transact such other business as may properly come before the meeting. |
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. To assure your representation at the meeting, you are encouraged to vote your shares as soon as possible. This Notice and the Proxy Statement provide instructions on how you can vote your shares online or by telephone, or if you have received a printed copy of the proxy materials and a proxy card, by mail. You may attend the meeting and vote in person even if you have previously voted by proxy.
Only stockholders of record at the close of business on February 26, 2018 may vote at the meeting or any postponement or adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS, |
/s/ Roger F. Dunbar |
Roger F. Dunbar |
Chairman of the Board |
Santa Clara, California
March 8, 2018
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD, OR VOTE OVER THE TELEPHONE OR THE INTERNET AS PROMPTLY AS POSSIBLE, IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING. IF YOU HAVE RECEIVED PRINTED PROXY MATERIALS, A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR YOUR CONVENIENCE. EVEN IF YOU HAVE VOTED BY PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. WE ENCOURAGE YOU TO VOTE: (I) FOR THE ELECTION OF ALL ELEVEN (11) NOMINEES FOR DIRECTOR, AND (II) IN FAVOR OF THE ABOVE REMAINING PROPOSALS.
PROXY STATEMENT GENERAL INFORMATIONSTATEMENT—TABLE OF CONTENTS
General
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◾Proposal No. 2 — Ratification of Appointment of Independent Registered Public Accounting Firm | 56 | |||
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◾Proposal No. 3 — Advisory Approval of our Executive Compensation | 57 | |||
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◾ | Indicates matters to be voted on at the Annual Meeting. |
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SUMMARY PERFORMANCEAND PROXY INFORMATION |
This summary highlights our 2017 performance, as well as information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should review this entire Proxy Statement, as well as our Annual Report on Form10-K, for the year ended December 31, 2017.
2017 PERFORMANCE
2017 Financial Performance Highlights
We achieved another year of record diluted earnings per share (“EPS”) and net income, and we maintained multi-year growth of our average total assets, loans (net of unearned income), and client funds (deposits and client investment funds). Our stock price has also generally performed well, as illustrated in the graph below.
2017 Business Performance Highlights
2017 reflected another year of healthy business growth, as we continued to serve the innovation economy. We continued to focus on our clients, our global growth, and in particular, growing our “core fee income” business. Select 2017 highlights include:
Market Share Growth
¡ | We grew our total net count of core commercial clients by 15%. |
¡ | We grew our net client count in key client segments, including early-stage clients (by 15%), Private Bank (by 25%), and private equity clients (by 17%). |
Expanding our Global Reach
¡ | We continued to make significant progress establishing lending branches in Germany and Canada, both of which are subject to regulatory approval. |
¡ | Our EMEA client count increased by 30%. |
Continued Focus on our Core Fee Income Business
¡ | Our foreign exchange transaction volume increased by over 30%, compared to 2016, hitting anall-time quarterly high of $34 million in revenues. |
¡ | We surpassed $4.5 billion in annual credit card transactions for our clients in 2017, a 31% increase compared to 2016. |
¡ | We achieved a year-over-year increase of 74% in client investment fees. |
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SUMMARY INFORMATION |
ANNUAL MEETINGAND PROXY STATEMENT INFORMATION
Annual Meeting
Time and Date: | 4:30 p.m. (Pacific Time), April 26, 2018 | Record Date: | February 26, 2018 | |||
Place: | SVB Financial Group—Corporate Headquarters 3005 Tasman Drive, Santa Clara, California 95054 | Voting: | Stockholders as of the record date are entitled to vote |
Proposals and Voting Recommendations
Proposal | Board Recommendation | Page Reference | ||
Proposal No. 1 — Election of Eleven (11) Directors | For all nominees | 2 | ||
Proposal No. 2 — Ratification of KPMG LLP as Auditors for 2018 | For | 56 | ||
Proposal No. 3 — Advisory(Non-Binding) Vote on Executive Compensation | For | 57 |
Director Nominees
We are seeking your election of the eleven (11) directors described below—ten of which are current incumbent directors. Ms. Kimberly A. Jabal is a new director nominee who will join the Board, subject to stockholder election. Mr. David M. Clapper and Ms. Lata Krishnan, both current directors, will not be standing forre-election and will be retiring from the Board at the Annual Meeting.
Committee Membership* | ||||||||||||||||||||||
Name | Age | Year First Elected By Stockholders | Principal Occupation | # of Other Public Company Boards | Audit | Compensation | Credit | Finance | Governance | Risk | ||||||||||||
Greg W. Becker
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| President and Chief Executive Officer, SVB Financial Group
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Eric A. Benhamou
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| Chairman and Chief Executive Officer, Benhamou Global Ventures, LLC
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John S. Clendening
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President and CEO, Blucora, Inc.
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Roger F. Dunbar
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| Board Chairman SVB Financial Group; Former Global Vice Chairman, Ernst & Young, LLP
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Joel P. Friedman
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| Former President, Business Process Outsourcing, Accenture
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Kimberly A. Jabal
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Chief Financial Officer, Weebly, Inc.
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Jeffrey N. Maggioncalda
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Chief Executive Officer, Coursera Inc.
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Mary J. Miller
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| Former Under Secretary for Domestic Finance, U.S. Department of Treasury
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Kate D. Mitchell
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| Co-Founder and Managing Director, Scale Venture Partners
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John F. Robinson
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| Former Deputy Comptroller of the Currency and former Executive Vice President, Washington Mutual Bank
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Garen K. Staglin
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Proprietor, Staglin Family Vineyard
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* “C” denotes committee chairperson; all memberships are as of the date of this Proxy Statement.
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SUMMARY INFORMATION |
Board and Corporate Governance Highlights
(Based on current Board profile and practices)
BOARD COMPOSITION
Total of 12 current directors — all independent directors, except for CEO director
Separate Board Chairperson and CEO roles
Independent Board Chairperson
Independent chairpersons and members of all Board committees
Seasoned Board with diverse experience, including innovation economy industries, banking/financial services, global, finance/accounting, risk oversight/management and Government/Regulatory
No director serves on more than one public company board, other than the Company
Policy requiring directors to submit their resignation upon reaching the age of 75
BOARD ACCOUNTABILITY
Annual election of directors
Effective majority voting standard in uncontested director elections (through director resignation policy)
Annual Board and committee evaluations
Regularly-held executive sessions ofnon-management directors
Robust executive and director equity ownership guidelines
Independent Board evaluation of CEO performance
Independent Board approval of CEO compensation
Ongoing director nominee identification and selection process
Limit on director compensation under equity plan
DIRECTOR QUALIFICATIONS
Our directors reflect an effective and diverse mix of skills and experience:
STOCKHOLDER INTERESTS
All independent directors, except for CEO director
Separate Board Chairperson and CEO roles
Active stockholder engagement practices
Annual Say on Pay vote
Stockholders may act by written consent
One single voting class — common stock class
No poison pill
RISK MANAGEMENT
Board and individual committee oversight of risk
Separate Board Risk Committee focused on enterprise-wide risk management framework
Risk Committee comprised of the chairpersons of the Board and all six Board committees
Risk management guided by Risk Appetite Statement (reviewed on an annual basis by the full Board)
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SUMMARY INFORMATION |
Auditor Matters
As a matter of good corporate practice, we are seeking your ratification of KPMG LLP (“KPMG”) as our independent registered public accounting firm for the 2018 fiscal year. If our stockholders do not ratify the selection of KPMG, the Audit Committee may reconsider its selection.
For 2017, the total fees for services provided by KPMG were $8,115,998, of which 80.8% represented audit and audit-related fees. (For more information, see page 56.)
Executive Compensation
Consistent with our Board’s recommendation and our stockholders’ preference, we submit an advisory vote to approve our executive compensation (otherwise known as “Say on Pay”) on an annual basis. Accordingly, we are seeking your approval, on an advisory basis, of the compensation of our Named Executive Officers, as further described in the “Compensation Discussion and Analysis” section of this Proxy Statement.
2017 Named Executive Officers (“NEOs”) In addition to applicable SEC requirements, the six NEOs for 2017 reflect key areas of Company focus, including our banking business, operational infrastructure, and risk management, as well as financial performance. Their 2017 compensation reflects their individual performance and contributions to the Company’s performance, as well as their leadership and increased span of responsibilities in their respective areas. “CD&A” Executive Summary | 2017 NEOs •GREG BECKER,President and •DAN BECK,Chief Financial Officer •MICHAEL DESCHENEAUX,President, Silicon •JOHN CHINA,Head of Technology Banking •MICHAEL DREYER,Chief Operations Officer •LAURA IZURIETA,Chief Risk Officer |
For a summary of the highlights of our 2017 executive compensation and key features of our executive compensation governance and practices, please refer to the Executive Summary of the “Compensation Discussion and Analysis” section of this Proxy Statement on page 29.
Important Dates for 2019 Annual Meeting
Stockholder proposals for inclusion in our 2019 proxy statement pursuant to SEC Rule14a-8 must be received by us by November 8, 2018. Notice of stockholder proposals for the 2019 annual meeting outside of SEC Rule14a-8 must be received by us no earlier than December 23, 2018 and no later than January 22, 2019.
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SUMMARY INFORMATION |
PROXY STATEMENT INFORMATIONOF SVB FINANCIAL GROUP |
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of proxies by, and on behalf of, the Board of Directors (the “Board”) of SVB Financial Group (the “Company”) for useto be voted at our 20162018 Annual Meeting of Stockholders toand any adjournments or postponements of that meeting (the “Annual Meeting”). The Annual Meeting will be held at our offices located at 3005 Tasman Drive, Santa Clara, California 95054, on Thursday, April 21, 201626, 2018 at 4:30 p.m., Pacific Time, and at all postponements or adjournments thereof (the “Meeting”). (ForTime. For directions to attend the Annual Meeting in person, please contact usvisit our website athttp://www.svb.com/locations.aspx.The proxies may also be voted at any adjournments or postponements of the meeting.
All properly executed written proxies and all properly completed proxies submitted by telephone or internet that are delivered pursuant to this solicitation will be voted at the telephone number below.)
Record Date
Only stockholdersAnnual Meeting in accordance with the directions given in the proxy, unless the proxy is revoked prior to completion of record on February 23, 2016 (the “Record Date”) will be entitled to votevoting at the Meeting. Atmeeting.
We are first furnishing the close of businessproxy materials to stockholders on the Record Date, there were 51,629,096 shares of our common stock, $0.001 par value (the “Common Stock”), outstanding.or about March 8, 2018.
Principal Executive OfficesPRINCIPAL EXECUTIVE OFFICES
The Company is a Delaware corporation and financial holding company for Silicon Valley Bank (the “Bank”) and its affiliates. Our principal executive offices are located at 3003 Tasman Drive, Santa Clara, California 95054, and our telephone number at that location is(408) 654-7400.
Important Notice RegardingRECORD DATE
Only stockholders of record as of the Availabilityclose of Proxy Materials forbusiness on February 26, 2018 (the “Record Date”) will be entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements of the meeting. At the close of business on the Record Date, there were 52,889,741 shares of our common stock, $0.001 par value (“Common Stock”), outstanding.
IMPORTANT NOTICE REGARDINGTHE AVAILABILITYOF PROXY MATERIALSFORTHE ANNUAL MEETING
This Proxy Statement and our 2015 Annual Report on Form10-K for the year ended December 31, 2017 are available electronically atwww.svb.com/proxyproxy.. (The The contents of our website are not incorporated herein by reference and any reference to our website address provided throughout this Proxy Statement is intended to be an inactive textual reference only. See also “Information about Voting and Proxy Solicitation—Delivery of Proxy Materials”below.The contents of the website are not incorporated herein by reference and the website address provided above and throughout this Proxy Statement is intended to be an inactive textual reference only.) See also “Information About Voting and Proxy Solicitation – Delivery of Proxy Materials” below.
ABOUT THE COMPANY… For 35 years, SVB Financial Group and its subsidiaries have helped innovative companies and their investors move bold ideas forward, fast. SVB Financial Group’s businesses, including Silicon Valley Bank, offer commercial and private banking, asset management, private wealth management and investment services, and funds management to companies in the technology, life science and healthcare, private equity and venture capital, and premium wine industries. Headquartered in Santa Clara, California, SVB Financial Group operates in centers of innovation around the world. |
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PROXY STATEMENT INFORMATION |
PROXY STATEMENT INFORMATION
BOARDOF DIRECTORSAND CORPORATE GOVERNANCE |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Proposal No. 1 – Election of Directors
ELECTION OF DIRECTORS
The Board of Directors Recommends a Vote “For”“FOR” All Nominees
DIRECTOR ELECTION, QUALIFICATIONAND OTHER INFORMATION
Our amended and restated bylaws (the “BylawsDirectors”) require
Upon the Boardrecommendation of Directorsthe Governance Committee, we are pleased to consist of at least eight (8), but no more than thirteen (13) members, with the exact number to be fixed by the Board of Directors. The number of directors authorized by the Board is currently fixed atpropose eleven (11).
Our Board of Directors has nominated eleven (11) directors — ten (10) independent directors and the CEO — director nominees for election at this year’s Meeting to hold office until the next annual meeting. All of our incumbent directors are nominees for re-election to the Board and were recommended by the Governance Committee. All of the nominees, with the exception of Ms. Miller (who joined the Board in May 2015), served as directors of the Company since the last annual meeting of stockholders in April 2015, each of whom received the support of more than 99% of the votes cast at the 2015 Annual Meeting.
year. We believe that our director nominees, individually and together as a whole, possess the requisite skills, experience and qualifications necessary to createmaintain an effective Board to serve the best interests of the Company and its stockholders. All nominees are deemed independent, except for our CEO.
During this most recent director term, we welcomed Mr. John Clendening, who joined our Board in August 2017. Additionally, the Board has nominated a new director, Ms. Kimberly Jabal, for election at the Annual Meeting. We believe that both Mr. Clendening and Ms. Jabal will bring additional diversity of experience and expertise, as further outlined in their biographies below, that will enhance the overall effectiveness of our Board. We also thank Ms. Krishnan and Mr. Clapper who will not be standing forre-election and will be retiring from our Board at the Annual Meeting. We are grateful for their many years of dedicated service on the Board and contributions to the Company.
Our directors are elected on an annual basis to hold office for aone-year term expiring at the 2019 Annual Meeting. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier death, resignation or removal.
Director Qualifications
The Board recognizes that it is of utmost importance to assemble a body of directors that, taken together, has the skills, qualifications, experience and attributes appropriate for functioning as a board and working productively with management. The Governance Committee of the Board is responsible for maintaining a well-rounded and diverse board that has the requisite diversity of skills and qualifications to oversee the Company effectively. The Governance Committee has not formally established any minimum qualifications for director candidates. However, in light of our business, the primary areas of experience, qualifications and attributes typically sought by the Governance Committee in director candidates include,but are not limited to, the following primary areas:
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| Client Industry - Experience with our key client industries, including technology, life science and healthcare, private equity/venture capital and premium wine, to help deepen our knowledge of the innovation and other markets in which we do business. | |||
Banking/Financial Services - Experience with the banking or financial services industry, to help support and grow our core business. | ||||
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Other key attributes deemed important for directors to possess include:
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• Availability and commitment to serve |
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BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
BOARD & CORPORATE GOVERNANCE
Nominees for DirectorDirector; Plurality Vote
All proxies will be voted “FOR”“FOR” the election of the following eleven (11) nominees, as recommended by the BoardGovernance Committee and approved for a term of one year,nomination for election by the Board, unless authority to vote for the election of directors (or for any particular nominee) is withheld. If any of the nominees should unexpectedly declinedeclines or bebecomes unable to act as a director, the proxies may be voted for a substitute nominee designated by the Board. As of the date of this Proxy Statement, the Board has no reason to believe that any nominee will become unavailable and has no present intention to nominate persons in addition to, or in lieu of, those listed below. Our directors serve until the next annual meeting of stockholders and until their successors are duly elected and qualified, or until their earlier death, resignation or removal.
Vote Required
Any nominee Pursuant to our Bylaws, directors are elected by a plurality of votes cast at the Annual Meeting. This means that the eleven (11) nominees who receives a greaterreceive the highest number of votes cast “for” his or her election than votes cast “withheld” his or hertheir election will be elected.
Majority VotingDirector Resignation Policy
The Governance Committee of our Board has adopted a majority votingdirector resignation policy applicable to uncontested director elections, (i.e.,such as the election to be held at the upcoming Annual Meeting, which effectively requires an uncontested nominee to receive a majority of votes cast in such election or offer to resign. Uncontested elections are elections where the number of nominees is not greater than the number of directors to be elected). Under thiselected. Pursuant to the director resignation policy, any of our director nominees in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall, promptly following certification of the stockholder vote, offeris required to tender his or her resignation to the Board for consideration.consideration promptly following certification of the stockholder vote. The Governance Committee will act within 90ninety (90) days after certification of the stockholder vote to determine whether to accept the director’s resignation, and thereafter submit such resignation and its recommendation to the Board for consideration at itsthe Board’s next scheduled meeting. The Board expects that theany director whose resignation is under consideration will abstain from participating in any decision or deliberation regarding that resignation. FollowingWe will disclose any decision made by the Board’s decision, we will publicly disclose the decision madeBoard with respect to any tendered resignation.
Director Biographies
The biographical information forSimilarly, upon reaching the age of 75, eachnon-executive director shall also tender his or her resignation, which shall also be subject to the acceptance of the director nominees is as follows:Governance Committee, in consultation with the Board.
3
BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
BIOGRAPHIESOF DIRECTOR NOMINEES
| ||||
Mr. Becker, age 48, was appointed the President and Chief Executive Officer of the Company and the Bank in April 2011. He first joined us in 1993 as part of the Northern California Technology Division, and since then, has served in a number of executive and senior management positions, including Division Manager of Venture Capital (1999-2002), Chief Banking Officer (2002-2003), Chief Operating Officer (2003-2008) and President of Silicon Valley Bank (since 2008). Mr. Becker was elected by stockholders as a director of the Company in April 2011.
| DIRECTORSINCE 2011 | |||||||
| ||||||||
Committees: N/A | Independent: No |
BUSINESS EXPERIENCE
CURRENT PRIVATE DIRECTORSHIPS:
- | Silicon Valley Leadership Group, a non-profit organization with an emphasis on issues of importance to employers, employees and residents of Silicon Valley |
|
|
- | Advisory Council Member, Alliance for Southern California Innovation (since 2017) |
PRIOR DIRECTORSHIPS:
- | Director and executive committee member, Bay Area Council, a public policy advocacy organization (2011-2015) |
OTHER PRIOR EXPERIENCE:
|
|
- | President, Board of Trustees, Silicon Valley and Monterey Bay Area Chapter of the Leukemia & Lymphoma Society(2004-2011) |
EDUCATION:
|
|
QUALIFICATIONS
|
|
| |
Client Industry | ||
Banking/Financial Services— Career-long experience within the banking industry | ||
Global— Extensive global experience through the Company’s international expansion efforts |
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BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
BOARD & CORPORATE GOVERNANCE
| DIRECTORSINCE 2005 | |||||||
Mr. Benhamou, age 62, is Chairman and Chief Executive Officer of Benhamou Global Ventures, LLC (“Benhamou Global Ventures”), which he founded in 2003. Benhamou Global Ventures invests and plays an active role in innovative high-tech firms throughout the world. Mr. Benhamou also sits on various public and private technology company boards, and serves a variety of educational and philanthropic organizations. | ||||||||
Committees: Governance (Chair), Finance and Risk | Independent: | |||||||
Yes |
|
BUSINESS EXPERIENCE
CURRENT PUBLIC DIRECTORSHIPS:
• Finance
• Risk
- |
Mr. Benhamou, age 60, is Chairman and CEO of Benhamou Global Ventures, LLC, which he founded in 2003. Benhamou Global Ventures, LLC invests and plays an active role in innovative high tech firms throughout the world. He also sits on various public and private technology company boards, and serves a variety of educational and philanthropic organizations. Mr. Benhamou was appointed by the Board of Directors as a director of the Company in February 2005 and was first elected by stockholders in April 2005.
|
CURRENT PRIVATE DIRECTORSHIPS/OTHER EXPERIENCE:
|
- | Chairman, Ayehu, a developer of IT process automation products (since 2015)
|
- | Grid Dynamics, a provider of commerce technology solutions for retailers (since 2015) |
|
- | Chairman, |
PRIOR DIRECTORSHIPS:
|
- | Qubell,
|
- | ConteXtream, a private carrier equipment vendor for intellectual property based media services
|
- | Load
|
- | PureWave Networks, Inc., a private developer of outdoor compact base stations for the 4G marketplace (2010-2014)
|
- | RealNetworks, Inc., a public company creator of digital media services and software (2003-2012)
|
- | Voltaire Ltd., a public grid computing network solutions company (acquired by Mellanox Technologies, Ltd.) (2007-2011)
|
- | Dasient Inc., a private security company that provides malware detection and prevention solutions (acquired) (2010-2011)
|
- | Chairman, 3Com Corporation, a public networking solutions provider (acquired) (1990-2010) |
- | Chairman of the Board of Directors of Palm, Inc., a public mobile products provider (acquired) (1999-2007)
|
OTHER PRIOR EXPERIENCE:
|
- | Visiting professor, IDC Business School (2001-2015)
|
- | Executive committee member, Ben Gurion University of Negev (2000-2013)
|
- | Visiting professor, INSEAD Business School (2003-2012)
|
- | Executive committee member, Computer Science & Telecommunications Board (CSTB) (2003-2008) |
- | Interim Chief Executive Officer of Palm, Inc. (2001-2003)
|
- | Chief Executive Officer, 3Com Corporation (1990-2000), and other
|
- | Executive committee member,
|
- | Member, US-Israel Science and Technology Commission (2003)
|
- | Co-founder and Vice President of Engineering, Bridge Communications (1981-1987) |
EDUCATION:
|
- | Master’s degree in Science from the School of Engineering at Stanford University
|
- | Several honorary doctorates | ||
QUALIFICATIONS
| ||
| Client Industry
| |
Global
|
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BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
BOARD & CORPORATE GOVERNANCE
| ||||||||||
| DIRECTORSINCE 2017 | |||||||||
Mr. Clendening, age 55, is currently President and CEO of Blucora, Inc., a provider of multi-channel financial and tax preparation services. Mr. Clendening previously served in various executive management roles at The Charles Schwab Corporation (“Charles Schwab”) from 2004-2015, most recently as Executive Vice President and Co-Head, Retail Business. | ||||||||||
Committees: Credit | Independent: Yes |
Mr. Clapper, age 64, has been the Chief Executive Officer of Minerva Surgical, a medical device company, since May 2011. He has had an extensive career in the healthcare and medical device industries, including serving as the President and Chief Executive Officer (2005-2008) of SurgRx, Inc., a privately held medical device manufacturer, until its acquisition by Ethicon Endo-Surgery in 2008, as well as a variety of public and private company directorships. Mr. Clapper was appointed by the Board of Directors as a director of the Company in October 2004 and was first elected by stockholders in April 2005.BUSINESS EXPERIENCE
CURRENT PUBLIC DIRECTORSHIPS:
- | Blucora, Inc., a provider of multi-channel financial and tax preparation services (since 2016) |
PRIOR DIRECTORSHIPS:
- | Betterment Holdings, Inc., an online investment services company (2016-2017) |
OTHER PRIOR EXPERIENCE:
- | Executive Vice President, The Charles Schwab Corporation, a financial services and banking company (2004-2015) |
- | President and Founder, Restaurant Business Services, eMac Digital (2001-2004) |
- | Senior Vice President, Web, Marketing and Technology, Living.com (2000) |
- | Chief Marketing Officer and Senior Vice President, Consumer Banking Group, First Union Corporation (1998-2000) |
- | Various management positions at The Coca-Cola Company, Frito-Lay, SEARS Specialty Merchandising Group and Booz Allen & Hamilton, Inc. |
EDUCATION:
- | Bachelor’s degree in Economics from Northwestern University |
- | Master’s degree in Business Administration from Harvard University |
QUALIFICATIONS
| ||
| ||
| ||
| ||
| ||
| Banking/Financial Services — Extensive experience with banks and financial services companies through current roles at Blucora, Inc. and Betterment Holdings, Inc. as well as prior roles at Charles Schwab and First Union Corporation
|
6
Proposal 1 — Election of
|
5
BOARD & CORPORATE GOVERNANCE
| DIRECTORSINCE 2004 | |||||||
Mr. Dunbar, age 72, is our current Chairman of the Board of Directors, and subject to his election, he is expected to continue to serve as our Board Chairman during the 2018-2019 director term. Mr. Dunbar retired from Ernst & Young LLP (“Ernst & Young”) in 2004, where he served in a variety of positions since 1974, including key leadership positions. | ||||||||
| Independent: Yes |
Mr. Dunbar, age 70, is our current Chairman of the Board of Directors, and subject to his election, he is expected to continue to serve as our Board Chairman during the 2016-2017 director term. Mr. Dunbar retired from Ernst and Young in 2004, where he served in a variety of positions since 1974, including key leadership positions. Mr. Dunbar was appointed by the Board of Directors as a director of the Company in October 2004 and was first elected by stockholders in April 2005.
BUSINESS EXPERIENCE
PRIOR EXPERIENCE WITH ERNST & YOUNG:
- |
|
- | Member, Global Practice Council, London, United Kingdom (2000-2004)
|
- | Member, Global Management Committee, London, United Kingdom (2000-2004)
|
- | Member,
|
- | Other key positions, including Client Service Partner, |
PRIOR DIRECTORSHIPS:
|
- | Desert Mountain Property, Inc.
|
OTHER PRIOR EXPERIENCE:
|
- | Instructor, Santa Clara University’s Graduate School of Business
|
- | Advisory Boards, Santa Clara University and Cal Poly San Luis Obispo
|
- | Member, Joint Venture Silicon Valley’s
|
- | U.S. Naval Officer (1967-1980) |
EDUCATION:
|
- | Master’s degree in Business Administration from Santa Clara University
|
- | Certified public accountant, inactive, and a member of the California State Board of Accountancy and the AICPA |
QUALIFICATIONS
|
| ||
| Client Industry
| |
| ||
| ||
Risk Oversight/Management — Deep experience auditing risk management controls through his roles at Ernst & Young |
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BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
BOARD & CORPORATE GOVERNANCE
| DIRECTORSINCE 2004 | |||||||
Mr. Friedman, age 70, retired from Accenture PLC (“Accenture”), a public company global management-consulting firm, in 2005, where he held the position of President of the Business Process Outsourcing organization. Over the course of his 34-year career with Accenture, Mr. Friedman held a variety of senior leadership roles. | ||||||||
| Independent: Yes |
Mr. Friedman, age 68, retired from Accenture, a public company global management consulting firm in 2005, where he held the position of President of the Business Process Outsourcing (“BPO”) organization. Over the course of his 34-year career with Accenture, Mr. Friedman held a variety of senior leadership roles. Mr. Friedman was appointed by the Board of Directors as a director of the Company in October 2004 and was first elected by stockholders in April 2005.
BUSINESS EXPERIENCE
CURRENT PRIVATE DIRECTORSHIPS/OTHER EXPERIENCE:
|
- | Advisory Director, Community Gatepath, a non-profit organization (since 2013; director from 1991-2012) |
PRIOR DIRECTORSHIPS:
- | NeuStar, Inc., a provider of essential clearinghouse services to the communications industry |
| ||
| ||
|
- | Endeca Technologies, Inc., a provider of enterprise search solutions (2006-2011)
|
- | Junior Achievement of Northern California, a non-profit organization
|
- | Other directorships completed prior to 2009 |
OTHER PRIOR EXPERIENCE:
|
- | Dean’s Advisory Council for Stanford Graduate School of Business (1998-2004) |
EDUCATION:
|
- | Master’s degree in Business Administration from Stanford University | ||
QUALIFICATIONS
| ||
| ||
Banking/Financial Services — Extensive experience working within the banking industry through Accenture | ||
Finance/Accounting — Deep experience with corporate finance and capital markets through Accenture |
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BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
BOARD & CORPORATE GOVERNANCE
| ||||||||
|
Ms. | ||||||||
Committees: N/A | Independent: Yes |
BUSINESS EXPERIENCE
CURRENT PUBLIC DIRECTORSHIPS:
- | FedEx Corporation, a multinational transportation and delivery service company (2013-present) |
CURRENT PRIVATE DIRECTORSHIPS/OTHER EXPERIENCE:
- | Bring Change 2 Mind, an organization devoted to removing the stigma associated with |
PRIOR DIRECTORSHIPS:
- | Menlo Park Atherton Education Foundation, a non-profit education organization (2011-2013) |
OTHER PRIOR EXPERIENCE:
- | Various roles at Google (2003-2011), including Director of |
- | Technology investment banking roles at Goldman Sachs (2000-2002) |
- | Various technology and software development roles at Andersen Consulting (now Accenture) (1990-1998) |
EDUCATION:
- | Bachelor’s degree in |
- | Master’s degree in |
QUALIFICATIONS
|
| |
|
| |
|
| |
|
| |
| ||
experience
|
|
|
8
BOARD & CORPORATE GOVERNANCE
| DIRECTORSINCE 2012 | ||||||||
|
Mr. Maggioncalda, age |
Committees: Credit and Compensation | Independent: Yes |
BUSINESS EXPERIENCE
PRIOR DIRECTORSHIPS:
|
- | Affinity Circles, a social networking developer |
OTHER PRIOR EXPERIENCE:
|
- | Associate, Cornerstone Research, an economic and financial consulting firm (1991-1994) |
EDUCATION:
|
- | Master’s degree in Business Administration from Stanford University |
QUALIFICATIONS
Leadership — Current and former roles as CEO of Coursera and Financial Engines
| ||
|
9
BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
| DIRECTORSINCE 2015 | ||||||||
|
Ms. Miller, age |
Committees: Audit and Finance | Independent: Yes |
BUSINESS EXPERIENCE
CURRENT PRIVATE DIRECTORSHIPS/OTHER EXPERIENCE:
|
- | Trustee, Cornell University, a higher education institution (since 2015)
|
|
PRIOR DIRECTORSHIPS:
|
OTHER PRIOR EXPERIENCE:
- | Director, Fixed Income Division, T. Rowe Price Group, Inc., a global investment management firm
|
- | Various investment management positions with T. Rowe Price Group |
EDUCATION:
|
- | Master’s degree in City and Regional Planning,
|
- | Chartered Financial Analyst (CFA) |
QUALIFICATIONS
| ||
| ||
Banking/Financial Services | ||
Finance/Accounting— Extensive experience in financial roles, including within the U.S. Treasury | ||
Government/Regulatory— Served in key positions within the U.S. Treasury |
910
BOARD & CORPORATE GOVERNANCE
BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
| DIRECTORSINCE 2010 | |||||||
Ms. Mitchell, age 59, is Managing Partner and Co-Founder of Scale Venture Partners (“Scale Venture”), a venture capital firm that invests in enterprise software companies, and is instrumental in building the firm’s team and strategic direction. Prior to founding Scale Venture in 1996, Ms. Mitchell held a variety of senior management positions with Bank of America. | ||||||||
Committees: Compensation (Chair), Credit and Risk | Independent: | |||||||
Yes |
|
BUSINESS EXPERIENCE
CURRENT PUBLIC DIRECTORSHIPS:
• Audit
• Risk
- |
Ms. Mitchell, age 57, is Managing Partner and Co-Founder of Scale Venture Partners (“Scale”), a venture capital firm where she leads investments in software and business services and is instrumental in building the firm’s team and strategic direction. Prior to founding Scale in 1996, Ms. Mitchell held a variety of senior management positions with Bank of America. Ms. Mitchell was elected by stockholders as a director of the Company in April 2010.CURRENT PRIVATE DIRECTORSHIPS/OTHER EXPERIENCE:
|
- | Member, NASDAQ Private Market Advisory Council, an advisory forum related to private capital markets (since 2014) |
- | Founding Chair and Member, NVCA Diversity Task Force (Venture Forward), a
|
- | Silicon Valley Community Foundation, a |
- | Mentor, Kauffman Fellows, a venture capital leadership development organization (since 2016) |
PRIOR DIRECTORSHIPS:
•
- | National Venture Capital Association (“NVCA”), a trade association focused on regulatory and economic policy impacting the venture industry and the companies that are funded by venture capital (2007-2011 and |
|
|
|
- | New Century Hospice, a provider of hospice services for patients, families and healthcare providers (2014-2015)
|
- | Jaspersoft, Inc., a manufacturer of business intelligence software (2009-2014) |
- | Friends of the San Francisco Public Library (2007-2010) |
- | Wayport, Inc. (2000-2008) |
- | Other directorships completed prior to 2009 include: Songbird Medical (1998-2005); Acusphere, Inc. |
OTHER PRIOR EXPERIENCE:
|
- | Various senior management positions in finance and technology (including Senior Vice President)
|
- | Various finance and lending positions at Bank of California (now Union Bank of California) |
EDUCATION:
|
- | Master’s degree in Business Administration from Golden Gate University |
QUALIFICATIONS
|
| ||
| Client Industry
| |
Banking/Financial Services
| ||
Finance |
1011
BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
BOARD & CORPORATE GOVERNANCE
| DIRECTORSINCE 2010 | |||||||
Mr. Robinson, age 71, is a former Executive Vice President, Corporate Risk Management of Washington Mutual Bank, a financial lending institution. Prior to his position with Washington Mutual, Mr. Robinson served with the Office of the Comptroller of the Currency as a Deputy Comptroller. | ||||||||
Committees: Audit (Chair), Compensation, Credit and Risk | Independent: | |||||||
Yes |
|
BUSINESS EXPERIENCE
CURRENT PUBLIC DIRECTORSHIPS:
• Compensation
• Credit
• Risk
- | Federal Home Loan Bank of San Francisco (from 2004-2005 and 2007-2008, and since 2011) |
Mr. Robinson, age 69, is a former Executive Vice President of Washington Mutual Bank, a financial lending institution. Prior to his position with Washington Mutual, Mr. Robinson served with the Office of the Comptroller of the Currency as a Deputy Comptroller. Mr. Robinson was appointed by the Board of Directors as a director of the Company in July 2010 and was first elected by stockholders in April 2011.PRIOR DIRECTORSHIPS:
|
|
| |
|
- | Long Beach Mortgage Corporation
|
OTHER PRIOR EXPERIENCE:
|
- | Executive Vice President, Corporate Risk Management, Washington Mutual Bank, a financial lending institution (2002-2008)
|
- | Deputy Comptroller, Office of the Comptroller of the Currency (1997-2002) |
EDUCATION:
|
- | Master’s degree in Business Administration from Harvard University
|
- | Chartered Financial Analyst (CFA) |
QUALIFICATIONS
|
| ||
Risk Oversight/Management | ||
Government/Regulatory— Served in a |
1112
BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
BOARD & CORPORATE GOVERNANCE
| DIRECTORSINCE 2011 | ||||||||
|
Mr. Staglin, age | |||||
Committees: Compensation and |
Independent: Yes |
BUSINESS EXPERIENCE
CURRENT PUBLIC DIRECTORSHIPS:
|
CURRENT PRIVATE DIRECTORSHIPS:
|
- | Vice Chairman, Profit Velocity Solutions, a manufacturing analytics firm (since 2007)
|
- | Chairman, Nvoice Payments, an electronic payment service provider (since 2010) |
OTHER EXPERIENCE:
|
|
PRIOR DIRECTORSHIPS:
|
- | Chairman, Free Run Technologies, an internet and technology services company (2003-2014)
|
- | Bottomline Technologies, a provider of payment and invoice automation software and services (2007-2012)
|
- | Advisory Board, Blaze Mobile, a mobile payments company (2006-2011)
|
- | Solera Holdings, Inc.,
|
- | Global Document Solutions, a private document processing outsourcing company (2005-2010) |
- | Other directorships completed prior to 2009 include: First Data Corporation, a payment solutions provider (1992-2003); Quick Response Services, a public retail management and supply chain services company (1991-2001); CyberCash, Inc., a public micro-payments and platform company (1996-2000); Chairman, Safelite Auto Glass, a private national auto glass provider (1993-1999) |
OTHER PRIOR EXPERIENCE:
|
EDUCATION:
|
- | Master’s degree in Business Administration, Finance and Systems Analysis from Stanford University Graduate School of Business |
QUALIFICATIONS
|
| ||
| Client Industry
| |
|
1213
BOARD & CORPORATE GOVERNANCE Proposal 1 — Election of Directors |
BOARD & CORPORATE GOVERNANCE
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
We are committed to having sound corporate governance principles.practices, as outlined in our Corporate Governance Principles. These principles are important to the way in which we manage our business and to maintaining our integrity in the marketplace,marketplace. They provide a framework for our Company with respect to corporate governance practices and are discussed in further detail inreviewed at least annually by the Governance Committee, as well as amended from time to time to continue to enhance our Corporate Governance Guidelines. (Agovernance structure. A copy of our guidelines is available atwww.svb.com under “About Us—Investor Relations—Corporate Governance.” The contents of the website are not incorporated herein by reference and the website address provided above and throughout this Proxy Statement is intended to be an inactive textual reference only.)
Board Independence and LeadershipBOARD INDEPENDENCEAND LEADERSHIP
The Board has determined that, with the exception of Mr. Becker, our President and CEO, all of our current directors and(and director nominees,nominees) are “independent” within the meaning of the director independence standards set by NasdaqThe NASDAQ Stock Market LLC (“NASDAQ”) and the Securities Exchange Commission (the “SEC as currently in effect.”).
Additionally, our Amended and Restated Bylaws (“Bylaws”) provide that the Board shall not have more than two (2) directors who do not meet the definition of an “Outside Director.” AnFor these purposes, an Outside Director is any director who meets the independence and experience requirements of NASDAQ and the SEC and Nasdaq Stock Market, Inc. (“Nasdaq”) and who, in the opinion of the Board, has the ability to exercise independent judgment in carrying out the responsibilities of a director of the Company. All of our current directors, except for our CEO, are considered Outside Directors.
Separate Chairperson/Chairperson and CEO Roles
The Board has determined that it is in the best interests of the Company to continue to maintain the Board chairperson and CEO positions separately. We believe that having an outside, independent director serve as chairperson is the most appropriate leadership structure for the Board at this time, as it enhances the Board’s independent oversight of management and strategic planning, reinforces the Board’s ability to exercise its independent judgment to represent stockholder interests and strengthens the objectivity and integrity of the Board. Moreover, we believe an independent chairperson can more effectively lead the Board in objectively evaluating the performance of management, including the CEO, and guide the Board through appropriate governance processes. The Board of Directors periodically reviews the Company’s leadership structure and may modify the structure as it deems appropriate given the specific circumstances then facing the Company. | Independence and Leadership Structure • Separation of Chairperson and CEO roles • Allnon-employee directors are independent under applicable stock exchange and SEC rules • Independent Committee Chairs • Regularly scheduled executive sessions |
The Board has determined that it is in the best interests of the Company to maintain the Board chairperson and CEO positions separately. It believes that having an outside, independent director serve as chairperson is the most appropriate leadership structure for the Board, as it enhances the Board’s independent oversight of management and our strategic planning, reinforces the Board’s ability to exercise its independent judgment to represent stockholder interests, and strengthens the objectivity and integrity of the Board. Moreover, an independent chairperson can more effectively lead the Board in objectively evaluating the performance of management, including the CEO, and guide it through appropriate Board governance processes.
Mr. Dunbar, our current Chairman of the Board, is independent within the meaning of the director independence standards described above. Subject to his election, Mr. Dunbar is expected to serve as the Board’s Chairman for the 2016-20172018-2019 director term.
Executive Sessions
The Company’s independent directors meet in regularly scheduled executive sessions at which only independent directors are present.
Board Risk Oversight and Risk CommitteeBOARD RISK OVERSIGHTAND RISK COMMITTEE
Oversight of the Company’s risk management is one of the Board’s key priorities and is carried out both by the Board as a whole, as well as by each of its various committees.
In January 2015, the The Board has formed a committee to specifically focus on the Company’s risk management. Our Risk Committee is comprised of the chairpersons of each of the Board and the Audit, Compensation, Credit, Finance and Governance Committees. The Risk Committee has the primary oversight responsibility forof the Company’s enterprise-wide risk management (“EWRM”) framework, including the oversight of risk management policies, and the monitoring of the Company’s risk profile. In addition, the Risk Committeeit is responsible for overseeing the Company’s compliance with its risk appetite statement, which sets forth the tolerance levels with respect to the amount and types of various acceptable key risks underlying the Company’s business. The Risk Committee also oversees compliance with,reviews, and recommends any changes for Board approval to, the Company’s risk appetite statement. Our other Board committees also share responsibility for the risk appetite statement by overseeing and approving applicable risk metrics, including risk limits and thresholds, for each of their relevant areas of responsibility.
14
BOARD & CORPORATE GOVERNANCE Corporate Governance Principles |
Additionally, each Board committee is engaged in overseeing the Company’s risks in itsas they relate to that committee’s respective areas of oversight. For example, the Audit Committee regularly oversees our risks relating to our accounting and financial reporting, as well as legal, information technology and security-related risks. The Compensation Committee engages in periodic risk assessments to review and evaluate our compensation programsrisks in relation to our risks.compensation programs. The Finance Committee actively oversees our capital liquidity and financialliquidity management and the associated risks (whether as an ongoing matter or as it relates specifically to a transaction, such as an equity or debt securities offering). Our Governance Committee oversees our compliance functions and routinely reviews our compliance risks. Moreover, the Credit Committee routinely oversees our management of credit risks. Each committee chairperson regularly reports back to both the Risk Committee and the full Board on its risk oversight activities. In addition, the Board routinely engages in discussions with management about the Company’s risks.risk profile.
ANNUAL BOARD EVALUATION
13
BOARD & CORPORATE GOVERNANCE
Annual Board Evaluation
The Governance Committee of the Board, conducts, in coordination with the full Board, anconducts a periodic evaluation of the Board’s performance and effectiveness, either the Board as a whole and/or on an individual director basis. The Governance Committee develops and implements a process for such evaluation and review, which may involve outside consultants or advisers and may include a review of how certain attributes affect Board effectiveness, such as Board size, meeting frequency, quality and timing of information provided to the Board, director communication, director education, director skills and qualifications, director independence and Board strategy sessions. The results of the evaluation are discussed with the Board. The Governance Committee also leads an evaluation of the performance and effectiveness of each of the Board’s committees. All Board and committee evaluations are typically conducted on an annual basis. See “Board “Board Committees—Committee GovernanceGovernance”” below.
Board Succession PlanningOVERSIGHTOF CEOAND EXECUTIVES
The Board’s succession planning is primarily overseen by the Governance Committee. Such planning takes into account the balancing of the appropriate representation of experience and skills on the Board, with the importance of Board refreshment. Identifying possible director candidates that possess the appropriate qualifications and the desire to serve on a financial services public company board, as well as who will complement our existing Board, takes time and effort. As such, the Governance Committee discusses recruiting strategies and actively considers potential director candidates, whether or not there is an immediate vacancy on the Board to fill. The Governance Committee also reports to and discusses succession planning with the full Board.
In 2015, the Board added one new director (Ms. Mary Miller) who brings a scope of skills, experience and perspectives to enhance the already well-rounded Board of Directors.
Oversight of CEO
Annual CEO Performance Evaluation
The independent members of the Board evaluate the performance of our CEO on an annual basis. Each year, the Governance Committee approves thea process to solicit the Board’s feedback.feedback from each individual independent director. Our Chairman of the Board, together with the chairpersons of the Governance and Compensation Committees, then lead discussions with the Board (without the CEO present) to evaluate the CEO’s performance, both generally as well as against certain predetermined annual goals.
CEO and Executive Succession Planning
As a matter of sound governance, the Board, as a whole or from time to time through a special committee, of the Board, routinely reviews and discusses the Company’s contingency or long-term plans for CEO and executive succession. The special committee seeksThese efforts involve seeking input from our current CEO and our Head ofChief Human Resources Officer, as well as external advisors, as the Board deems appropriate. Succession plans are reviewed and discussed by the Board on at least an annual basis.
DIRECTOR MATTERS
Outside Directorships
We encourage all directors to carefully consider the number of other company boards of directors on which they serve, taking into account the time required for board attendance, conflicts of interests, participation, and effectiveness on these boards. Directors are asked to report all directorships, including advisory positions, accepted, as well as to notify the Governance Committee in advance of accepting any invitation to serve on another public company board.
Director Education and Orientation
The specialBoard believes that ongoing director education is important for maintaining a current and effective Board. Accordingly, the Board encourages directors to be continually educated on matters pertinent to his or her service on the Board. It is the Board’s view that continuing education may be achieved in various ways as appropriate for each individual director, including, among other things, participation in formal education programs, conferences or seminars (the reasonable expenses of which are reimbursable by the Company) or through independent study or outside reading. In addition, from time to time, management may also bring education opportunities to the Board through management presentations, additional education materials or outside speakers.
15
BOARD & CORPORATE GOVERNANCE Corporate Governance Principles |
New directors joining the Board also participate in a director orientation program, which involves a variety of informational sessions about our business, strategy and governance with Board members and members of executive and senior management. New directors typically join at least one Board committee upon joining the Board, and are also reportsinvited to and discusses any such plans withparticipate as a guest director at the full Board.meetings of the other Board committees.
Meeting AttendanceMEETING ATTENDANCE
Board and Committee Meetings
The Board and its standing committees held a total of fifty-four (54) meetings during 2017. The Board itself held eight (8) meetings during fiscalthe year, 2015. For the number of committee meetings held in 2015, see “Board Committees—Committee Chairpersons/Membership, Responsibilities and Meetings” below.including atwo-day annual session focused on strategic planning. Each director attended in person or via teleconference 75% or more of the total number of meetings of the Board and of the committees on which he or she served which were held during the period for which he or she was a director or committee member.2017.
54 Total Board and Committee Meetings in 2017 |
2017 Meetings | ||
Board | 8 | |
Audit | 11 | |
Compensation | 8 | |
Credit | 6 | |
Finance | 10 | |
Governance | 6 | |
Risk | 5 |
Stockholder Meetings
It is the Board’s policy that each director employs his or her best efforts to attend each of our annual stockholder meetings. EightTen (10) of our eleven (11) then-serving Board members attended our 20152017 Annual Meeting of Stockholders.
BOARD REFRESHMENT; CONSIDERATIONOF DIRECTOR NOMINEES
14Board Refreshment and Succession Planning
BOARD & CORPORATE GOVERNANCE
Consideration of Director Nominees
Stockholder Nominees
The Governance Committee primarily oversees the refreshment or succession planning of Board membership. Succession planning takes into account the importance of balancing the appropriate representation of experience and skills on the Board, with the benefits of Board refreshment. Identification of possible director candidates that possess the appropriate qualifications, desire to serve on a financial services public company board and are able to complement our existing Board can be a lengthy process. As such and as an ongoing matter, the Governance Committee discusses recruiting strategies and actively considers potential director candidates, whether or not there is an immediate vacancy on the Board to fill. It may from time to time use outside recruiters to assist with identifying potential candidates. The Governance Committee also reports to, and discusses director succession planning with, the full Board.
Based on the recruiting efforts of, and recommendations from, the Governance Committee, the Board appointed a new director during the 2017-2018 director term, and nominated a new director nominee for election at the Annual Meeting. Mr. John Clendening joined the Board in August 2017 and Ms. Kimberly Jabal has been nominated for election to join the Board for the 2018-2019 director term.
Board Diversity; Selection and Evaluation of Director Candidates
While the Board has not formally adopted a policy governing board diversity, it is focused on assembling a well-rounded, diverse body of directors. The Governance Committee, with the participation of the full Board, is primarily responsible for reviewing the composition of the Board and identifying candidates for membership on the Board in light of our ongoing requirements, the committee’s assessment of the Board’s performance and any input received from stockholders or other key constituencies. The Governance Committee makes determinations as to whether to recommend directors forre-election or director candidates for nomination to the Board based on such individual’s skills, character, judgment and business experience, as well as his or her ability to diversify and add to the Board’s existing strengths. Overall, the Governance Committee typically seeks an appropriate mix of individuals with diverse backgrounds and skills complementary to our business and strategic direction. Please see the description under “Director Qualifications” above for additional information.
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BOARD & CORPORATE GOVERNANCE Corporate Governance Principles |
Stockholder Nominees
The Governance Committee considers director candidates it identifies, but will also consider Board nominees proposed by stockholders. The Governance Committee has no formal policy with regard to stockholder nominees as itand considers all nominees on their merits, as discussed below. Any stockholder nominations proposed for consideration by the Governance Committee should include the nominee’s name and qualifications for Board membership, and should be addressed to:
SVB Financial Group,
3003 Tasman Drive,
Santa Clara, California 95054,
Attn: General Counsel and Corporate Secretary,
Facsimile:(408) 969-6500969-6500.
In addition, our Bylaws permit stockholders to nominate directors for consideration at an annual stockholder meeting. For a description of the process for nominating directors in accordance with the Bylaws, please see “Stockholder Proposals and Director Nominations” below.
Board Diversity; Selection and Evaluation of Director CandidatesCOMMUNICATIONSWITHTHE BOARD
While the Board has not formally adopted a policy governing board diversity, it recognizes the importance of assembling a well-rounded, diverse body of directors. The Governance Committee, with the participation of the full Board, is primarily responsible for reviewing the composition of the Board and for identifying candidates for membership on the Board, all in light of our ongoing requirements, its assessment of the Board’s performance and any input received from stockholders or other key constituencies. The Governance Committee makes determinations as to whether to recommend directors for re-election or director candidates’ nomination to the Board based on their skills, character, judgment and business experience, as well as their ability to diversify and add to the Board’s existing strengths. The Governance Committee typically seeks an appropriate mix of individuals with diverse backgrounds and skills complementary to our business and strategic direction. In addition to the areas of director qualifications and attributes discussed under “Director Qualifications” above, this assessment includes consideration of areas of expertise in industries important to us (such as technology; life science/healthcare; energy and resource innovation; premium wine; and venture capital/private equity), functional expertise in areas such as banking/financial services, public companies, global markets, legal/compliance, regulatory, accounting, finance, operations, information technology and risk management, and an assessment of an individual’s abilities to work constructively with the other Board members and management.
Communications with the Board
Individuals who wish to communicate with our Board may do so by sending ane-mail to our Board at bod@svb.com. Any communications intended fornon-management directors should be sent to thee-mail address above to the attention of the Board Chairman. Board-related communications are reviewed by the ChairmanChairperson of the Board and shared with the full Board as appropriate.
Code of EthicsCODEOF ETHICS
We havemaintain a Code of Ethics for the Principal Executive Officer and Senior Financial Officers (the “Code of Ethics”) that applies to our CEO, Chief Financial Officer, Chief Accounting Officer and other senior members of the Finance staff. A copy of thisthe Code of Ethics is available on our website at www.svb.com under “About Us—Investor Relations—Corporate Governance,” or can be obtained without charge by any person requesting it. (The contents of the website are not incorporated herein by reference and the website address provided above and throughout this Proxy Statement is intended to be an inactive textual reference only.) To request a copy of our Code of Ethics, please contact: Kristi Gilbaugh,Corporate Secretary, SVB Financial Group, 3003 Tasman Drive, Santa Clara, California 95054, or by telephone(408) 654-7400.
We intend to disclose any waivers from, or changes to, our Code of Ethics by posting such information on our website. No waivers or substantive changes were made during fiscal year 2015.2017.
CORPORATE SOCIAL RESPONSIBILITY
15We are committed to the communities where we operate through corporate giving, employee volunteering, workforce development and environmental sustainability programs. In addition to these programs, we finance affordable housing in the San Francisco Bay Area as part of our commitment to the Community Reinvestment Act. We recognize that understanding our efforts to improve environmental, social and governance practices is increasingly important to our stockholders, customers and associates and have included some highlights below to clarify our ongoing commitments in these areas.
BOARD & CORPORATE GOVERNANCE
• | Community Development –As a financial institution focused on supporting innovation and entrepreneurship, we have contributed to community development by collaborating with local organizations to offer lending solutions for small businesses in our communities, including collaborating with the Opportunity Fund, which provides microloans, along with education and support, to underserved small business owners, and partnering with Grameen America, which provides microloans and education tolow-income female entrepreneurs. In addition, we have contributed funds and provided lending support to affordable housing efforts, including those of the Housing Trust Silicon Valley and various developers of affordable housing forvery-low andlow-income families, seniors, veterans and formerly homeless individuals in the San Francisco Bay Area. |
• | Environmental Sustainability –We have also invested in environmental sustainability both by implementing energy efficiencies internally that have significantly reduced carbon emissions and promoting sustainable practices in certain of our workplaces and by supporting companies that are developing energy and resource efficiency solutions. |
• | Diversity and Inclusion –In addition to investing in the environmental and economic health of our communities, we have also focused on fostering diversity and promoting inclusion in the workplace through corporate-wide initiatives, including hosting trainings and workshops on unconscious bias, sponsoring leading conferences focused on professional development for women, and serving as founding partner and global sponsor to theBoardlist, a resource designed to help recruit women for corporate board positions. |
For further information regarding our sustainability and social responsibility efforts, please see our website under “About Us— Living Our Values.”
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BOARD & CORPORATE GOVERNANCE Corporate Governance Principles |
OurWe believe our Board has created a sound committee structure designed to help the Board carry out its responsibilities in an effective and efficient manner. ThereWhile the Board may form from time to time ad hoc or other special purpose committees, there are six (6) core standing Board committees: Audit, Compensation, Credit, Finance, Governance and Risk.
Committee Independence and Audit Committee Financial ExpertsCOMMITTEE INDEPENDENCEAND AUDIT COMMITTEE FINANCIAL EXPERTS
The Board has determined that each of the current members of the Audit Committee, Compensation Committee, Credit Committee, Governance Committee and Risk Committee are “independent” under Nasdaqwithin the meaning of applicable SEC rules, NASDAQ director independence standards and other applicable regulatory requirements.requirements, to the extent applicable.
In addition, the Board has determined that each of Messrs. Robinson and Dunbar and Ms. Krishnan are “audit committee financial experts,” as defined under SEC rules, and possess “financial sophistication,” as defined under the rules of Nasdaq.NASDAQ.
Committee GovernanceCOMMITTEE GOVERNANCE
Committee Charters
Each committee is governed by a charter that is approved by the Board, which sets forth each committee’s purpose and responsibilities. The Board reviews the committees’ charters, and each committee reviews its own charter, on at least an annual basis, to assess the charters’ content and sufficiency, with final approval of any proposed changes required by the full Board. The charters of each committee are available on our website, www.svb.com under “About Us—Investor Relations—Corporate Governance.” (The contents of the website are not incorporated herein by reference and the website address provided above and throughout this Proxy Statement is intended to be an inactive textual reference only.)
The charters provide that each committee hashave adequate resources and authority to discharge its responsibilities, including appropriate funding for the retention of external consultants or advisers, as itthe committee deems necessary or appropriate.
Annual Committee Evaluations
The Governance Committee, in coordination with the Board, implements and develops a process to conduct an assessment ofassess committee performance and effectiveness. Typically, theThe assessments are conducted on an annual basis, and include a self-assessment by each committee. The review includes an evaluation of various areas that may include committee sizes,size, composition, performance, coordination among committee composition, committee performance, committee coordinationmembers and among the standing committees, and involvement with one another and committee involvement of the full Board. The results of the committee performance assessments are reviewed by each committee, as well as by the Governance Committee, and discussed with the full Board.
Committee Chairpersons/Membership, Responsibilities and MeetingsCOMMITTEE CHAIRPERSONS/MEMBERSHIP, RESPONSIBILITIESAND MEETINGS
All committee chairpersons of our six standing committees are independent and appointed annually by the Board of Directors. Each chairperson presides over committee meetings; oversees meeting agendas; serves as liaison between the committee members and the Board, as well as between committee members and management; and works actively and closely with executive and senior management on all committee matters, as appropriate.
The committees meetEach committee meets regularly, at least on a quarterly basis. The committees, typically through their committee chairpersons, routinely report their activitiesactions to, and discuss their recommendations with, the full Board. In addition, certain committees periodically hold extended meetings dedicated to discussing key strategic matters or other business items, on a more in-depth basis, that are relevant or subject to the committee’s oversight responsibilities.
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BOARD & CORPORATE GOVERNANCE
The names of the members and highlights of some of the key oversight responsibilities of the committeesBoard Committees are set forth below:
| John Robinson, Chair Dave Clapper Roger Dunbar Lata Krishnan
| Audit Committee(11 meetings in 2017) • Quality and integrity of our financial statements, including internal controls over • Independent auditor of the Company, including its qualification, independence, • Internal audit function of the Company, as well as other key areas including |
| Kate Mitchell, Chair Jeff Maggioncalda John Robinson Garen Staglin | Compensation Committee(8 meetings in 2017) • Overall compensation strategies, plans, policies and programs. • Executive and director compensation approval. • Compensation risk management, including annual compensation-related risk |
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Dave Clapper, Chair John Clendening Jeff Maggioncalda Kate Mitchell John Robinson | Credit Committee
• • • |
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| Joel Friedman, Chair Eric Benhamou Roger Dunbar Lata Krishnan Mary Miller | Finance Committee(10 meetings in 2017) • Financial strategies, objectives and risks relating to capital and liquidity management, • Annual budget of the Company, and recommendation to the Board for approval. • Compliance with certain applicable financial regulatory requirements, including capital • Material corporate development matters that may result in a significant financial |
| Eric Benhamou, Chair Roger Dunbar Joel Friedman Garen Staglin | Governance Committee(6 meetings in 2017) • Corporate governance practices, including our Corporate Governance Guidelines. • Annual performance evaluation processes of our Board and its committees, and CEO. • Identification and nomination of director candidates. • Regulatory compliance function of the Company, including financial crimes risk |
| Roger Dunbar, Chair Eric Benhamou Dave Clapper Joel Friedman Kate Mitchell John Robinson
| Risk Committee(5 meetings in 2017) • Enterprise-wide risk management policies of the Company. • Operation of our enterprise-wide risk management framework. • Risk appetite statement of the Company, including recommendations to the Board • Overall risk profile of the Company. |
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BOARD & CORPORATE GOVERNANCE
REPORT OF THE AUDIT COMMITTEE OF THE BOARDREPORT
The Report of the Audit Committee of the Board shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Act”“Act”), or under the Securities Exchange Act of 1934, as amended (the “Exchange Act”“Exchange Act”), except to the extent that we specifically incorporate the information contained in the report by reference, and shall not otherwise be deemed filed under such acts.
Our Audit Committee has prepared the following report for inclusion in this Proxy Statement. The Audit Committee is governed by a Board-adopted charter, a copy of which is available on our website at www.svb.com.www.svb.com. The charter specifies, among other things, the scope of the committee’s responsibilities and how those responsibilities are performed. All members of the Audit Committee are “independent” as defined by Nasdaq, ourNASDAQ and the requirements of the Exchange Act, and meet the applicable listing standard.heightened independence criteria under SEC rules. In addition, Messrs. Robinson and Dunbar and Ms. Krishnan meet the “audit committee financial expert” requirement as defined in RegulationS-Kunder SEC rules,the Exchange Act, and possess “financial sophistication,” as defined under the rules of Nasdaq.NASDAQ.
Responsibilities of the Audit Committee
The primary responsibility of the Audit Committee is to act on behalf of the Board in fulfilling the Board’s responsibility with respect to overseeing our accounting and reporting practices, and the quality and integrity of our financial statements and reports and our internal control over financial reporting. The committee is responsible for the appointment (or reappointment) and the compensation of our independent registered public accounting firm, as well as for the review of the qualifications, independence and performance of the registered public accounting firm engaged as our independent auditors. Specifically, in reappointing KPMG LLP as the Company’s independent registered public accounting firm for 2018, the Audit Committee considered, among other factors: KPMG’s performance on prior audits; the quality, efficiency and cost of KPMG’s services; KPMG’s knowledge of the Company’s business and the banking industry; and KPMG’s overall relationship with the Audit Committee and management. (See “Other Proxy Proposals—Ratification of Appointment of Independent Registered Public Accounting Firm—Principal Audit Fees and Services”for more information about the Audit Committee’s oversight of KPMG’s audit and permissiblenon-audit fees.)
In addition, the Audit Committee oversees our internal auditInternal Audit function, which is responsible for reviewing and evaluating the effectiveness of our internal controls, and also overseesas well as other management functions including information technology and security. To the extent applicable, the committee also oversees the Company’s material litigation matters, regulatory enforcement actions, and other legal proceedings.
The Audit Committee meets regularly in executive session with our independent auditor and our Head of Internal Audit (both separately and together), without other members of management present.as appropriate.
Responsibilities of Management, and Independent Auditor and Internal Audit
Management has the primary responsibility forover the Company’s financial statements and the reporting process, as well as for our internal controls. Our independent registered public accounting firm, KPMG, LLP, is responsible for expressing an opinion on the conformity of our audited financial statements with U.S. generally accepted accounting principles, as well as an opinion on the effectiveness of our internal control over financial reporting in accordance with the requirements promulgated by the Public Company Accounting Oversight Board (the “PCAOB”). KPMG LLP has served as our independent auditor since 1994.
Our Head of Internal Audit reports directly to the Audit Committee (and administratively to the CEO). Under his direction, our Internal Audit function is responsible for preparing an annual audit plan and conducting internal audits intended to evaluate the Company’s internal control structure and compliance with applicable regulatory requirements.
Financial Reporting for 20152017
The Audit Committee has reviewed and discussed with management its assessment and report on the effectiveness of our internal control over financial reporting as of December 31, 2015,2017, which it made using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control –— Integrated Framework (2013).” The committee also has reviewed and discussed with KPMG LLP its review and report on our internal control over financial reporting.
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BOARD & CORPORATE GOVERNANCE Board Committees |
(Report of the Audit Committee of the Board continued)
Moreover, the Audit Committee has reviewed and discussed with management and the independent auditors the audited consolidated financial statements as of and for the year ended December 31, 2015.2017. The Audit Committee discussed with the independent auditorsauditor the matters required to be discussed by PCAOB Auditing Standard No. 16,1301,Communications with Audit Committees. In addition, the Audit Committee received from the independent auditors the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, including Rule 3526,Communication with Audit Committees Concerning Independence, and has discussed with the independent auditorsauditor the auditors’auditor’s independence from us and our management.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report onForm 10-K for the fiscal year ended December 31, 2015,2017, for filing with the SEC.
This report is included herein at the direction of the members of the Audit Committee.
AUDIT COMMITTEE
John Robinson (Chair)
David Clapper
Roger Dunbar
Lata Krishnan
Kate Mitchell
John Robinson (Chair) | David Clapper | Roger Dunbar | Lata Krishnan | Mary Miller |
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BOARD & CORPORATE GOVERNANCE
This Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Act or the Exchange Act, except to the extent that we specifically incorporate the information contained in the report by reference, and shall not otherwise be deemed filed under such acts.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Proxy Statement. Based on this review and these discussions, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form10-K for the year ended December 31, 20152017 and this Proxy Statement.
This report is included herein at the direction of the members of the Compensation Committee.
COMPENSATION COMMITTEE
Kate Mitchell
(Chair) | Jeff Maggioncalda | John Robinson | Garen Staglin |
Compensation Committee Interlocks and Insider ParticipationCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2015,2017, the Compensation Committee (or the 162(m) Committee of the Board) performed all compensationexecutive compensation-related functions of the Board, except for the approval of CEO compensation, which was approved by the independent members of the Board based on the Compensation Committee’s recommendation. (SeeSee discussion above under“Board Committees – Committees—Committee Chairpersons/Membership, Responsibilities and Meetings”for additional information on the Compensation Committee.) Mr. Becker does not participate in any of the Board or Compensation Committee discussions related to the evaluation of his performance or the recommendation/recommendation or determination of his compensation. See descriptions of related transactions between us and each of the members of the Compensation Committee, if any, under “Certain Relationships and Related Transactions” below.
None of the members of the Compensation Committee has ever been one of our officers or employees and none of our executive officers serves, or in the past fiscal year served, as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving on our Board.
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BOARD & CORPORATE GOVERNANCE
OVERVIEW
Our compensation for ournon-employee directors is designed to be competitive with other financial institutions that are similar in size, complexities or business models. In addition, our director compensation is designed to be tied to business performance and stockholder returns, and to align director and stockholder interests through director ownership of the Company’s stock.
The following table sets forthCompensation Committee oversees and approves our director compensation. In doing so, the amounts earned or paidCompensation Committee reports to each non-employee memberand, as appropriate, consults with, the full Board on all relevant matters. Our CEO, the only employee director on the Board, does not receive any payment for his services as a director.
Determination of our Board of Directors during the year ended December 31, 2015.Director Compensation
Overview
Our compensation for our non-employee
The Compensation Committee oversees
Our CEO, the only employee director on | Name | Fees Earned or Paid in Cash | Stock Awards ($) (1) | Total | ||||||||||
Roger F. Dunbar | $ | 192,500 | $ | 200,007 | $ | 392,507 | ||||||||
Eric A. Benhamou | 83,250 | 100,004 | 183,254 | |||||||||||
David M. Clapper | 86,250 | 100,004 | 186,254 | |||||||||||
Joel P. Friedman | 84,000 | 100,004 | 184,004 | |||||||||||
C. Richard Kramlich (2) | 67,500 | 100,004 | 167,504 | |||||||||||
Lata Krishnan | 71,500 | 100,004 | 171,504 | |||||||||||
Jeffrey N. Maggioncalda | 70,750 | 100,004 | 170,754 | |||||||||||
Mary J. Miller (3) | 51,750 | 100,004 | 151,754 | |||||||||||
Kate D. Mitchell | 94,000 | 100,004 | 194,004 | |||||||||||
John F. Robinson | 112,250 | 100,004 | 212,254 | |||||||||||
Garen K. Staglin | 65,250 | 100,004 | 165,254 | |||||||||||
(1) Values indicated for annual director equity grants reflect the fair value of awards made during the fiscal year for the 2015-2016 term. Such values were computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718. The actual value realized is subject to our stock price performance on the date of release. (2) Mr. Kramlich retired from the Board of Directors effective as of December 31, 2015 and transitioned to an advisory director position. (3) Ms. Miller joined the Board of Directors as of May 12, 2015.
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Each year, the Compensation Committee, together with its independent compensation consultant, conducts a comprehensive review of director compensation, taking into consideration our overall compensation philosophy, as well as competitive compensation data from the Company’s Peer Group for the applicable year and other relevant and comparable market data and trends. The committee reviews, on at least an annual basis, each of the various pay components, the form and amount of payment, as well as the cash/equity compensation mix. Based on such review and any recommendations from its independent compensation consultant, the Compensation Committee may make changes to director compensation to the extent it deems appropriate. No changes to director compensation were made in 2017.
Elements of Director Compensation
Compensation for ournon-employee directors reflects a combination of cash (annual retainer fees and committee meeting fees) and equity (annual restricted stock unit awards). Consistent with 2014, the components of our non-employee director compensation for 2015 were as follows:
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The members of the BoardDirectors are also eligible for reimbursement for their reasonable expenses incurred in connection with attendance at meetings or the performance of their director duties in accordance with Company policy.
Schedule of Director Fees | ||||
Annual Director Retainer Fee | $60,000 | |||
Annual Chairperson Fee | $90,000, Board Chair $20,000, Audit Committee Chair $15,000, Compensation Committee and Risk Committee Chairs $12,000, Credit, Finance and Governance Chairs | |||
Committee Meeting Fees | $2,500(in-person)/$1,250 (telephonic), Audit Committee $1,500(in-person)/$750 (telephonic), all other committees $5,000 per day, for Audit Committee strategic planning or other extended meetings $3,000 per day, for strategic planning or other extended meetings for all other committees | |||
Annual Equity Retainer Award | Grant of restricted stock units subject to annual vesting with a total value of approximately $200,000 and $100,000 for the Board Chair and each of the othernon-employee directors, respectively. |
2017 Director Compensation |
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The following table sets forth the amounts earned or paid to eachnon-employee member of our Board of Directors during the year ended December 31, 2017.
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Name | Fees Earned or Paid in Cash | Stock Awards ($) (1) | Total | |||||||||
Roger F. Dunbar | $ | 210,750 | $ | 200,154 | $ | 410,904 | ||||||
Eric A. Benhamou | 97,500 | 100,077 | 197,577 | |||||||||
David M. Clapper | 104,750 | 100,077 | 204,827 | |||||||||
John S. Clendening(2) | 51,640 | 73,151 | 124,791 | |||||||||
Joel P. Friedman | 98,250 | 100,077 | 198,327 | |||||||||
Lata Krishnan | 85,500 | 100,077 | 185,577 | |||||||||
Jeffrey N. Maggioncalda | 77,250 | 100,077 | 177,327 | |||||||||
Mary J. Miller | 91,500 | 100,077 | 191,577 | |||||||||
Kate D. Mitchell | 98,250 | 100,077 | 198,327 | |||||||||
John F. Robinson | 125,000 | 100,077 | 225,077 | |||||||||
Garen K. Staglin | 75,750 | 100,077 | 175,827 | |||||||||
(1) Values indicated for annual director equity awards reflect the fair value of restricted stock units at the time of grant for the fiscal year for the 2017-2018 term. The actual value realized is subject to our stock price performance on the date of settlement. (2) Mr. Clendening joined the Board in August 2017; represents a prorated annual equity award. |
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BOARD & CORPORATE GOVERNANCE
Director Equity Compensation; Deferral Elections
Our annual equity retainer awards are typically granted to directors in the form of restricted stock units. The awards are approved by the Compensation Committee and are granted approximately one month after the Company’s annual meeting of stockholders (typically the following month), andstockholders. The awards vest in full upon the completion of the annual director term on the date of the next annual meeting. In 2015,2017, the directors were granted an aggregate total of 8,8446,508 restricted stock units with a scheduled vesting date of April 21, 2016.the upcoming Annual Meeting.
Non-employee directors may elect an irrevocable deferral of the receiptsettlement of restricted stock unit awards until the earliest of: (a)(i) a specific future settlement date that meets the requirements of Section 409A of the Internal Revenue Code 409A, (b)of 1986, as amended, (ii) separation from service, (c)(iii) the date of a change in control, (d)(iv) death or (e)(v) the date of disability. Elections will apply to restricted stock unit awards received during 2015. Ms.Mdmes. Krishnan and Ms. Mitchell elected to defer the receiptsettlement of their 20152017 equity grants of 737561 restricted stock units each.
Equity Plan Limits Applicable to Directors
Equity grants to directors are subject to the terms of our 2006 Equity Incentive Plan, as amended, including the following limitations (as provided under the plan):
Nonon-employee director may be granted, in any fiscal year, awards covering shares having an initial value greater than $500,000.
Annual director grants of full value equity awards may become fully vested no earlier than the last day of the director’s then current annual term of service, subject to certain limited exceptions as provided under the plan.
Determination of Director CompensationDIRECTOR EQUITY OWNERSHIP GUIDELINES
Each year, the Compensation Committee, together with its independent compensation consultant, conducts a comprehensive review of director compensation, taking into consideration our overall compensation philosophy, as well as competitive compensation data from the Company’s 2015 Peer Group and other relevant and comparable market data and trends. The committee routinely reviews each of the various pay components, the form and amount of payment, as well as the cash/equity compensation mix. Based on such review and any recommendations from its independent compensation consultant, the Compensation Committee will make changes to the extent it deems appropriate.
Director Equity Ownership Guidelines
Under the current equity ownership guidelines for ournon-employee directors, eachnon-employee member of the Board of Directors is expected to hold, within five years of becoming a director, shares of our Common Stock that have a minimum value equivalent to 600% of his or her annual retainer fee.
The Compensation Committee is responsible for setting and periodically reviewing the equity ownership guidelines. Equity ownership requirements for directors are established based upon a competitive review and subsequent recommendations by the committee’s independent compensation consultant. The Governance Committee is responsible for overseeing director compliance with these guidelines, and reviews directors’ holdings on a quarterly basis. Any exceptions to meeting the guidelines due to personal financial or other reasons are reviewed and determined by the Governance Committee.
As of December 31, 2015,2017, allnon-employee directors were in compliance withhad attained the applicable ownership guidelines.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions PolicyRELATED PARTY TRANSACTIONS POLICY
Our policy on related party transactions (“Related Party Policy”) governs the transactions involving us and certain related persons that are required to be disclosed under Item 404 of SEC Regulation S-K (“S-K 404”).S-K. We regularly monitor our business dealings and those of our directors and executive officers, as appropriate, to determine whether any such dealings would constitute a related party transaction under the Related Party Policy. Generally, under the policy, any transaction, arrangement or relationship will be considered an interested transaction subject to the review and/or approval of the Audit Committee, if: (i) we are a participant in the transaction; (ii) the aggregate transaction amount involved will or may be expected to exceed $120,000 in any calendar year; and (iii) a related person or party has or will have a direct or indirect material interest in the transaction. (Transactions not required to be disclosed under S-K 404 are excluded from this policy.) Moreover, any of theThe following persons isare considered a related person“Related Parties” under the Related Party Policy: (i) any director or executive officer of the Company; (ii) any nominee for director of the Company; (iii) any holder of more than 5% of our Common Stock; and (iv) any immediate family member of any of the above.
We have implemented a framework to help identify potential related party transactions, which may include from time to time, loan transactions by the Company or the Bank, investment transactions, compensation arrangements, or other business transactions involving us or our subsidiaries. Under this framework, we have processes in place that are designed to identify, review and escalate, as appropriate, proposed transactions involving a potential party related to the Company. In addition, employeesRelated Party. Employees are also expected to escalate any transaction involving potential conflicts of interests pursuant to our Code of Conduct.
The Audit Committee has primary responsibility for reviewing these transactions for potential conflicts of interestsinterest and approving them (or denying approval, as the case may be). Under the Related Party Policy, the Audit Committee’s approval may be granted in advance, ratified or based on certain standing approvals previously authorized by resolution. The Audit Committee may delegate its approval authority under the Related Party Policy to the committee chairperson. Additionally, the Credit Committee reviews and approves certain related party loan transactions as described below, and the Governance Committee takes into consideration related party transactions involving our directors as part of its annual director independence review.
Insider Loan PolicyINSIDER LOAN POLICY
We also have in place a policy whichthat permits the Bank to make loans (“Insider Loans”) to directors, executive officers and principal stockholders of the Bank or its affiliates (“Insiders”) and the related interests of those Insiders (“Insider LoansInsiders”), pursuant to the applicable requirements of Regulation O of the Federal Reserve Act (“Regulation O”). Moreover, Insider Loans qualify for an exemption from Section 402 of the Sarbanes-Oxley Act of 2002, as they are made by the Bank and subject to Regulation O.
Pursuant to Regulation O, theour Insider Loan policy authorizes the Bank to make Insider Loans if such Insider Loans: (a)(i) are approved in advance by a majority of the Board of Directors of the Bank, for Insider Loans whereif the aggregate amount of all outstanding extensions of credit to the Insider and to all related interests of the Insider exceeds $500,000; (b)(ii) are extended under substantially the same terms and conditions and rates as those prevailing at the time of the Insider Loan for comparable transactions withnon-Insider Bank clients; and (c)(iii) do not have more than a normal risk of failure of repayment to the Bank or other unfavorable features. The Insider whose credit extension is subject to Board approval mustmay not participate either directly or indirectly in the voting to approve such extension of credit.
Related Party TransactionsRELATED PARTY TRANSACTIONS
Ordinary Course Loan Transactions
During 2015,Except as described below, during 2017 the Bank made loans to related parties,Related Parties, including certain companies in which certain of our directors or their affiliated venture funds are beneficial owners of ten percent10% or more of the equity securities of such companies. Such loans: (a)companies, that were made(i) in the ordinary course of business; (b) were madebusiness, (ii) on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons;persons, and (c) did(iii) not involveinvolving more than the normal risk of collectability or present other unfavorable features.
Prior to their respective appointments as executive officers, each of John China and Philip Cox received a mortgage loan through the Bank’s
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BOARD & CORPORATE GOVERNANCE Related Transactions |
Employee Matters
SVB also maintains an Employee Home Ownership Program (“EHOP”), an employeea benefit program wherebythat allows eligiblenon-executive employees of the Bank and its affiliates to receive preferential terms on mortgage loans.loans at preferred rates. Generally, executive officers may not participate in the EHOP unless they have received a loan prior to their appointment as executive officers, as was the case for Mr. China’sPhil Cox. In September 2011, Mr. Cox received an EHOP mortgage loanin the amount of approximately $311,000, which was $1,176,000, withfully repaid on September 19, 2017.
We also maintain a principal balanceseries of $1,014,689employee-funded investment funds known as of December 31, 2015. Mr. China’s loan matures April 1, 2016. Mr. Cox’s EHOP mortgage loan amount was $310,553, with a principal balance of $262,918 as of December 31, 2015. Mr. Cox’s loan matures October 1, 2018.
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BOARD & CORPORATE GOVERNANCE
Employee Funds
In 2015, we formed Qualified Investors Fund IV, LLCFunds (“QIF IVQIFs”), a $5.3 million employee-funded investment fund. Participating employees must meet certain eligibility requirements pursuant to applicable regulatory requirements. QIF IV investswhich invest employees’ own capital in certain funds, including certain SVB Capital funds. We do not charge a management fee on QIF IV, but pass on the cost of external expenses to the QIF IV participants. The following executive officersparticipants and do not charge a management fee. Participating employees must meet certain eligibility qualifications pursuant to applicable regulatory requirements. Messrs. Beck, Becker, Cadieux, China, Cox, Descheneaux, Dreyer, Leone and Zuckert and Mdme. Draper have each made a commitmentcommitments to QIF IVQIFs in commitment amounts ranging from $50 thousand$50,000 to $250 thousand: Greg Becker, John China, Philip Cox, Michael Descheneaux, Michelle Draper, Joan Parsons, Bruce Wallace and Michael Zuckert.$1,025,000.
OtherVendor Arrangements
Total compensationIn July 2017, Cachematrix, a cash management platform provider for 2015 for Jon Wolter,the Bank’s Cash Sweep Program, was acquired by BlackRock, Inc., which, together with its affiliates, is a vice presidentgreater than 5% owner of our outstanding voting securities. In 2017, we paid fees totaling approximately $770,000 to Cachematrix. Additionally, we offer certain BlackRock investment funds, among other third party investment funds, under our Cash Sweep Program. Client investments in the BankCash Sweep Program are initiated and directed by clients themselves.
In addition, we have engaged The Vanguard Group, which, together with its affiliates, is a greater than 5% owner of our outstanding securities, as the son-in-lawrecord-keeper and trustee of Joan Parsons, wasour 401(k) and Employee Stock Ownership Plan, as well as the record-keeper of our Deferred Compensation Plan. We paid The Vanguard Group a fee of approximately $144,000 (including his base salary, bonuses, company contributions$215,000 relating to his 401(k)/ESOP account, but excluding other normal benefits provided to all employees). His compensation isservices rendered in accordance with our standard employment and compensation practices applicable to employees with equivalent qualifications and responsibilities as those holding similar positions. Ms. Parsons has no management oversight responsibility over Mr. Wolter, nor is she involved with any decisions concerning his compensation.2017.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe, based on a review of Forms 3, 4 and 5 and amendments thereto filed with the SEC and other information known to us, that during fiscal year 20152017 our directors, officers (as defined in the rules under Section 16 of the Exchange Act), and any greater than 10% stockholders have complied with all Section 16(a) filing requirements in a timely manner; except for one late report relating to the disposition of shares held in the 401(k) account of our executive officer, Marc Verissimo, in November 2015 due to an inadvertent administrative error.
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BOARD & CORPORATE GOVERNANCE Section 16(a) Compliance |
BOARD & CORPORATE GOVERNANCE
EXECUTIVE OFFICERSAND COMPENSATION |
INFORMATION ON EXECUTIVE OFFICERSInformation on Executive Officers
Our executive officers perform policy-making functions for us within the meaning of applicable SEC rules. They may also serve as officers of the Bank and/or our other subsidiaries. There are no family relationships among our directors or executive officers.
The following information outlines the name and age of each of our executive officers, (asas of the date of this Proxy Statement)Statement, and his or her principal occupation with the Company, followed by biographical information of each such executive officer:
Name | Age | Principal Occupation | ||||||
Greg W. Becker | 50 | President and Chief Executive Officer | ||||||
Dan J. Beck | 45 | Chief Financial Officer | ||||||
Marc C. Cadieux | 51 | Chief Credit Officer | ||||||
John D. China | 52 | Head of | ||||||
Philip C. Cox | 51 | Head EMEA and President of the UK Branch | ||||||
Michael R. Descheneaux | President, Silicon Valley Bank | |||||||
Michelle A. Draper | 50 | Chief Marketing Officer | ||||||
Michael L. Dreyer | 54 | Chief Operations Officer | ||||||
Christopher D. Edmonds-Waters | ||||||||
Laura H. Izurieta | 57 | Chief Risk Officer | ||||||
Roger E. Leone | 64 | Chief Information Officer | ||||||
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Michael S. Zuckert | 59 | General Counsel |
EXECUTIVE BIOGRAPHIES
Executive Biographies
Greg W. Becker’sbiography can be found under “Proposal No. 1—Election of Directors” above.
Dan J. Beck,Chief Financial Officer,is responsible for our finance, treasury and accounting functions. Before joining the Company in 2017, Mr. Beck served as the Chief Financial Officer for Bank of the West, a subsidiary of BNP Paribas Group, from June 2015 to May 2017 and as Executive Vice President and Corporate Controller from June 2008 to June 2015. Prior to his tenure at Bank of the West, Mr. Beck held various finance and accounting roles with Wells Fargo Bank, the Federal Home Loan Mortgage Corporation, E*TRADE Financial Corporation and Deloitte & Touche LLP. Mr. Beck holds a B.S. in Accounting from Virginia Commonwealth University and a B.S. in Biology from Virginia Polytechnic Institute and State University.
Marc C. Cadieux,Chief Credit Officer, oversees our credit administration function. Mr. Cadieux joined us in 1992 as Assistant Vice President and has held a variety of positions of increasing responsibility in the areas of credit administration, business development and relationship management during his tenure with us, includingthe Company. Mr. Cadieux was previously the Division Risk Manager for the Company’sSVB’s Eastern Division, where he was responsible for overseeing our commercial lending activities in the eastern United States, Canada, the United Kingdom and Israel. Mr. Cadieux was appointed as Assistant Chief Credit Officer in 2009 and was later appointed as Chief Credit Officer in 2013, where he currently oversees our credit administration function.2013. Prior to joining the Company, Mr. Cadieux held several credit-related positions with Pacific Western Bank and Bank of New England. Mr. Cadieux holds a Bachelor’s degree in Economics from Colby College.
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EXECUTIVE OFFICERS & COMPENSATION Information on Executive Officers |
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EXECUTIVE OFFICERS & COMPENSATION
John D. China,Head of Technology Banking, oversees the growth of our technology banking business. Mr. China joined us in 1996 as Senior Relationship Manager and has since held a variety of positions with the Company, including Head of Venture Capital GroupManagement and Head of Venture Capital and Private Equity Group.division. Mr. China was appointed as the Head of Relationship Management in 2010. In 2014, Mr. China was appointed the2010, Head of Relationship Banking where hein 2014, and Head of Technology Banking in 2017. Mr. China is a member of the boards of H2, a digital industry leadership network, and BUILD, a nonprofit organization dedicated to educating under-resourced youth through entrepreneurship; and the advisory boards of Alpha Club, a networking community of founders, CEOs and technology influencers, and York Butter Factory, an Australian coworking and startup incubator space. Mr. China holds a Bachelor’s degree in Industrial Engineering from Stanford University.
Philip C. Cox,Head of Europe, Middle East and Africa; President of the UK Branch, is focused on the international development of our business and is responsible for overseeing all aspects of our relationships within the venture capital and private equity, private bank and commercial bank communities.
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Advisory Board Member, DEMO, an organization dedicated to emerging technology development (since 2010)
Director, Astia.org, a not-for-profit organization dedicated to the success of women-led, high-growth ventures (since 2009)
Advisory Council, Advancing Science in America, a non-profit organization dedicated to advancing science and technology in the United States (since 2013)
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Philip C.UK branch. Mr. Cox joined us in 2009 as Head of UK, Europe & Israel, where he was responsible for the overall strategic direction of the Company in the UK, Europe and Israel, as well as the establishment of our UK Branch banking business. Hebusiness, prior to his appointment to his current role in 2012. Prior to joining the Company, Mr. Cox was appointed as Head of Europe, Middle EastCommercial Banking at the Bank of Scotland in London, a division of Lloyds Banking Group (2008-2009) and Africa (“EMEA”)the Chief Executive Officer of Torex Retail PLC (2005-2008). Prior to his tenure at Torex Retail PLC, Mr. Cox spent approximately 23 years with NatWest/RBS Group in a variety of positions, including Managing Director of Transport and PresidentInfrastructure Finance, Regional Managing Director of the UK Branch in 2012, where heNorth of England Region and the same position for the South West and Wales business. Mr. Cox is focused ona member of the international developmentChartered Institute of our businessBankers (UK) and is responsible for our UK branch.the Association of Corporate Treasurers (UK).
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Michael R. Descheneaux,President, Silicon Valley Bank,oversees the Company’s global commercial bank, private bank and funds management businesses, as well as credit administration. Mr. Descheneaux joined us in 2006 as Managing Director of Accounting and Financial Reporting, and was appointed as Chief Financial Officer in 2007, where he iswas responsible for all our finance, treasury, accounting and legal functions, as well as our funds management business. He also plays a keybusiness until he assumed his current role in our global strategy2017. Prior to joining the Company, Mr. Descheneaux was a managing director of Navigant Consulting (2004 – 2006) and growth.
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Directorships:
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Variousheld various leadership positions with Arthur Andersen for the Central and Eastern Europe Region (1995-2002)
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Technical expert on U.S. GAAP and generally accepted auditing standards matters
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Certified(1995 – 2002). Mr. Descheneaux holds a Bachelor’s degree in Business Administration from Texas A&M University. He is also a certified public accountant,
Member as well as a member of the Texas State Board of Public Accountancy and the American Institute of Certified Public AccountantsAccountancy.
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EXECUTIVE OFFICERS & COMPENSATION
Michelle A. Draper, joined us in 2013 as Chief Marketing Officer where she, is responsible for the strategy and execution of our global marketing initiatives. Prior to joining us she wasin 2013, Ms. Draper held various senior-level marketing positions at Charles Schwab & Co. from 1992 - 2013, including as Senior Vice President of Institutional Services Marketing, atwhere she oversaw advertising, brand management and other key marketing strategies. Prior to that, Ms. Draper also served as a director of Investor Services Segment Marketing and Vice President of Advisor Services Marketing Programs, developing marketing strategies for both the retail and institutional sides of the Charles Schwab & Co.
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business. Ms. Draper holds a Bachelor’s degree in Journalism from California Polytechnic State University – San Luis Obispo, as well as Series 7 General Securities Representative and Series 24 General Securities Principal Licenses
licenses.
Michael L. Dreyer, joined us in 2015 as Chief Operations Officer where he, is responsible for the Company’s global technology and infrastructure functions. Most recently, hePrior to joining us in 2015, Mr. Dreyer served as the Chief Operations Officer and President of the Americas for Monitise, where he was responsible for the design, build and operations of itsMonitise’s technology globally, as well as its Americas business (2014 - 2015). Prior to that, Mr. Dreyer was the Chief Information Officer at Visa Inc., where he was responsible for company’s systems and the company’s Americas business.
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Various senior-level positions at American Express, (1995-1998)
Various senior-level positions at Prime Financial, Inc. (1992-1995)
Various senior-level positions at, the Federal Deposit Insurance Corporation (FDIC) (1990-1992)
Various senior-level positions atand Bank of America (1989-1990)
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America. He has been on the board of directors of Finisar Corporation since 2015, and F5 Networks Inc., since 2012. Mr. Dreyer holds a Bachelor’s degree in Psychology and a Master’s degree in Business Administration from Washington State UniversityUniversity.
Christopher D. Edmonds-Waters, joined us in 2003 as Director of Organization Effectiveness, and in 2007, was appointed to his current role as Head ofChief Human Resources where heOfficer, oversees our human resources function, which includes our compensation, global mobility, recruiting and learning and development functions. Mr. Edmonds-Waters joined us in 2003 as Director of Organization Effectiveness and was appointed to his current role in 2007. Prior to joining the Company, Mr. Edmonds-Waters held various senior-level human resources positions at Charles Schwab & Co. from 1996 – 2003 and began
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EXECUTIVE OFFICERS & Information on Executive Officers |
Various leadership roles withhis career at Macy’s California managing corporate training programswhere he held various merchandising as well human resources roles. Mr. Edmonds-Waters holds a Bachelor’s degree in Intercultural Communications from Arizona State University and a Master’s degree in Human Resources and Organization Development from the University of San Francisco.
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Laura H. Izurieta,Chief Risk Officer,is responsible for leading our enterprise-wide risk management, corporate compliance and regulatory functions. From 2000 until joining the Company in 2016, Ms. Izurieta held various roles of increasing responsibility at Capital One, including Vice President of Corporate Reputation and Governance, Vice President of Capital One Home Loans and Vice President of Information Technology, and most recently as the Executive Vice President and Chief Risk Officer, Retail and Direct Bank. Prior to her tenure at Capital One, Ms. Izurieta also held positions at Freddie Mac and Bank of America. Ms. Izurieta holds a Bachelor’s degree in Business Administration from Towson University and a Master’s degree in Applied Behavioral Science from John Hopkins School of Business.
Roger E. Leone, joined us in 2015Chief Information Officer, oversees our information technology function and previously served as Head of IT Infrastructure Engineering and Operations, and in September 2015, was appointed to his current role as Chief Information Officer, where he oversees our information technology functions.Operations. Prior to joining us in 2015, he served in a wide range of technology positions, including within the financial services industry.as an independent consultant from (2011-2014) and Vice President, Global IT Services at Yahoo! (2010-2011). Prior to joining us, hethat, Mr. Leone held seniorvarious senior-level IT leadership rolespositions at Pfizer (1996 – 2010), including as Vice President of Americas Regional Shared Services, where he managed a team of over 400 IT professionals supporting over 26,000 clients in the Americas.
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Vice President Global IT Services at Yahoo! (2010-2011)
Various senior-level positions Prior to his time at Pfizer, (1996-2010)
Various senior-level positions atMr. Leone spent approximately 20 years with Bank of America (1976-1996)
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Other:
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EXECUTIVE OFFICERS & COMPENSATION
Joan S. Parsons joined us in 1994 and has served in a variety of leadership positions throughout the Company, including Eastern Division Manager and Chief Banking Officer. Ms. Parsons was appointed HeadIT positions. Mr. Leone holds a Bachelor’s degree in Mathematics from Utica College of U.S. Banking in 2008, and was appointed Head of Specialty Banking in 2014, where she is responsible for all specialty debt products; sponsor finance, mezzanine finance, life science and healthcare, and energy and resource innovation banking practices; loan syndications, SVB Investment Services and SVB Analytics.
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Director, Planstrong Investment Management (since 2005)
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Banking Officer, Mellon Bank (1981-1983)
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Syracuse University.
Marc J. Verissimo joined us in 1993 and has served in a variety of leadership positions throughout the Company, including Manager of our Corporate Finance Group and our Risk Management Group. Mr. Verissimo was named Chief Strategy Officer in 2002. He is currently the Chief Risk Officer, where he is responsible for overseeing our credit, enterprise-wide risk management, corporate compliance and security functions.
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High Street Partners, Inc., a cross-border finance and administrative services firm (2009-2010)
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Bruce E. Wallace joined us in 2008 as Head of Global Services, where he was responsible for our operations, product management, global transaction banking and service delivery. He was later appointed Chief Operations Officer in 2011, where he was responsible for leading all bank and non-bank operations and information technology services, and in 2015, was appointed to his current role as Chief Digital Officer, where he is responsible for the Company’s digital banking functions and the Company’s fee-based product businesses.
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Various senior management positions in banking operations, Wells Fargo & Company (1987-2005)
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EXECUTIVE OFFICERS & COMPENSATION
Michael S. Zuckert, joined us in 2014 as General Counsel where he, is responsible for all our legal and government affair matters. Prior to joining us,the Company in 2014, he served in a wide range of legal positions within the financial services industry. Most recently, he served as Deputy General Counsel of Citigroup from 2009-2014,(2009-2014), where he served as general counsel for its the company’snon-core assets business, Citi Holdings, and also focused on mergers and acquisitions.
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Law Foundation of Silicon Valley, a non-profit organization providing free legal services Prior to Silicon Valley individuals in need (since 2015)
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his time at Citigroup, Mr. Zuckert held various senior-level positions at Morgan Stanley & Co. Inc., and was Vice President and General Counsel at TheStreet.com, Inc., an online financial news provider (1999-2000)provider. Mr. Zuckert is a director of the Law Foundation of Silicon Valley and the Global EIR Coalition and a member of the leadership council of Tech:NYC. He holds Bachelor’s degrees in History and Law and Society from Brown University and a Juris Doctor from New York University School of Law.
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EXECUTIVE OFFICERS & COMPENSATION Information on Executive Officers |
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EXECUTIVE OFFICERS & COMPENSATION
COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) discusses our 20152017 executive compensation program, primarily as it relates to our five “named executive officers” listed below.(“NEOs”).
CD&A | ||
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PRIMARY EXECUTIVE COMPENSATION ELEMENTSFOR 2015 - SUMMARY
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MESSAGEFROMTHE COMPENSATION COMMITTEE We, as the Compensation Committee of the Board of Directors (“Compensation Committee”), have the delegated responsibility of primary oversight over the design and execution of the Company’s executive compensation program. We did not make any material changes to the design of our executive compensation program for 2017, and remained consistent with our core compensation strategy and philosophy, taking into account the following key considerations in determining executive pay: • Performance - Setting challenging performance metrics aligned with our strategic business and growth objectives, as well as stockholder interests; • Risk - Establishing a compensation framework that incents consistent and sustainable long-term performance, but without encouraging undue risk-taking; and • Talent - Setting appropriate compensation to attract and retain the executive talent needed for our business. We also considered the Company’s pace of growth and increasing business and regulatory complexities. Overall, we were pleased to see another year of strong performance delivered by the Company. Our pay decisions reflected that performance, as well as our continuing emphasis on our core banking business, operational infrastructure, risk management and financial performance. In 2018, we remain committed to setting the appropriate compensation framework to drive our long-term, sustainable global growth and other strategic objectives. | |||||||||||||||||||
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John Robinson | Garen Staglin |
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CASH COMPENSATION
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Base Salary | Incentive Compensation
| Performance-Based Restricted | Stock Options | Restricted Stock Units (RSUs) | ||||||||
----------------- Short-Term Emphasis -----------------
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Ongoing | 1-Year Performance Period | 3-Year Performance Period | 4-Year Vesting Period | |||||||||
Fixed | Performance-Based | Fixed^ | ||||||||||
----------------------------------------------------------------------------- Applicable Performance Metrics ----------------------------------------------------------------------------- | ||||||||||||
Compensation Committee judgment | Return on Equity Formulaic pool funding, plus Compensation Committee judgment | Total Stockholder Return Return on Equity Selected Fee Income Formulaically determined, plus Compensation Committee judgment
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Continued year over year stock
price momentum
2015 TSR
performance ranked 6th
(65thpercentile) relative to 2015 Peer
Group
Any incremental value realized above the grant value of time-based RSUs, as well as earned PRSUs, is based on stock price |
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EXECUTIVE OFFICERS & COMPENSATION
2015 EXECUTIVE COMPENSATIONAND OTHER HIGHLIGHTS
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GREG BECKER, President and Chief Executive Officer |
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DAN BECK, Chief Financial Officer | MICHAEL DREYER, Chief Operations Officer | |
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EXECUTIVE OFFICERS & COMPENSATION
EXECUTIVE COMPENSATION GOVERNANCE AND PRACTICES
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2017 CEO COMPENSATION HIGHLIGHTS
312017 Company Performance
EXECUTIVE OFFICERS & COMPENSATION
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EXECUTIVE OFFICERS & COMPENSATION
2017 Year-Over-Year Changes | CEO Compensation Based on SEC-reported total compensation | |||||||||
Total Target Pay | p 15% | Primarily due to an increase in long-term equity incentive awards. | ||||||||
Total SEC- | p 19% | Primarily due to an increase in long-term equity incentive awards and higher annual cash incentive compensation due to strong Company and individual performance. | ||||||||
Continued Emphasis on Performance-Based, Long Term CEO Pay (Competitive with Peers)
Fixed v. Performance-Based CEO Target Pay | Short-Term v. Long-Term CEO Target Pay | 2017 CEO Target Pay Mix | ||
(Compared to 2017 Peer Group) | ||||
Fixed Pay: Performance-Based Pay: Base Salary, RSUs ICP, PRSUs, Stock Options | Short-Term Pay: Long-Term Pay: Base Salary, ICP PRSUs, RSUs, Stock Options | 83% of total target pay at risk (slight increase from last year at 81%) | ||
* | Based on TSR calculation methodology described on page 40. |
** | Based on closing prices reported as of December 30, 2016 and December 29, 2017. |
+ | CEO Target Pay discussed in this summary is based on the actual equity grant value of target awards. |
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
EPS Net Income ROE SVB Fixed Peer Performance-Based 33% 33% 67% 67% SVB Short-Term Peers Long-Term 34% 45% 55% 66% Long-Term Equity Base Salary ICP 66% 17% 17%
EXECUTIVE COMPENSATIONAND PRACTICES
Highlights of our executive compensation program and practices are set forth below:(details are further discussed in this CD&A section)
Compensation Oversight and Governance
• | Independent Board* oversight of CEO compensation(based on the CompensationCommittee’s recommendations) | |
• | Independent Compensation Committee oversight ofnon-CEO executive compensation | |
• | Independent compensation consultant to the Compensation Committee | |
• | Active Compensation Committee engagement (held 8 meetings in 2017) |
Focus on Stockholder Interests
• | Say on Pay vote on an annual basis (Say on Pay approval rate of 98.6% of votes cast in 2017) | |
• | Robust executive equity ownership guidelines | |
• | Continuing stockholder outreach to solicit feedback and to discuss our business and practices(throughout the year) | |
• | Performance metrics focused on stockholder return (including total stockholder return and return on equity) |
Compensation Risk Mitigation and Management
• | Compensation risk management(includingannual risk assessments, internal audit review of compensation programs, oversight under the Company’s enterprise-wide risk management framework) | |
• | Minimums/maximums applied to incentive awards (minimum performance thresholds and maximum funding limits) | |
• | No hedging or pledging (executives not permitted to hedge ownership of our securities through selling puts or shorts, or to pledge our securities to secure personal obligations) |
Executive Compensation Features
• | Competitive benchmarking against peers (both compensation and performance) | |
• | Double trigger change in control severance(under our executive Change in Control Plan) | |
• | No 280G excise taxgross-ups (under our executive Change in Control Plan) | |
• | No individual employment agreements for executives(unless required by law) | |
• | No executive perquisite/benefit programs | |
• | No special executive retirement benefits; no pension or SERP plans |
Equity Plan Practices
Our executives’ equity awards are made under our 2006 Equity Incentive Plan and have the following features/practices:
General Features/Practices:
¡ | No evergreen provision |
¡ | No recycling of shares used to pay for the exercise price of stock options |
¡ | Annual burn rate maximum of 2.5% (2017 burn rate was 1.17%) |
¡ | No single-trigger vesting upon change in control |
¡ | No taxgross-ups for plan awards |
Stock Options:
¡ | No stock option repricing/exchange without stockholder approval |
¡ | No stock option reloads |
¡ | Minimum 100% fair market value exercise price for options |
¡ | Maximum7-year term for options |
¡ | Minimum1-year vesting for stock options awards (typical practice – 4 years) |
Full Value Awards:
¡ | Each full value award share counted as 2 shares |
¡ | Minimum3-year time-based vesting for full value awards (typical practice – 4 year vesting) |
¡ | Minimum1-year vesting for performance-based full value awards (typical practice –3-year vesting) |
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* Independent members acting as a committee, without CEO participation
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
EXECUTIVE COMPENSATION PHILOSOPHYAND
The key compensation philosophy and objectives of our executive compensation program and practices are as follows:
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• Aligning the interests of our stockholders, our Company and employees;
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• Recruiting and maintaining a cohesive,top-talent executive management
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Our compensation philosophy and program take into consideration our business objectives (including our long-term global growth)
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EXECUTIVE OFFICERS & COMPENSATION
Compensation Governance
The Company’s executive compensation program is supported by strong corporate governance and Board-level oversight:
Role of Compensation Committee; Compensation Committee Meetings
All members of the Compensation Committee are “independent” under applicable NasdaqNASDAQ 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 Compensation Committee: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 Compensation Committeecommittee 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.
The Compensation Committee meets on a regular basis, and routinely meets in executive session without management present. During 2015,2017, the Compensation Committee held ten (10)8 meetings, including an extended annual session where the Compensation Committee met with the Board Chair (also Chair of the Risk Committee), as well as key members of executive management, including the CEO, President of the Bank, Chief Financial Officer, the Head ofChief Human Resources Officer, Chief Risk Officer and the General Counsel, to discuss considerations for reviewing and enhancingreview compensation programs in light of the Company’s compensation strategy.strategic objectives, as well as relevant market trends.
Role of the Independent Board Members
Subject to the recommendation of the Compensation Committee, all of the independent directors of the Board (all Board members except the CEO)CEO, acting as a committee) review and approve the compensation for the CEO. Such review and approval are conducted during the executive session portion of the Board’s meetings,sessions, where neither the CEO nor any other member of management is present.
Role of Compensation Committee Consultant
The Compensation Committee has retained Pay Governance LLC (“Pay Governance”), 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 2015, 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 2015 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 periodic review of potential risks associated with our compensation programs; recommendations regarding our 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 2015. 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 2015.
Role of Chief Executive Officer
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 heHe 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 assessments 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.compensation. The Compensation Committeecommittee 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.
Role of Compensation Committee Consultant
34The 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 committee’s charter. The Compensation Committee in its sole discretion selects the consultant, and determines its compensation and the scope of its responsibilities.
EXECUTIVE OFFICERS & COMPENSATION
EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
In 2017, Pay Governance assisted the Compensation Committee with: advice and recommendations regarding the Company’s compensation philosophy and strategies; advice on director and executive compensation levels and practices, including review and recommendations on director, CEO and other executive compensation and evaluation of CEO pay and Company performance; advice on the Company’s 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.
Pay Governance provides services only to the Compensation Committee, and not to the Company, and did not provide any additional services to the committee outside of executive and director compensation consulting during 2017. 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 2017.
Compensation Risk Management
A primary area of focus of the Compensation Committee is compensation risk management. The committee, together with its compensation consultant, conducts annual risk assessments of our compensation program, which include process, tone and culture. 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. Based on these various steps, we do not believe that our compensation program creates risks that are reasonably likely to have a material adverse effect on the Company.
Moreover, our compensation programs and risks are routinely discussed at the Board-level, both with and without the CEO present. In particular, the chairperson of our Compensation Committee reports to and discusses compensation risk issues with the full Board and the Risk Committee. The chairperson of the Compensation Committee and one other member of the committee (who also serves as the chairperson of the Audit Committee) are members of the Risk Committee of the Board of Directors. Additionally, certain compensation matters are also reviewed with the Audit Committee, particularly as it relates to exclusions under our ICP funding.
ANNUAL SAYON PAY; FOCUSON STOCKHOLDERS
Say on Pay Frequency
We submit an advisory vote on executive compensation, or Say on Pay, to our stockholders 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.
We conducted an advisory vote on the frequency of the advisory Say on Pay vote at our 2017 Annual Meeting. Following the recommendation of our stockholders in 2017, we will continue to hold our advisory Say on Pay vote on an annual basis.
2017 Say on Pay Advisory Vote
In 2017, over 98.6% of the votes cast approved our 2016 executive compensation program (as described in our 2017 proxy statement). In light of the strong voting support and the extent of other feedback we have solicited from our stockholders, the Compensation Committee remained consistent with our executive compensation philosophy, policies or overall program, and did not make any material changes. 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.
Stockholder Focus
We are focused on the interests of our stockholders. Our two primary performance metrics selected for our performance-based incentive awards measure stockholder return: (i) total stockholder return (for our executives’ performance-based restricted stock unit awards); and (ii) return on equity (for our annual incentive compensation awards). In both cases, we measure performance relative to our peers.
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
We conduct active investor outreach activities throughout the year to engage with our stockholders. Additionally, as part of our annual proxy statement preparation process, we routinely and proactively reach out to our key stockholders to invite their feedback, including their view about our executive compensation program.
COMPENSATION DECISIONS
Our Compensation Committee is responsible for deciding the design of the executive compensation structure (including choosing and setting applicable performance metrics, selecting the forms of compensation, determining the overall pay mix and setting pay levels) and approving actual executive compensation awards. (In the case of the CEO, the Compensation Committee makes recommendations about CEO pay decisions for approval by the independent members of the full Board.) Decisions are typically made within the first quarter of each year, both to determine the compensation design applicable for any performance period involving that particular and subsequent years, and to approve any incentive awards based on the prior year’s performance.
While compensation decisions are made during the earlier part of the year, the rest of the year is focused on monitoring performance against set goals and determining funding accruals, as well as other aspects of the compensation program, including, among other things, peer group review, compensation design changes for the subsequent years, compensation risk review, and monitoring market and governance trends impacting compensation.
As further discussed below, in making compensation decisions, the Compensation Committee considers a variety of factors and data, including peer benchmarking and other industry data and performance reviews of individual executives. The key decisions for 2017 relating to our NEOs are also summarized below under “2017 NEO Compensation Decisions.”
Competitive Benchmarking Against Peers
For 2017, the Compensation Committee benchmarked and compared our compensation and performance with our peer companies, in a manner consistent with prior years. The names of the 18 companies on our 2017 Peer Group list is set forth below.
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The Compensation Committee, with its compensation consultant and management, reviews on at least an annual basis, the composition of the
It is important to note that in determining executive compensation, the Compensation Committee does not solely rely on comparative data from the 2017 Peer Group. Such comparative data provides helpful market information about our peer 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 |
It is important to note that in determining executiveMcLagan) and other available proxy and compensation the Compensation Committee does not solely rely on comparative data from the 2015 Peer Group. Such comparative data provides helpful market information about our peer 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 and 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.
2017 Peer Group
(18 companies)
Associated Banc-Corp
BOK Financial Corporation
Comerica Incorporated
Commerce Bancshares, Inc.
Cullen/Frost Bankers, Inc.
E*TRADE Financial Corporation*
East West Bancorp, Inc.
First Republic Bancorp
Huntington Bancshares
KeyCorp*
M&T Bank Corporation*
New York Community Bancorp Inc.*
Northern Trust Corporation*
Regions Financial Corporation*
Signature Bank
Umpqua Holdings Corporation
Webster Financial Corp.
Zions Bancorporation
* New for 2017
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
Executive Performance Reviews
In making compensation decisions or recommendations for individual executives, the Committee takes into consideration the performance reviews conducted for each executive officer, which includes a self-review of the prior year’s performance. The Committee meets and discusses with the CEO his assessment of the performance of the other executive officers, based on such self-reviews and the CEO’s own evaluation. The independent members of the Board meet and discuss, without the CEO present, their collective performance assessment of the CEO, taking into consideration his self-review and the individual evaluation provided by each Board member.
Executives are evaluated based on Company performance as well as individual performance. Specific performance metrics for annual and long-term incentive awards are based on corporate-wide performance, including return on equity, total stockholder return, selected fee income, and relative performance against peers. All executives are subject to the same corporate-wide performance metrics. In addition, executives are evaluated based on his or her individual performance and overall contributions. Evaluation criteria may include, among other things: skills and expertise, demonstrated leadership, development of strategy, span of responsibility, achievement of corporate and personal goals, risk management, talent management, regulatory compliance, and alignment with the Company’s pay for performance and internal parity objectives. All applicable information is reviewed and considered in aggregate, and thecore values.
2017 NEO Compensation Committee does not place any particular weighting on any one factor.Decisions
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2015 Executive Compensation
SummaryHighlights of 2015 Key Executive Compensation Componentsthe key compensation decisions for 2017 are set forth, the details of which are discussed in this CD&A section:*
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Component
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| Base Salary |
NEO merit increases (2.7% - 22.0%) reflect broadening span of NEO responsibilities amidst an increasingly complex business environment
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Annual Cash Incentives
| No material changes to performance-based funding methodology for
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| Annual ICP targets for NEOs stayed at prior year’s level or was 167% of individual target payout.
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Performance-Based Restricted Stock Units (“PRSUs”)
| PRSUs granted in 2017 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 (funding threshold) and Selected Fee Income performance.
| 2017 PRSUs represented 50% of the total value of | ||||||||
Stock Options
| All stock options and RSU awards are subject to standard annual vesting over a | |||||||||
Restricted Stock Units (“RSUs”) | 2017 stock options and RSUs each represented 25% of the total value of each NEO’s target long-term equity compensation. | |||||||||
* | Excluding Mr. Beck’s 2017 equity awards, which were granted in connection with his hiring in June 2017. |
** | Approximately 75% of the average total target compensation for NEOs, including the CEO, is at risk. |
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OVERVIEWOF NAMED EXECUTIVE OFFICERS | ||||||||
We have six named executive officers (“ Mr. Descheneaux, our former Chief Financial Officer, was promoted effective June 2017 to the role of President, Silicon Valley Bank. Mr. Beck, our Chief Financial Officer who joined in June 2017, along with Mr. Dreyer and Ms. Izurieta are NEOs for the first time since joining the Company. | 2017 NEOs GREG BECKER,President and Chief Executive Officer DAN BECK,Chief Financial Officer MICHAEL DESCHENEAUX,President, Silicon Valley Bank (former Chief Financial Officer; promoted in 2017) JOHN CHINA,Head of Technology Banking MICHAEL DREYER,Chief Operations Officer LAURA IZURIETA,Chief Risk Officer
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ELEMENTSOF EXECUTIVE COMPENSATION
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Elements of 2015 Compensation
Base Salary
We providepay 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, typically as 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 | Year-Over- Year Increase | 2017 Annual Base Salary | ||||||||||
Greg Becker | 2.7% | $ | 950,000 | |||||||||
Dan Beck | — | 525,000 | ||||||||||
Michael Descheneaux | 16.7 | 700,000 | ||||||||||
John China | 5.0 | 525,000 | ||||||||||
Michael Dreyer | 11.1 | 500,000 | ||||||||||
Laura Izurieta | 22.0 | 500,000 |
In 2015,2017, each NEO, except our Chief Financial Officer (who was hired in 2017), received merit increase adjustments to their base salaries based on individual performance, salary market positioning relative to peers, and internal parity, as appropriate. In particular, the salary increase for Mr. Descheneaux reflects: (i) his overall exceptional performance, and (ii) the increasing complexities under his span of responsibilities, including preparation for compliance of financial requirements applicable to large financial institutions with over $50 billion in total average assets.
NEO | Percentage Increase | 2015 Annual Base Salary | ||||||||||||
Greg Becker | 4.0 | % | $ | 910,000 | ||||||||||
Michael Descheneaux | 14.3 | 600,000 | ||||||||||||
John China | 6.7 | 480,000 | ||||||||||||
Joan Parsons | 6.7 | 480,000 | ||||||||||||
Bruce Wallace | 5.9 | 450,000 |
applicable.
Annual Cash Incentives (Incentive Compensation Plan)
(% of Annual Salary) | ||||||||||||
NEO | Prior Year (2016) ICP Target | 2017 Annual ICP Target | ||||||||||
Greg Becker | 100 | % | 100 | % | ||||||||
Dan Beck | — | 70 | ||||||||||
Michael Descheneaux | 70 | 90 | ||||||||||
John China | 70 | 80 | ||||||||||
Michael Dreyer | 60 | 80 | ||||||||||
Laura Izurieta | 50 | 60 |
Our NEOs, as well as other executives and employees, participate in the Company’s Incentive Compensation Plan (“ICP”), an annual cash incentive plan that rewards performance against individual and Company objectives.
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Each executive participant is assigned an incentive target, stated as a percentage of the individual’s annual base salary. In 2015,Based on the Compensation Committee’s annual compensation review, in 2017, ICP targets:
Increased from 80% to 90%targets for Mr. Becker; and
Increased from 50% to 60% for Messrs. Descheneaux and Wallace.
These adjustments were made in order to align targetsNEOs reflected the committee’s focus on balancing overall total target pay mix with an emphasis towards increasing the allocation ofat-risk compensation, as well as comparative peer and market compensation and to balance overall total target pay mix. In addition, the adjustments applicable to Messrs. Descheneaux and Wallace were made to maintain internal parity among the executive team, as applicable. No changes were made to targetsdata for Mr. China or Ms. Parsons.their respective positions.
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
ICP Funding
Each year, the Compensation 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 Compensation Committee will also determine the extent to which the Company will fund the incentive pool.
For 2015, the Compensation Committee utilized the same methodology for funding the ICP as in 2014 in all material respects. The Compensation Committee continued to believe that return on equity (“ROE”) is an appropriate indicator of financial
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EXECUTIVE OFFICERS & COMPENSATION
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:
| Performance Metrics for
• ROE measured against budget • ROE relative to 2017 Peer Group |
•ROE Performance Against Annual Budget(Two-Thirds (2/3) of Pool) –Two-thirds (2/3) of the total incentive pool is funded based on the Company’s ROE performance (as adjusted for the exclusions discussed below) relative to our Board-approved annual target (budget) ROE, as illustrated by the graph below to the left. There is a funding maximum of 200% of target (for achievement of 150% or over of our target ROE). Additionally, the funding slope applicable to thesub-pool for executives is steeper than the general broad-based pool, where there is no formulaic funding for executives if the Company meets less than 90% of its annual target ROE (compared to 80% of the target for employees).
Exclusions/Adjustments
The Compensation Committee retains discretion to determine the extent to which the Company met its For
| 2017 exclusions
the |
annual budget); (ii) 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; (iii) certaintax-related adjustments, including those relating to the recently-enacted Tax Cuts and Jobs Act; and (iv) other various items relating toout-of-period adjustments orone-time events, such as the redemption of the Company’s Trust Preferred Securities and SVB Analytics’ sale of its valuation business. The net impact of these exclusions resulted in a lower adjusted ROE metric that reduced the overall funding of the 2017 ICP pool.
•ROE Performance Against 2017 Peer Group(One-Third (1/3) of Pool) – The otherone-third of the total incentive pool is funded based on the Company’s actual ROE performance of 12.38% relative to the 2017 Peer Group, as illustrated in the graph below to the right. There is no payout if our performance falls in the bottom five positions, and a payout maximum if our performance falls in the top four positions. The extent of funding earned is subject to straight-line interpolation based on ROE performance between the fifth and fourteenth ranked companies.
Our ranking is based on our full year 2015 ROE performance, compared to the ROE performance of our 2015 Peer Group from the fourth quarter 2014 through the third quarter 2015, due to the timing and availability of peer performance information.
For 2015,
* While the Compensation Committee determined that:retains discretion to fund a portion of the bonus pool if performance thresholds are not achieved, this discretion was not exercised in 2017.
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
For 2017, the Compensation Committee approved the funding of the total ICP pool at 153% of total target, based on: (i) the Company’s ROE (as adjusted) of 12.11% against the annual target ROE of 10.53%, resulting in the funding of 130% for 2/3 of the executive ICP pool would be funded at 132%total pool; and (ii) the Company��s ranking in the second highest position against our 2017 Peer Group, resulting in the maximum funding of target, based on the Company’s ROE performance, as adjusted, after taking into account the adjustments as discussed above; and (ii)200% for 1/3 of the executive ICP pool would be funded at 183% of target, based on the Company’s relative ROE performance, ranking in the fourth position (76th percentile) against the 2015 Peer Group. In addition to these two ROE metrics, the Compensation Committee took into consideration the overall strong performance of the Company and the executive team in 2015. In particular, they took into consideration: overall strong executive leadership as a team; exceptional annual financial performance, including, in particular, EPS and net income increases and strong financial growth in assets, loans and client fund balances; strong overall performance relative to peers; continued progress towards global growth; and continued focus on risk management. As a result, the Compensation Committee approved funding the overall executive ICP pool at 156% of total target.
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EXECUTIVE OFFICERS & COMPENSATION
20152017 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. For 2015,2017, each NEO was awarded the ICP amounts set forth in the table to the right.
NEO |
ICP Award | ||||||||
Greg Becker | $ | | |||||||
Dan Beck | 325,000 | + | |||||||
Michael Descheneaux | |||||||||
John China | |||||||||
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+ | Represents a prorated award for Mr. Beck who was hired in June 2017. |
In determining such 20152017 awards, the Board considered Mr. Becker’s performance assessment conducted by the independent members of the Board, and the Compensation Committee considered the performance assessments of each of the other NEOs as conducted by Mr. Becker, as well as input from the independent members of the Board.
In addition, the independent members of the Board (with respect to Mr. Becker) and the Compensation Committee (with respect to the other NEOs) considered a variety of factors that they believed to be relevant, including: (i) the overall strong performance of the Company and the respective areas of oversight of each NEO in 2017, and (ii) each NEO’s contributions to our business and financial results, execution of our 20152017 corporate initiatives, corporate risk management, and broader leadership within the organization.
Specifically for Mr. Becker, certainkey factors considered included:
Strong 2015 profitabilityHealthy financial performance and financial performance:
◾Annual EPS increase by |
| Annual net income |
Strong Company growth:
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income) increase by |
investment |
◾ Core fee income growth of 20%*
| Continued |
GrowthStrategic leadership of the Company, focusing on the growth of the core banking business domestically and internationally, including in market share; 18% increase in net client count
Continued global growth
ContinuedStrengthening of the corporate brand and steadfast focus on enterprise-wideclient satisfaction
ExpansionContinued execution of the Company’s diversity and enhancementinclusion initiatives
39* Core Fee Income is comprised of our foreign exchange fees, credit card fees, deposit service charges, lending related fees, client investment fees and letters of credit fees — each of which are components of our noninterest income. Please see a reconciliation of Core Fee Income, anon-GAAP financial measure, to the most closely related GAAP financial measure on page 53 of our Annual Report on Form10-K for the year ended December 31, 2017.
EXECUTIVE OFFICERS & COMPENSATION
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
Long-Term Equity Incentives
The Company believes that equity-based awards, particularly in combination with the Company’s
| Allocation of Total Equity Award
|
In 2017, 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. For information about the actual grants made in 2017, see the “Grants of Plan-Based Awards” under “Compensation for Named Executive Officers.”
Stock Options and Restricted Stock Units (RSUs)
Stock options and restricted stock units (RSUs) are subject to annual vesting over a four-year period. The stock options have a maximum term of 7 years. No performance-based criteria was established, as the increase in the value of these stock options, and the value of the RSUs, are inherently tied to the future performance of the Company’s common stock. 2017 annual vesting over a four-year period. The stock options have a maximum term of seven years. No additional performance-based criteria were established, as the increase in the value of these stock options, and the value of the RSUs, are inherently tied to the future performance of the Company’s Common Stock. 2015 stock option and RSU grants were made effective as of May 1, 2015.
Performance-based Restricted Stock Units (PRSUs)
Performance-based restricted stock units (PRSUs) are earned based on the achievement of certain performance conditions, as determined by the Compensation Committee. After the end of the specified performance period, the Compensation Committee will determine whether (and to what extent) the NEOs had earned the PRSUs, based on the Company’s Relative TSR, ROE and Selected Fee Income performance. The PRSUs are subject to a maximum total payout at 150% of target award. No payout is made if the Company ranks in the bottom five peer companies.
Similar to 2014, for 2015, PRSUs are subject to performance-based vesting over a three-year period (from 2015 through 2017). To the extent earned, PRSUs are subject to additional time-based vesting through January 30, 2018. 2015 PRSU grants were made effective as of March 30, 2015. Additionally for 2015, the Compensation Committee designed the PRSUs to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code by subjecting the awards to the following performance conditions:May 2, 2017.
Performance-based Restricted Stock Units (PRSUs)
Performance-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 committee will determine whether (and to what extent) the NEOs earned the PRSUs, subject to a maximum total payout of 150% of target award. For 2017, the Compensation Committee utilized the same performance metric design for the PRSUs as in the prior year in all material respects. The NEOs were granted, effective as of February 21, 2017, PRSUs that were subject to performance-based vesting over a3-year period (from 2017 through 2019) and certain designated performance metrics. To the extent earned, these awards are subject to additional time-based vesting through January 30, 2020. The PRSUs were designed to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code under then current law. 2017 represents the first year of a3-year performance period, hence none of the PRSUs granted in 2017 have been earned. The performance metrics for the 2017 PRSUs are as follows: | ||||
Performance Metrics • TSR relative to 2017 Peer Group • ROE (as funding threshold) • Selected Fee Income (foreign exchange |
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
• ) The
For |
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EXECUTIVE OFFICERS & COMPENSATION
• | ROE Funding Threshold and Selected Fee Income |
The other fifty percent of the PRSU award is funded at a maximum 150% payout subject to the Company’s achievement of a three-year annual average ROE performance threshold of 5% or higher. (No funding below 5%.) The Compensation Committee may apply negative discretion to reduce the actual funding, as it deems appropriate.
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 |
The Compensation CommitteeCompany’s performance against the 3-year annual average of its budgeted annual income from foreign exchange fees and credit card fees (“Selected Fee Income”). Consistent with prior years, the committee determined Selected Fee Income as an additionala 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.
2015 representsFor 2017, the first year of the3-year performance period: (i) the Company’s actual ROE of 12.38% exceeded the 5% funding threshold; and (ii) the Company achieved $192.3 million in Selected Fee Income, or 95% of the budgeted total.
Previously Granted PRSU Awards for Performance Period Ended in 2017
In 2015, Messrs. Becker, Descheneaux and China were granted PRSU awards subject to performance over a three-year performance period hence none of(2015-2017). (Messrs. Beck and Dreyer and Ms. Izurieta had not yet joined the PRSUs granted in 2015 have been earned.
The Compensation Committee typically makes equity awards to each NEOCompany at the time of grant in 2015.) Similar to the individual is hired or promoted, and annually thereafter. The size2017 PRSUs described above: (i) 50% of the awards reflects the overall number of shares availableaward was subject to the Company under our equity incentive plan,Company’s TSR performance relative to peers, and (ii) 50% of the award was subject to the Company’s ROE (funding threshold) and Selected Fee Income performance.
Upon completion of the performance period, the Compensation Committee’s determination of an appropriate annual equity burn rate (the percentage of total shares outstanding thatCommittee determined that: (i) the Company’s relative TSR performance ranked in the first position against the applicable 2015 peer group (of 17 companies), and (ii) the 5% minimum ROE funding threshold was met, and the Company has issued duringachieved 106%, 98% and 95% of its Selected Fee Income targets for 2015, 2016 and 2017, respectively. Consequently, the yearcommittee determined that 125% of the target PRSU awards were earned. The awards were also subject to a brief time-based vesting requirement, and were fully vested as of January 30, 2018.
1 TSR is measured based on the average closing stock price for the last two months of the applicable performance period and the average closing stock price for the two months immediately preceding the performance period, with dividends reinvested.
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
Other Compensation for CFO
When Mr. Beck joined the Company in June 2017 as Chief Financial Officer, he received the following as part of his compensation: (i) an equity award for 2017 with a value of approximately $650,000, of which 75% was in the form of restricted stock units and 25% in the form of stock options, all of which are subject to4-year time-based vesting; (ii) aone-time new hire equity compensation),award of approximately $300,000 in the NEO’s roleform of restricted stock units, which is also subject to a 4-year time-based vesting; and performance, and the market compensation data for the NEO’s external peers.(iii) aone-time new hire cash award of $300,000, which is subject to repayment if his employment is terminated in certain circumstances within1-year of his start date.
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, SVB Financial Group doesPlan, we do not provide any pension, excess retirement or SERPssupplemental executive retirement (“SERP”) to our NEOs.
Under our 401(k) plan,Plan, our U.S. employees, including our NEOs, may make voluntarypre-tax and/or traditional/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 — the Employee Stock Ownership Plan (the “ESOP”).component. Under the ESOP, we may make discretionary annual contributions for U.S. employees, as determined by the Compensation Committee. ESOP
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EXECUTIVE OFFICERS & COMPENSATION
contributions may be in the form of cash, the Company’s Common Stock,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.
Similar to 2014,2016, for 2015,2017, the Compensation Committee established performance criteria based on the Company’s adjusted ROE similar toagainst budget (same as the calculation of 2/3 of the total ICP pool) to fund the ESOP contribution, and set the funding level to a 2.5% (of1.25% of eligible compensation) funding levelcompensation based on target ROE performance, upperformance. Despite a higher allowable maximum under the ESOP, the Compensation Committee has committed to a funding maximum funding of 5%. Based on the Company’s 20152017 above-target ROE performance, the Compensation Committee approved a contribution of 3.3%1.63% of eligible compensation in cash (50%) and the Company’s Common Stockcommon 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 for Named ExecutiveOfficers—Non-Qualified Deferred Compensation”below.
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 NEOs participated in the DCP in 2015. Among the NEOs, only Mr. Becker holds a balance dueand Ms. Izurieta are participants in the plan. Mr. Becker received in January 2017 the first of five annual installments relating to deferrals made under the plancertain compensation deferred in 2005.
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
Health and Welfare BenefitsBenefits/Time Away From Work
Our NEOs are eligible to participate in our standard health and welfare benefits program, which provides 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 benefits formulaically.
Executive Termination BenefitsGrants of Plan-Based Awards
See” under “Compensation for Named Executive Officers—Other Post-Employment PaymentsOfficers.” below.
PerquisitesStock Options and Restricted Stock Units (RSUs)
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 a business purpose or are customary outside of the U.S. that may otherwise be considered perquisites. We disclose those benefits as required by applicable rules.
Stock Option and Other Equity Practices
Grant Practices for Executive Officers
The Compensation Committee approved all equity grants in 2015 made to executive officers of the Company, except that the independent members of the Board approved equity grants made to the Chief Executive Officer. Except for awards that qualify as performance-based compensation under Section 162(m) of the Code (as defined below) which are awarded during the first quarter of the year, annual equity compensation grants to executives have typically been approved during the second quarter of the year. Grants are made effective during an open trading window pursuant to our Insider Trading Policy, with limited
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EXECUTIVE OFFICERS & COMPENSATION
exceptions. The exercise price for stock option grants is equal to the closing market price on the grant’s effective date and grants typically have an annual vesting period of four years, subject to continued employment or service. All 2015 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 such executive commences employment. This approach provides for the exercise price of stock options to reflect 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 to non-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 any non-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 the month following approval or, where the first Monday is a Company-observed U.S. holiday, on the first 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,are 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 onannual vesting over 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.
four-year period. 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 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
Except 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.
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. Our stock options have a maximum term of 7 years. No performance-based criteria was established, as well as beginning for the year 2015, our executives’ PRSU awards, qualify for this tax deductibility. However, in order to maintain flexibility and promote simplicityincrease in the Compensation Committee’s administrationvalue of and oversight over executive compensation arrangements, other compensation arrangements, such as time-based restrictedthese stock units that vest based solely on continued serviceoptions, and ICP payments, do not qualify for tax deductibility. This design allows the Compensation Committee to balance tax deductibility with other business priorities that affect stockholder value.
Compensation that qualify as “performance-based” under Section 162(m) are 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.
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EXECUTIVE OFFICERS & COMPENSATION
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 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 RSUs, are inherently tied to the future performance of the Company’s Commoncommon stock. 2017 annual stock option and RSU grants were made effective as of May 2, 2017.
Performance-based Restricted Stock as a percentage of annual base salary,Units (PRSUs)
Performance-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 committee will determine whether (and to what extent) the NEOs earned the PRSUs, subject to a maximum total payout of 150% of target award. For 2017, the Compensation Committee utilized the same performance metric design for the PRSUs as in the prior year in all material respects. The NEOs were granted, effective as of February 21, 2017, PRSUs that were subject to performance-based vesting over a3-year period (from 2017 through 2019) and certain designated performance metrics. To the extent earned, these awards are subject to additional time-based vesting through January 30, 2020. The PRSUs were designed to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code under then current law. 2017 represents the first year of a3-year performance period, hence none of the PRSUs granted in 2017 have been earned. The performance metrics for the 2017 PRSUs are as follows: | ||||
Performance Metrics • TSR relative to 2017 Peer Group • ROE (as funding threshold) • Selected Fee Income (foreign exchange |
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
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For 2017, the first year of the three year performance period, we ranked in the first position against our 2017 Peer Group. | ||
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Company’s performance against the 3-year annual average of its budgeted annual income from foreign exchange fees and credit card fees (“Selected Fee Income”). Consistent with prior years, the committee determined Selected Fee Income as a 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 2017, the first year of the3-year performance period: (i) the Company’s actual ROE of 12.38% exceeded the 5% funding threshold; and (ii) the Company achieved $192.3 million in Selected Fee Income, or 95% of the budgeted total.
Previously Granted PRSU Awards for Performance Period Ended in 2017
In 2015, Messrs. Becker, Descheneaux and China were granted PRSU awards subject to performance over a three-year performance period (2015-2017). (Messrs. Beck and Dreyer and Ms. Izurieta had not yet joined the Company at the time of grant in 2015.) Similar to the 2017 PRSUs described above: (i) 50% of the award was subject to the Company’s TSR performance relative to peers, and (ii) 50% of the award was subject to the Company’s ROE (funding threshold) and Selected Fee Income performance.
Upon completion of the performance period, the Compensation Committee determined that: (i) the Company’s relative TSR performance ranked in the first position against the applicable 2015 peer group (of 17 companies), and (ii) the 5% minimum ROE funding threshold was met, and the Company achieved 106%, 98% and 95% of its Selected Fee Income targets for 2015, 2016 and 2017, respectively. Consequently, the committee determined that 125% of the target PRSU awards were earned. The awards were also subject to a brief time-based vesting requirement, and were fully vested as of January 30, 2018.
1 TSR is measured based on the average closing stock price for the last two months of the applicable performance period and the average closing stock price for the two months immediately preceding the performance period, with dividends reinvested.
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| EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
All executive officers have five years to attain
Other Compensation for CFO
When Mr. Beck joined the minimum level of 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 considersCompany in June 2017 as Chief Financial Officer, he received the following as shares owned: (1) shares actually held, (2) shares owned through investmentpart of his compensation: (i) an equity award for 2017 with a value of approximately $650,000, of which 75% was in the Company’sform of restricted stock fundunits and 25% in the form of stock options, all of which are subject to4-year time-based vesting; (ii) aone-time new hire equity award of approximately $300,000 in the form of restricted stock units, which is also subject to a 4-year time-based vesting; and (iii) aone-time new hire cash award of $300,000, which is subject to repayment if his employment is terminated in certain circumstances within1-year of his start date.
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 (3) earned but unvested awardsprofit sharing plan that is generally available to all of restricted stock awards and restricted stock units (subjectthe 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 supplemental executive retirement (“SERP”) to either time-based our NEOs.
Under our 401(k) Plan, our U.S. employees, including our NEOs, may make voluntarypre-tax and/or performance-based vesting). Neither vested nor unvested stock options count towardstraditional/Rothpost-tax deferrals up to the ownership guidelines. Exceptionsmaximum provided for by IRS regulations. The Company providesdollar-for-dollar matching contributions up to meetinga maximum of 5% of cash compensation or the guidelines due to personal financial or other reasons are reviewed andInternal 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 GovernanceCompensation 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.
AsSimilar to 2016, for 2017, the Compensation Committee established performance criteria based on the Company’s adjusted ROE against budget (same as the calculation of December 31, 2015,2/3 of the total ICP pool) to fund the ESOP contribution, and set the funding level to 1.25% 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 2017 above-target ROE performance, the Compensation Committee approved a contribution of 1.63% 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 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 for Named ExecutiveOfficers—Non-Qualified Deferred Compensation”below.
We establish and maintain a bookkeeping account for each participant that 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. Among the NEOs, Mr. Becker and Ms. Izurieta are participants in the plan. Mr. Becker received in January 2017 the first of five annual installments relating to certain compensation deferred in 2005.
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EXECUTIVE OFFICERS & COMPENSATION Compensation Discussion & Analysis |
Health and Welfare Benefits/Time Away From Work
Our NEOs are eligible to participate in our standard health and welfare benefits program, which provides medical, dental, life, accident and disability coverage to all of our NEOs were in complianceeligible U.S.-based employees. We do not provide executives with the applicable ownership guidelines.
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EXECUTIVE OFFICERS & COMPENSATION
COMPENSATION FOR NAMED EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth the compensation paidany health and welfare benefits that are not generally available to other Company employees. Additionally, under our “time away from work” policy, U.S. exempt employees, including our NEOs, fordo not accrue vacation benefits. Rather, such employees are expected to manage their time away from work, subject to the years ended December 31, 2013, 2014demands and 2015.needs of their jobs.Non-exempt U.S. employees and othernon-U.S. employees continue to accrue vacation benefits formulaically.
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, | 2015 | 912,333 | - | 2,092,890 | 670,964 | 1,225,000 | 25,947 (5) | 4,927,134 | ||||||||||||||||||||||||||
President and Chief | 2014 | 869,167 | - | 1,175,470 | 1,070,211 | 935,000 | 22,924 (6) | 4,072,772 | ||||||||||||||||||||||||||
Executive Officer | 2013 | 835,613 | - | 1,336,868 | 867,018 | 925,000 | 22,389 (7) | 3,986,888 | ||||||||||||||||||||||||||
Michael Descheneaux, | 2015 | 592,885 | - | 837,104 | 268,394 | 575,000 | 22,508 (8) | 2,295,891 | ||||||||||||||||||||||||||
Chief Financial Officer | 2014 | 520,833 | 600 | 517,225 | 470,896 | 425,000 | 21,347 (9) | 1,955,901 | ||||||||||||||||||||||||||
2013 | 499,780 | - | 739,544 | 474,665 | 450,000 | 22,389 (10) | 2,186,378 | |||||||||||||||||||||||||||
John China, | 2015 | 479,308 | - | 456,520 | 146,366 | 525,000 | 24,383 (11) | 1,631,577 | ||||||||||||||||||||||||||
Head of Relationship | 2014 | 437,500 | 600 | 282,044 | 256,837 | 380,000 | 21,890 (12) | 1,378,871 | ||||||||||||||||||||||||||
Banking | 2013 | 373,113 | - | 412,438 | 235,961 | 1,072,500 | (13) | 22,389 (14) | 2,116,401 | |||||||||||||||||||||||||
Joan Parsons, | 2015 | 479,308 | - | 456,520 | 146,366 | 425,000 | 23,680 (15) | 1,530,874 | ||||||||||||||||||||||||||
Head of Specialty | 2014 | 441,667 | 600 | 282,044 | 256,837 | 380,000 | 24,067 (16) | 1,385,215 | ||||||||||||||||||||||||||
Banking | 2013 | 399,780 | - | 405,327 | 257,910 | 350,000 | 22,389 (17) | 1,435,406 | ||||||||||||||||||||||||||
Bruce Wallace, | 2015 | 449,872 | - | 456,520 | 146,366 | 440,000 | 22,609 (18) | 1,515,367 | ||||||||||||||||||||||||||
Chief Digital Officer | 2014 | 420,833 | 600 | 282,044 | 256,837 | 260,000 | 21,455 (19) | 1,241,769 | ||||||||||||||||||||||||||
2013 | 398,113 | - | 398,216 | 257,910 | 350,000 | 22,389 (20) | 1,426,628 |
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EXECUTIVE OFFICERS & COMPENSATION
Grants of Plan-Based Awards
The following table sets forth all plan-based awards, including both equity awards and non-equity incentive awards under plans, made to our NEOs during the year ended December 31, 2015.
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 (4) | Grant Date Fair Value of Stock and Option Awards(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date |
Threshold |
Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Greg Becker | January 22, 2015 | January 22, 2015 | - | 819,000 | - | - | - | - | - | - | $ | - | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Greg Becker | March 30, 2015 | March 27, 2015 | - | - | - | 5,500 | 11,000 | 16,500 | - | - | - | 1,395,680 | ||||||||||||||||||||||||||||||||||||||||||||||||
Greg Becker | May 1, 2015 | March 27, 2015 | - | - | - | - | - | - | 5,371 | - | - | 697,210 | ||||||||||||||||||||||||||||||||||||||||||||||||
Greg Becker | May 1, 2015 | March 27, 2015 | - | - | - | - | - | - | - | 16,237 | 129.81 | 670,964 | ||||||||||||||||||||||||||||||||||||||||||||||||
Michael Descheneaux | January 22, 2015 | January 22, 2015 | - | 360,000 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Michael Descheneaux | March 30, 2015 | March 19, 2015 | - | - | - | 2,200 | 4,400 | 6,600 | - | - | - | 558,272 | ||||||||||||||||||||||||||||||||||||||||||||||||
Michael Descheneaux | May 1, 2015 | March 19, 2015 | - | - | - | - | - | - | 2,148 | - | - | 278,832 | ||||||||||||||||||||||||||||||||||||||||||||||||
Michael Descheneaux | May 1, 2015 | March 19, 2015 | - | - | - | - | - | - | - | 6,495 | 129.81 | 268,394 | ||||||||||||||||||||||||||||||||||||||||||||||||
John China | January 22, 2015 | January 22, 2015 | - | 288,000 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
John China | March 30, 2015 | March 19, 2015 | - | - | - | 1,200 | 2,400 | 3,600 | - | - | - | 304,512 | ||||||||||||||||||||||||||||||||||||||||||||||||
John China | May 1, 2015 | March 19, 2015 | - | - | - | - | - | - | 1,171 | - | - | 152,008 | ||||||||||||||||||||||||||||||||||||||||||||||||
John China | May 1, 2015 | March 19, 2015 | - | - | - | - | - | - | - | 3,542 | 129.81 | 146,366 | ||||||||||||||||||||||||||||||||||||||||||||||||
Joan Parsons | January 22, 2015 | January 22, 2015 | - | 288,000 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Joan Parsons | March 30, 2015 | March 19, 2015 | - | - | - | 1,200 | 2,400 | 3,600 | - | - | - | 304,512 | ||||||||||||||||||||||||||||||||||||||||||||||||
Joan Parsons | May 1, 2015 | March 19, 2015 | - | - | - | - | - | - | 1,171 | - | - | 152,008 | ||||||||||||||||||||||||||||||||||||||||||||||||
Joan Parsons | May 1, 2015 | March 19, 2015 | - | - | - | - | - | - | - | 3,542 | 129.81 | 146,366 | ||||||||||||||||||||||||||||||||||||||||||||||||
Bruce Wallace | January 22, 2015 | January 22, 2015 | - | 270,000 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Bruce Wallace | March 30, 2015 | March 19, 2015 | - | - | - | 1,200 | 2,400 | 3,600 | - | - | - | 304,512 | ||||||||||||||||||||||||||||||||||||||||||||||||
Bruce Wallace | May 1, 2015 | March 19, 2015 | - | - | - | - | - | - | 1,171 | - | - | 152,008 | ||||||||||||||||||||||||||||||||||||||||||||||||
Bruce Wallace | May 1, 2015 | March 19, 2015 | - | - | - | - | - | - | - | 3,542 | 129.81 | 146,366 |
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(3) Non-Equity Incentive Plan Compensation is comprised of 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 2017 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.
(5) In June 2017, Mr. Descheneaux, former Chief Financial Officer, was promoted to President, Silicon Valley Bank. 45
GRANTSOF PLAN-BASED AWARDS The following table sets forth all plan-based awards, including equity awards andnon-equity incentive awards, made to our NEOs during the year ended December 31, 2017.
OPTION EXERCISESAND STOCK VESTED The following table sets forth the number of securities underlying equity awards that vested (in the case of restricted stock) or were exercised (in the case of stock options) by the NEOs during the year ended December 31, 2017, and the value realized upon such vesting or exercise.
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OUTSTANDING EQUITY AWARDSAT FISCAL YEAR END The following tables set forth all outstanding equity awards to the NEOs as of December 31, 2017. 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 table below. Outstanding stock awards are valued based upon the closing market price of our stock as of December 29, 2017, which was $233.77 per share.
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