UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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CITIZENS FINANCIAL GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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LETTER FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER TO OUR STOCKHOLDERS
March 8, 2019
Dear Stockholder:Stockholder,
YouWe recently completed our fourth year as an independent, publicly traded company with strong overall performance and good achievement against our 2018 goals. We delivered strong positive operating leverage, hit key performance targets and added important new capabilities while making the strategic investments to drive success over the long-term. We continue to deliver well for all of our stakeholders and entered 2019 with good momentum.
On behalf of the Board of Directors, we are cordially invitedpleased to invite you to attend the Annual Meetingour annual meeting of Stockholders of Citizens Financial Group, Inc.,stockholders to be held on Thursday, April 28, 2016,25, 2019, at 9:00 a.m. Eastern Time, at the Company’sour headquarters located at One Citizens Plaza, Providence, Rhode Island 02903. TheYou’ll find the matters scheduled for consideration at the meeting are described in detail in the following 2019 Notice of Annual Meeting of Stockholders and the proxy statement. StockholdersProxy Statement. If you owned shares of our stock as of the record date of March 7, 2016 are entitledFebruary 28, 2019, we encourage you to vote at the meeting.on these matters.
In order to accommodate those attending, we ask that you please mark your enclosed proxy card to let us know of your plans to attend. Registration and seating will begin at 8:00 a.m. Eastern Time. Each stockholderTime and we will be askedask you to sign an admittance card and will be asked to present valid picturephoto identification. Stockholders holding stockIf you held your shares in a brokerage accounts will needaccount please be sure to bring a copy of a brokerage statement reflecting stock ownershipthat shows you held shares as of February 28, 2019. If you are the March 7, 2016 record date.legal representative of a stockholder, please also bring proof thereof. Cameras and recording devices will not be permitted at the meeting.
We are pleased to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish our proxy materials to their stockholders on the Internet. We believe these rules allow usinternet at www.edocumentview.com/CFG in order to provide you with the information you need in an expedited manner while significantly lowering the costs of delivery and reducing the environmental impact of our annual meeting. Consequently, most stockholdersYou will not receive paper copies of our proxy materials. We will instead send these stockholders a notice with instructions for accessing the proxy materials and voting via the Internet. The notice also providesInternet in addition to information onabout how stockholders mayto obtain paper copies of our proxy materials if they so choose.you would prefer.
ItYour vote is important that your shares be represented at the Annual Meeting of Stockholders. Therefore,and whether or not you plan to attend the annual meeting, or not,we encourage you mayto access electronic voting via the Internet or utilize the automated telephone voting feature both of which areas described on your enclosed proxy card, or you may sign, date and return the proxy card in the envelope provided. IfYou may also vote in person if you plan to attend the annual meeting you may votemeeting.
Finally, we would like to thank Mr. Ryan and Mr. Di Iorio for their service as they both retire from our Board at the conclusion of the annual meeting. We appreciate their valuable insight and will miss their dedication and extensive contributions which have been instrumental to our journey to sustainable growth since becoming a public company in person.2014.
On behalf of our board of directors, I want toWe thank you for your support of Citizens Financial Group, Inc.
March 8, 2016
Sincerely, |
Bruce Van Saun Chairman of the Board and Chief Executive Officer |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 201625, 2019
To the Stockholders of Citizens Financial Group, Inc.:
NOTICE IS HEREBY GIVENthat the annual meeting of stockholders (the “Annual Meeting”) of Citizens Financial Group Inc., a Delaware corporation (the “Company”), will be held on April 28, 2016,25, 2019, at 9:00 a.m. Eastern Time, at the Company’s headquarters located at One Citizens Plaza, Providence, Rhode Island 02903 for the following purposes:
1. | The election of the twelve directors named in the accompanying proxy statement to serve until the |
2. | Advisory vote to approve the Company’s executive compensation, commonly referred to as a “say-on-pay” vote; |
3. | Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for |
4. | The transaction of such other business as may properly come before the Annual Meeting or any reconvened meeting following any adjournment or postponement thereof. |
Stockholders of record at the close of business on March 7, 2016February 28, 2019 are entitled to notice of, and to vote at, the Annual Meeting. We are first sending this proxy statement and the enclosed proxy formcard to stockholders on or about March 18, 2016.15, 2019.
Our board of directors recommends that you vote FOR the election of each of the director nominees named in Proposal No. 1 of the proxy statement, FOR, on an advisory basis, the Company’s executive compensation as described in Proposal No. 2 of the proxy statement, and FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm as described in Proposal No. 2 of the proxy statement and FOR, on an advisory basis, the Company’s executive compensation as described in Proposal No. 3 of the proxy statement.
For our Annual Meeting, we have elected to use the Internet as the primary means of providing our proxy materials to stockholders. Consequently, most stockholders will not receive paper copies of our proxy materials. We will instead send to these stockholders of record a Notice of Internet Availability of Proxy Materials (the “Notice”) with instructions for accessing the proxy materials, including our proxy statement and annual report, and for voting via the Internet. The Notice of Internet Availability of Proxy Materialsprovides the information above and also provides information on how stockholders may obtain paper copies of our proxy materials free of charge, if they so choose. The electroniccharge. Electronic delivery of our proxy materials will significantly reducereduces our printing and mailing costs and the environmental impact of circulating our proxy materials.
The Notice of Internet Availability of Proxy Materials will also provide the date, time and location of the Annual Meeting; the matters to be acted upon at the meeting and the board of directors’ recommendation with regard to each matter; a toll-free number, an email address and a website where stockholders may request a paper or email copy of the proxy statement, our annual report to stockholders and a form of proxy relating to the Annual Meeting; andprovides information on how to vote, including how to attend the meeting and vote in person.
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You are cordially invited to attend the Annual Meeting, but whether or not you expect to attend in person, you are urged to mark, date and sign your proxy card and return it by mail or follow the alternative voting procedures described in the Notice of Internet Availability of Proxy Materials or the proxy card.
BY ORDER OF THE BOARD OF DIRECTORS |
Robin S. Elkowitz |
Executive Vice President, Deputy General Counsel and Secretary |
Stamford, Connecticut
March 8, 20162019
Important notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 28, 2016:25, 2019:
This notice of the Annual Meeting of stockholders,Stockholders, the accompanying proxy statement and our 20152018 annual report to stockholders will be available at www.edocumentview.com/CFG commencing on or about March 18, 2016.
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TABLE OF CONTENTS TO PROXY STATEMENT
72 | ||||
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND ANNUAL MEETING | 72 | |||
78 | ||||
78 | ||||
79 | ||||
HOUSEHOLDING OF ANNUAL DISCLOSURE DOCUMENTS | 80 | |||
81 | ||||
CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – PROXY SUMMARY |
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, andconsider; accordingly, you should read the entire proxy statement carefully before voting.
Citizens Financial Group, Inc.’s 2016 Annual Meeting Information2019 ANNUAL MEETING INFORMATION
Date and Time: | April | |
Place: | One Citizens Plaza, Providence, Rhode Island | |
Record Date: | ||
Voting: | Holders of common stock are entitled to one vote per | |
Admission: | To attend the meeting in person you will need proof of your | |
Date of Mailing: | A Notice of Internet Availability of Proxy Materials (the “Notice”) or this proxy statement is first being mailed to stockholders on or about March |
Items of BusinessMATTERS TO BE VOTED ON AT THE 2019 ANNUAL MEETING
Proposals | Board Vote Recommendation | Page Reference | ||||
1. | Elect the directors named in this proxy statement | FOR ALL | 75 | |||
2. | Ratify the appointment of our independent registered public accounting firm | FOR | 76 | |||
3. | Advisory vote on executive compensation | FOR | 77 |
PROPOSAL
| BOARD VOTE
| REASON FOR VOTE RECOMMENDATION
| PAGE
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1. | Elect the following nominees as directors: Bruce Van Saun, Mark Casady, Christine M. Cumming, William P. Hankowsky, Howard W. Hanna III, Leo I. (“Lee”) Higdon, Edward J. (“Ned”) Kelly III, Charles J. (“Bud”) Koch, Terrance J. Lillis, Shivan Subramaniam, Wendy A. Watson and Marita Zuraitis. | FOR ALL | Our Board believes that its directors represent an appropriate mix of experience and skills relevant to the size and nature of our business. | 8 | ||||
2. | Approve, on a non-binding, advisory basis, the compensation of the Company’s executive officers named in the2018 Summary Compensation Table, as disclosed in the Compensation Discussion and Analysis, the compensation tables and accompanying narrative. | FOR | Our Board believes our executive compensation closely aligns the interests of our named executive officers and the interests of our stockholders. | 30 | ||||
3. | Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the 2019 fiscal year. | FOR | Based on its most recent evaluation, the Audit Committee believes it is in the best interests of the Company and its stockholders to retain Deloitte & Touche LLP. | 67 |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – PROXY SUMMARY |
Stockholders of record may vote by using the Internet, telephone, by mail (if you received a proxy card by mail) or in person as described below.
Internet | Telephone | In Person | ||||||||||
The address of the website for Internet voting can be found on your proxy card or Notice. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on April 24, 2019. | Dial the number listed on your proxy card or your Notice. You will need the control number included on your proxy card or voting instruction form. | If you received a proxy card by mail and choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope. | Stockholders also may attend the meeting and vote in person. |
If you hold shares through a bank or broker, please refer to your proxy card, Notice or other information forwarded by your bank or broker to see which voting options are available to you.
The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. Written ballots will be passed out to anyone who wants to vote at the Annual Meeting. If you hold your shares in “street name” you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the Annual Meeting.
BOARD AND GOVERNANCE HIGHLIGHTS
Our board of directors (the “Board”) will consist of not less than 5five nor more than 25twenty-five directors, excluding any directors elected by holders of preferred stock pursuant to provisions applicable only in the case of defaults.defaults under the terms of our preferred stock. The exact number of directors will be fixed from time to time by resolution of our Board. Citizens Financial Group, Inc. (the “Company” or “we” or “us” or “our”) currently has twelvefourteen directors. The current terms of office of all directors expire at the Annual Meeting.
Twelve of the fourteen directors currently serving are standing for election at the Annual Meeting. Mr. Anthony Di Iorio and Mr. Arthur Ryan are retiring from the Board as of the Annual Meeting in accordance with the mandatory retirement provisions in our Corporate Governance Guidelines and as a result were not nominated by the Board for re-election at the Annual Meeting. The size of the Board, which was temporarily increased and is currently set at fourteen, will be reduced back to twelve upon the conclusion of the Annual Meeting.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – PROXY SUMMARY |
The nominees for director all currently serve on our Board and are as follows:
Name | Age | Director Since | Occupation | Board Committees | Independent1 | |||||||||
Bruce Van Saun | 61 | 2013 | Chairman and CEO, Citizens Financial Group, Inc. | Executive (Chair) Equity | No | |||||||||
Mark Casady | 58 | 2014 | Retired Chairman and CEO, LPL Financial Holdings, Inc. | Risk | Yes | |||||||||
Christine M. Cumming | 66 | 2015 | Retired First Vice President and COO, Federal Reserve Bank of New York | Risk | Yes | |||||||||
William P. Hankowsky | 67 | 2006 | Chairman, President and CEO, Liberty Property Trust | Audit Compensation | Yes | |||||||||
Howard W. Hanna III | 71 | 2009 | Chairman and CEO, Hanna Holdings, Inc. | Audit Governance | Yes | |||||||||
Leo I. (“Lee”) Higdon | 72 | 2014 | Past President, Connecticut College | Audit Compensation | Yes | |||||||||
Edward J. (“Ned”) Kelly III | 65 | 2019 | Former Chairman, Institutional Clients Group, Citigroup, Inc. | Compensation Governance | Yes | |||||||||
Charles J. (“Bud”) Koch | 72 | 2004 | Retired Chairman, President and CEO, Charter One Financial | Risk (Chair) Audit | Yes | |||||||||
Terrance J. Lillis | 66 | 2019 | Retired CFO, Principal Financial Group, Inc. | Audit | Yes | |||||||||
Shivan Subramaniam | 70 | 2005 | Retired Chairman and CEO, FM Global | Governance (Chair) Risk Executive | Yes | |||||||||
Wendy A. Watson | 70 | 2010 | Retired Executive Vice President, Global Services, State Street Bank & Trust Company | Audit (Chair) Compensation Risk | Yes | |||||||||
Marita Zuraitis | 58 | 2011 | Director, President and CEO, The Horace Mann Companies | Risk | Yes |
Additional information about the director nominees can be found beginning on page 9.
1 | Under applicable NYSE and SEC independence standards. |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – PROXY SUMMARY |
We believe that our directors represent an appropriate and diverse mix of experience and skills relevant to the size and nature of our business. The following key facts reflect the composition, skills and experience of the Board following the retirement of Mr. Di Iorio and Mr. Ryan effective at the conclusion of the 2019 Annual Meeting.
Board Composition and Skills Matrix |
Board and Governance Key Facts | ||||||
Size of Board | 12* | Classified Board | No | |||
Number of Independent Directors | 11* | Lead Independent Director | Yes | |||
Board Meetings Held in 2018 | 10 | Majority Voting for Directors | Yes | |||
Director Election Term (years) | 1 | Tenure Limits | No | |||
Average Director Age | 66* | Key Committees Independent** | ✓ | |||
Mandatory Retirement Age Policy | ✓ | Annual Board & Committee Evaluation | ✓ | |||
Limit Service on Other Public Company Boards | ✓ | Board Orientation & Continuing Education Program | ✓ | |||
Executive Sessions of Independent Directors | ✓ | Succession Planning Process | ✓ | |||
Stock Ownership Guidelines | ✓ | Board Oversight of Strategy | ✓ | |||
Stockholder Outreach Program | ✓ | Diversity & Inclusion Program | ✓ | |||
Corporate Responsibility Reporting | ✓ | Political Contributions Policy | ✓ |
* Effective upon conclusion of the Annual Meeting. The board size was temporarily increased to fourteen effective February 2019 to accommodate the addition of Mr. Lillis and Mr. Kelly prior to the retirement of Mr. Ryan and Mr. Di Iorio following the Annual Meeting.
** Audit, Risk, Compensation and Human Resources and Nominating and Corporate Governance Committees are comprised of independent directors.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – PROXY SUMMARY |
Prior to our initial public offering (“IPO”) in September 2014 and subsequent separation from The Royal Bank of Scotland Group plc, our performance had fallen behind peers given balance sheet shrinkage and underinvestment in strategic initiatives, technology and talent over a number of years.
Over the past four years, we have addressed many of the challenges we faced at our IPO and have consistently demonstrated the ability to set a course, develop a plan, and execute well. Our strategies to drive improvement in performance across the Company have continued and at year end we had exceeded the medium-term return on tangible common equity (“ROTCE”) target we established in January 2018. We have met or exceeded analyst expectations for 18 consecutive quarters. We have focused on growing the bank and investing in capabilities, consistently delivering positive operating leverage. This has resulted in improvements across earnings per share (“EPS”), ROTCE and efficiency ratio. We continue to deliver well for all stakeholders, with consistent progress for customers, colleagues and communities, and our regulatory position is solid. We believe we have turned the corner on performance and are now aiming for excellence, on our way towards becoming atop-performing regional bank. We believe we have built a solid foundation with additional levers available to us for continued performance improvement.
2018Year-end Achievements
January 2018 medium- term targets | 2018 GAAP results | 2018 Underlying results* | 4Q18 GAAP results | 4Q18 Underlying results* | GAAP improvement since 3Q13 | Underlying improvement since 3Q13* | ||||||||||
ROTCE* | ~13-15% | 12.9% | 13.1% | 13.8% | 14.1% | 9.5% | 9.8% | |||||||||
Efficiency ratio* | ~mid 50%’s range | 59.1% | 58.1% | 59.7% | 56.7% | 8.8% | 11.8% |
*Key Performance Metrics (KPMs) are used by management to gauge our performance and progress over time in achieving our strategic and operational goals and also in comparing our performance against our peers. Underlying results, Adjusted results and Adjusted/Underlying results are considerednon-GAAP financial measures and exclude certain notable items, where applicable. Adjusted, Underlying and Adjusted/Underlying KPMs are considerednon-GAAP financial measures. For additional information on our use of KPMs and non-GAAP financial measures, see pages42-43 of our 2018 Annual Report on Form10-K, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Introduction—Key Performance Metrics Used by Management andNon-GAAP Financial Measures” and pages102-110 of our 2018 Annual Report on Form10-K, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Performance Metrics,Non-GAAP Financial Measures and Reconciliations” of Part II, Item 7. See Appendix A to this proxy statement for calculations of KPMs and reconciliations ofnon-GAAP financial measures used herein.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – PROXY SUMMARY |
Beyond Our Financial Performance
Our mission is to help our customers, colleagues and communities reach their potential. If we do this well, we will build long-term franchise value and stand out in a crowded banking landscape. We are committed to balancing the need for investments that position us well for the future with the imperative that we deliver consistent earnings growth and attractive returns. Our success through our turnaround phase gives us confidence in our future, as we seek to become atop-performing bank.
We continue to exercise strong financial discipline, with a mindset of continuous improvement that has delivered efficiencies to self-fund investments and strategic initiatives to better serve customers and grow revenues. We have utilized new technologies to deliver more effective service at lower costs.
We’ve gained additional momentum on fee income growth initiatives with expanded capabilities in key businesses, including Capital & Global Markets, Mortgage, Wealth and Treasury Solutions.
We’ve delivered disciplined execution against enterprise-wide initiatives like our Tapping Our Potential (“TOP”) and Balance Sheet Optimization programs.
We’ve made strong progress on advancing strategic capabilities using digital technologies and Fintech partnerships to create better experiences for our customers.
We are committed to attracting high caliber talent in order to further strengthen the senior leadership team while developing existing leaders and talent.
We’ve enhanced our customer-centric culture, with a goal to achieve apeer-leading customer, colleague and community experience.
We’ve continued to build a strong risk management culture, which has resulted in an improved control environment, as well as significant progress on our regulatory agenda, including meeting heightened regulatory standards and expectations. We received anon-objection to our Comprehensive Capital Analysis and Review (“CCAR”) submission for the fourth year in a row.
While we recognize there is much remaining to achieve, these milestones signify meaningful progress towards becoming atop-performing bank. We believe we have the vision, strategy, leadership, capabilities and talent to continue to deliver strong performance and to continue to meet rising stockholder expectations.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – PROXY SUMMARY |
How Do We Determine Compensation? • Overall funding for variable compensation is determined based on a number of performance factors, including financial and risk performance, progress against strategic initiatives, performance relative to peers (including relative performance improvement), and percentage ofpre-tax,pre-incentive profit. • The Board’s independent Compensation and Human Resources Committee (“Compensation Committee”) determines executive compensation based on an evaluation of Company, business/function and individual performance, through the use of a scorecard reflecting various performance dimensions. | ||
How Do We Pay Our Executives? • Executive pay mix is aligned with stockholder interests by delivering60%-70% of variable compensation in the form of long-term awards. • 70% of long-term awards are granted in the form of performance stock units with a three-year performance period for our CEO, CFO, and the heads of our Commercial and Consumer businesses. | ||
How Do We Address Risk? • The risk performance of our executives is assessed annually by our Chief Risk Officer and the results of that assessment are considered in determining pay. • Incentive plan governance requires approval by all control partners for plan changes (including risk, legal, human resources, and finance) and an independent risk review of our plans is conducted every three years (in addition to annual internal review). • We maintain a clawback process, through which events having a material adverse impact on the Company are reviewed for potential impact on compensation. | ||
Why Should You Approve ourSay-on-Pay Vote? • Since separating from The Royal Bank of Scotland Group plc in 2015, we have aligned our compensation program with US compensation practices, and we remain committed to continually evaluating our program relative to peer and best practices. • We believe our compensation program provides an appropriate balance of short-term and long-term compensation, designed to align our executive officers’ interests with those of stockholders. • Stockholders overwhelmingly approved the 2017 compensation of our named executive officers, with an approval rate of over 95% of votes cast on the proposal. |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
PROPOSAL 1 - ELECTION OF DIRECTORS
Our Charter and Bylaws provide that the Board shall consist of not less than five nor more than twenty-five directors, excluding any directors elected by holders of preferred stock pursuant to provisions applicable only in the case of defaults under the terms of our preferred stock. The Board will fix the exact number of directors from time to time and has currently fixed the number at fourteen. The number of directors will be reduced to twelve following the retirement of Mr. Di Iorio and Mr. Ryan effective at the conclusion of the Annual Meeting. At each annual meeting, directors are elected to hold office for a term of one year expiring at the next annual meeting.
OurThe Board currently consistshas nominated twelve of the following directors: Bruce Van Saun, Mark Casady, Christine M. Cumming, Anthony Di lorio, William P. Hankowsky, Howard W. Hanna Ill, Leo I. (“Lee”) Higdon, Charles J. (“Bud”) Koch, Arthur F. Ryan, Shivan S. Subramaniam, Wendy A. Watsonfourteen directors currently serving on the Board for election at the Annual Meeting to serve until the 2020 annual meeting or until their respective successors are duly elected and Marita Zuraitis.
Electionqualified. If any nominee is unable to serve as a director, the Board may reduce, by resolution, the number of Directorsdirectors or choose a substitute nominee. We are not aware of any nominee who will be unable to or will not serve as a director.
Our amendedBylaws provide for the election of directors by a majority of the votes cast in an uncontested election. This means that the twelve individuals nominated for election to the Board must receive more “FOR” than “AGAINST” votes (among votes properly cast in person, electronically or by proxy) to be elected. Abstentions and restated certificatebrokernon-votes are not considered votes cast for the foregoing purpose, and will have no effect on the election of incorporation (the “Charter”)nominees. Proxies cannot be voted for a greater number of persons than the number of nominees named. There is no cumulative voting. If you sign and bylaws,return the accompanying proxy card, your shares will be voted for the election of the twelve nominees recommended by the Board unless you choose to vote against any of the nominees or abstain from voting. If any nominee for any reason is unable to serve or will not serve, proxies may be voted for such substitute nominee as amended and restated on February 13, 2015 (the “Bylaws”),the proxy holder may determine. If the election of directors is a contested election, directors are elected by a plurality of the votes cast.
Our Bylaws also provide that directors may be removed, with or without cause, by an affirmative vote of shares representing a majority of the outstanding shares then entitled to vote at an election of directors. Any vacancy occurring on our Board and any newly created directorship may be filled only by a vote of a majority of the remaining directors in office.
The nominees for director are as follows:
Name | Age | Director Since | Occupation | Board Committees | Independent1 | |||||
Bruce Van Saun | 58 | 2013 | Chairman and CEO, Citizens Financial Group, Inc. | Executive; Equity | No | |||||
Mark Casady | 55 | 2014 | Chairman and CEO, LPL Financial Holdings, Inc. | Risk | Yes | |||||
Christine M. Cumming | 61 | 2015 | Former First Vice President and COO, Federal Reserve Bank of New York | Risk | Yes | |||||
Anthony Di lorio | 72 | 2014 | Retired CFO, Deutsche Bank AG | Audit; Governance | Yes | |||||
William P. Hankowsky | 64 | 2006 | Chairman, President and CEO, Liberty Property Trust | Audit; Compensation | Yes | |||||
Howard W. Hanna Ill | 68 | 2009 | Chairman and CEO, Hanna Holdings, Inc. | Audit; Governance | Yes | |||||
Leo I. (“Lee”) Higdon | 69 | 2014 | Past President of Connecticut College | Audit; Compensation | Yes | |||||
Charles J. (“Bud”) Koch | 69 | 2004 | Former Chairman, President and CEO, Charter One Bank | Audit; Risk (Chair) | Yes | |||||
Arthur F. Ryan | 73 | 2009 | Retired Chairman, CEO and President of Prudential Financial, Inc. | Compensation (Chair); Governance; Executive | Yes | |||||
Shivan S. Subramaniam | 67 | 2005 | Chairman, FM Global | Governance (Chair); Risk; Executive | Yes | |||||
Wendy A. Watson | 67 | 2010 | Former Executive Vice President, Global Services, State Street Bank & Trust | Audit (Chair); Compensation; Risk | Yes | |||||
Marita Zuraitis | 55 | 2011 | Director, President and CEO, The Horace Mann Companies | Risk | Yes |
AdditionalBiographical information about the director nominees is provided on page 11.
Ratification of the Appointment of the Independent Registered Public Accounting Firm
The Board is asking you to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the 2016 fiscal year. Summary information with respect to the fees for services provided to us by Deloitte & Touche LLP during the fiscal years ended December 31, 2015 and 2014 can be found beginning on page 74.
Advisory Vote to Approve Executive Compensation
The Board is asking you to approve, on a non-binding, advisory basis, the compensation of the Company’s executive officers named in the2015Summary Compensation Table, as disclosed pursuant to Item 402 of Regulation S-K (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and accompanying narrative).
The deadline for stockholder proposals submitted pursuant to SEC Rule 14a-8 to be included in the proxy statement for our annual meeting of stockholders expected to be held in April 2017 is November 8, 2016. For more information, see page 78.
Our Bylaws impose some procedural requirements on stockholders who wish to make nominations to elect directors, propose that a director be removed, propose any repeal or change in our Bylaws or propose any other business to be brought before an annual or special meeting of stockholders.
Under these procedural requirements, in order to bring a proposal before a meeting of stockholders, a stockholder must deliver timely notice of a proposal pertaining to a proper subject for presentation at the meeting to our Corporate Secretary.
To be timely, a stockholder’s notice for proposals outside of SEC Rule 14a-8 must be delivered to the Corporate Secretary at 600 Washington Boulevard, Stamford, Connecticut, 06901 not less than 120 days or more than 150 days prior to the first anniversary of the preceding year’s annual meeting. Therefore, to be presented at our annual meeting of stockholders to be held in 2017, such a proposal must be received on or after November 29, 2016, but not later than December 29, 2016. In the event that the date of the annual meeting of stockholders to be held in 2017 is advanced by more than 30 days or delayed by more than 70 days from the anniversary date of this year’s annual meeting of stockholders, such notice by the stockholder must be so received no earlier than 120 days prior to the annual meeting of stockholders to be held in 2017 and not later than 70 days prior to such annual meeting of stockholders to be held in 2017 or 10 days following the day on which public announcement of the date of such annual meeting is first made.
A stockholder’s notice to the Corporate Secretary shall set forth (A) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (as amended, together with the rules and regulations promulgated thereunder, the “Exchange Act”) including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws, the text of the proposed amendment), the reasons for conducting such business and any material interest in such business of
such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and (C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made:
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING
This proxy statement and proxy card are furnished in connection with the solicitation of proxies to be voted at our annual meeting of stockholders, which will be held on April 28, 2016, at 9:00 a.m. Eastern Time, at the Company’s headquarters located at One Citizens Plaza, Providence, Rhode Island 02903 (the “Annual Meeting”).
Why am I receiving this proxy statement and proxy card?
You have received these proxy materials because our board of directors is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement describes issues on which we would like you to vote at our Annual Meeting. It also gives you information on these issues so that you can make an informed decision.
Because you own shares of our common stock, our board of directors has made this proxy statement and proxy card available to you on the Internet, in addition to delivering printed versions of this proxy statement and proxy card to certain stockholders by mail.
When you vote by using the Internet or (if you received your proxy card by mail) by signing and returning the proxy card, you appoint each of Bruce Van Saun, Stephen T. Gannon and Robin S. Elkowitz (with full power of substitution) as your representatives at the Annual Meeting. They will vote your shares at the Annual Meeting as you have instructed them or, if an issue that is not on the proxy card comes up for vote, in accordance with their best judgment. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by using the Internet or (if you received your proxy card by mail) by signing and returning your proxy card. If you vote by using the Internet, you do not need to return your proxy card.
Why did I receive a Notice of Internet Availability of Proxy Materials in the mail instead of a printed set of proxy materials?
Pursuant to rules adopted by the SEC, we are permitted to furnish our proxy materials over the Internet to our stockholders by delivering a Notice in the mail. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review the proxy statement and annual report over the Internet. The Notice also instructs you on how to electronically access and review all of the important information contained in this proxy statement and the annual report and how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials contained in the Notice.
Stockholders who receive a printed set of proxy materials will not receive the Notice but may still access our proxy materials and submit their proxies over the Internet by following the instructions provided on their proxy card.
Who is entitled to vote?
Holders of our common stock at the close of business on March 7, 2016 are entitled to vote. March 7, 2016 is referred to as the record date. In accordance with Delaware law, a list of stockholders entitled to vote at the meeting will be available in electronic form at the Annual Meeting site on April 28, 2016 and will be accessible in electronic form for ten days before the meeting at our principal place of business located at One Citizens Plaza, Providence, Rhode Island 02903, between the hours of 9:00 a.m. and 5:00 p.m. Eastern Time.
How many votes is each share of common stock entitled to?
Holders of common stock are entitled to one vote per share. As of March 7, 2016, there were 527,856,179 shares of our common stock outstanding.
What is the difference between a stockholder of record and a “street name” holder?
Many of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially.
Stockholder of Record. If your shares are registered directly in your name with the Company’s transfer agent, Computershare, you are considered, with respect to those shares, the stockholder of record, and these proxy materials are being sent directly to you by the Company. As the stockholder of record, you have the right to grant your voting proxy directly to certain officers of Citizens Financial Group, Inc. or to vote in person at the Annual Meeting. The Company has enclosed or sent a proxy card for you to use. You may also vote on the Internet, as described below under the heading “How do I vote?”
Beneficial Owner or “Street Name” Holder. If your shares are held in an account at a broker, bank or other nominee, like many of our stockholders, you are considered the beneficial owner of shares held in street name, and these proxy materials were forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares, and you are also invited to attend the Annual Meeting.
Since a beneficial owner is not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you obtain a “legal proxy” from the broker, bank, or other nominee that is the stockholder of record of your shares giving you the right to vote the shares at the Annual Meeting. If you do not wish to vote in person or you will not be attending the Annual Meeting, you may vote by proxy. You may vote by proxy by completing, signing and returning the proxy card or by using the Internet or by telephone, as described below under the heading “How do I vote?”.
How do I vote?
Stockholders of record may vote by using the Internet or (if you received a proxy card by mail) by mail as described below. Stockholders also may attend the meeting and vote in person. If you hold shares through a bank or broker, please refer to your proxy card, Notice or other information forwarded by your bank or broker to see which voting options are available to you.
The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. Written ballots will be passed out to anyone who wants to vote at the Annual Meeting. If you hold your shares in “street name,” you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the Annual Meeting.
What if I change my mind after I return my proxy?
You may revoke your proxy and change your vote at any time before the polls close at the Annual Meeting. You may do this by:
If you hold shares through a bank or broker, please refer to your proxy card, Notice or other information forwarded by your bank or broker to see how you can revoke your proxy and change your vote.
Attendance at the meeting will not by itself revoke a proxy.
How many votes do you need to hold the Annual Meeting?
The presence, in person or by proxy, of the holders of a majority of the total voting power of all outstanding securities entitled to vote at the Annual Meeting will constitute a quorum. If a quorum is present, we can hold the Annual Meeting and conduct business.
On what items am I voting?
You are being asked to vote on three items:
No cumulative voting rights are authorized, and dissenters’ rights are not applicable to these matters.
How does the board of directors recommend that I vote?
The Board recommends that you vote as follows:
How may I vote in the election of directors, and how many votes must the nominees receive to be elected?
With respect to the election of directors, you may:
Our Bylaws provide for the election of directors by a plurality of the votes cast. This means that the twelve individuals nominated for electionincluding information about their qualifications to the board of directors who receive the most “FOR” votes (among votes properly cast in person, electronically or by proxy) will be elected.
What happens if a nominee is unable to stand for election?
If a nominee is unable to stand for election, the Board may either:
If the Board designates a substitute nominee, shares represented by proxies voted for the nominee who is unable to stand for election will be voted for the substitute nominee.
How may I vote for the proposal to ratify the appointment of our independent registered public accounting firm, and how many votes must this proposal receive to pass?
With respect to this proposal, you may:
In order to pass, the proposal must receive the affirmative vote of a majority of the votes cast at the Annual Meeting by the holders who are present in person or by proxy. Abstentions will not count as votes cast.
How may I cast my advisory vote for the proposal to approve the Company’s executive compensation?
With respect to this proposal, you may:
In accordance with applicable law, this vote is “advisory,” meaning it will serve as a recommendation to the Board, but will not be binding. The Compensation and Human Resources Committee (the “Compensation Committee”) will seriously consider the outcome of this vote when determining future executive compensation arrangements. Abstentions and broker non-votes will not count as votes cast.director, is set forth below.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
What happens if I sign and return my proxy card but do not provide voting instructions? Nominees
If you return a signed card but do not provide voting instructions, your shares will be voted as follows:
Will my shares be voted if I do not vote by using the Internet, telephone or by signing and returning my proxy card?
If you do not vote by using the Internet, telephone or (if you received a proxy card by mail) by signing and returning your proxy card, then your shares will not be voted and will not count in deciding the matters presented for stockholder consideration at the Annual Meeting.
If your shares are held in street name through a bank or broker, your bank or broker may vote your shares under certain limited circumstances if you do not provide voting instructions before the Annual Meeting, in accordance with the New York Stock Exchange (“NYSE”) rules that govern banks and brokers. These circumstances include voting your shares on “routine matters,” such as the ratification of the appointment of our independent registered public accountants described in this proxy statement. With respect to the proposal to ratify the appointment of our independent registered public accounting firm, therefore, if you do not vote your shares, your bank or broker may vote your shares on your behalf or leave your shares unvoted.
The election of directors and approval, on an advisory basis, of the Company’s executive compensation are not considered routine matters under the NYSE rules relating to voting by banks and brokers. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.” Broker non-votes that are represented at the Annual Meeting will be counted for purposes of establishing a quorum, but not for determining the number of shares voted for or against the non-routine matter.
We encourage you to provide instructions to your bank or brokerage firm by voting your proxy. This action ensures your shares will be voted at the meeting in accordance with your wishes.
What is the vote required for each proposal to pass, and what is the effect of abstentions or withheld votes and uninstructed shares on the proposals?
Our Bylaws provide for the election of directors by a plurality of the votes cast. This means that the twelve individuals nominated for election to the board of directors who receive the most “FOR” votes (among votes properly cast in person, electronically or by proxy) will be elected. Withheld votes are not considered votes cast for or against the nominee under a plurality voting standard. For each other proposal to pass in accordance with our Bylaws, the proposal must receive the affirmative vote of a majority of the votes cast in person, electronically or by proxy at the Annual Meeting. Abstentions and broker non-votes are not counted as votes cast. The following table summarizes the Board’s recommendation on each proposal and the vote required for each proposal to pass.
| Age: 61 | |||||
Chairman and Chief Executive Officer, Citizens Financial Group, Inc. |
Committees: Executive (Chair); Equity | |||||
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What do I need to show to attend the Annual Meeting in person?
You will need proof of your share ownership (such as a recent brokerage statement or letter from your broker showing that you owned shares of the Company’s common stock as of March 7, 2016 if you hold your shares through a broker) and a form of government-issued photo identification. If you do not have proof of ownership and valid photo identification, you may not be admitted to the Annual Meeting. No cameras, cell phones, smart phones, laptops, tablets, or recording equipment are permitted in the meeting room. In addition, large bags, backpacks, briefcases, and similar items are not permitted in the meeting room.
Who bears the cost of the proxy materials?
The Company pays for preparing, printing and mailing this proxy statement and the annual report. Officers and employees of the Company may solicit the return of proxies, but will not receive additional compensation for those efforts. The Company will request that brokers, banks, custodians, nominees and other fiduciaries send proxy materials to all beneficial owners and upon request will reimburse them for their expenses. Solicitation may be made by mail, telephone or other means.
Can I receive future proxy materials and annual reports electronically?
Yes. Instead of receiving future paper copies in the mail, you can elect to receive our future annual reports and proxy materials electronically. Opting to receive your proxy materials electronically will save us the cost of producing and mailing documents to your home or business, and will reduce the environmental impact of our annual meetings.
If you are a stockholder of record and wish to enroll in the electronic proxy delivery service for future meetings, you may do so by going to the website provided on your proxy card and following the prompts.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following sections provide an overview of our corporate governance structure and processes. Among other topics, we describe how we select directors, how we consider the independence of our directors and key aspects of our Board operations.
Our Charter and Bylaws provide that the board of directors shall consist of not less than 5 nor more than 25 directors, excluding any directors elected by holders of preferred stock pursuant to provisions applicable only in the case of defaults under the terms of our preferred stock. The exact number of directors will be fixed from time to time by resolution of our Board. The board of directors has fixed the current number of directors at twelve. The terms of office of all directors expire at the Annual Meeting.
At each annual meeting, the successors of the directors are elected to hold office for a term expiring at the next annual meeting. The board of directors is therefore asking you to elect the nominees for director. All twelve have been nominated for reelection at the Annual Meeting. See “Proposal 1—Election of Directors” on page 75.
Directors are elected by a plurality. Therefore, the twelve nominees who receive the most “FOR” votes will be elected. Proxies cannot be voted for a greater number of persons than the number of nominees named. There is no cumulative voting. If you sign and return the accompanying proxy card, your shares will be voted for the election of the twelve nominees recommended by the board of directors unless you choose to withhold your vote against any of the nominees. If any nominee for any reason is unable to serve or will not serve, proxies may be voted for such substitute nominee as the proxy holder may determine. The Company is not aware of any nominee who will be unable to or will not serve as a director.
Set forth below for each nominee is biographical information. We have also identified for each individual the business experience, qualifications, attributes and skills that underlie the Board’s and Nominating and Corporate Governance Committee’s belief that each individual is a valuable member of the board of directors.
Experience, Skills and Qualifications | ||||||
• Executive in the financial services industry with over 30 years experience • Extensive financial background and service on the boards of other public companies • Additional role as our Chief Executive Officer brings management’s perspective to Board deliberations and provides valuable information about the status ofday-to-day operations | ||||||
Mr. Van Saun joined From 1997 to 2008, Mr. Van Saun held a number of senior positions with |
Mr. Van Saun Mr. Van Saun received a B.S. in Business Administration from Bucknell University in 1979 and an M.B.A. in Finance and General Management from the University of North Carolina in 1983.
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Mark Casady Retired Chairman and Chief Executive Officer, LPL Financial Holdings, Inc. | Age: 58 | |||||
Director Since: 2014 Committees: Risk | ||||||
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• Compliance and risk experience as an executive in • Expertise in the area of wealth management and brokerage, including experience while Chairman and Chief Executive Officer of LPL Financial Holdings, Inc. | ||||||
• Knowledge of data management and analysis through his role at Vestigo Ventures and technology and innovation through his service on the board of Eze Software Group | ||||||
Background Mr. Casady was Chairman and Chief Executive Officer of LPL Financial Holdings, Inc. until his retirement in 2017. He joined LPL Financial Before joining LPL Financial, |
Mr. Casady currently serves on the board of Mr. Casady received
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2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Christine M. Cumming Retired First Vice President and Chief Operating Officer, Federal Reserve Bank of New York | Age: 66 Director Since: 2015 Committees: Risk | |||||||
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• Seasoned bank regulatory executive with over 35 years at the Federal Reserve Bank of New York (“FRBNY”), including serving as First Vice President and Chief Operating Officer • Extensive background in risk management, technology, monetary policy and bank supervision • Experience in crisis management as chair of the Cross-Border Crisis Management Group for the Resolution Steering Group of theG-20’s Financial Stability Board | ||||||||
Background Until her retirement in 2015, Ms. Cumming was First Vice President of the FRBNY, its second highest ranking officer, Previously, Ms. Cumming was |
Ms. Cumming Ms. Cumming holds both a B.S. and Ph.D in economics from the University of Minnesota.
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William P. Hankowksy | Age: 67 Director Since: 2006 Committees: Audit; Compensation | |||||||
Chairman, President and Chief Executive Officer, Liberty Property Trust | ||||||||
Experience, Skills and Qualifications | �� | |||||||
• Extensive business and management expertise, particularly in the real estate sector as Chief Executive Officer of Liberty Property Trust and as President of the Philadelphia Industrial Development Corporation • Service on the boards of other public companies and numerousnon-profit entities | ||||||||
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Mr. Hankowsky currently serves on the boards of Aqua America Inc. (since 2004), Delaware River Waterfront Corporation, Greater Philadelphia Chamber of Commerce, Mr. Hankowsky received a B.A. in economics from Brown University.
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2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Age: 71 Director Since: 2009 Committees: Audit; Nominating & Corporate Governance | ||||||||
Howard H. Hanna III Chairman and Chief Executive Officer, Hanna Holdings, Inc. | ||||||||
Experience, Skills and Qualifications | ||||||||
• Extensive business and management expertise, particularly in the real estate and mortgage origination sectors • Compliance and regulatory experience serving on the board of directors of the Federal Reserve Bank of Cleveland’s Pittsburgh office • Service on the boards of other financial institutions including Equibank and National City Pennsylvania Bank | ||||||||
Mr. Hanna is the Chairman and Chief Executive Officer of Hanna Holdings, Inc. |
Mr. Hanna currently serves as the Chair of the Children’s Hospital of Pittsburgh Board of Trustees and is a member of the hospital’s Foundation Board and Finance and Investment Committee. Previously, Mr. Hanna served on the board Mr. Hanna received a B.S. from John Carroll University in 1969.
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Age: 72 Director Since: 2014 Committees: Audit; Compensation | ||||||||
Leo I. (“Lee”) Higdon Past President, Connecticut College | ||||||||
Experience, Skills and Qualifications | ||||||||
• Experienced executive in the financial services industry, including serving as Managing Director and Vice Chairman of Salomon Brothers Inc. • Service on the boards of other public companies, including asnon-executive Chairman of Encompass Health Corporation and as lead director of Eaton Vance Corporation • Experience in academic institutions, including as Past President of Connecticut College, Dean of the Darden Graduate School of Business Administration at the University of Virginia | ||||||||
Mr. Higdon was the President of Connecticut |
at Salomon Brothers Inc, holding various positions, including Managing Director and Vice Chairman. Mr. Higdon Mr. Higdon
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2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Edward J. (“Ned”) Kelly III Former Chairman, Institutional Clients Group, Citigroup, Inc. | Age: 65 | |||||||
Director Since: 2019 | ||||||||
Committees: Compensation; Nominating & Corporate Governance | ||||||||
Experience, Skills and Qualifications | ||||||||
• Extensive experience in the financial services industry in various roles including Vice Chairman, Chief Financial Officer at Citigroup, Inc. and General Counsel at J.P. Morgan • Service on the boards of other public companies including MetLife and CSX Corporation | ||||||||
Background Mr. Kelly joined our Board on February 1, 2019. Until his retirement in 2014, he was Chairman of Citigroup Inc.’s Institutional Clients Group. He previously served as Chairman of Global Banking from April 2010 to January 2011, and as Vice Chairman of Citigroup from July 2009 to April 2010. He also served as Citigroup’s Chief Financial Officer during 2009, and was previously head of Global Banking and President and Chief Executive Officer of Citi Alternative Investments. Mr. Kelly currently serves on the board of MetLife and was chairman of the board of directors at CSX Corporation until January 2019. He previously served on the board of XL Catlin (from 2014 to 2018). He also serves on the board of our primary subsidiary CBNA. Mr. Kelly joined Citigroup in 2008 from The Carlyle Group, a private investment firm, where he was a managing director. Prior to joining Carlyle in 2007, he was a Vice Chairman at PNC Financial Services Group following PNC’s acquisition of Mercantile Bankshares Corporation in 2007. He was Chairman, Chief Executive and President of Mercantile from 2003 to 2007. Before Mercantile, he was at J.P. Morgan where he held various positions including General Counsel and Secretary and managing director within J.P. Morgan’s investment banking business. Prior to joining J.P. Morgan, Mr. Kelly was a partner at the law firm of Davis Polk & Wardwell, where he specialized in matters related to financial institutions. Mr. Kelly received his J.D. from the University of Virginia School of Law, in 1981 and A.B. from Princeton University in 1975. | ||||||||
Charles J. (“Bud”) Koch | Age: 72 Director Since: 2004 Committees: Risk (Chair); Audit | |||||||
Retired Chairman, President and Chief Executive Officer, Charter One Financial | ||||||||
Experience, Skills and Qualifications | ||||||||
• Veteran executive in the financial services industry, particularly in the retail banking sector, including position as Chief Executive Officer of Charter One Financial • Regulatory experience from service on the board of the Federal Home Loan Bank (“FHLB”) of Cincinnati • Service on the boards of other public companies and academic institutions | ||||||||
Mr. Koch is the retired Chairman and Chief Executive Officer of Charter One Financial and its subsidiary Charter One Mr. Koch has been a director of |
Assurant Inc. Mr. Koch
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2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Terrance J. Lillis Retired Chief Financial Officer, Principal Financial Group, Inc. | Age: 66 Director Since: 2019 Committees: Audit | |||||||
Experience, Skills and Qualifications | ||||||||
• Seasoned executive with 35 years experience in the financial services industry • Service as Chief Financial Officer of Principal Financial Group, Inc. • Experience in capital allocation, portfolio management and strategic transactions | ||||||||
Mr. Lillis joined our board on February 1, 2019. Until his retirement in 2017, he was the Chief Financial Officer of Principal Financial Group, Inc. He joined Principal in 1982 as an actuarial student and held various senior actuarial, risk management and product-pricing roles through 2008 when he was appointed Chief Financial Officer. Mr. Lillis currently serves on the board of Mercy Medical Center Board of Directors and is Chair of the Simpson College Board of Trustees. He also serves on the Henry B. Tippie College of Business Advisory Board, the Diocese of Des Moine and Catholic Charities Finance Council and the board of Principal International-Mexico. Mr. Lillis also serves on the board of our Mr. | ||||||||
Shivan Subramaniam Retired Chairman and Chief Executive Officer, FM Global | Age: 70 Director Since: 2005 Committees: Nominating & Corporate Governance (Chair); Risk; Executive | |||||||
Experience, Skills and | ||||||||
• Extensive business and management expertise, including serving as Chairman and Chief Executive Officer • Expertise in • Service on the boards of directors of |
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Mr. Subramaniam Mr. |
Mr. Subramaniam received
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2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Wendy A. Watson Retired Executive Vice President, Global Services, State Street Bank & Trust Company | Age: 70 Director Since: 2010 Committees: Audit (Chair); | |||||||
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• Experienced executive in the financial services industry and extensive financial background, including serving as Executive Vice President, Global Services for State Street Bank & Trust Company • Fellowship with the National Association of Corporate Directors and credentials as a CPA and Certified Fraud Examiner • Advanced Professional Director Certification from the American College of Corporate Directors, a public company director education and credentialing organization | ||||||||
�� | Background Until her retirement in 2009, Ms. Watson was the Executive Vice President, Global Services for State Street Bank & Trust Company which she joined in 2000. Ms. Watson |
Ms. Watson is a magna cum laude graduate of McGill University in Montreal with a Bachelor of Commerce degree with majors in Accounting and Law.
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Marita Zuraitis Director, President and Chief Executive Officer, The Horace Mann Companies | Age: 58 Director Since: 2011 Committees: Risk | |||||||
Experience, Skills and Qualifications | ||||||||
• Seasoned executive in the financial services industry including experience as Chief Executive Officer of The Horace Mann Educators Corporation • Expertise in the Insurance sector with over 30 years industry experience • Service on the boards of other companies and academic institutions | ||||||||
Ms. Zuraitis is Director, President and Chief Executive Officer of The Horace Mann Educators Corporation. Prior to joining Horace Mann in May 2013, |
Ms. Zuraitis Ms. Zuraitis is a graduate of Fairfield
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2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
BOARD GOVERNANCE AND OVERSIGHT
The following sections provide an overview of our board governance structure and processes. Among other topics, we describe how we select directors, how we consider the independence of our directors and key aspects of our Board operations.
BackgroundCorporate Governance Guidelines, Committee Charters and ExperienceCode of DirectorsBusiness Conduct and Ethics
Our Board has adopted Corporate Governance Guidelines which set forth a flexible framework within which our Board, assisted by Board committees, directs our affairs. The Corporate Governance Guidelines address, among other things, the composition and functions of the Board, director independence, Board and Board committee evaluations, compensation of directors, management succession and review, Board committees and selection of new directors.
Our Corporate Governance Guidelines are available on the corporate governance section of our website at www.citizensbank.com/investor-relations.
The charters for each of the Audit, Compensation, Nominating and Corporate Governance, Risk and Executive Committees are also available on the corporate governance section of our website at www.citizensbank.com/investor-relations.
Our Board has also adopted a Code of Business Conduct and Ethics (the “Code”), which sets forth key guiding principles concerning ethical conduct and is applicable to all of our directors, officers and employees. The Code addresses, among other things, conflicts of interest, protection of confidential information and compliance with laws, rules and regulations, and describes the process by which any concerns about violations should be reported.
The Code is available on the corporate governance section of our website at www.citizensbank.com/investor-relations. You may also obtain a copy, free of charge, by writing to our Corporate Secretary at 600 Washington Boulevard, Stamford, Connecticut 06901. Any amendments to the Code, or any waivers of its requirements, will be disclosed on our website.
When considering whether directors and director nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our Board to satisfy its oversight responsibilities effectively in light of our business and structure, theour Board focuses primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set
forth above.experience. This includes leadership, character, financial literacy, judgment, independence, diversity and key skills. We believe that our directors providerepresent an appropriate and diverse mix of backgrounds, experience and skills relevant to the size and nature of our business. In particular,
The following key facts reflect the members of our Board considered the following important characteristics, among others:
Mr. Van Saun—we considered hiscomposition, skills and experience as an executive in the financial services industry, his extensive financial background and his experience serving on the boards of other public companies. Furthermore, we also considered how his additional role as our Chief Executive Officer would bring management’s perspective to Board deliberations and provide valuable information about the status of our day-to-day operations.
Mr. Casady—we considered his experience in compliance and risk as an executive in the financial services industry, including his experience as Chief Executive Officer of LPL Financial Holdings Inc., and his experience serving on the board of governors of FINRA and the boards of directors of the Financial Services Roundtable and Eze Software Group.
Ms. Cumming—we considered her experience as an executive inBoard following the financial services industry, including her experience as the First Vice President and Chief Operating Officer with the Federal Reserve Bankretirement of New York and her broad background in risk management, technology, monetary policy and bank supervision.
Mr. Di lorio—we considered his experience as an executive inIorio and Mr. Ryan effective at the financial services industry, including his experience as Chief Financial Officer of Deutsche Bank, his extensive financial background and his experience serving on the boards of other public companies.
Mr. Hankowsky—we considered his extensive business and management expertise, including his experience as Chief Executive Officer of Liberty Property Trust, his service as Presidentconclusion of the Philadelphia Industrial Development Corporation, his experience serving on the boards of numerous public companies and non-profit entities and his experience in the real estate sector.2019 Annual Meeting.
Mr. Hanna—we considered his extensive business and management expertise, his experience serving on the boards of numerous non-profit entities and the board of directors of the Federal Reserve Bank of Cleveland’s Pittsburgh office, and his experience in the real estate and mortgage origination sectors.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Mr. Higdon—we considered his experience as an executive in the financial services industry, including his experience as Managing Director and Vice Chairman of Salomon Brothers Inc. and his experience serving on the boards of other public companies, including as non-executive Chairman of HealthSouth Corporation and as lead director of Eaton Vance Corporation. In addition, we considered his experience in academic institutions, including as Dean of the Darden Graduate School of Business Administration at the University of Virginia.
Mr. Koch—we considered his experience as an executive in the financial services industry, including his experience as Chief Executive Officer of Charter One Financial, his experience serving on the boards of other public companies and the FHLB of Cincinnati and his experience in the retail banking sector.
Mr. Ryan—we considered his experience as an executive in the financial services industry, including his experience as Chief Executive Officer of Prudential Financial, Inc. and President and Chief Operating Officer of Chase Manhattan Bank, his experience serving on the boards of other public companies and his experience in the retail banking sector.
Mr. Subramaniam—we considered his extensive business and management expertise, including his experience as Chief Executive Officer of FM Global, and his experience serving on the boards of directors of FM Global and Lifespan Corporation and the board of trustees of Bryant University.
Ms. Watson—we considered her experience as an executive in the financial services industry, including her experience as Executive Vice President, Global Services for State Street Bank & Trust Company, her extensive financial background, her fellowship with the National Association of Corporate Directors, her credentials as a CPA and Certified Fraud Examiner, and her experience serving on the boards of other financial services companies.
Ms. Zuraitis—we considered her experience as an executive in the financial services industry, her experience serving on the boards of Horace Mann Educators Corporation and NCCI Holdings, Inc. and her experience in the insurance sector.
Selecting Nominees for DirectorBoard Selection and Refreshment
Our Board has delegated responsibility for the review and recommendation of director nominees to the Nominating and Corporate Governance Committee the responsibility for reviewing and recommending to the Board nominees for director. In accordance with our Corporate Governance Guidelines,Committee. Upon the Nominating and Corporate Governance Committee evaluates and recommends candidates for Board membership to the Board annually and as vacancies or newly created positions occur. Upon theCommittee’s recommendation, of the Nominating and Corporate Governance Committee, a slate of directors is nominated by the Board and submitted to a stockholder vote annually.
The Nominating and Corporate Governance Committee will consideralso review and recommend candidates for nomination persons who have demonstrated leadership, have experience or relevant knowledge, time availability and commitment, the highest character, reputation and integrity, the analytical and critical thinking skills, the financial literacy, risk management and other business experience and acumen, the ability to work as a team constructively in a collegial environment and who exhibited independent thought and judgment.
The Nominating and Corporate Governance Committee also recommends individuals for membership on the committees of the Board annually and as vacancies or newly created positions occur.
In making its recommendations for Board and committee membership, the Nominating and Corporate Governance Committee reviews candidates’ qualifications for membership on the Board or committee (including making a specific determination as to the independence of the candidate) based on the criteria described above and taking into account the enhanced independence, financial literacy and financial and risk management expertise standards that may be required under law, regulation or NYSE rules for committee membership purposes. In addition, the Nominating and Corporate Governance Committee evaluates current directors for re-nomination to the Board or committee, including assessing such directors’ performance and reassessing their independence. The Nominating and Corporate Governance Committee also periodically reviews the composition of the Board and its committees in light of the current challenges and needs of the Board and the Company, and determines whether it may be appropriate to add or remove individuals after considering issues of judgment, diversity, age, skills, background and experience.
Considerations |
The Nominating and Corporate Governance Committee will consider for nomination persons who have demonstrated leadership, have experience or relevant knowledge, time availability and commitment, the highest character, reputation and integrity, analytical and critical thinking skills, financial literacy, risk management and other business experience and acumen, the ability to work as a team constructively in a collegial environment and who exhibit independent thought and judgment. |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Recommendations |
In making its recommendations for Board and committee membership, the Nominating and Corporate Governance Committee shall review the: (i) candidates’ qualifications for membership on the Board or committee (including their independence taking into account the enhanced independence, financial literacy and financial and risk management expertise standards that may be required under law, regulation or New York Stock Exchange rules for committee membership purposes); (ii) candidates’ performance and professional responsibilities; and (iii) composition of the Board and its committees considering issues of judgment, skills and expertise, background and experience, and diversity with respect to age, gender and ethnicity. |
Review |
In recommending there-nomination of directors to the Board or a committee, the Nominating and Corporate Governance Committee evaluates current directors, including assessing such directors’ performance and reassessing their independence and expertise. Periodically, the Committee will review the composition of the Board and its committees in light of the current challenges and needs of the Board and the Company. |
New candidates may be identified to serve on the board of directors through recommendations from independent directors or members of management, search firms discussions withor other persons who may know of suitable candidates to serve on the board of directors,sources, and stockholder recommendations.stockholders. Evaluations of prospective candidates typically include a review of the candidate’s background and qualifications by the Nominating and Corporate Governance Committee, interviews with the committee as a whole, one or more members of the committee, or one or more other board members, and discussions within the committee and the full board of directors.
TheIn preparation for the retirements of Mr. Di Iorio and Mr. Ryan, the Board engaged a highly regarded leadership consulting firm, Spencer Stuart, to assist in identifying and evaluating potential new Board members. After a review of a range of highly qualified candidates by the Nominating and Corporate Governance Committee will consider director candidates proposed by stockholders as well asbased on the criteria outlined above, the Nominating and Corporate Governance Committee submitted their recommendations from other sources. to the Board and Mr. Lillis and Mr. Kelly were appointed effective February 1, 2019.
Any stockholder who wishes to recommend a prospective candidate for the board of directors for consideration by the Nominating and Corporate Governance Committee may do so by submitting the name and qualifications of the prospective candidate in writing to the following address: Corporate Secretary, 600 Washington Boulevard, Stamford, Connecticut 06901. Stockholders must propose nominees for consideration by the Nominating and Corporate Governance Committee in accordance with the procedures and other requirements set forth in our Bylaws. See “Other Information for Stockholders—Proposals for 2017”2020 Annual Meeting and Stockholder Proposals.”
While all of our directors meet the requirements of our Corporate Governance Guidelines, in recommending there-nomination of directors to the Board, the Nominating and Corporate Governance Committee reviews, among other things, all outside directorships on page 78.a facts and circumstances basis to determine whether simultaneous service on other boards could impair a director’s ability to effectively serve on our Board. Mr. Hankowsky is an active CEO and Chairman of a public company and sits on two additional public company boards, including ours. In considering
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Mr. Hankowsky’sre-nomination, the Nominating and Corporate Governance Committee reviewed his (i) geographic proximity to and length of tenure on his other boards; (ii) locality to a key area of the Citizens footprint; (iii) real estate and financial services industry expertise; (iv) leadership and management experience; and (v) attendance, performance and contributions to our Board. Based upon its review, the Nominating and Corporate Governance Committee has determined that Mr. Hankowsky’s outside directorships do not impair his effectiveness as a director and valuable member of our Board.
As a part of its listing standards, the NYSENew York Stock Exchange (“NYSE”) has adopted certain criteria that determine director independence. As an NYSE-listed company, our Board considers when determiningutilizes these criteria to determine our director independence. Under the NYSE rules, the Board also broadly considers all other relevant facts and circumstances that bear on the materiality of each director’s relationship with the Company, including the potential for conflicts of interest, when determining director independence. In addition, the Board considers whether the Company or one of its subsidiaries has a lending relationship, deposit relationship, or other banking or commercial relationship with a director, an immediate family member, or an entity with which the director or a family member is affiliated by reason of being a director, an officer or a significant stockholder thereof. Any such relationship must meet the following criteria: (1)(i) it must be in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions withnon-affiliated persons; and (2)(ii) with respect to extensions of credit by the Company or its subsidiaries to such entity: (a) such extensions of credit have been made in compliance with applicable law, including Federal Reserve Regulation O and Section 13(k) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (b) no event of default has occurred and is continuing beyond any period of cure.
To assist the Board in its determination of director independence, the Nominating and Corporate Governance Committee annually evaluates each prospective and incumbent director using the foregoing standards and such other factors as the Nominating and Corporate Governance Committee deems appropriate, and makes a recommendation to the Board regarding the independence or non-independencenon- independence of each such person. As a part of this evaluation process, the Nominating and Corporate Governance Committee considers all relevant facts and circumstances and, in particular, the independence requirements of the Securities Exchange Commission (“SEC”) and the NYSE. Banking relationships with the Company or any of its subsidiaries (including deposit, investment, lending, fiduciary) that are conducted in the ordinary course of business on substantially the same terms and conditions as are otherwise available to nonaffiliatednon-affiliated customers for comparable transactions are not considered material in determining independence.
We have determined that each of Mr. Casady, Ms. Cumming, Mr. Di lorio,Iorio, Mr. Hankowsky, Mr. Hanna, Mr. Higdon, Mr. Kelly, Mr. Koch, Mr. Lillis, Mr. Ryan, Mr. Subramaniam, Ms. Watson and Ms. Zuraitis is an independent director within the meaning of the applicable rules of the SEC and NYSE. In addition, we have determined each of Mr. Di lorio, Mr. Hankowsky, Mr. Hanna, Mr. Higdon, Mr. KochCommittee member meets the independence and Ms. Watson is also an independent director under Rule 10A-3 of the Exchange Act for the purpose of audit committee membership, and each of Mr. Ryan, Mr. Hankowsky, Mr. Higdon and Ms. Watson is also an independent director under Rule 10C-1 of the Exchange Act for the purpose of compensation committee membership. Our Board has determined that each of Mr. Di lorio, Mr. Hankowsky, Mr. Hanna, Mr. Higdon, Mr. Koch and Ms. Watson is an audit committee financial expertexpertise requirements within the meaning of the applicable rules of the SEC and NYSE.
Executive SessionsNYSE for the Committees on which they serve. For further information see “Corporate Governance – Board Governance and Oversight – Committees of Our Non-Management Directors
The Company’s non-employee directors participate in regularly scheduled executive sessions in which management does not participate. If the non-employee directors include directors who are not considered independent, the independent directors must also meet in executive session at least once a year.
The Lead Director (or Chairman, if the Chairman is a non-employee director) shall preside at each executive session. Currently, our Lead Director is Arthur F. Ryan. Interested persons may make their concerns known directly to the Lead Director or the non-management directors as a group by submitting their written correspondence to the Company’s Corporate Secretary located at 600 Washington Boulevard, Stamford, Connecticut 06901. The Corporate Secretary may facilitate such direct communication to the Lead Director or the non-management directors as a group by reviewing, sorting and summarizing such communications.Board.”
The Company’s Corporate Governance Guidelines provide that our Chief Executive Officer shall serve as Chairman of the Board, while an independent director shall serve as Lead Director. Given the significant duties designated to our independent Lead Director, the Board’s view is that having a
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
combined Chairman and Chief Executive Officer enables it to (i) provide efficient and effective governance and leadership to the Company, (ii) be apprised of current risks and issues that may impact the Company in a timely manner, and (iii) present a single point of leadership to all Company stakeholders. Accordingly, the Board has determined that a combined Chairman and Chief Executive Officer position, with an independent Lead Director, is the most appropriate Board leadership structure for the Company.
The Board periodically reviews its leadership structure periodically in light of the composition of the Board, the needs of the Company and its stockholders, thepeer company practices, of the Company’s peers, and other factors and retains itsthe flexibility to allocate the responsibilities of the offices of the Chairman and Chief Executive Officer in any waymanner that is inserves the best interests of the Company at a given point in time.Company.
The Lead Director is an independent director designated by the Board, based on the recommendation of the Nominating and Corporate Governance Committee. In addition to other duties and
Key responsibilities of the Lead Director set forth in the Corporate Governance Guidelines or our Bylaws, the Lead Director shall:Director:
Preside at Board and stockholder meetings where the Chairman is not present, including executive sessions of the independent directors | Serve as a liaison, facilitating communication between independent directors and the Chairman | Provide advice and guidance to the Chairman on board leadership, executive management and corporate strategy matters | Review and approve agendas/agenda planners and materials for Board meetings in coordination with the Chairman, adding items to the agenda as appropriate | |||||||||||||
Call meetings of the independent directors as required | Communicate with major stockholders and regulators upon request | Be an independent advocate and ensure accountability to investors when potential conflicts of interest arise between management and investors | Together with the Chair of the Compensation Committee discuss the Board’s annual evaluation of the CEO’s performance with the CEO |
Currently, Mr. Van Saun serves as our Chairman of the Board and Chief Executive Officer and Mr. Ryan serves as our Lead Director.
The Board, based on the recommendation of the Nominating and Corporate Governance Committee, has designated Mr. Subramaniam to serve as Lead Director upon Mr. Ryan’s retirement following the conclusion of the Annual Meeting.Meetings of the Board of Directors and Attendance at the Annual Meeting
Our board of directors held ten meetings during fiscal 2018. No member attended fewer than 75% of the Board and committee meetings on which the member sits. All directors are expected to attend our annual meetings. Ten of our twelve directors serving during 2018 attended the annual meeting held April 26, 2018. The 2019 Annual Meeting is the Company’s fifth annual meeting since becoming a public company during fiscal 2014.
Executive Sessions of Our Non-Employee Directors
The Company’snon-employee directors, who are all independent, participate in regularly scheduled executive sessions in which management does not participate. Our Lead Director, currently Mr. Ryan, presides at each executive session. Interested persons may make their concerns known directly to Mr. Ryan, his successor or the non-employee directors as a group by submitting their written correspondence to the Company’s Corporate Secretary located at 600 Washington Boulevard, Stamford, Connecticut 06901. The Corporate Secretary may facilitate such direct communication to
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
the Lead Director or the non-employee directors as a group by reviewing, sorting and summarizing such communications.
Board, Committee and Director Evaluations
The Board, led by the Nominating and Corporate Governance Committee, conducts an annual self-evaluation to determine whether it and its committees are functioning effectively. Under each committee’s charter, the committee evaluates and assesses its performance, skills and resources required to meet its obligations under its charter at least annually. In addition, all directors complete a self-evaluation. At least every three years, an independent party is used to conduct the Board and committee evaluations.
Results of the evaluations are then presented to the Board and its committees and used to determine actions designed to enhance the operations of the Board and its committees going forward. Periodically, the Board will also complete peer evaluations. The results of all peer evaluations are reviewed by the Chair, Lead Director and Chair of the Nominating and Corporate Governance Committee. In addition, each director receives a copy of their individual report. The following outlines our annual evaluation cycle:
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Each of our Board members participates in an annual training and continuing education program which includes both full board training and board committee training. An annual schedule is developed, with input from the directors, which covers a broad range of topics to enhance and strengthen the skills, knowledge and competencies of directors, individually and collectively. Examples of such topics include cybersecurity, crisis management, regulatory developments, corporate governance, anti-money laundering and industry trends. The program encompasses presentations from internal and external speakers as well as site visits to key locations and regular meetings with management. In addition, directors are encouraged to avail themselves of educational programs offered through recognized independent providers.
The Board is responsible for guiding and ultimately approving the strategic direction of the Company and overseeing execution of the Company’s strategic plan. Every year the Board holds an offsite meeting dedicated to reviewing the Company’s long-term strategy which includes detailed discussions with management, investors, securities analysts and industry experts. In addition, the Board assesses the Company’s strategic, competitive and financial performance at each of its meetings to ensure continued alignment to the long-term strategy.
Board’s Role in Risk Oversight
The Board is responsible for oversight of the Company’s internal controls and risk management framework. This oversight generally requires evaluation of management’s systems of internal control, financial reporting and public disclosure, ensuring the accuracy and completeness of financial results, and review and approval of the Company’s enterpriseenterprise-wide risk management governance framework and ensuring that risks to the Company are properly managed. The Board has delegated itscertain risk oversight duties to the Risk Committee and, with respect to financial controls, the Audit Committee. The Board receives independent reports from each ofboth the Audit Committee and the Risk Committee at each of its meetings.
While each of the Audit and Risk Committees play a role in the oversight of risk, it is the Risk Committee which serves as the primary point of contact between the Board and the management-level committees that have responsibility for risk management. See “Corporate Governance—Board Governance and Oversight—Committees of the Board.”
Under its charter, the Risk Committee is responsible for overseeing the design, implementation and operation of the Company’s enterprise-wide risk management includinggovernance framework with respect to funding and liquidity risk, credit risk, market risk, strategic risk, business risk, reputation risk, operational risk, model risk and pension risk. The Risk Committee reviews and, as it deems appropriate, recommends to the Board the design and implementation of the Company’s risk strategy and policy, risk appetite framework and specific risk appetites and limits.
Under the oversight of the Risk Committee, the Company operates an enterprise-wide risk management framework which sets standards and provides guidance for the identification, assessment, monitoring and control of material risks that affect or have the potential to affect the value for our stockholders, customers and colleagues and the safety and soundness of the Company. The framework sets forth the risk governance model that operates within the Company and outlines the responsibilities of the Board and its committees, executive officers, colleagues and oversight committees with respect to risk governance, supervision and internal control systems.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Our cybersecurity program is overseen by both the Audit and Risk Committees. The Audit Committee is responsible for overseeing our cybersecurity program under its risk oversight responsibilities as it relates to financial controls. The Risk Committee servesis responsible for oversight of management of cybersecurity risk consistent with the Company’s enterprise-wide risk management governance framework. Both the Audit and Risk Committees receive regular reporting on cybersecurity and as cyber threats continue to evolve, under their oversight, we continually seek to enhance our layers of defense.
We remain committed to building and maintaining a strong risk management culture throughout the primary pointCompany and believe having an ethical culture that extends through every layer of contact between the BoardCompany is foundational to delivering the best possible banking experience for our customers and a great workplace for our colleagues. Our Conduct Office, overseen by the management-level committees that deal with risk management. The Risk Committee’s responsibility is one of oversight, and theAudit Committee, has no dutyoversight responsibility for monitoring the behavior of our colleagues in relation to ensure compliance with laws and regulations. See “—Committees of the Board—Risk Committee” on page 22.
Corporate Governance Guidelines, Committee Charters andour Code of Business Conduct and Ethics,
Our Board has adopted Corporate Governance Guidelines, which set forth Sales Practices and other key policy considerations on a flexible framework within which our Board, assisted by Board committees, directs our affairs. The Corporate Governance Guidelines address, among other things, the composition and functions of the Board, director independence, compensation of directors, management succession and review, Board committees and selection of new directors. Our Corporate Governance Guidelines are available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations. The charters for each of the Audit, Compensation, Nominating and Corporate Governance, Risk and Executive Committees are also available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations.
Our Board has also adopted a Code of Business Conduct and Ethics (the “Code”), which sets forth key guiding principles concerning ethical conduct and is applicable to all of our directors, officers and employees. The Code addresses, among other things, conflicts of interest, protection of confidential information and compliance with laws, rules and regulations, and describes the process by which any concerns about violations should be reported. The Code is available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations. You may also obtain a copy, free of charge, by writing to our Corporate Secretary at 600 Washington Boulevard, Stamford, Connecticut 06901. We expect that any amendments to the Code, or any waivers of its requirements, will be disclosed on our website.Company-wide basis.
Our board of directorsBoard has six standing committees. Four of these committees (Audit, Compensation, Nominating and Corporate Governance and Risk) meet on a regular basis. The Executive Committee meets as needed and is composed of our Chairman and Chief Executive Officer, our Lead Director and the chairChair of our Nominating and Corporate Governance Committee. The Executive Committee may act on behalf of the Board and reports its actions to the full Board. The Equity Committee acts as needed and is composed of our Chairman and Chief Executive Officer. The
Equity Committee makesOfficer and acts as needed to make equity grants (subject to certain limitations determined by the Compensation Committee) between annual grant cycles and reports its actions to the Compensation Committee. See “—Compensation Matters—Compensation Discussion and Analysis—Process for Approval of Equity Grants.” The following table shows the current members of each of the four primary standing committees and the number of meetings held during fiscal 2015.
Director | Audit | C&HR | N&CG | Risk | ||||
Mark Casady | ü | |||||||
Christine M. Cumming | ü | |||||||
Anthony Di lorio | ü | ü | ||||||
William P. Hankowsky | ü | ü | ||||||
Howard W. Hanna III | ü | ü | ||||||
Leo I. Higdon | ü | ü | ||||||
Charles J. Koch | ü | ü* | ||||||
Arthur F. Ryan | ü* | ü | ||||||
Shivan S. Subramaniam | ü* | ü | ||||||
Wendy A. Watson | ü* | ü | ü | |||||
Marita Zuraitis | ü | |||||||
Number of meetings | 13 | 8 | 3 | 7** |
* = chair.
Audit Committee. The Audit Committee reviews and, as it deems appropriate, recommends to our Board our internal accounting and financial controls and the accounting principles and auditing practices and procedures to be employed in preparation and review of our financial statements. The Audit Committee is also directly responsible for the engagement and oversight of our independent public auditors.
During fiscal 2015, the Audit Committee held thirteen meetings. Each member of the Audit Committee meets the independence requirements of the NYSE and is financially literate, and each member of the Audit Committee is an independent director under Rule 10A-3 under the Exchange Act. In addition, each member of the Audit Committee is an audit committee financial expert.
Compensation and Human Resources Committee. The Compensation Committee is responsible for, among other things, reviewing and approving our overall compensation philosophy, determining the compensation of our executive officers and directors, administering our incentive and equity-based compensation plans, and succession planning as described in further detail in the Compensation Discussion and Analysis.
During fiscal 2015, the Compensation Committee held eight meetings. Each member of our Compensation Committee meets the independence requirements of the NYSE and Rule 10C-1 of the Exchange Act, is a “non-employee director” under Exchange Act Rule 16b-3, and is an “outside director” under Section 162(m) of the Internal Revenue Code. If, at any time, all directors serving on the Compensation Committee do not meet the “non-employee director” requirements of Exchange Act Rule 16b-3 and “outside director” requirements of Section 162(m) of the Internal Revenue Code, the
Compensation Committee will delegate to a special Section 16b-3 and Section 162(m) subcommittee consisting of those Compensation Committee members who meet such requirements the authority to approve grants of equity-based compensation subject to Section 16(b) of the Exchange Act and Section 162(m) of the Internal Revenue Code.
Compensation Advisory Partners, LLC provides guidance and advice to the Compensation Committee on compensation-related matters. See “—Compensation Discussion and Analysis—Executive Compensation Procedures—Role of Compensation Consultants.”
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee reviews and, as it deems appropriate, recommends to the Board policies and procedures relating to director and board committee nominations and corporate governance policies.
During fiscal 2015, the Nominating and Corporate Governance Committee held three meetings. Each member of the Nominating and Corporate Governance Committee meets the independence requirements of the NYSE.
Risk Committee. The Risk Committee reviews and, as it deems appropriate, recommends to the Board the design and implementation of our risk strategy and policy, risk appetite framework and specific risk appetites and limits. The Risk Committee also oversees our risk management function and reviews the due diligence of any proposed strategic transaction. In addition, the Risk Committee oversees the Chief Risk Officer and the internal risk management function of the Company. In carrying out itstheir duties, each committee of the Risk CommitteeBoard is authorized to select, retain, terminate and approve fees and other retention terms of independent legal or other advisors as it deems appropriate without seeking approval of management or the Board. The following table shows the current members of each of the four primary standing committees and the number of meetings held during fiscal 2018.
During fiscal 2015, the Risk Committee held seven meetings.
Director | Audit | Compensation | Nominating & Corporate Governance | Risk | ||||
Mark Casady | ||||||||
Christine M. Cumming | ||||||||
Anthony Di Iorio | ||||||||
William P. Hankowsky | ||||||||
Howard W. Hanna III | ||||||||
Leo I. Higdon | ||||||||
Edward J. Kelly III* | ||||||||
Charles J. Koch | ||||||||
Terrance J. Lillis* | ||||||||
Arthur F. Ryan | ||||||||
Shivan Subramaniam | ||||||||
Wendy A. Watson | ||||||||
Marita Zuraitis | ||||||||
Number of meetings | 14 | 7 | 4 | 7 |
Committee member |
« | Committee chair |
* | Committee appointments effective April 1, 2019 |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
The Audit Committee reviews and, as it deems appropriate, recommends to our Board our internal accounting and financial controls and the accounting principles and auditing practices and procedures to be employed in preparation and review of our financial statements. The Audit Committee is also directly responsible for the appointment, compensation, retention and evaluation of the qualifications, independence, performance of our independent public auditors. Each member of the Audit Committee meets the independence requirements of the NYSE and is financially literate, and each member of the Audit Committee is an independent director under Rule10A-3 under the Exchange Act. In addition, each member of the Audit Committee is an audit committee financial expert. The Audit Committee charter is available on the corporate governance section of our website at www.citizensbank.com/investor-relations. | ||||||
Audit Committee | ||||||
Members: | ||||||
Wendy A. Watson (Chair) | ||||||
Anthony Di Iorio | ||||||
William P. Hankowsky | ||||||
Howard W. Hanna III | ||||||
Leo I. Higdon | ||||||
Charles J. Koch | ||||||
Terrance J. Lillis* | ||||||
Meetings held in 2018: 14 | ||||||
*Effective April 1, 2019
The Compensation Committee is responsible for, among other things, reviewing and approving our overall compensation philosophy, determining the compensation of our executive officers and directors, administering our incentive and equity- based compensation plans, and talent and succession planning, as described in further detail in the Compensation Discussion and Analysis. Each member of our Compensation Committee meets the independence requirements of the NYSE and Rule10C-1 of the Exchange Act and is a“non-employee director” under Exchange Act Rule16b-3. If, at any time, any director serving on the Compensation Committee does not meet the“non-employee director” requirements of Exchange Act Rule16b-3, the Compensation Committee will delegate to a specialSection 16b-3 subcommittee consisting of those Compensation Committee members who meet such requirements the authority to approve grants of equity-based compensation subject to Section 16(b) of the Exchange Act. Compensation Advisory Partners, LLC provides guidance and advice to the Compensation Committee on compensation-related matters. See “Compensation Matters—Compensation Discussion and Analysis—Executive Compensation Governance—Role of Compensation Consultants.” The Compensation Committee charter is available on the corporate governance section of our website at www.citizensbank.com/investor-relations. | ||||||
Compensation Committee | ||||||
Members: | ||||||
Arthur F. Ryan (Chair) | ||||||
William P. Hankowsky | ||||||
Leo I. Higdon | ||||||
Edward J. Kelly III* | ||||||
Wendy A. Watson | ||||||
Meetings held in 2018: 7 | ||||||
*Effective April 1, 2019
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
The Nominating and Corporate Governance Committee reviews and, as it deems appropriate, recommends to the Board policies and procedures relating to director and board committee nominations and corporate governance policies. It also oversees the development and implementation of the Board annual training and continuing education program and annual Board and committee self-evaluation process. Each member of the Nominating and Corporate Governance Committee meets the independence requirements of the NYSE. The Nominating and Corporate Governance Committee charter is available on the corporate governance section of our website at www.citizensbank.com/investor-relations. | ||||||
Nominating & Corporate Governance Committee | ||||||
Members: | ||||||
Shivan Subramaniam (Chair) | ||||||
Anthony Di Iorio | ||||||
Howard H. Hanna III | ||||||
Edward J. Kelly III* | ||||||
Arthur F. Ryan | ||||||
Meetings held in 2018: 4 | ||||||
*Effective April 1, 2019
The Risk Committee reviews and, as it deems appropriate, recommends to the Board the design and implementation of our risk strategy and policy, risk appetite framework and specific risk appetites and limits. The Risk Committee also oversees our risk management function, our enterprise risk management governance framework and reviews the due diligence of any proposed strategic transaction. In addition, the Risk Committee oversees the Chief Risk Officer and the internal risk management function of the Company. Each member of the Risk Committee meets the independence requirements of the NYSE. Mr. Koch qualifies as an expert, as required by federal banking regulations, having the experience in identifying, assessing and managing large, complex financial firms’ risk exposures relevant to the Company’s particular risks and commensurate with the Company’s structure, risk profile, complexity, activities and size. As required by the Risk Committee charter, the chair of the committee, Mr. Koch, is also a non-executive director who meets the criteria for independence specified by the Federal Reserve Board’s Enhanced Prudential Standards (12 CFR 252.33(a)(4)(ii)). The Risk Committee charter is available on the corporate governance section of our website at www.citizensbank.com/investor-relations. | ||||||
Risk Committee | ||||||
Members: | ||||||
Charles J. Koch (Chair) | ||||||
Mark Casady | ||||||
Christine M. Cumming | ||||||
Shivan Subramaniam | ||||||
Wendy A. Watson | ||||||
Marita Zuraitis | ||||||
Meetings held in 2018: 7 | ||||||
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee who served during 20152018 are current or former officers or employees of the Company or any of our subsidiaries. No Company executive officer served on the compensation committee of another entity that employed an executive officer who also served on our Board. No Company executive officer served as a director of an entity that employed an executive officer who also served on our Compensation Committee.
Meetings of the Board of DirectorsTalent Management and Attendance at the Annual MeetingSuccession Planning
Our board of directors held eleven meetings during fiscal 2015. No member attended fewer than 75% ofAt least annually, the Board and committee meetings on which the member sits. It is the Board’s policy that our directors attend our annual meetings. The Annual Meeting is the Company’s second annual meeting since becoming a public company during fiscal 2014.
Plurality Voting for Directors
Our Bylaws provide for the election of directors by a plurality of the votes cast. This means that the twelve individuals nominated for election to the board of directors who receive the most “FOR” votes (among votes properly cast in person, electronically or by proxy) will be elected.
Succession Planning and Management Development
The Compensation Committee reviews at least annually, in consultation with the Chief Executive Officer, the Company’s talent management and management succession planning,plan, including with respect to Chief Executive Officer selection and succession inother executive positions. This includes the eventreview and evaluation of the incapacitation, retirement or removal of the Chief Executive Officer, and reviews evaluations of, and development plans for any potential successors to the Chief Executive Officer role and other key positions.
Developing talent at all levels is a priority for the Company. We have two programs focused on providing the Board with additional opportunities to interact with senior management, which gives management unique access to the Board and also facilitates a deeper understanding of the organization by the Board. This includes a mentoring program that pairs executives with Board members and informal feedback sessions where directors meet with groups of senior management below the executive level. The Company also offers various talent development programs throughout the organization focused on building leadership and management skills, career development, and other areas.
Our executive officers are designated by, and serve at the discretion of, our board of directors. There are no family relationships among any of our directors or executive officers. Our executive officers are as follows:
Executive Officer | Age | Position | ||||
Bruce Van Saun | Chairman and Chief Executive Officer | |||||
| Executive Vice President | |||||
| ||||||
Brad L. Conner | Vice Chairman, Consumer Banking | |||||
Stephen T. Gannon | Executive Vice President, General Counsel and Chief Legal Officer | |||||
Malcolm Griggs | 58 | Executive Vice President and Chief Risk Officer | ||||
Donald H. McCree III | 57 | Vice Chairman, Commercial Banking | ||||
C. Jack Read | 50 | Executive Vice President and Controller | ||||
John F. Woods | 54 | Vice Chairman |
Bruce Van Saun |
Chairman and Chief Executive Officer |
|
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Mary Ellen Baker | ||||
Executive Vice President | ||||
| Mary Ellen Bakerhas responsibility for Technology, Information and Corporate Security, Property Services, Vendor Management, Enterprise Information, ProcessRe-engineering and Change Management. Ms. Baker joined the Company in August 2016 from PNC Financial Services Group, Inc. where she most recently held the title of Executive Vice President of Enterprise Services. She previously worked for Bank of America Corporation as Head of Enterprise Resiliency and Corporate Services and Head of Technology and Operations for the Consumer and Small Business Bank. Throughout her career, Ms. Baker has led numerous strategic projects in the areas of technology and operations, including supply chain, risk management, new technology implementation, and crisis response initiatives. |
Brad L. Conner |
Vice Chairman, Consumer Banking |
Brad L. Conneris responsible for Retail Banking, Business Banking, Wealth Management, Home Lending Solutions, Auto Finance and Education Finance, as well as the Consumer Phone Bank and online channels. Before joining the Company in 2008, Mr. Conner was President of JPMorgan Chase & Co.’s Home Equity and Mortgage Home Loan Direct business. He previously oversaw the combined home equity business of Chase and Bank One after the companies merged in 2004, and served as Chief Executive Officer of Chase’s Education Finance businesses. Mr. Conner served as a director for the Rhode Island Public Expenditure Council from 2010 through 2012. Since 2009, he has served on the board of trustees of the Dave Thomas Foundation for Adoption, where he has served as treasurer since 2011, and currently serves on its audit committee and committee for institutional advancement. Mr. Conner currently serves on the board of directors of Amgine Technologies (US), Inc. and is Chairman of the Consumer Bankers Association board of directors, where he has served as a board member since 2011. Mr. Conner has a B.A. and M.B.A. from the University of Arkansas. |
Stephen T. Gannon |
Executive Vice President, General Counsel and Chief Legal Officer |
Stephen T. Gannonis responsible for overseeing our legal department, providing strategic leadership to the management of legal risk and overseeing an integrated legal function which includes regulatory relations and government relations. Prior to joining the Company in August 2014, Mr. Gannon was the Executive Vice President and Deputy General Counsel of Capital One Financial Corporation. In his seven years at Capital One Financial Corporation, Mr. Gannon was responsible for advising on litigation and regulatory matters, transactional and product line matters as well as policy affairs and governance and, in January 2014, was appointed to serve as Market President for Central Virginia. Mr. Gannon was previously the General Counsel—Retail Brokerage Group at Wachovia Securities LLC, a partner and head of the securities litigation practice at LeClair Ryan, P.C., as well as a Staff Attorney and Branch Chief at the Securities and Exchange Commission. Mr. Gannon earned an A.B. in History and a J.D. from Georgetown University. |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – CORPORATE GOVERNANCE |
Malcolm Griggs |
Executive Vice President and Chief Risk Officer |
Mr. Malcolm Griggs, age 55, will become our Executive Vice President and Chief Risk Officer effective April 1, 2016, upon Ms. Shanik’s retirement as Chief Risk Officer.
Mr. Van Saun’s biography and related information may be found above at “Directors, Executive Officers and Corporate Governance—Nominees.”
Eric Aboaf became our Executive Vice President and Chief Financial Officer effective April 6, 2015. Prior to joining the Company, Mr. Aboaf was global Treasurer at Citigroup Inc. since 2009, where he was responsible for managing the company’s balance sheet, ensuring strong liquidity and optimizing the capital structure. Prior to becoming global Treasurer, Mr. Aboaf held the chief financial officer positions for both the Institutional and North American Consumer bank segments at Citigroup Inc. He was Global CFO for the Institutional Clients Group, leading the finance and strategy functions for Capital Markets, Investment Banking, Transaction Services and Alternative Investments. Mr. Aboaf served as CFO for the North American Consumer Group, which included Credit Cards, Retail Banking, Consumer Finance and Insurance. Before holding those roles, he served as Citigroup Inc.’s head of Financial Planning and Analysis. Prior to joining Citigroup Inc., Mr. Aboaf was a partner at Bain & Company and Co-Head of its U.S. Financial Services Practice. He also worked at Oliver Wyman & Company, a New York-based strategy firm. Mr. Aboaf is a graduate of both the Wharton School of Business and the Engineering School at the University of Pennsylvania. He holds a Master of Science degree from Massachusetts Institute of Technology.
David Bowerman is Vice Chairman, Head of Business Services with responsibility for Operations, Technology, Property, Procurement and Security. Previously, Mr. Bowerman was Managing Director, U.K. and European Operations for RBS Business Services. He joined NatWest Bank in 1982, which was acquired by RBS in 2002. During his years with RBS, he undertook a range of retail and corporate roles. Mr. Bowerman is a fellow of the Chartered Institute of Bankers in Scotland. He was educated in England and attended Harvard Business School’s Advanced Management Program. Mr. Bowerman has served on the board of the Institute for the Study and Practice of Nonviolence, in Providence, Rhode Island, since 2011.
Brad L. Conner is Vice Chairman of our Consumer Banking Division. He is responsible for Retail Banking, Business Banking, Wealth Management, Home Lending Solutions, Auto Finance and Education Finance, as well as the Consumer Phone Bank and online channels. Before joining the Company in 2008, Mr. Conner was President of JP Morgan Chase & Co.’s Home Equity and Mortgage Home Loan Direct business. He previously oversaw the combined home equity business of Chase and Bank One after the companies merged in 2004, and served as Chief Executive Officer of Chase’s Education Finance businesses. Mr. Conner served as a director for the Rhode Island Public Expenditure Council from 2010 through 2012. Since 2009, he has served on the board of trustees of the Dave Thomas Foundation for Adoption, where he has served as treasurer since 2011, and currently serves on its audit committee and committee for institutional advancement. He has also been a member of the Consumer Bankers Association board of directors since 2011. Mr. Conner has a B.A. and M.B.A. from the University of Arkansas.
Stephen T. Gannon is our General Counsel and Chief Legal Officer. Mr. Gannon is responsible for overseeing our legal department, providing strategic leadership to the management of legal risk and overseeing an integrated legal function. Prior to joining the Company in August 2014, Mr. Gannon was the Executive Vice President and Deputy General Counsel of Capital One Financial Corporation. In his seven years at Capital One Financial Corporation, Mr. Gannon was responsible for advising on litigation and regulatory matters, transactional and product line matters as well as policy affairs and governance and, in January 2014, was appointed to serve as Market President for Central Virginia. Mr. Gannon was previously the General Counsel—Retail Brokerage Group at Wachovia Securities LLC, a partner and head of the securities litigation practice at LeClair Ryan, P.C., as well as a Staff Attorney and Branch Chief at the Securities and Exchange Commission. Mr. Gannon earned an A.B. in History and a J.D. from Georgetown University.
Malcolm Griggs will become ourhas been Executive Vice President and Chief Risk Officer effectivesince April 1, 2016. Mr. Griggs joined the Company in December 2014 as Executive Vice President and Chief Credit Officer. He is responsible for all credit, market, regulatory, compliance and operational risk management governance, reporting and analytics for the Company. Prior to joining Citizens, Mr. Griggs was head of business risk and controls for the U.S. Consumer and Commercial Banking businessesbusiness at Citigroup. Mr. Griggs has had a wide range of risk management responsibility over his banking career, including senior risk positions at Morgan Stanley Private Bank, Bank of America, Wachovia, and as the first Chief Risk Officer at Fifth Third Bank. He also served on the national Board of Directors of the Risk Management Association, including serving as Chairman. He currently serves on the Rhode Island Philharmonic Orchestra and RMA Foundation Boards. Mr. Griggs received his undergraduate and law degrees from the University of North Carolina at Chapel Hill.
Donald H. McCree III |
Vice Chairman, Commercial Banking |
Donald H. McCree III |
C. Jack Read |
Executive Vice President and Controller |
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Throughout the year we interact and communicate with our stockholders in a number of forums, including quarterly earnings presentations, investor conferences, press releases and SEC filings, stockholder dialogue, our annual report, proxy statement and the annual meeting of stockholders.
On an annual basis, we proactively reach out to our largest stockholders to solicit feedback on corporate governance and executive compensation in order to continue to look for opportunities to enhance our current practices. In 2018, six of our stockholders accepted our invitation to engage in discussions regarding our progress against our strategic plan, key elements of our executive compensation program and our corporate governance practices. We also held discussions with additional stockholders at their request. We were supportive of their feedback and used it to enhance certain practices, for example, we published a statement regarding our commitment to pay equity on our website. Obtaining investor feedback is important to us and feedback received was shared with the Board.
Stockholders who wish to contact our Board may send written correspondence, in care of the Corporate Secretary, to Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901. Communications may be addressed to the Lead Director or any alternate director, marked as confidential or otherwise. Communications which are addressed to the Board, an individual director or group of directors will be processed by the Office of the Corporate Secretary. Communications received that discuss business or other matters relevant to the activities of our Board, as determined by the Corporate Secretary, will be distributed to the addressees either in summary form or by delivering a copy of the communication. With respect to other correspondence received by the Company on behalf of one or more directors, the Board has requested that certain items, including the following, not be distributed to directors, because they generally fall into the purview of management, rather than the Board: junk mail and mass mailings, product and services complaints, product and services inquiries, resumes and other forms of job inquiries, solicitations for charitable donations, surveys, business solicitations and advertisements.
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Our vision of being atop-performing regional bank is guided by our core values. We believe that good citizens help each other and that when communities prosper, we all thrive. We remain committed to contributing to the health of the community through our customers, colleagues and management of our environmental impact. In 2018 we published our first Corporate Responsibility Report which provides an overview of how we’re putting these commitments to work in serving our customers well, providing our colleagues with a great place to work, strengthening our communities and reducing our environmental impact. Our Corporate Responsibility Report can be found on our website.
Policies and Procedures for Related Person Transactions
We have adopted a written related person transaction policy pursuant to which our executive officers, directors and significant stockholders, including their immediate family members, are not permitted to enter into a related person transaction with us without the consent of our Nominating and Corporate Governance Committee. Subject to certain transactions excluded from the policy, any request for us to enter into a transaction with an executive officer, director, significant stockholder or any of such persons’ immediate family members, in which the amount involved exceeds $120,000, is required to be presented to our Nominating and Corporate Governance Committee for review, consideration and approval. All of our directors, director nominees, executive officers and significant stockholders are required to report to our Nominating and Corporate Governance Committee any such related person transaction. In approving or rejecting the proposed transaction, our Nominating and Corporate Governance Committee will take into account, among other factors it deems appropriate, the commercial reasonableness of the terms, the benefit or perceived benefit, or lack thereof, to the Company, opportunity costs of alternate transactions, the materiality and character of the related person’s direct or indirect interest and the actual or perceived conflict of interest of the related person.
Transactions with Executive Officers and Directors
We provide credit facilities from time to time to certain directors and executive officers and their immediate families, as well as their affiliated companies. These credit facilities (i) complied with our Regulation O policies and procedures, (ii) were made in the ordinary course of business, (iii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, and (iv) did not involve more than a normal risk of collectability or did not present other features unfavorable to the Company.
Under supplemental retirement arrangements relating to their prior service to Charter One, which we acquired in 2004, Mr. Charles Koch, a director, as well as his brother, Mr. John Koch, are entitled to receive monthly payments. Mr. Charles Koch and Mr. John Koch received approximately $877,500 and $744,900, respectively, under this arrangement during 2018.
We entered into indemnification agreements with our directors and executive officers. These agreements require us to indemnify these individuals to the fullest extent permitted by Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors or executive officers, we have been informed that in the opinion of the SEC such indemnification is against public policy and is therefore unenforceable.
There is currently no pending material litigation or proceeding involving any of our directors and executive officers for which indemnification is sought or which is adverse to the Company.
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PROPOSAL 2 - ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Company provides this vote under the federal securities laws (Section 14A of the Securities Exchange Act of 1934) and in recognition of our stockholders’ vote in 2015 recommending that we hold anon-binding, advisory vote on executive compensation each year. Following that vote, the Board affirmed that recommendation and elected to hold future“say-on-pay” advisory votes on an annual basis, until the next stockholder vote onsay-on-pay frequency.
With this item, stockholders may submit an advisory vote on the compensation of our CEO and other named executive officers listed in the Summary Compensation Table. We encourage stockholders to review the complete description of our executive compensation programs provided in this proxy statement, including the Compensation Discussion and Analysis and the compensation tables and accompanying narrative, which describe the ways we seek to align the interests of our executives with those of our stockholders.
We ask our stockholders to vote on the following resolution at the Annual Meeting.
RESOLVED, that the Company’s stockholders approve, on anon-binding, advisory basis, the compensation of the Company’s executive officers named in the2018 Summary Compensation Table, as disclosed pursuant to Item 402 of RegulationS-K (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and accompanying narrative).
Although the vote on this proposal is advisory and, thereforenon-binding, the Compensation Committee will carefully consider the results of this vote when making future compensation decisions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
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COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation philosophy and program. In particular, the CD&A and the compensation tables that follow focus on the compensation paid to our named executive officers (“NEOs”) with respect to fiscal year 2018. Our NEOs for 2018 are named below:
Brad L. Conner
Stephen T. Gannon
Nancy L. Shanik
Name of Executive | Position | |
Bruce Van Saun | Chairman and Chief Executive Officer | |
John F. Woods | Vice Chairman and Chief Financial Officer | |
Donald H. McCree III | Vice Chairman, Commercial Banking | |
Brad L. Conner | Vice Chairman, Consumer Banking | |
Malcolm Griggs | Executive Vice President and Chief Risk Officer | |
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Background
As a wholly-owned subsidiary of RBS prior to our initial public offering in September 2014, the compensation arrangements of our NEOs were governed by the compensation philosophy
Alignment of Pay and objectives of RBS, and were subject to approval by the RBS Performance and Remuneration Committee of the Board of Directors of RBS (“RemCo”), with our Compensation Committee involved with the evaluation of the performance of our executive team, providing oversight with respect to our executive compensation decisions and being actively engaged with senior management in talent management and succession planning. Following our initial public offering, decision-making authority with respect to executive compensation transitioned to our Compensation Committee, with RemCo’s role limited to providing the necessary oversight to ensure that our compensation arrangements continued to comply with applicable UK and European remuneration regulations for so long as they applied. During this time, our Compensation Committee structured executive compensation within applicable regulatory parameters taking into account our strategic objectives and the interests of our stockholders.
RBS completed the sale of its equity interest in the Company in November 2015, as a result of which UK and European remuneration regulations no longer apply to the Company. Consistent with our compensation philosophy, several changes have been made to our compensation structure effective in 2016, most notably to reduce fixed pay by eliminating role-based allowances in order to more effectively align our compensation program with our strategic objectives, the interests of our stockholders and practices at our regional bank peers. However, much of the compensation disclosed in the2015 Summary Compensation Table for 2015 and all of the compensation disclosed for 2014 and 2013 was partially driven by compliance within the regulatory environment in which we were operating at the time. For further details regarding these regulatory requirements, see “—Applicability of UK and European Remuneration Rules” below.
2015 Performance Highlights
Our executive compensation program is designed to provide incentives to achieve desired results, attract and retain key talent, and encourage effective risk management. Our executive compensation strategies and performance highlights may vary from year to year as we continue to evolve as an independent publicly traded company and will be highly influenced by how we achieve and deliver financial results and meet key stakeholder objectives, while still ensuring that we maintain a reasonable and balanced risk appetite.
The Company made good progress and had a strong overall year in 2015, delivering solid execution on our plan to improve our performance for all stakeholders.
Significant 2015 Executive Compensation Decisions
Over 98% of the votes cast on the annual advisory say-on-pay vote conducted at our 2015 annual meeting approved the compensation of our NEOs. In light of this favorable result, no specific actions were taken in response to the vote, although we have made several executive compensation decisions during 2015 which have served to further align the Company’s executive compensation program with the interests of our stockholders, consistent with good governance and market practice:
Executive Compensation Philosophy & Principles
The fundamental principles that have historically guided
Prior to our initial public offering in September 2014 and subsequent separation from The Royal Bank of Scotland Group plc, our performance had fallen behind peers given balance sheet shrinkage and underinvestment in strategic initiatives, technology and talent over a number of years. Over the past four years, we have addressed many of those challenges and have consistently demonstrated the ability to set a course, develop a plan and execute well, as demonstrated by our ability to meet or exceed analyst expectations for 18 consecutive quarters. Our performance journey is described in further detail in the section titled “Performance Highlights.”
We believe we have turned the corner on performance and are now aiming for excellence, on our way towards becoming atop-performing regional bank. We believe we have built a solid foundation with additional levers available to us for continued performance improvement.
To realize these results, it has been essential for us to effectively attract, retain, and motivate highly capable and experienced executive management and we feel our compensation program has been integral in achieving this goal.
Executive Compensation Philosophy & Principles
The fundamental principles that guide the design and implementation of compensation programs for our NEOs include:
Attract, retain, motivate and reward high-caliber executives to deliver long-term business | ||
Provide alignment between annual and long-term compensation for executives and | ||
Support a culture where employees recognize the importance of serving customers well and are rewarded for superior | ||
Encourage the creation of value over the long-term and align the rewards | ||
| Design compensation in a |
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Review of Compensation Program
Over 95% of the votes cast on the advisorysay-on-pay vote conducted at our 2018 annual meeting approved the compensation of our NEOs. Notwithstanding oursay-on-pay results in any given year, throughout the year the Compensation Committee’s consultant provides updates regarding executive compensation trends, best practices, and regulatory developments in order to assist the Compensation Committee in determining whether any changes to our executive compensation program should be considered. No significant changes were made to our executive compensation program in 2018.
Highlights of our Pay Practices
We believe our pay practices demonstrate our commitment to alignment with stockholders’ interests and our dedication to maintaining a compensation program supported by strong corporate governance, as exemplified by the following practices:
What We Do | What We Don’t Do | |||||
Pay for performance. A significant portion of our executives’ compensation | No single trigger vesting of equity awards or cash payments. We do not provide for any single trigger vesting of equity awards or severance payments upon a change of control, unless there is a qualifying termination of employment. | |||||
Bonus funding dependent on our risk performance. Our bonus funding is determined based on a number of factors, including but not limited to, the Company’s risk performance. | Prohibition against hedging and | |||||
| Pay is | No taxgross-ups. We do not offer taxgross-ups on executive benefits other than in connection with our relocation program, | ||||
Robust compensation plan governance.Our compensation plans are subject to a robust governance process that involves review by control partners (including risk, legal, human resources, and finance). The plans are subject to a risk review by the Compensation Committee on an annual basis and a risk review by an independent third party every three years. | Dividend equivalents are not paid on unvested units. Dividend equivalents are accrued but not paid until restricted stock units and performance stock units become vested. |
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Stock ownership and retention guidelines. Our executives and directors are subject to stock ownership and retention guidelines (CEO - 5x base salary; other executives - 3x base salary; directors - 4x annual cash retainer). | No repricing or exchange of underwater stock options. Our compensation plan does not allow for repricing or buying out underwater options. | |||||
Annualsay-on-pay vote. We submit our | ||||||
Stockholder engagement. We proactively engage with key stockholders in order to elicit their feedback on our | ||||||
Independent compensation consultant.The Compensation Committee engages an independent compensation consultant, who performs work solely for the committee. |
Executive Compensation Program Components
The following table summarizes the principal elements of the compensation program that applied to our NEOs for 2015.2018. Each element is described more fully in subsequent sections of the Compensation Discussion and Analysis.CD&A.
Element of Pay | Objective | Key Characteristics | ||
Base Salary | To attract and retain talented executives who can effectively lead the organization to achieve our strategic objectives. | Base salaries are reviewed annually and are intended to fairly compensate executives for the position | ||
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Variable Compensation | To support a culture where employees recognize the importance of serving customers well and are rewarded for their individual contributions and our collective success and to align compensation with stockholders’ interests. | Variable compensation is designed to reward achievement of long-term objectives and annual progress toward those objectives, in a manner that aligns pay with the interests of stockholders and is market competitive. Variable compensation |
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Long-Term Awards | ||||
Short-Term Awards | The remaining portion of variable pay for the | |||
Benefits | To give executives an opportunity to provide for their retirement and address | Our NEOs are |
Executive Compensation ProceduresGovernance
Role of Compensation Committee
The Compensation Committee is composed solely of independent directors and is responsible for establishing, implementing and monitoring the administration of our executive compensation plans and programs, and for approving our executive officers’executives’ compensation. Among its duties, the Compensation Committee is responsible for determining the compensation of our CEO and, based upon recommendations from the CEO approves(together with our Chief Human Resources Officer), approving compensation for our other executive officers,executives. In addition, the Compensation Committee is also generally responsible for overseeing Citizens’our material compensation and material benefit plans, recommending to the Board of Directors non-employee director compensation, evaluating executive officer
performance, and compensation, and reviewing talent management and succession planning. Until RBS sold its remaining equity interest in the Company in November 2015, RemCo provided oversight to the Compensation Committee to ensure compliance with UK and European remuneration regulations while those regulations applied to us. For further details, see “—Applicability of UK and European Remuneration Rules” below.plans.
Role of Compensation Consultants
Compensation Advisory Partners, LLC
The Compensation Committee retained Compensation Advisory Partners, LLC (“CAP”) to provide guidance and advice on compensation-related matters during 2015.2018. CAP was directly selected and retained by the Compensation Committee to provide a broad set of services pertaining to the compensation of our executives and our directors. The Compensation Committee does not engage CAP for any additional services outside of executive and director compensation consulting. In
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
connection with CAP’s retention and on an annual basis, the Compensation Committee conducts an assessment of potential conflicts of interest, of CAP, considering various factors including but not limited to the six factors mandated by the New York Stock Exchange rules, and no conflicts of interest relating to its services have been identified.
McLagan, AON Hewitt (“McLagan”)
Our management retains McLagan to provide peer surveymarket compensation data, that is referred to in making executive compensation recommendations. Survey data gathered by McLaganwhich is referenced by the Compensation Committee when making decisions on executive compensation.compensation decisions. In addition during 2015to our internal review of incentive plans, management engaged McLagan to conduct aan independent risk review of our incentive compensation plans.
Other Advisors
PricewaterhouseCoopers LLP (“PwC”) was appointed as RemCo’s remuneration advisor for 2015.plans during 2018. The advisorsCompany engages an independent third party to RemCo are appointed independently by RemCo. PwC also provides professional services in the ordinary courseconduct this type of business, including advice on remuneration matters, to RBS management. PwC is not an advisor to the Compensation Committee.analysis at least once every three years.
Role of Management
Annually ourOur CEO reviews the performance of each of the other NEOs.executives, including the NEOs, annually. Following this review, the CEO together(together with our Chief Human Resource Officer,Resources Officer) makes salary and variable compensation recommendations for the NEOs other than himself, including recommendations for salary and fixed pay adjustments and variable compensation awards,executives to the Compensation Committee for review, feedback, and approval. OurNeither our CEO does not havenor our Chief Human Resources Officer has any role in determining his or her own compensation.
Compensation Peer Group
As part of its decision-making process, the Compensation Committee usesrefers to a peer group of companies for comparisons of compensation and performance. Although the Compensation Committee refers to peer group data in making compensation decisions, it does not target a specific percentile for executive compensation. In approvingdetermining how to position our compensation relative to peers, the Compensation Committee focuses on how well the Company has performed relative to internal targets and performance improvement relative to peers.
The Compensation Committee’s compensation consultant leads a review of the Company’s compensation peer group on an annual basis, with the Compensation Committee making any adjustments based on the advice of management and its compensation consultant. During its annual review of the peer group, the Compensation Committee considers the size, complexity, and business mix of businesspotential peers, and also considers the banks with which the Company competes for talent. At the time of potential peers. The Compensation Committee discussesour 2018 peer group review, the constructmedian annual assets of these companies was $140.7 billion (as of the peer group on an annual basis, and makes necessary adjustments based on the advicesecond quarter of management and its independent consultant. 2018), which was comparable to our asset size of $155.4 billion.
The Compensation Committee determined in 20152018 that continued use of the following peer group, which is also consistent with our financial peer group, remained appropriate for the Compensation Committee’sits reference in making 20152018 performance year decisions in early 2016:compensation decisions:
BB&T Corporation
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KeyCorp
| SunTrust Banks, Inc. | ||
Comerica Corporation | M&T Bank Corporation | Regions Financial Corporation | ||
Fifth Third Bancorp |
Group | U.S. Bancorp |
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Role of Risk Management in Executive Compensation
The Company acknowledges that there are inherent risks associated with executive compensation and has taken a multi-faceted approach to manage those risks, including the following:
Risk-Mitigating Compensation Governance |
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• Our Compensation Committee engages an independent third party to conduct a risk assessment of our incentive compensation plans every three years. |
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Compensation Design That Drives a Culture of Risk Management |
• Executives are awarded a meaningful portion of their compensation in the form of long-term equity awards. |
• Between50%-70% of long-term awards for executives are awarded in the form of performance stock units that vest following a three-year performance period depending on achievement againstpre-established performance criteria. |
• Equity compensation awards do not accelerate in the event of retirement or change of control. |
Use of Competitive Data
The Compensation Committee refers to competitive compensation and performance information in making compensation decisions. The Compensation Committee does not target a specific percentile of market data, but uses the information to determine an appropriate competitive range and mix of total compensation for each NEO.
Executives are Subject to an Independent Review of Risk Performance Conducted by our Chief Risk Officer |
• The Chief Risk Officer conducts an annual review of executives’ risk performance. |
• Inputs to this review include a risk performance questionnaire designed by the Chief Risk Officer and completed by Risk partners who have worked closely with the executive, audit results, and executives’ self-evaluations against risk objectives. |
• The resulting risk score is taken into consideration by the Compensation Committee in determining executives’ compensation. |
Executive Compensation Decisions
The Compensation Committee evaluates a broad set of performance criteria in making compensation decisions, through evaluation of performance against a balanced scorecard measuring performance against the following dimensions: financial; risk; customer; strategic initiatives; and people. The elements considered reflect a balanced review of performance, providing a means for applying structured discretion in assessing results and determining pay. The Compensation Committee’s performance considerations represent both objective and subjective goals. The Compensation Committee does not necessarily favor one measure over another or apply a particular formula or weighting, but instead uses a balanced view of performance to gain a comprehensive understanding of the Company’s overall results.
The Compensation Committee determined our NEOs’ variable compensation amounts following a comprehensive review of the Company’s performance as noted in“—2015 Performance Highlights” above, as well an evaluation of the following key individual achievements during 2015:
John Fawcett, our former Chief Financial Officer, received a separation payment in lieu of incentive compensation for the 2015 performance year, the amount of which was negotiated with Mr. Fawcett in connection with his departure. In addition, the Compensation Committee decided to award the equity portion of his incentive compensation payment in respect of the 2014 performance year in non-performance based awards. For a more detailed discussion, see “Potential Payments Upon Termination or Change of Control—Separation Agreement with Mr. Fawcett”.
2015 Performance Year Variable Compensation Supplemental Table
Based upon its assessment of overall Company performance, division/functional and individual performance assessments, and recommendations of the CEO for each active NEO other than himself, the Compensation Committee determined 2015 variable compensation amounts for the active NEOs. The following table reflects the 2015 performance year variable compensation earned by each active NEO.
Name | Total 2015 Performance Year Variable Compensation | Cash(1) | Restricted Stock Units(2) | Performance Share Units(2) | ||||||||||||
Bruce Van Saun | $ | 3,336,400 | $ | 1,000,920 | $ | 667,280 | $ | 1,668,200 | ||||||||
Eric Aboaf | $ | 1,781,481 | $ | 534,444 | $ | 356,296 | $ | 890,741 | ||||||||
Brad L. Conner | $ | 1,020,000 | $ | 306,000 | $ | 204,000 | $ | 510,000 | ||||||||
Stephen T. Gannon | $ | 1,100,000 | $ | 440,000 | $ | 330,000 | $ | 330,000 | ||||||||
Nancy L. Shanik | $ | 939,000 | $ | 375,600 | $ | 281,700 | $ | 281,700 |
2015 Performance Year Total Direct Compensation Supplemental Table
The following table reflects the 2015 direct total compensation earned by each active NEO, by element, as well as 2014 total direct compensation.
Name | 2015 Annual Base Salary(1) | 2015 Role- Based Allowance(2) | 2015 Total Variable Compensation(3) | 2015 Total Direct Compensation | 2014 Total Direct Compensation | |||||||||||||||
Bruce Van Saun | $ | 1,487,000 | $ | 2,676,600 | $ | 3,336,400 | $ | 7,500,000 | $ | 7,350,000 | ||||||||||
Eric Aboaf(4) | $ | 505,556 | $ | 562,963 | $ | 1,781,481 | $ | 2,850,000 | NA | |||||||||||
Brad L. Conner | $ | 700,000 | $ | 805,000 | $ | 1,020,000 | $ | 2,525,000 | $ | 2,500,000 | ||||||||||
Stephen T. Gannon | $ | 600,000 | $ | 550,000 | $ | 1,100,000 | $ | 2,250,000 | $ | 2,250,000 | ||||||||||
Nancy L. Shanik | $ | 575,000 | $ | 661,000 | $ | 939,000 | $ | 2,175,000 | $ | 2,175,000 |
Base Salary
Our NEOs’The base salaries of our executives, including those of our NEOs, are reviewed by the Compensation Committee annually. Executives’ salaries are subject to change at the Compensation Committee’s discretion if, among other reasons, the executives’ responsibilities change materially or there are significant changes in the competitive market environment. There were noNo modifications have been made to our NEOs’ salaries for our NEOs approved for either 2015 or 2016,2019, as the Compensation Committee determined each of their salaries is at a level appropriate to
for their role. The current base salaries of our active NEOs are as follows: Mr. Van Saun ($1,487,000); Mr. Aboaf ($700,000); Mr. Conner ($700,000); Mr. Gannon ($600,000); and Ms. Shanik ($575,000). For the amounts of our NEOs’ base salaries earned during 2015,2018, see the “Salary” column of the20152018 Summary Compensation Tablebelow, along with accompanying footnotes.
Role-Based Allowance
CRD IV provides that variable pay for certain employees may not exceed 100% of fixed pay or, with stockholder approval, 200% of fixed pay. During 2014, this 100% cap applied to certain of our employees, including each of our NEOs, who were considered to be “Material Risk Takers” (“MRTs”) under UK and European remuneration regulations. Further, this cap was anticipated to apply to the Company during 2015 until RBS disposed of its remaining equity interest in the Company in November 2015. For further details, see “—Applicability of UK and European Remuneration Rules”.
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Role-based allowances were introduced by RBS as an element of fixed pay in order to maintain competitive levels of total compensation within the limitations of CRD IV for affected employees. These allowances were delivered in a combination of cash and Company shares. Any shares delivered as part of the allowance were fully vested upon grant, and subject to transfer restrictions generally lapsing ratably over three years. Role-based allowances granted in 2015 are disclosed in the2015 Summary Compensation Table below, with the cash portion included in the “All Other Compensation” column and the stock portion included in the “Stock Awards” column. The annualized role-based allowances of our NEOs during 2015 were as follows: Mr. Van Saun ($2,676,600); Mr. Aboaf ($800,000); Mr. Conner ($805,000); Ms. Shanik ($661,000); Mr. Gannon ($550,000); and Mr. Fawcett ($525,000).
Consistent with our pay for performance philosophy, these role-based allowances have been discontinued effective January 1, 2016, following RBS’ sale of its remaining equity interest in the Company in November 2015. The value of the role-based allowances will instead become part of our executives’ variable compensation opportunity for 2016 and future years, thereby significantly reducing fixed pay and further aligning our executives’ interests with those of shareholders.
Variable Compensation
Section 162(m) Plan
In early 2014 we adopted the Citizens Financial Group, Inc. Performance Formula and Incentive Plan (the “Section 162(m) Plan”) (also see “—Tax Deductibility ofOur Compensation” below). Variable compensation payable Committee members believe it is important for them to our executive officers is generally subjectretain discretion to the maximums set forth in the Section 162(m) Plan based on our pre-tax operating income. The Section 162(m) Plan has been designed to funddetermine overall variable compensation (annualfunding as well as individual executive awards, in order to ensure that we continue to build stockholder value while promoting the stability and long-term) that is intended to qualify as performance-based compensation under Section 162(m)growth of the Internal Revenue Code. At the beginningCompany.
The Compensation Committee exercises structured discretion in making these determinations, with decisions informed by a number of eachqualitative and quantitative performance year,metrics across various dimensions. The factors considered by the Compensation Committee designates participants in the Section 162(m) Plan. For more information about awards granted under the Section 162(m) Plan in respect of 2015, including the formula for determining the maximum annual variable compensation that may be paidrepresent both objective and the definition of pre-tax operating income, please see footnote 6 to the2015 Grants of Plan-Based Awards Table.
Determination of our CEO’s 2015 Performance Year Annual Variable Compensation
In determining our CEO’s variable compensation amount for the 2015 performance year, first the maximum funding under the Section 162(m) Plan was determined, as described above in “—Variable Compensation—162(m) Plan”. In addition, consideration was given to Mr. Van Saun’s 2015 target total direct compensation of $6.5 millionsubjective considerations, and maximum total direct compensation of $8.9 million. In exercising its negative discretion to reduce the maximum funding amount produced by the
Section 162(m) Plan, the Compensation Committee considereddoes not favor one measure over another or apply a particular formula or weighting.
The Compensation Committee believes that reviewing multiple dimensions of performance in determining pay facilitates management’s focus on Company performance overall and mitigates the risk of disproportionate focus on certain elements of performance to the detriment of others.
Process for Determining Overall Funding
The determination of our overall variable compensation funding is informed by a robust process that includes a comprehensive review of Company performance through multiple dimensions. These dimensions include key financial performance measures, risk performance, delivery to stakeholders (customers, employees, stockholders, regulators, and community), progress on strategic initiatives, performance relative to peer companies (including relative performance improvement), and the amount of the pool as a percentage of ourpre-tax,pre-incentive operating profit.
At the end of 2018, performance against each of these dimensions was reviewed by the Compensation Committee, as well as pay levelsthe potential impact of peer CEOs, and awarded Mr. Van Saun total variable compensationvarious pool allocation scenarios on the employee population. Following the consideration of $3,336,400 (resulting in $7.5 million in total direct compensation), which is at the medianall of our peers’ CEO compensation based on most recently available data (2014). In determining Mr. Van Saun’s variable compensation,these factors, the Compensation Committee concluded thatdetermined the Company’s 2015overall variable compensation pool.
Determining NEO Variable Compensation Awards
After the overall variable compensation pool was established, the Compensation Committee determined the variable compensation amounts for each of our NEOs based on its review of each executive’s performance. In making these determinations, the Compensation Committee evaluated executive performance was strong, with improvement in closing performance gaps to peers. through the use of a balanced scorecard reflecting the following dimensions:
1. | Financial and overall business performance(for example, financial performance as compared to our budget/strategic plan as well as improvement relative to peers) |
2. | Risk and control(for example, delivery against regulatory expectations and control environment) |
3. | Customer outcomes (for example, measures reflecting customer satisfaction and deepening customer relationships) |
4. | Strategic initiatives (for example, successful execution of M&A and cost saving initiatives) |
5. | Human capital (for example, talent development, turnover and organizational health metrics) |
The Compensation Committee provided for Mr. Van Saun’s variable paybelieves that this approach provides a comprehensive understanding of the Company’s overall results and the individual executive’s contributions to be delivered 50% in performance share units that become vested after 3 years based on the level of achievement against specified performance measures, 20% in restricted stock units that become vested over three years and 30% in cash.
Determining Other NEOs’ 2015 Performance Year Annual Variable Compensation
After 2015 maximum awards under the Section 162(m) Plan were determined, the Compensation Committee exercised its negative discretion to reduce the total variable compensation for each active NEO, based on the Compensation Committee’s assessment of overall Company performance, business or functional performance and individual performance.those results. These performance assessments occur through the evaluation of performance against a balanced scorecard measuring performance against the following dimensions: financial; risk; customer; strategic initiatives; and people. The elements considereddimensions reflect a balanced review of performance, providing a means for applying structured discretion in assessing results and determining pay,pay.
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Executives, including the NEOs (other than the Chief Risk Officer, whose performance is evaluated by the Risk Committee), are also subject to an annual risk assessment by our Chief Risk Officer, the results of which are considered by the Compensation Committee when evaluating executive performance and represent both objective and subjective goals. In addition, executivemaking compensation decisions.
Executive compensation levels at our peer firms arecompanies were also considered by the Compensation Committee in making compensation decisions based on most recently available data (2014) (our(McLagan 2018 survey data reflecting 2017 compensation). Our peer firms for this purpose are identified above in “—Executive Compensation Procedures—Governance—Compensation Peer GroupGroup.”). The resultingCompensation Committee also considered the target compensation amount for Mr. Van Saun in determining his variable compensation, although the target is intended to serve only as a reference point, with the primary drivers of the compensation decision being performance across the five dimensions discussed above. Mr. Van Saun’s target total compensation is $9.0 million (which was increased from $8.1 million in December 2018 in light of the increase to median CEO compensation in our peer group).
The Compensation Committee determined that the 2018 variable compensation amounts are described abovereflected below in the20152018 Performance Year Variable Compensation Supplemental Table. The Compensation Committeefor our NEOs were appropriate, in large part, due to 2018 Company performance described earlier in “Performance Highlights”and the following key individual achievements during 2018:
• | Bruce Van Saun, Chairman and Chief Executive Officer: |
Delivered excellent financial performance with results ahead of budget, paced by strong revenue growth and operating leverage. This continues a strong, consistent performance trajectory since the initial public offering.
Completed two strategic acquisitions, Franklin American Mortgage Company and Clarfeld Financial Advisors, designed to accelerate growth and build capabilities in fee income businesses.
• | Implemented several initiatives designed to enhance customer experience and be responsive to the needs of clients, including the launch of Citizens Access™ (a national direct banking platform) in the Consumer Bank, and the enhancement of Commercial Banking products, capabilities and customer-facing applications. |
Continued to advance our regulatory agenda through remediation and termination of regulatory actions, further embedding a strong risk culture and improving the control environment, enhancing data analytics, and implementing comprehensive risk management programs, which have resulted in gaining further confidence of the Company’s regulators.
Successfully recruited key leadership positions, including Head of Mortgage, Controller, Chief Information Officer, and Chief Data Officer and made continued investments in data analytics, digital, cybersecurity, and customer experience teams.
Continued commitment to colleagues and community, including through the delivery of several new leadership, training, career development and diversity and inclusion programs, the completion of our Johnston, Rhode Island campus, and the introduction of our first Corporate Responsibility Report.
• | John F. Woods, Vice Chairman and Chief Financial Officer: |
• | Supported strong year-over-year financial performance and the continued successful execution of our Tapping our Potential (“TOP”) efficiency initiatives, which help fund important strategic initiatives such as Citizens Access™. |
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Significantly matured merger and acquisition capabilities and led the successful diligence and negotiation of the Franklin American Mortgage Company and Clarfeld Financial Advisors acquisitions.
Introduced substantial rigor to our balance sheet optimization program by establishing ongoing reviews and oversight of our asset and liability strategies.
Introduced additional enhancements to the strategic planning process, including the development and formalization of innovation efforts.
Drove several Treasury contributions integral to the Company continuing to meet regulatory expectations and optimizing its capital structure, such as the successful submission of the annual Comprehensive Capital Analysis and Review (“CCAR”) as well as execution of various capital markets transactions.
• | Donald H. McCree III, Vice Chairman, Commercial Banking: |
Generated strongyear-on-year growth in revenue and pretax income, with disciplined expense and credit management.
Executed client and regional expansion strategies, including achievement of targeted new client levels, the addition of bankers in various locations, and implementation of strong coverage intensity and market planning strategies.
Delivered key initiatives to broaden and integrate product offerings, including the successful integration of Western Reserve Partners, continued build out of Corporate Finance and Markets businesses and enhanced Structured Finance/Asset Based Lending capability.
Strong customer experience relative to industry benchmark, with the execution of several initiatives designed to further improve customer experience, including the enhancement of several customer facing applications, the launch of client priority services and significant operational improvements.
• | Brad L. Conner, Vice Chairman, Consumer Banking: |
Demonstrated continued commitment to customers through a movement to simplify the customer experience and significantly improved our ability to meet changing customer preferences through the acceleration of our physical network transformations that are currently underway, including ATM transformations.
Drove stronglow-cost deposit growth and household growth through the introduction of a new marketing acquisition program and product enhancements, and maintained status as an industry leader in the student lending space.
• | Delivered Citizens Access™, a national direct banking platform featuring an industry-leading digital customer experience, and made excellent progress on the digital agenda with several investments, most notably in mobile enhancements. |
Completed the successful acquisition and integration of Franklin American Mortgage Company and acquisition of Clarfeld Financial Advisors, with Franklin adding critical scale to mortgage servicing and providing new origination channels.
• | Malcolm Griggs, Executive Vice President and Chief Risk Officer: |
Fully embedded Enterprise Risk Management governance framework across the organization, including risk management processes, consistent reporting, and a standardized methodology for identifying and escalating risks.
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Enhanced the capabilities of our Conduct Risk Office through the development of analytics to track conduct risk metrics in real time and aggregate data into a quarterly report provided forto management and the other active NEOs’ variable compensationBoard and made advancements in Risk data science, including the development of models to be delivered 30%-50%mitigate and detect risk issues at an early stage.
Achieved significant progress migrating from a “rules-based” to a “principles-based” risk and control philosophy, including the simplification and streamlining of several policies to ensure appropriate focus on major risks and alignment with the strategic direction of the Company.
Continued improvement in performance share units that become vested after 3 years based on the level of achievement against specified performance measures, 20%-30% in restricted stock units that become vested over three yearsasset quality year-over-year through strong credit discipline and 30%-40% in cash, as illustrated in the2015 Performance Year Variable Compensation Supplemental Table.enhanced change control protocols, including those related to major initiatives and merger integration.
There were no target awards for the other active NEOs other than the CEO. Mr. Aboaf’s employment agreement, however, does include a guarantee of total 2015 variable compensation of not less than $1,756,481. Mr. Aboaf received total 2015 variable compensation of $1,781,481 based on his strong performance during 2015 as discussed above in “—Executive Compensation Decisions”.
2014 Performance Year Variable Compensation Mix
Individuals considered to be “Material Risk Takers” for purposes of European Banking Authority regulations were subject to a specific deferral of 2014 performanceEach year, variable compensation to ensure compliance with UK and European remuneration regulations. After the Compensation Committee determineddetermines the appropriate mix of executive variable compensation. For performance year 2018, the following variable compensation mixes were approved for our NEOs. The Compensation Committee believes that these variable compensation mixes are appropriate as they result in a meaningful portion of variableexecutives’ compensation to award in performance share units, the remaining variable compensation was delivered either 40% or 60% (depending on the amount of variable compensation award) in current cash or immediately vested stock awards, with the remainder deferred over three years, either in cash or stock-based awards. As a result, in accordance with the regulatory requirements that applied to us for 2014, in March 2015 our NEOs were granted immediately vested stock, performance share units and restricted stock units under the Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan (“Omnibus Plan”) as well as immediately paid cash and deferred cash. Under the SEC reporting rules, the immediately vested stock, performance share units and restricted stock units are reflectedbeing awarded in the “Stock Awards” columnform of our2015 Summary Compensation Table. The current and deferred cash portionlong-term equity awards(60%-70%), which ensures alignment with stockholders’ interests without the rigidity of our NEOs’ variable compensation awards for the 2014 performance year was disclosed in the “Non-Equity Incentive Plan Compensation” column of our2014 Summary Compensation Table.
The performance share units will become vested on the third anniversary of the grant date in a percentage of between 0% to 125% of the target award, based on achievement against return on average tangible common equity and diluted earnings per share targets as well as a risk sensitivity assessment to be performed by the Compensation Committee. The Committee may determine to downward adjust the number of shares earned by up to 100%, in the aggregate for all grantees or on an individual basis, based on the risk sensitivity assessment results if it is determined that there was inadequate sensitivity to risk that caused or could be expected to cause a material adverse impact on the Company. The restricted stock units will become vested ratably over three years following grant.
2015 Performance Year Variable Compensation Mix
During 2015, the Compensation Committee determined a future-looking variable compensation mix to be applied when UK and European remuneration regulations cease to apply to the Company. Following RBS’ sale of its remaining equity interest in the Company in November 2015, the Compensation Committee was able to apply that variable pay mix to 2015 performance year awards, pursuant to which our active NEOs’ variable compensation is delivered 30%-50% in performance share units that become vested after three years depending on performance, 20%-30% in restricted stock units that become vested over three years and 30%-40% in cash, as illustrated in the2015 Performance Year Variable Compensation Supplemental Tableabove. Under the SEC reporting rules, the cash portion of our NEOs’ variable compensation awards for the 20152018 performance year is reflected in the “Non-Equity Incentive Compensation” column of our2015 Summary Compensation Table. The guaranteed cash portion of Mr. Aboaf’s 2015 variable compensation award is reflected in the “Bonus” column of our20152018 Summary Compensation Table. TheIn addition, the performance sharestock units and restricted stock units granted in 2018 relating to performance year 2017 are reflected in the “Stock Awards” column of our2018 Summary Compensation Table. However, the performance stock units and restricted stock units granted in 2019 for performance year 2018 will be reflected in the “Stock Awards” column of our20162019 Summary Compensation Table.
ConversionRestricted stock units granted in 2018 for performance year 2017 are scheduled to become vested in equal installments on the first, second and third anniversaries of Outstanding RBS Deferred Sharethe grant date.
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PSUs Granted in 2018
Performance stock units granted in 2018 for performance year 2017 (“2018 PSU Awards”) have a three-year performance period of January 1, 2018 through December 31, 2020 and are scheduled to become vested on March 1, 2021. Half of each 2018 PSU Award will be earned based on achievement of targeted cumulative diluted earnings per share (“Diluted EPS”) and half will be earned based on achievement of targeted average return on average tangible common equity (“ROTCE”), with a maximum payout of 150% of target.
The Compensation Committee believes that Diluted EPS and ROTCE continue to be appropriate measures for the Company’s PSU Awards because improvement in these metrics is an integral element of the Company’s strategic plan, with growth in Diluted EPS and RBS LTIPin ROTCE being essential for us to continue on our trajectory to becoming a top performing regional bank. Targets for Diluted EPS and ROTCE for 2018 PSU Awards Following Our Offering
Priorhave been set by the Compensation Committee, together with management, in connection with our strategic planning process. As part of the strategic planning process, our Board considers prior year performance as a baseline and formulates a three-year strategic plan informed by historic performance, market conditions, and the competitive landscape. Due to our initial public offering, certainthe comprehensive nature of our employees (including our NEOs) were granted equity-based awards under RBS plans in respect of RBS shares. Upon the completionstrategic plan, achievement of our initial public offering, all outstanding awardsstrategic plan targets would represent payout at a level of100-125% of target under the RBS plans held by our employees were converted into Company share-based awards. These converted awards are governed by2018 PSU Awards. Under the terms of the Citizens Financial Group, Inc. Converted Equity 2010 Long Term Incentive Planawards, the Compensation Committee retains the ability to exercise some negative discretion to reduce the number of shares earned based on achievement of Diluted EPS and ROTCE targets at the end of the performance period.
We define “ROTCE” as net income available to common stockholders divided by average common equity excluding average goodwill (net of related deferred tax liabilities) and average other intangible assets, as reported on an underlying or adjusted basis consistent with our external earnings reporting. We define “Diluted EPS” as net income divided by weighted average diluted common shares outstanding, also as reported on an underlying or adjusted basis consistent with our external earnings reporting. “Underlying” or “Adjusted” results exclude certain items, as applicable, that may occur in a reporting period which management does not consider indicative ofon-going financial performance.
Performance Assessment of PSUs Granted in 2016
General 2016 PSU Award
The Compensation Committee assessed the performance level of performance stock units granted in 2016 relating to the 2015 performance year (“CFG LTIP”2016 PSU Awards”) at its meeting held on February 13,
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2019. The last performance assessment of PSU awards by the Compensation Committee was in 2017, when the PSUs granted in 2015 were assessed at 74% of target.
Half of each 2016 PSU Award has been earned based on achievement of targeted Diluted EPS and half has been earned based on achievement of targeted ROTCE, with an overall maximum payout of 150% of target. 2016 PSU Awards were earned based on performance during the 2016-2018 three-year performance period compared topre-established performance criteria, which were established in connection with our strategic planning process. The ROTCE target for this award represents 4% growth in average ROTCE for the period and maximum represents 14% growth in average ROTCE relative to 2015. The Diluted EPS target for this award represents 11% growth in 2016 and then flat performance in 2017 and 2018, while the maximum represents a compound annual growth rate of 9% per annum over the period.
During the performance period of 2016-2018, the average ROTCE for the period was 9.60% (43% improvement over the period) and Diluted EPS for the period was $7.61 (a compound annual growth rate of 17% over the period), which both delivered maximum payout.
CEO 2016 Special PSU Award
The Company entered into a new employment agreement with Mr. Van Saun in May 2016 following the Company’s full separation from the Royal Bank of Scotland plc, which among other terms, eliminated the annual fixed cash pension benefit allowance of ~$550,000 provided under Mr. Van Saun’s prior contract. As consideration for that change, Mr. Van Saun was granted a special equity award with a target grant date value of $3 million. Half of this special equity award was granted in the form of restricted stock units and half in performance stock units with a three-year performance period (“Special PSU Award”). In addition to providing consideration for the elimination of Mr. Van Saun’s annual fixed cash pension benefit allowance, the Compensation Committee determined that making thisone-time award to Mr. Van Saun would provide additional retentive value in a form that further aligns his incentives with stockholders’ interests and the Citizens Financial Group, Inc. Converted Equity 2010 Deferral Plan Rules (“CFG Deferral Plan”), as applicable, each of which is intended to mirror the termsstrategic objectives of the related RBS plan. Thebusiness.
At its February 13, 2019 meeting, the Compensation Committee assessed the Special PSU Award at a level of 125% of target, in light of the Company’s strong performance during the performance period (2016-2018) across the performance dimensions described below. This award will vest on May 5, 2019 at this level of achievement, subject to the terms and conditions of converted awards remain the same as prior to conversion in all material respects, except that outstanding awards will be settled in Company shares rather than RBS shares.award agreement.
Dimension | Objective | Performance Criteria | Outcome | |||
Financial (25%) | Deliver strong ROTCE results while maintaining capital and liquidity. | 1. ROTCE 2. Loan to deposit ratio 3. CET1 Capital Ratio 4. Efficiency Ratio | ||||
Risk (25%) | Make significant improvement against Citizens’ critical risk objectives. | 1. CCARnon-objection 2. Meet heightened regulatory standards and expectations 3. Reduce MRAs 4. Improve and maintain self-identified issues and control environment self-assessment 5. Acceptable credit loss performance vs. peers |
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Customer (25%) | Execute against efforts to drive an improved customer experience across Citizens. | 1. Increase customer satisfaction 2. Improve Market Share 3. Improve Cross-sell | ||||
Enterprise Initiatives (25%) | Drive significant change through the execution of long-term enterprise initiatives. | 1. Technology 2. Leadership 3. Culture 4. Fee Income |
2018 Performance Year Compensation Supplemental Table
The following table reflects the direct compensation earned by each of our active NEOs for the 2018 performance level for Mr. Van Saun’s converted 2013 LTIP award was assessed at 66.7% by RemCo in February 2016 (resulting in 131,377 shares that could be earned) based on RemCo’s discretionary assessment of RBS performance. The number of Company shares subject to the converted awards held by our NEOs as of December 31, 2015 is reflected in theOutstanding Equity Awards at 2015 Fiscal Year-End Table.year.
Variable Compensation | Total 2018 Direct Compensation | |||||||||||||||||||||||
Name | Base Salary | Cash (1) | Restricted Stock Units (2) | Performance Stock Units (2) | ||||||||||||||||||||
Bruce Van Saun | $ | 1,487,000 | $ | 2,463,900 | $ | 1,642,600 | $ | 4,106,500 | $ | 9,700,000 | ||||||||||||||
John F. Woods | $ | 700,000 | $ | 900,000 | $ | 600,000 | $ | 1,500,000 | $ | 3,700,000 | ||||||||||||||
Donald H. McCree III | $ | 700,000 | $ | 997,500 | $ | 665,000 | $ | 1,662,500 | $ | 4,025,000 | ||||||||||||||
Brad L. Conner | $ | 700,000 | $ | 735,000 | $ | 490,000 | $ | 1,225,000 | $ | 3,150,000 | ||||||||||||||
Malcolm Griggs | $ | 519,231 | (3 | ) | $ | 656,000 | $ | 492,000 | $ | 492,000 | $ | 2,159,231 |
(1) | The cash portion of 2018 variable compensation awards is reflected in the “Bonus” column of the2018 Summary Compensation Tablebelow. |
(2) | The number of Company shares subject to these awards was determined based on the Company’s closing share price on the grant date. Under SEC reporting rules, equity awards relating to performance year 2018 are not reflected in the2018 Summary Compensation Tablebecause they were granted in March 2019 and will instead be disclosed in our proxy statement filed next year. |
(3) | Represents the actual salary earned by Mr. Griggs during 2018, which reflects an increase in his salary from $500,000 to $525,000 effective as of March 26, 2018. |
Other Benefits
Employment Agreements/Offer Letters and Severance BenefitsAgreements
We have entered into employment agreements or offer letters with eachEach of our active NEOs is party to an employment agreement that contain covenants, such as those prohibiting post-employment competition or solicitation by the NEOs.sets forth their compensation and benefits, including severance benefits available in certain circumstances. For details, see “Potential Payments Upon Termination orof Employment and Change of Control—Severance” and “Termination of Employment and Change of Control—Employment Agreements/ Offer LettersAgreements with our NEOs” below.
In addition, all of our full-time employees, including our NEOs (other than our CEO who is eligible for severance under the terms of his employment agreement) are eligible for severance benefits in accordance with our severance practice. Our severance practice provides for the payment of severance benefits to employees in the event their employment with us is terminated without cause and for reasons unrelated to poor performance, and provides for minimum severance amounts depending on an employee’s level of compensation and tenure. For NEOs who participate in the severance practice, a minimum of 26 weeks of salary is payable under the severance practice as provided for in their employment agreement or offer letter, as applicable. For details, see “Potential Payments Upon Termination or Change of Control—Severance Practice” below.
Nonqualified Deferred Compensation PlansPlan
We sponsor two nonqualified deferred compensation plans—the CFG Deferred Compensation Plan and the CFG Voluntary Executive Deferred Compensation Plan (formerly known as the RBS Americas Deferred Compensation Plan). Following closure of the CFG Deferred Compensation Plan to new participants on December 31, 2008, theThe CFG Voluntary Executive Deferred Compensation Plan was adopted, effective as of January 1, 2009. The deferred compensation plans currently do2009 and does not offer any matching contributions or provide for above-market earnings. During 2015,2018, Mr. Van Saun was the only NEO who participated in the CFG Voluntary Executive Deferred Compensation Plan. For a description of the material terms of this deferred compensation plan, see the narrative following the20152018 Nonqualified Deferred Compensation Table below.Tablebelow.
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Pension Plan
We sponsor theThe CFG Pension Plan, (formerly the RBS Americas Pension Plan), atax-qualified,non-contributory defined benefit pension plan that was closed to new participants effective January 1, 2009 and frozen to all participants and benefit accruals effective December 31, 2012. Mr. Conner had a benefit under this plan as of December 31, 20152018 because he was hired prior to 2009. For a description of the material terms of the CFG Pension Plan, see the narrative following the20152018 Pension Benefits Table and related narrative below.Table.
401(k) Plan
We maintain a qualified defined contribution 401(k) plan for all of our employees. Employees may defer up to 50% of their eligible pay to the plan up to Internal Revenue Code limits. After employees have completed one full year of service, employee contributions are matched at 100% up to an overall limit of 4% on a pay period basis and employees receive an additional Company contribution equal to 2% of earnings, subject to limits set by the Internal Revenue Service. Our NEOs are entitled to participate in our 401(k) plan on the same basis as our employees generally, except that Mr. Van Saun is not eligible to receive any Company contributions under our 401(k) plan.generally.
Health and Welfare Benefit Plans
Our NEOs are currently eligible to participate in Company-sponsored benefit programs, offered on the same terms and conditions as those made generally available to our employees, including medical, dental, vision, and short-term and long-term disability plans.
Perquisites and Other Benefits
We provide our executives, including our NEOs, with Company-selected independent advisors to assist them with financial planning, if desired by the executives. Our executives, including our NEOs, are also covered by a relocation policy and amatching charitable contribution policyprograms that generally covers allcover our employees. Mr. Van Saun receives an annual pension and benefits allowance intended to make him whole for certain pension and benefits funding
available to him during his service to RBS in the UK, which is approximately 38% of his base salary. In addition, a companyour Company car was used by certain of our NEOsMr. Van Saun for limited personal use. For additional details, regarding these and other perquisites that we provide to our executives, see footnote 97 to the20152018 Summary Compensation Tablebelow.
Clawback PolicyProcess
CitizensThe Company has a company-widefirm-wide accountability review process to ensure that there is a standardized process to take appropriate action in instances where new information would have changed variable compensation decisions made in previous years or should be considered in making variable compensation decisions for the current year. As part of that process, the Company has an Accountability Review Panel (“ARP”), which meets on a quarterlyregular basis to consider events having a material adverse impact on the events referredCompany to determine whether compensation adjustments are appropriate for its review by our businesses and functions.involved employees. Potential actions by the ARP may include current-year compensation adjustments (e.g., current-year variable compensation reductionadjustment, forfeiture of unvested awards, or clawback), disciplinary action (e.g., dismissal) and performance adjustments (e.g., a change to performance rating).
In addition, all CFG Deferral Plan and CFG LTIP awards that were converted into Company share-based awards in connection with our offering are subject to clawback provisions contained in the relevant plan rules. Specifically, under the plans that govern the converted awards, an award may be reduced before it is paid out if, following the grant date, RBS or the Company becomes aware of information that would have affected the decision about the executive’s performance or learns that the performance factors on which reward decisions were based do not turn out to be accurate. The Company may also reclaim any unpaid portion of an award if RBS or the Company or an executive’s business unit suffers a material downturn in its financial performance or suffers a material failure of risk management. In addition, awards granted in 2014 that are governed by the converted plans are subject to clawback provisions which may apply post-vesting, normally for up to six months following the vesting date. This means RBS or the Company may require individuals to repay some or all of their awards in exceptional circumstances relating to the performance of RBS (or the Company) or an individual participant or the application of (or non-compliance with) any legal or regulatory requirement applicable to RBS or the Company or such participant.
Generally, awards granted under the Omnibus Plan are also subject to adjustment and clawback. However, Company shares granted in 2014 and 2015 to certain Material Risk Takers as part of their role-based allowances are not subject to clawback.
Lastly, ourOur CEO and CFO are also subject to clawback as mandated by the Sarbanes-Oxley Act. The Compensation Committee monitors the regulatory developments relatedrelating to clawback including under the Dodd-Frank Act, and will modifycontinue to evaluate our practices in order to the extent necessary, to comply with applicable lawensure they drive appropriate behavior and regulations.
Balancing Risk and Incentive Compensation
The structure of our compensation program is designed to discourage inappropriate risk taking, by delivering a balanced portfolio of compensation distributed among fixed and variable pay, short and long-term incentives, and cash and equity. In addition, we have implemented a multi-layered approach designed to appropriately balance risk and compensation.
All employees, including our NEOs, participate in a performance management process whereby managers and employees develop a set of mutually agreed performance objectives, which includes objectives and measures specific to risk management. There are also additional layers of risk review depending on the extent to which a particular employee can expose the Company to risk, based on their seniority and particular role. Each of our NEOs is subject to additional levels of risk review as part of our annual process, the results of which are taken into consideration by the Compensation Committee in making variable compensation decisions.
Applicability of UK and European Remuneration Rules
During the period of RBS’ ownership of the Company until November 2015, certain employees, including our NEOs, were identifiedwell as “Material Risk Takers” under European Baking Authority (“EBA”) rules, which subjected them to specific requirements regarding variable pay under the UK Remuneration Code (“UK Code”). Under the UK Code, a minimum of 50% of any variable pay for MRTs must be delivered in equity or equivalents, and any shares delivered upon vesting of variable pay awards must be held for at least six months post-vesting prior to sale or transfer. In addition, a minimum of 40% or 60% of variable pay (depending on the amount of an MRT’s variable compensation) is required to be deferred over a minimum three-year period, vesting no faster than on an annual pro-rata basis.
In addition, under CRD IV, MRTs could not receive variable compensation in excess of 100% of fixed compensation during performance year 2014. In order to deliver competitive levels of compensation to our employees impacted by CRD IV, role-based allowances were approved by the Compensation Committee for certain MRTs, including the NEOs, as described in more detail in “—Executive Compensation Decisions—Role-Based Allowances.” Role-based allowances were implemented by RBS in order to maintain competitive total compensation levels for affected employees, although the structure of our compensation packages may not have been considered in linecomply with our regional bank peers, who were not subject to the same regulatory requirements.law.
Following RBS’ sale of its remaining equity interest in the Company in November 2015, UK and European remuneration regulations no longer apply to the Company. As a result, role-based allowances have been discontinued effective January 1, 2016, with such amounts becoming part of executive’s variable compensation opportunity for 2016 and future years, thereby reducing fixed pay and more closely aligning executives’ interests with those of our shareholders. In addition, neither the CRD IV variable compensation limit nor a mandated deferral schedule applies for variable compensation relating to performance year 2015, which has allowed our Compensation Committee the opportunity to approve a pay mix for our NEOs which is more aligned to peer compensation structures.
Stock Ownership and Retention Guidelines
The Company establishedmaintains stock ownership and retention guidelines in order to further align the long-term interests of our executive officersexecutives andnon-employee directors with those of our stockholders.
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Our stock ownership guidelines require that our executive officersexecutives andnon-employee directors ownhold shares of our common stock having an aggregate value equal to a multiple of the executive officer’sexecutives’ annual base salary or the non-employee director’s directors’ annual cash retainer, as follows:
Position | Multiple | |
Chief Executive Officer | 5x Annual Base Salary | |
Other | 3x Annual Base Salary | |
Non-Employee Directors | 4x Annual Cash Board Retainer |
Shares that count for purposes of ownership under the share ownership guidelines include (i) shares or units for which receipt has been deferred (including shares held through our 401(k) plan, shares purchased under ourtax-qualified employee share purchase program, unvested restricted stock units, and shares or units held through a deferred compensation plan maintained by us)the Company) and (ii) restricted stock and unvested restricted stock units (that may only be settled in shares) that are subject to time-based vesting conditions only. Unexercised options (whether vested or unvested), performance awards (including performance-based restricted stock and performance-based units), and unvested restricted stock units that may only be settled in cash dowould not count towards the satisfaction of these stock ownership guidelines.
Generally, eachEach executive ornon-employee director will havehas five years from the date he or she becomes subject to these guidelines to achieve compliance. Non-employee directorsExecutives are subject to a general holding requirement until they achieve compliance with these stock ownership guidelines. Executives arealso required to hold 50% of the net shares acquired as a result of settlement of compensatory awards granted in 2016 and onward until ownership guidelines have been met. Directors’ restricted stock unit awards are not settled until their cessation from service on the Board.
Prohibition on Hedging and Pledging
We have adopted a policy prohibitingprohibit our employees and directors, including our NEOs and other officers, from engaging in any hedging transactions (including transactions involving options, puts, calls, prepaid variable forward contracts, equity swaps, collars and exchange funds or other derivatives) that are designed to hedge or speculate on any changeoffset a decrease in the market value of the Company’s equity securities or pledging their ownership in our securities (including equity-based awards), which would undermine the risk alignment embedded in our equity-based compensation arrangements.
Tax Deductibility of Compensation
Under Section 162(m) of the Internal Revenue Code (“Section 162(m)”), a public company generally may not deduct compensation in excess of $1 million paid to its chief executive officerCEO and other covered officers. The Tax Cuts and Jobs Act (“TCJA”) made certain changes to Section 162(m), most notably repealing the three other most highly compensatedexemption for qualified performance-based compensation for taxable years beginning after December 31, 2017 and expanding the scope of persons covered by its limitations on deductibility. Accordingly, compensation paid after 2017 to our covered executive officers (other than the chief financial officer),in excess of $1 million will not be deductible unless the compensationit qualifies for transition relief applicable to certain arrangements in place as “performance-based.” The Company believes that tax deductibility of compensation is an important factor, but not the sole or primary factor in setting executive compensation policy or in rewarding executive performance. Accordingly, we seekNovember 2, 2017. We have historically sought to structure our variable equity-based and cash-based incentive awards to be deductible under Section 162(m), ifto the extent possible. However, to maintain flexibility in compensating our executives, we do not have a policy requiring compensation to be fully deductible under Section 162(m). While the Company plans to rely on the transition relief included in the TCJA to the extent practicable, the Company believes that tax deductibility of compensation should not be the sole or primary factor in setting executive compensation policy or in rewarding executive performance.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
Process for Approval of Equity Grants
We do not grant equity awards in anticipation of the release of material,non-public information, nor do we time the release of material,non-public information based on equity grant dates. The Compensation Committee has delegated the authority to make off cycleoff-cycle equity grants under the Citizens Financial Group, Inc. 2014 Omnibus Plan (“Omnibus Plan”) to participants other than our executives to the Equity Committee of the Board, which is comprised of our CEO, subject to limits designated by the Compensation Committee, as described above in ““—Directors, Executive OfficersBoard Governance and Corporate Governance—Oversight—Committees of the BoardBoard.”.
The Compensation Committee has reviewed and discussed the Compensation Discussion and AnalysisCD&A included in this proxy statement with members of management, and based on such review and discussions, the Compensation Committee recommended to the board that the Compensation Discussion and AnalysisCD&A be included in this proxy statement.
The Compensation and Human Resources Committee |
Arthur F. Ryan (Chair) |
William P. Hankowsky |
Leo I. Higdon |
Wendy A. Watson |
Arthur F. Ryan (Chair)
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
William P. Hankowsky
Leo I. Higdon
Wendy A. Watson
2018 Summary Compensation Table
This20152018 Summary Compensation Tablereflects the compensation of our NEOs in accordance with SEC reporting rules, which require that cash incentive awards be disclosed in the year in which they are earned and that stock grants be disclosed in the year of grant (regardless of whether they were earned for performance during that year).
Name and Principal Position | Year | Salary ($)(4) | Bonus ($)(5) | Stock Awards ($)(6) | Non-Equity Incentive Plan Compensation ($)(7) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(8) | All Other Compensation ($)(9) | Total ($) | ||||||||||||||||||||||||
Bruce Van Saun, | 2015 | 1,487,000 | 0 | 4,393,876 | 1,000,920 | 0 | 1,115,166 | 7,996,962 | ||||||||||||||||||||||||
Chairman & Chief Executive Officer | 2014 | 1,455,050 | 0 | 4,935,526 | 3,342,638 | 0 | 790,541 | 10,523,755 | ||||||||||||||||||||||||
2013 | 1,203,538 | — | 3,733,933 | — | — | 733,352 | 5,670,823 | |||||||||||||||||||||||||
Eric Aboaf | 2015 | 505,556 | 526,944 | 2,164,267 | 7,500 | 0 | 395,312 | 3,599,579 | ||||||||||||||||||||||||
Chief Financial Officer(1) | ||||||||||||||||||||||||||||||||
Brad L. Conner, | 2015 | 700,000 | 0 | 979,713 | 306,000 | 164 | 546,499 | 2,532,376 | ||||||||||||||||||||||||
Head of Consumer Banking | 2014 | 700,000 | 0 | 1,247,579 | 823,375 | 24,441 | 554,208 | 3,349,602 | ||||||||||||||||||||||||
2013 | 700,000 | 189,115 | 860,942 | — | 505 | 36,063 | 1,786,625 | |||||||||||||||||||||||||
Stephen T. Gannon, | 2015 | 600,000 | 0 | 764,498 | 440,000 | 0 | 528,243 | 2,332,741 | ||||||||||||||||||||||||
General Counsel(2) | 2014 | 219,231 | 2,117,000 | 20,078 | 0 | 0 | 249,147 | 2,605,455 | ||||||||||||||||||||||||
Nancy L. Shanik, | 2015 | 575,000 | 0 | 772,529 | 375,600 | 196 | 515,900 | 2,239,225 | ||||||||||||||||||||||||
Chief Risk Officer | 2014 | 575,000 | 0 | 1,163,824 | 768,650 | 1,140 | 518,200 | 3,026,815 | ||||||||||||||||||||||||
2013 | 575,000 | 39,115 | 1,058,336 | — | 670 | 20,250 | 1,693,371 | |||||||||||||||||||||||||
John J. Fawcett, | 2015 | 243,704 | 0 | 574,061 | — | 131 | 762,839 | 1,580,735 | ||||||||||||||||||||||||
Former Chief Financial Officer(3) | 2014 | 700,000 | 0 | 1,053,444 | 1,050,000 | 762 | 561,868 | 3,366,074 | ||||||||||||||||||||||||
2013 | 700,000 | 39,115 | 805,939 | — | 520 | 32,059 | 1,577,633 |
Name and Principal | Year | Salary | Bonus | Stock | Non-Equity | Change in ($)(6) | All | Total ($) | ||||||||||||||||||||||||
Bruce Van Saun, Chairman & Chief Executive Officer | | 2018 2017 2016 | | | 1,487,000 1,487,000 1,487,000 | | | 2,463,900 - - |
| | 5,259,033 4,699,056 5,478,086 | | | - 2,253,900 2,013,900 | | | - - - |
| | 196,000 110,033 260,538 | | | 9,405,933 8,549,989 9,239,524 | | ||||||||
John F. Woods, | | 2018 2017 | | | 700,000 619,231 | | | 900,000 3,000,000 | | | 1,889,986 4,659,743 | | | - 810,000 |
| | - - |
| | 64,859 12,825 | | | 3,554,845 9,101,799 | | ||||||||
Donald H. McCree III, | | 2018 2017 2016 | | | 700,000 700,000 700,000 | | | 997,500 - - |
| | 2,222,468 1,977,481 641,363 | | | - 952,500 | | | - - - |
| | 12,602 119,907 139,200 | | | 3,932,570 3,749,888 2,328,063 | | ||||||||
Brad L. Conner, | | 2018 2017 2016 | | | 700,000 700,000 700,000 | | | 735,000 - - |
| | 1,627,456 1,487,475 752,605 | | | - 697,500 | | | 0 13,875 10,977 | | | 69,929 54,983 51,456 | | | 3,132,385 2,953,833 2,152,538 | | ||||||||
Malcolm Griggs, | 2018 | 519,231 | 710,368 | 878,958 | - | - | 71,194 | 2,179,751 |
(1) | Represents the |
(2) |
Mr. Van Saun elected to defer |
For the performance share unit awards, the amounts above were calculated based on the probable outcome of the performance conditions as of the grant date, and represent the value of the target number of units granted, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718. As of the grant date, the value of the performance share unit awards held by the NEOs assuming the highest level of performance were as follows, which are 125% of the grant date value: Mr. Van Saun ($1,491,202); Mr. Conner ($434,600); Mr. Gannon ($411,821); and Ms. Shanik ($351,530).
For a breakdown of all awards granted during 2015, see the2015 Grants of Plan-Based Awards Table below.
2018 amounts in this column |
For Mr. Griggs, this amount also includes $54,368 related to the 2018 vesting and payout of the last installment of a cashbuy-out award granted to him in connection with the commencement of his employment in 2014.
Mr. Van Saun elected to defer 80% of the cash portion of his 2018 variable compensation ($1,971,120 out of $2,463,900) pursuant to the CFG Voluntary Executive Deferred Compensation Plan, which is discussed in more detail in the narrative following the2018 Nonqualified Deferred CompensationTable.
(4) | Amounts in this column for 2018 reflect the aggregate grant date fair value of restricted stock unit and performance stock unit awards granted in March 2018 as part of 2017 performance year compensation. |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
The fair value of awards has been calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC 718”), using the valuation methodology and assumptions set forth in Note 17 to the |
For the performance stock unit awards, the amounts above were calculated based on the probable outcome of the performance conditions as of the service inception date and represent the value of the target number of units granted, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the service inception date under FASB ASC 718. As of the service inception date, the values of the performance stock unit awards granted to the NEOs in 2018 assuming the highest level of performance (150% of the grant date value), were as follows: Mr. Van Saun ($5,634,697); Mr. Woods ($2,024,972); Mr. McCree ($2,381,222); Mr. Conner ($1,743,681); and Mr. Griggs ($659,218). For a breakdown of all awards granted during 2018, see the2018 Grants of Plan-Based AwardsTable. |
(5) | 2017 and 2016 amounts in this column reflect the cash portion of |
(6) | The actuarial present value of Mr. Conner’s accumulated benefit under our pension plan decreased by $9,085 during 2018. As a result, consistent with SEC rules, a zero is reflected in this column for 2018. The $9,085 decrease includes a decrease of $13,194 due to changes in assumptions underlying the present value calculations and an increase of $4,109 due to the effect of Mr. Conner being one year closer to his assumed retirement age. See footnote 3 to the2018 Pension BenefitsTable for more details on the assumptions used to determine the present value. |
(7) | The below table reflects |
Pension and Benefits Allowance | Cash Portion of Role Based Allowance | 401(k) Matching Contribution | Charitable Matching Contribution | Relocation Expenses | Financial Planning | Tax Gross Ups | Personal Use of Car and Driver / Car Service | Separation Payments / Benefits | Total | |||||||||||||||||||||||||||||||
Bruce Van Saun | 561,000 | 500,000 | 0 | 40,500 | 0 | 0 | 0 | 13,666 | 0 | 1,115,166 | ||||||||||||||||||||||||||||||
Eric Aboaf | 0 | 361,111 | 0 | 25,000 | 0 | 9,201 | 0 | 0 | 0 | 395,312 | ||||||||||||||||||||||||||||||
Brad L. Conner | 0 | 500,000 | 15,900 | 10,000 | 0 | 14,290 | 6,309 | 0 | 0 | 546,499 | ||||||||||||||||||||||||||||||
Stephen T. Gannon | 0 | 500,000 | 4,889 | 0 | 12,553 | 0 | 10,801 | 0 | 0 | 528,243 | ||||||||||||||||||||||||||||||
Nancy L. Shanik | 0 | 500,000 | 15,900 | 0 | 0 | 0 | 0 | 0 | 0 | 515,900 | ||||||||||||||||||||||||||||||
John J. Fawcett | 0 | 174,074 | 15,900 | 0 | 0 | 0 | 0 | 12,032 | 560,833 | 762,839 |
401(k) Company Contribution ($) | Charitable Matching Contribution ($) | Dividend Equivalents Paid in Cash ($) | Other ($) | Total ($) | ||||||||||||||||
Bruce Van Saun | 16,500 | 50,000 | 93,016 | 36,484 | 196,000 | |||||||||||||||
John F. Woods | 16,500 | - | 32,203 | 16,156 | 64,859 | |||||||||||||||
Donald H. McCree III | 5,500 | - | 7,102 | - | 12,602 | |||||||||||||||
Brad L. Conner | 16,500 | 11,000 | 26,539 | 15,890 | 69,929 | |||||||||||||||
Malcolm Griggs | 16,500 | 23,130 | 31,564 | - | 71,194 |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
2018 Grants of Plan-Based Awards
Name | Grant Date |
Estimated Future Payouts |
Estimated Future Payouts | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards(2) | |||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#)(1) | Target (#)(1) | Maximum (#)(1) | |||||||||||||||||||||||||||||
Bruce Van Saun | 12/15/2015 | — | — | — | — | — | — | 40,746 | (3) | 1,081,399 | ||||||||||||||||||||||||
6/23/2015 | — | — | — | — | — | — | 39,922 | (3) | 1,125,401 | |||||||||||||||||||||||||
— | — | (6) | — | — | — | — | — | |||||||||||||||||||||||||||
3/23/2015 | — | — | — | 12,045 | 48,181 | 60,226 | — | 1,192,962 | ||||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 16,060 | (4) | 397,646 | |||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 24,090 | (5) | 596,468 | |||||||||||||||||||||||||
Eric Aboaf | 12/15/2015 | — | — | — | — | — | — | 5,616 | (3) | 149,049 | ||||||||||||||||||||||||
6/23/2015 | — | — | — | — | — | — | 2,358 | (3) | 66,472 | |||||||||||||||||||||||||
6/23/2015 | — | — | — | — | — | — | 69,129 | (7) | 1,948,747 | |||||||||||||||||||||||||
— | — | (6) | — | — | — | — | — | |||||||||||||||||||||||||||
Brad L. Conner | 12/15/2015 | — | — | — | — | — | — | 5,709 | (3) | 151,517 | ||||||||||||||||||||||||
6/23/2015 | — | — | — | — | — | — | 5,594 | (3) | 157,695 | |||||||||||||||||||||||||
— | — | (6) | — | — | — | ��� | — | |||||||||||||||||||||||||||
3/23/2015 | — | — | — | 3,511 | 14,042 | 17,553 | — | 347,680 | ||||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 7,823 | (4) | 193,697 | |||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 5,215 | (5) | 129,123 | |||||||||||||||||||||||||
Stephen T. Gannon | 12/15/2015 | — | — | — | — | — | — | 936 | (3) | 24,841 | ||||||||||||||||||||||||
6/23/2015 | — | — | — | — | — | — | 917 | (3) | 25,850 | |||||||||||||||||||||||||
— | — | (6) | — | — | — | — | — | |||||||||||||||||||||||||||
3/23/2015 | — | — | — | 3,327 | 13,306 | 16,633 | — | 329,457 | ||||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 9,314 | (4) | 230,615 | |||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 6,209 | (5) | 153,735 | |||||||||||||||||||||||||
Nancy L. Shanik | 12/15/2015 | — | — | — | — | — | — | 3,013 | (3) | 79,965 | ||||||||||||||||||||||||
6/23/2015 | — | — | — | — | — | — | 2,953 | (3) | 83,245 | |||||||||||||||||||||||||
— | — | (6) | — | — | — | — | — | |||||||||||||||||||||||||||
3/23/2015 | — | — | — | 2,840 | 11,358 | 14,198 | — | 281,224 | ||||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 7,951 | (4) | 196,867 | |||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 5,300 | (5) | 131,228 | |||||||||||||||||||||||||
John J. Fawcett | — | — | (6) | — | — | — | — | — | ||||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 9,274 | (4) | 229,624 | |||||||||||||||||||||||||
3/23/2015 | — | — | — | — | — | — | 13,911 | (5) | 344,436 |
Grant Date | Estimated Future Payouts Under Equity Incentive Plan Awards
| All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(1) | |||||||||||||||||||||||||
Name | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||
Bruce Van Saun | ||||||||||||||||||||||||||||
3/1/2018 | (2) | 43,148 | 86,296 | 129,444 | - | 3,756,465 | ||||||||||||||||||||||
3/1/2018 | (3) | - | - | - | 34,518 | 1,502,569 | ||||||||||||||||||||||
John F. Woods | ||||||||||||||||||||||||||||
3/1/2018 | (2) | 15,506 | 31,013 | 46,519 | - | 1,349,996 | ||||||||||||||||||||||
3/1/2018 | (3) | - | - | - | 12,405 | 539,990 | ||||||||||||||||||||||
Donald H. McCree III | ||||||||||||||||||||||||||||
3/1/2018 | (2) | 18,234 | 36,469 | 54,703 | - | 1,587,496 | ||||||||||||||||||||||
3/1/2018 | (3) | - | - | - | 14,587 | 634,972 | ||||||||||||||||||||||
Brad L. Conner | ||||||||||||||||||||||||||||
3/1/2018 | (2) | 13,352 | 26,705 | 40,057 | - | 1,162,469 | ||||||||||||||||||||||
3/1/2018 | (3) | - | - | - | 10,682 | 464,987 | ||||||||||||||||||||||
Malcolm Griggs | ||||||||||||||||||||||||||||
3/1/2018 | (2) | 5,048 | 10,096 | 15,144 | - | 439,479 | ||||||||||||||||||||||
3/1/2018 | (3) | - | - | - | 10,096 | 439,479 |
(1) |
Amounts in this column reflect the grant date fair value of awards |
Represents performance stock units granted under the Omnibus Plan |
Represents restricted stock units granted |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
Outstanding Equity Awards at 20152018 FiscalYear-End
The following table shows, for each NEO, the outstanding equity awards held as of December 31, 2018. These awards include restricted stock units and performance stock units granted in years 2016, 2017 and 2018.
Stock Awards | ||||||||||||||||
Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | ||||||||||||
Bruce Van Saun | ||||||||||||||||
2013 LTIP(2) | 0 | 0 | 196,967 | 5,158,566 | ||||||||||||
2014 IPO Award(3) | 225,066 | 5,894,479 | 0 | 0 | ||||||||||||
2015 RSUs(4) | 24,090 | 630,917 | 0 | 0 | ||||||||||||
2015 PSUs(5) | 0 | 0 | 48,181 | 1,261,860 | ||||||||||||
Eric Aboaf | ||||||||||||||||
2015 Buy-Out(6) | 69,129 | 1,810,489 | 0 | 0 | ||||||||||||
Brad L. Conner | 0 | 0 | ||||||||||||||
2013 LTIP(2) | 32,958 | 863,170 | 0 | 0 | ||||||||||||
2013 Deferred(7) | 5,057 | 132,443 | 0 | 0 | ||||||||||||
2014 IPO Award(3) | 47,951 | 1,255,837 | 0 | 0 | ||||||||||||
2014 Deferred(8) | 10,763 | 281,883 | 0 | 0 | ||||||||||||
2015 RSUs(4) | 5,215 | 136,581 | 0 | 0 | ||||||||||||
2015 PSUs(5) | 0 | 0 | 14,042 | 367,760 | ||||||||||||
Stephen T. Gannon | ||||||||||||||||
2015 RSUs(4) | 6,209 | 162,614 | 0 | 0 | ||||||||||||
2015 PSUs(5) | 0 | 0 | 13,306 | 348,484 | ||||||||||||
Nancy L. Shanik | ||||||||||||||||
2013 LTIP(2) | 25,564 | 669,521 | 0 | 0 | ||||||||||||
2013 Deferred(7) | 6,686 | 175,106 | 0 | 0 | ||||||||||||
2014 IPO Award(3) | 42,197 | 1,105,139 | 0 | 0 | ||||||||||||
2014 Deferred(8) | 13,850 | 362,732 | 0 | 0 | ||||||||||||
2015 RSUs(4) | 5,300 | 138,807 | 0 | 0 | ||||||||||||
2015 PSUs(5) | 0 | 0 | 11,358 | 297,466 | ||||||||||||
John J. Fawcett | ||||||||||||||||
2013 LTIP(2) | 21,612 | 566,018 | 0 | 0 | ||||||||||||
2013 Deferred(7) | 4,766 | 124,822 | 0 | 0 | ||||||||||||
2014 IPO Award(3) | 45,554 | 1,193,059 | 0 | 0 | ||||||||||||
2014 Deferred(8) | 13,727 | 359,510 | 0 | 0 | ||||||||||||
2015 RSUs(4) | 13,911 | 364,329 | 0 | 0 |
Stock Awards | ||||||||||||||||
Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Units or Other Rights That Have Not Vested ($)(1) | ||||||||||||
Bruce Van Saun | ||||||||||||||||
2016 RSUs (2) | 11,566 | 343,857 | - | - | ||||||||||||
2016 PSUs(3) | 130,122 | 3,868,527 | - | - | ||||||||||||
2016 Special RSUs(4) | 68,212 | 2,027,943 | - | - | ||||||||||||
2016 Special PSUs (5) | 85,265 | 2,534,928 | - | - | ||||||||||||
2017 RSUs (6) | 22,607 | 672,106 | - | - | ||||||||||||
2017 PSUs (7) | - | - | 84,781 | 2,520,539 | ||||||||||||
2018 RSUs (8) | 34,518 | 1,026,220 | - | - | ||||||||||||
2018 PSUs(9) | - | - | 86,296 | 2,565,580 | ||||||||||||
John F. Woods | ||||||||||||||||
RSUBuy-out(10) | 72,974 | 2,169,517 | - | - | ||||||||||||
2018 RSUs (8) | 12,405 | 368,801 | - | - | ||||||||||||
2018 PSUs(9) | - | - | 31,013 | 922,016 | ||||||||||||
Donald H. McCree III | ||||||||||||||||
2016 RSUs(2) | 3,013 | 89,576 | - | - | ||||||||||||
2016 PSUs(3) | 33,900 | 1,007,847 | - | - | ||||||||||||
2017 RSUs(6) | 9,513 | 282,821 | - | - | ||||||||||||
2017 PSUs(7) | - | - | 35,678 | 1,060,707 | ||||||||||||
2018 RSUs (8) | 14,587 | 433,672 | - | - | ||||||||||||
2018 PSUs(9) | - | - | 36,469 | 1,084,223 | ||||||||||||
Brad L. Conner | ||||||||||||||||
2016 RSUs (2) | 3,535 | 105,096 | - | - | ||||||||||||
2016 PSUs(3) | 39,780 | 1,182,659 | - | - | ||||||||||||
2017 RSUs (6) | 7,156 | 212,748 | - | - | ||||||||||||
2017 PSUs(7) | - | - | 26,837 | 797,864 | ||||||||||||
2018 RSUs (8) | 10,682 | 317,576 | - | - | ||||||||||||
2018 PSUs(9) | - | - | 26,705 | 793,940 | ||||||||||||
Malcolm Griggs | ||||||||||||||||
2016 RSUs(2) | 6,239 | 185,485 | - | - | ||||||||||||
2016 PSUs(3) | 18,720 | 556,546 | - | - | ||||||||||||
2017 RSUs(6) | 6,566 | 195,207 | - | - | ||||||||||||
2017 PSUs(7) | - | - | 9,850 | 292,841 | ||||||||||||
2018 RSUs (8) | 10,096 | 300,154 | - | - | ||||||||||||
2018 PSUs(9) | - | - | 10,096 | 300,154 |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
(1) | The values in these columns have been calculated by multiplying the number of shares outstanding as of December 31, |
(2) | These amounts reflect |
(3) | These amounts reflect performance stock units granted in March 2016 for the |
(4) | This amount reflects restricted stock units granted to Mr. Van Saun on May 5, 2016 as part of his special equity award (granted in consideration for the elimination of his annual fixed cash pension benefit allowance, as described in Employment Agreements with our NEOs—Employment Agreement with Mr. Van Saun”), which are scheduled to become vested on May 5, 2019. |
(5) | This amount reflects performance stock units granted to Mr. Van Saun on May 5, 2016 as part of his special equity award (granted in consideration for the elimination of his annual fixed cash pension benefit allowance, as described in Employment Agreements with our NEOs—Employment Agreement with Mr. Van Saun”), which were earned during the performance period of January 1, 2016 through December 31, 2018 and which are scheduled to become vested on May 5, 2019. The Compensation Committee assessed the performance of this award at its February 13, 2019 meeting, as described earlier in “—Compensation Discussion and Analysis—Executive Compensation Decisions—Variable Compensation—Performance Assessment of PSUs Granted in 2016—CEO 2016 Special PSU Award.” |
(6) | These amounts reflect |
These amounts reflect |
These amounts reflect restricted stock units granted |
(9) | These amounts reflect performance stock units granted in March 2018 for the |
This amount reflects abuy-out award provided under |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
Stock Vested in 2018
Stock Awards(1) | ||||||||
Name | Number of Shares Vesting(#) | Value Realized on | ||||||
Bruce Van Saun | 66,553 | 2,798,331 | ||||||
John F. Woods | 44,726 | 1,946,923 | ||||||
Donald H. McCree III | 7,771 | 338,272 | ||||||
Brad L. Conner | 19,243 | 810,239 | ||||||
Malcolm Griggs | 23,027 | 985,157 |
Stock Awards(1) | ||||||||
Name | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($)(2) | ||||||
Bruce Van Saun | 299,984 | 7,732,595 | ||||||
Eric Aboaf | 7,974 | 215,521 | ||||||
Brad L. Conner | 58,922 | 1,506,962 | ||||||
Stephen T. Gannon | 11,167 | 281,306 | ||||||
Nancy L. Shanik | 57,947 | 1,470,954 | ||||||
John J. Fawcett | 56,660 | 1,425,173 |
(1) | Amounts reflect Company shares |
(2) | The values reflected in this column were calculated by multiplying the number of shares that vested in |
RBS Options Exercised in 20152018 Pension Benefits
Option Awards | ||||||||
Name | Number of Shares Acquired on Exercise (#)(1) | Value Realized on Exercise ($)(2) | ||||||
Bruce Van Saun | — | — | ||||||
Eric Aboaf | — | — | ||||||
Brad L. Conner | — | — | ||||||
Stephen T. Gannon | — | — | ||||||
Nancy L. Shanik | — | — | ||||||
John J. Fawcett | 212,451 | 239,421 |
Name | Plan Name | Number of Years Credited Service(2) | Present Value of Accumulated Benefits($)(3) | Payments During Last Fiscal Year($) | ||||||||||||
Bruce Van Saun | — | - | - | - | ||||||||||||
John F. Woods | — | - | - | - | ||||||||||||
Donald H. McCree III | — | - | - | - | ||||||||||||
Brad L. Conner(1) | CFG Pension Plan | 4.5411 | 105,132 | - | ||||||||||||
Malcolm Griggs | — | - | - | - |
(1) | Mr. Conner is the only NEO eligible to participate in |
(2) |
Name | Plan Name | Number of Years Credited Service(2) | Present Value of Accumulated Benefits(3) | Payments During Last Fiscal Year | ||||||||||
Bruce Van Saun(1) | — | — | — | — | ||||||||||
Eric Aboaf(1) | — | — | — | — | ||||||||||
Brad L. Conner | CFG Pension Plan | 4.5411 | 89,366 | 0 | ||||||||||
Stephen T. Gannon(1) | — | — | — | — | ||||||||||
Nancy L. Shanik(1) | — | — | — | — | ||||||||||
John J. Fawcett(1) | — | — | — | — |
After December 31, 2012, there were no further benefit accruals under the CFG Pension Plan. Therefore, an eligible employee’s actual years of service |
(3) | For Mr. Conner, the present value of accumulated benefits at December 31, |
20152018 Pension Benefits
We sponsor the CFG Pension Plan (formerly RBS Americas Pension Plan) (“Pension Plan”), which is anon-contributory defined benefit pension plan that is qualified under Section 401(a) of the Internal Revenue Code. The Pension Plan was closed to new hires andre-hires effective January 1, 2009 and frozen to all participants and benefit accruals effective December 31, 2012. During 2015, regularRegular full-time and part-time employees of the Company who were hired before January 1, 2009 and completed one year of service were eligible for benefits under the Pension Plan.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
The benefit under the Pension Plan for employees is currently calculated using a formula based on an employee’s “average gross compensation” (defined under the Pension Plan as a participant’s average eligible compensation during five years of employment (whether or not consecutive) prior to December 31, 2012 yielding the highest average), subject to limitations imposed by the Internal Revenue Service. Eligible compensation generally includes all taxable compensation, other than certain equity-based andnon-recurring amounts. The formula generally provides for a benefit of 1% of average gross compensation multiplied by each year of the participant’s credited service, with such benefit percentage varying depending on the employee’s hire date and retirement date, as specified under the Pension Plan. Pension benefitsBenefits under the Pension Plan are generally payable in the form of a monthly annuity, though benefits under the Pension Plan may be received as a lump sum payment.
A participant’s pension benefit under the Pension Plan generally vests in full on the “normal retirement date”—generally,date,” when the participant reaches age 65 (or, for certain individuals (depending on the date such participant commenced participation in the Pension Plan),or the fifth anniversary of the date suchthe participant commenced participation in the Pension Plan, if later).whichever is later. A participant’s pension benefit under the Pension Plan also vests in full upon completion of five years of vesting service. Participants may begin receiving full retirement benefits on the first day of the month coincident with or immediately following the normal retirement date and may be eligible for reduced benefits if retiring after attainment of age 55 with a minimum of five years of vesting service. Participants who retire after attainment of age 62 with a minimum of twenty years of vesting service are eligible to receive unreduced retirement benefits. Mr. Conner became a participant in the Pension Plan on July 1, 2009. As of December 31, 2015,2018, Mr. Conner was notis eligible for early retirement under the Pension Plan and, based on his age at date of hire, will never be eligible for unreduced retirement benefits at age 62.
20152018 Nonqualified Deferred Compensation
Name | Executive Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals in Last FY ($)(3) | Aggregate Balance at Last FYE ($) | ||||||||||||
Bruce Van Saun |
| |||||||||||||||
Voluntary deferred compensation plan(1) | 1,098,136 | -22,692 | 0 | 1,394,084 | ||||||||||||
Variable compensation awards—deferred cash / bonds | 0 | 0 | 0 | 597,450 | ||||||||||||
Eric Aboaf |
| |||||||||||||||
Variable compensation awards—deferred cash / bonds | 0 | 0 | 0 | 0 | ||||||||||||
Brad L. Conner |
| |||||||||||||||
Variable compensation awards—deferred cash / bonds | 0 | 2,033 | 197,373 | 219,632 | ||||||||||||
Stephen T. Gannon |
| |||||||||||||||
Variable compensation awards—deferred cash / bonds | 0 | 0 | 0 | 154,000 | ||||||||||||
Nancy L. Shanik |
| |||||||||||||||
Variable compensation awards—deferred cash / bonds | 0 | 2,589 | 246,671 | 250,827 | ||||||||||||
John J. Fawcett |
| |||||||||||||||
Variable compensation awards—deferred cash / bonds | 0 | 1,805 | 170,057 | 430,092 |
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals in Last FY ($)(3) | Aggregate Balance at Last FY ($) | |||||||||||||||
Bruce Van Saun Deferred compensation plan(1) Variable compensation awards | | 2,119,820 - | | | - - | | | (646,391 - | )
| | - 199,149 | | | 7,027,560 - | | |||||
John F. Woods | - | - | - | - | - | |||||||||||||||
Donald H. McCree III | - | - | - | - | - | |||||||||||||||
Brad L. Conner Variable compensation awards | - | - | - | 43,116 | - | |||||||||||||||
Malcolm Griggs | - | - | - | - | - |
(1) | The material terms of the CFG Voluntary Executive Nonqualified Deferred Compensation Plan are described in the narrative below. Executive contributions for Mr. Van Saun in the last fiscal year include the deferred portion of his |
$148,700 of his 2017 salary (which was reflected in the “Salary” column of the2017 Summary Compensation Table); $1,803,120 of his 2017 cash bonus (which was reflected in the“Non-Equity
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
Incentive Compensation” column of the2017 Summary Compensation Table); $297,400 of his 2016 salary (which was reflected in the “Salary” column of the2016 Summary Compensation Table); $1,611,120 of his 2016 cash bonus (which was reflected in the“Non-Equity Incentive Compensation” column of the2016 Summary Compensation Table); $297,400 of his 2015 salary (which was reflected in the “Salary” column of the2015 Summary Compensation Table); $800,736 of his 2015 cash bonus (which was reflected in the“Non-Equity Incentive Compensation” column of the2015 Summary Compensation Table); and $318,640 of his 2014 cash bonus (which was reflected in the“Non-Equity Incentive Compensation” column of the2014 Summary Compensation Table).
(2) | For Mr. Van Saun, the amount in this column reflects the earnings (losses) on his deferred compensation plan account during |
(3) | Amounts in this column reflect the |
Variable Compensation Awards—Deferred Bonds I Cash
As described in the Compensation Discussion and Analysis, in performance years prior to 2015 variable compensation awards were granted partially in the form of deferred cash (this portion was historically delivered as a deferred bond by RBS), with interest in certain prior years. For details, see “—Compensation Discussion and Analysis—Variable Compensation—2014 Performance Year Variable Compensation Mix”.
Amounts in the above table relate to the deferred bond / deferred cash portion of variable compensation awards granted for performance years 2011 and 2012, including applicable earnings to the extent they have been accrued or paid during 2015. Deferred bonds granted for performance years prior to 2014 remain subject to the cancellation and forfeiture provisions included in the CFG Deferral Plan.
Nonqualified Deferred Compensation Plans
We sponsor two nonqualified deferred compensation plans—the CFG Deferred Compensation Plan and the CFG Voluntary Executive Deferred Compensation Plan, (formerly known as the RBS Americas Deferred Compensation Plan). Following closure of the CFG Deferred Compensation Plan to new participants on December 31, 2008, the RBS Americas Deferred Compensation Plan was adopted, effective as of January 1, 2009. Our deferred compensation plans currently dowhich does not offer any matching contributions or provide for above-market earnings. During 2015,2018, Mr. Van Saun was the only NEO who participated in the CFG Voluntary Executive Deferred Compensation Plan and elected to defer 20%10% of his base salary and 80% of the cash portion of his variable compensation award for the 20152018 performance year.
Under the CFG Voluntary Executive Deferred Compensation Plan, eligibility is limited to employees who have total compensation in the immediately preceding year equal to or exceeding the Internal Revenue Code Section 401(a)(17) limit for the relevant plan year. Participants are permitted to defer between 1% and 80% of their base salary and annual bonus. Participants select the allocation of their accounts among investment indices available under the plan. Our Board of Directors has the power to amend the plan at any time, as long as the amount accrued to the date of amendment in any account under the plan is not decreased or otherwise restricted. In addition, following a termination of employment, participants in the CFG Executive Voluntary Deferred Compensation Plan are entitled to receive amounts that have been deferred under that plan.
Potential Payments Upon Termination or Change of ControlTERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
We have entered into either an employment agreement or offer letter with each of our NEOs. In addition, our NEOs, (other than our CEO) are eligible for severance benefits pursuant to our general severance practice, as modified by their employment agreements or offer letters, and Mr. Fawcett entered into a separation agreement in connection with his separation from employment during 2015. Thethe material terms of which are summarized below, including severance provisions. In addition, the treatment of equity-based awards held by our severance practice,NEOs upon a termination of employment and agreements or offer letters, and separation agreements for our NEOs, as applicable,change of control are summarized below. Please see thePotential Payments Tablebelow for quantification of estimated payments and benefits to which our NEOs would be entitled under various termination scenarios and upon a change of control, in each case, assuming such event occurred on December 31, 2015.
Equity Awards
Citizens Financial Group, Inc. Converted Equity 2010 Long Term Incentiveawards under the Omnibus Plan
RBS long-term incentive awards held by granted to our employees (including our NEOs) were converted into Company share-based awards in connection with our initial public offering and are governed byNEOs have the CFG LTIP. No additional awards have been or will be granted under this plan.
Termination of Employment
If a participant ceases to be an employee of any “member of the CFG group” (as defined in the CFG LTIP) for any reason other than due to the participant’s death or due to “exceptional circumstances” (as described in the CFG LTIP), outstanding LTIP awards will be forfeited on the date of such participant’sfollowing treatment upon termination of employment (or, on the date which the participant gives or receives notice of termination, as determined in the discretion of the Compensation Committee). Unless otherwise provided in an award certificate, any unvested portion of an LTIP award will vest in full on the date of a participant’s death. In the event a participant ceases to be employed by any member of the CFG group due to “exceptional circumstances,” unless otherwise provided in an award certificate, LTIP awards will continue to vest and will be settled on the original schedule, subject to the satisfaction of performance condition(s), if applicable, and will be pro-rated to reflect the period the participant was employed. However, if after a participant ceases to be an employee of the CFG group due to “exceptional circumstances,” such participant engages in “detrimental activity” (as defined in the CFG LTIP), LTIP awards will be forfeited.
Special IPO awards that were granted in 2014 have different termination treatment than LTIP awards granted in 2012 and 2013. If a grantee becomes employed by a member of the RBS Group with the Company’s consent, or the grantee’s employment is terminated by reason of redundancy, retirement with the Company’s consent or disability, awards remain outstanding and will vest as originally scheduled and will not be pro-rated. If a participant ceases to be employed due to death, awards will vest in full as of the date of death. If the participant voluntarily resigns or is terminated for cause, awards will lapse with no payment or consideration.
employment. Provisions relating to the treatment of Bruce Van Saun’s equity-based awards upon termination of employment (including following a sale of the company) are included below in the description of his employment agreement.
Change of Control
In the event of a “change of control” (as defined in the CFG LTIP), unless the Compensation Committee determines otherwise, any unvested portion of an LTIP award will vest on the date of such change of control subject to the satisfaction of performance condition(s), if applicable, and pro-rated to reflect the portion of the vesting period that has passed.
Citizens Financial Group, Inc. Converted Equity 2010 Deferral Plan
Deferred share awards in respect of RBS shares held by our employees (including our NEOs) were converted into Company share-based awards in connection with our initial public offering and are governed by the CFG Deferral Plan. No additional awards have been or will be granted under this plan.
Termination of Employment
If a participant ceases to be an employee of any “member of the CFG group” (as defined in the CFG Deferral Plan) for any reason other than for “cause” (as defined in the CFG Deferral Plan) and other
than due to the participant’s death, outstanding deferred shared awards will continue to vest on the original schedule, except that if a participant engages in any “detrimental activity” or “competitive activity” (in each case, as defined in the CFG Deferral Plan), any “unvested” portion of a deferred share award will be forfeited (except to the extent the Compensation Committee determines otherwise). If a participant ceases to be an employee of any member of the CFG group due to a termination for cause, any outstanding deferred share awards will be forfeited on the date of such participant’s termination of employment (or, on the date which the participant receives notice of such termination, as determined in the discretion of the Compensation Committee). Any “unvested” portion of deferred share awards will vest on the date of the participant’s death and the participant will receive an amount in cash equal to the value of the shares underlying such deferred share awards on such date.
Provisions relating to the treatment of Bruce Van Saun’s equity-based awards upon termination of employment (including following a sale of the Company) are included below in the description of his employment agreement.
Change of Control
In the event the Compensation Committee becomes aware that we are or expected to be affected by a “change of control” (defined under the CFG Deferral Plan similarly as under the Omnibus Plan, described below), the Compensation Committee will have authority to:
TerminationCitizens Financial Group, Inc. 2014 Omnibus Incentive Plan• Equity awards granted to our NEOs under the Omnibus Plan have the following treatment.Termination
Restricted Stock Units -
If a participant’s employment with the Company is terminated by the Company without Cause“cause” (as defined in the award agreements under the Omnibus Plan), or by reason of disability“disability” or retirement“retirement” (as defined)defined in award agreements under the Omnibus
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
Plan), vesting and settlement of awards will continue as originally scheduled subject to the participant not engaging in detrimental activity (or“detrimental activity” (as defined in award agreements under the Omnibus Plan), or competitive activity in the case of disability or retirement)retirement, during the remaining vesting period. If a participant voluntarily resigns or is terminated by the Company for cause, unvested awards will be forfeited. All unvested awards will become vested on the date of a participant’s death.
Performance ShareStock Units -
In the event of a participant’s voluntary resignation, all unvested awards would be forfeited. In the event of an involuntary termination by the Company of the grantee without cause, disability or retirement (as defined) awards will continue to vest in accordance with the original schedule subject to actual performance and wouldwill not bepro-rated based on service, provided the termination does not occur prior to the first anniversary of the performance period start date and the participant does not engagedengage in “detrimental activity” or, in; if the case of retirement or disability, “competitive activity”. In the
termination occurs prior to the first year anniversary of the performance period start date, awards wouldwill be forfeited. In the event of a termination by reason of “disability” or “retirement” (as each is defined in the Omnibus Plan), awards will continue to vest in accordance with the original schedule subject to actual performance and will not bepro-rated based on service, provided the participant does not engage in “detrimental activity” or “competitive activity.” In the event of a participant’s death, awards wouldwill become vested at target wouldand will not be subject topro-ration based on service. In the event of a termination without cause or resignation with good reason, in each case, within 12 months following a change of control of the Company, awards would be accelerated based on the level of performance measured as of the change of control. In the event of a termination for cause, awards wouldwill be forfeited.
Provisions relating to the treatment of Bruce Van Saun’s equity-based awards upon termination of employment (including following a sale of the Company) are included below in the description of his employment agreement.
Change of Control
• | Change of Control |
Omnibus Plan Provisions
In the event of a “change of control” (as defined in the Omnibus Plan and summarized below), except as otherwise provided in the applicable award agreement, the Compensation Committee may provide for:
continuation or assumption of outstanding awards under the Omnibus Plan by usthe Company (if we are the surviving corporation) or by the surviving corporation or its parent;
substitution by the surviving corporation or its parent of awards with substantially the same terms and value as such outstanding awards under the Omnibus Plan;
acceleration of the vesting (including the lapse of any restrictions, with any performance criteria or conditions deemed met at target) or the right to exercise outstanding awards immediately prior to the date of the change of control and the expiration of awards not timely exercised by the date determined by the Compensation Committee; or
in the case of outstanding stock options and SARs, cancelation in consideration of a payment in cash or other consideration equal to the intrinsic value of the award. The Compensation Committee may, in its sole discretion, terminate without the payment of any consideration, any stock options or SARs for which the exercise or hurdle price is equal to or exceeds the per share value of the consideration to be paid in the change of control transaction.
Under the Omnibus Plan, except as otherwise provided in a participant’s award agreement, “change of control” generally means the occurrence of one or more of the following events:
the acquisition of more than 50% of the combined voting power of our outstanding securities (other than by an employee benefit plan or trust maintained by us);
the replacement of the majority of our directors during any12-month period;
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
the consummation of our merger or consolidation with another entity (unless our voting securities outstanding immediately before such transaction continue to represent at least 50% of the combined voting power and total fair market value of the securities of the surviving entity, or if applicable, the ultimate parent thereof, outstanding immediately after such transaction); or
the transfer of our assets having an aggregate fair market value of more than 50% of the fair market value of usthe company and our subsidiaries immediately before such transfer, but only to the extent that in connection with such transfer or within a reasonable period thereafter, our stockholders receive distributions of cash and/or assets having a fair market value that is greater than 50% of the fair market value of us and our subsidiaries immediately before such transfer.
RSU & PSU AwardRestricted Stock Unit and Performance Stock Unit Agreements
In the event of a Changechange of Control,control, the actual number of PSUsperformance stock units earned will be determined and will remain subject to time-based vesting conditions until the end of the original performancevesting period. If within 12 months following a Changechange of Control,control, the participant’s employment is terminated by the Company without Cause“cause” (as defined)defined in award agreements under the Omnibus Plan) or the participant resigns for Good Reason“good reason” (as defined)defined in the award agreements under the Omnibus Plan), RSUsrestricted stock units and PSUsperformance stock units will fully vest and be settled immediately following the termination.
Severance Practice
Our severance practice, which may be amended at any time, providestermination, with the level of performance for the payment of severance benefits to eligible employees in the event their employment is terminated without cause and for reasons unrelated to poor performance. Under the severance practice, eligible employees who execute a release agreement may receive a lump sum payment equal to two weeks of severance pay for each year of his or her employment, with a minimum payment of 26 weeks of base salary for individuals whose base salary equals or exceeds $300,000 and a maximum of 52 weeks of base salary payments (regardlessperformance stock units measured as of the employee’s base salary).change of control.
As of December 31, 2015, the employment agreement and offer letters, as amended, for Messrs. Conner and Gannon and Ms. ShanikSeverance
The severance to which our NEOs are entitled each of them to a minimum of 26 weeks of base salary in the event of termination without cause for reasons unrelated to poor performance, subject to the execution and non-revocation of a release in our favor. Mr. Aboaf’s severancevarious circumstances is governed by histheir employment agreement.agreements, which are described below in “—See “—Employment AgreementslOffer LettersAgreements with Our NEOs—Employment Agreements I Offer LettersNEOs.” None of Messrs. Aboaf, Conner and Gannon and Ms. Shanik” belowour NEOs’ employment agreements provides for further detailsexcise taxgross-ups in connection with a change of control.Mr. Van Saun’s severance is governed by his employment agreement. See “—Employment AgreementslOffer Letters with Our NEOs—Employment Agreement with Mr. Van Saun” below for further details.
In addition to severance pay, eligible employees areunder our severance practice our NEOs would also be entitled to receive benefits under our then-existing health and welfare plans for a period of one month following the month in which termination of employment occurs at active employee rates, which is in additionprior to the start of the COBRA continuation coverage periods.period. Outplacement services arewould also be offered to eligible employees with the duration of such service varying by level of employee.for 12 months. We may amend or terminate this practice at any time.
None of our NEOs’ offer letters or employment agreements provides for an excise tax gross-ups in connection with a change in control.
Employment Agreements/Offer LettersAgreements with Our NEOs
We have entered into an employment agreement or offer letter with each of our NEOs. The material terms of thosethe agreements entered into with our NEOs are summarized below.
Employment Agreement with Mr. Van Saun
BelowIn light of UK and European remuneration regulations ceasing to apply to the Company in late 2015, we entered into an amended employment agreement with Mr. Van Saun on May 5, 2016. The Compensation Committee’s objective was to put into place an arrangement that balanced its former obligations under Mr. Van Saun’s prior agreement and achieved the following positive results for the Company: (i) motivates and rewards Mr. Van Saun for the achievement of our strategic objectives; (ii) provides additional retentive value; and (iii) aligns terms and conditions more closely with US market practice.
The agreement has an initial five-year term that will be extended automatically for a subsequenttwo-year term unless either party provides at least 12 months notice to terminate. There is no
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
further opportunity for automatic renewal beyond the additionaltwo-year term. In the event of Mr. Van Saun’s voluntary resignation, he would be required to provide the Company at least six months notice in order to effectuate an orderly handover of duties.
Pursuant to the agreement, Mr. Van Saun is entitled to receive an annual base salary of $1,487,000 and has a summarytarget total compensation opportunity of $9.0 million, which was increased from $8.1 million in December 2018 in light of the subsequent increases to median CEO compensation in our peer group. The form and terms of Mr. Van Saun’s variable compensation are to be determined annually by the Compensation Committee. In addition, Mr. Van Saun is eligible to participate in employee benefits available to the Company’s senior executives generally and is also entitled to the business use of a company car.
The agreement also provided Mr. Van Saun with aone-time equity award with a target value of $3 million, as consideration for the elimination of the annual fixed cash pension benefit allowance of ~$550,000 provided under his prior contract. Half of this special equity award was granted in the form of restricted stock units and half in performance stock units with a three year performance period (“Special PSU Award”). In addition to providing consideration for the elimination of Mr. Van Saun’s annual fixed cash pension benefit allowance, the Compensation Committee determined that making thisone-time award to Mr. Van Saun would provide additional retentive value in a form that further aligns him with stockholders and the strategic objectives of the business. The Special PSU Award was assessed by the Compensation Committee at its February 13, 2019 meeting, as discussed earlier in “—Compensation Discussion and Analysis—Executive Compensation Decisions—Variable Compensation—Performance Assessment of PSUs Granted in 2016—CEO 2016 Special PSU Award.”This award will vest on May 5, 2019 at this level of achievement, subject to the terms and conditions of the employment contract negotiated between Mr. Van Saun and RBS in connection with Mr. Van Saun’s transition into the role of the Company’s Chief Executive Officer. Given that UK and European remuneration regulations have ceased to apply to the Company, we intend to enter into an amended employment contract with Mr. Van Saun in 2016.
General Terms
In connection with his appointment, we entered into an offer letter and an employment agreement with our CEO, Mr. Van Saun, which were effective as of October 1, 2013 (referred to collectively as the “employment agreement”). Mr. Van Saun’s compensation, as set forth in his employment agreement, was informed by negotiations between RBS, us and Mr. Van Saun, as well as the terms of his compensation arrangement during his tenure with RBS.
Under the terms of Mr. Van Saun’s employment agreement, Mr. Van Saun is:
However, notwithstanding his eligibility under the bonus program and long-term incentive opportunity, as described above, during the 2014 performance year, Mr. Van Saun’s variable compensation was subject to the limitations imposed by CRD IV. For further details, see “Compensation Discussion and Analysis—Applicability of UK and European Remuneration Rules” above.award agreement.
Under the terms of his employment agreement, Mr. Van Saun is also entitled to certain severancethe following payments and benefits as described below.
Termination Without “Cause” or for “Good Reason” Absent Changeupon termination of Control
Upon six-months’ written notice to Mr. Van Saun (oremployment in the alternative, (i) paymentvarious scenarios, in lieu of such notice equal to six months of his base salary and Pension Benefits Funding, to be paid in installments on regularly scheduled payroll dates and reduced to offset other income he received during this period, or (ii) a six-month “garden leave” during which Mr. Van Saun will not be reporting to work but will continue to receive payments of his base salary and Pension Benefits Funding), we can terminate Mr. Van Saun’s employment without “cause” or, upon written notice to us, Mr. Van Saun can terminate his employment for “good reason” (as defined in his employment agreement and summarized below) if we fail to cure “good reason” circumstances within 30 days of receiving notice. Upon such terminations, in lieu of any other payments that may be due to him under any other severance plan or practice we maintain, Mr. Van Saun:
In addition, upon his termination for “good reason,” Mr. Van Saun will receive a payment equal to six months of his base salary and Pension and Benefit Funding in lieu of the six-months’ notice requirement (to be paid in installments on regularly scheduled payroll dates and reduced to offset other income received during this period).
Termination in Connection with Change of Control
If, within six months of a “disposal” of the Company (which under his employment agreement is defined as a sale to a third party of all or substantially all of the Company), Mr. Van Saun is terminated by the applicable acquirer or resigns in direct response to being assigned to a position in which the nature or scope of his responsibilities or authority is not reasonably regarded as equivalent to or more senior to his position at us immediately prior to such sale, subject to his execution of a release, Mr. Van Saun will generally be:our favor:
Termination without cause or resignation for good reason absent a change of control | Mr. Van Saun would receive a lump sum cash severance payment equal to two times his base salary and would also receive apro-rata portion of his target cash incentive for the year of termination payable when cash incentives are paid to other executives, in each case, subject to an orderly handover of duties. In addition, his outstanding unvested equity awards would continue to vest on their original schedule, with performance stock units subject to actual performance and, in each case, subject to Mr. Van Saun not engaging in detrimental activity for 12 months post-termination. It should be noted that the Company’s election not to renew the agreement for an additional two-year term would constitute a termination without cause. |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
Termination without cause or resignation for good reason following a change of control | In the event of a qualifying termination of employment occurring within 24 months following a change of control, Mr. Van Saun would receive a lump sum cash severance payment equal to three times the sum of his base salary and his target cash incentive for the year of termination, plus apro-rata portion of his target cash incentive for the year of termination. Upon the change of control, Mr. Van Saun’s performance stock units would be frozen at target performance level, but not accelerated. Following the subsequent qualifying termination, all of Mr. Van Saun’s outstanding equity awards would immediately vest and be paid. The agreement also provides that if any payments or benefits to Mr. Van Saun (whether or not under the employment agreement) would be considered parachute payments pursuant to Internal Revenue Code Section 280G, these payments and benefits would be reduced to the extent necessary to avoid triggering the excise tax under Internal Revenue Code Section 4999 unless he would be better off (on anafter-tax basis) if he received all payments and benefits due and paid all excise and income taxes. The employment agreement does not provide anygross-up for excise taxes. | |
Resignation without Good Reason (Retirement) | Mr. Van Saun currently meets the Company’s retirement rule as his age plus years of service equals or exceeds 65, with a minimum of at least five years of service. In connection with Mr. Van Saun’s retirement, he would be required to provide at least six months notice and effectuate an orderly handover of duties. At the time of termination, if the Company requires Mr. Van Saun to work during the notice period, the Company and Mr. Van Saun would mutually agree on how apro-rata portion of his variable compensation (excluding performance-based awards) for the year in termination would be payable. Outstanding unvested equity and awards, other than theone-time special award granted in May 2016, would continue to vest on their original schedule, with performance stock units subject to actual performance and, in each case, subject to Mr. Van Saun not engaging in competitive activity during the remaining vesting period or specified detrimental activity for 12 months post- termination. Theone-time special award would be forfeited. | |
Death | Mr. Van Saun’s estate would receive his base salary through the end of the month in which his death occurs as well as apro-rata portion of his target cash incentive. In addition, his outstanding equity awards would immediately vest and be paid, with performance stock units vesting at target level. | |
Disability | Mr. Van Saun would continue to receive his base salary up to the date he becomes eligible for long-term disability benefits under the Company’s plan (currently, six months from the date of disability) and, in addition, his outstanding unvested equity awards would continue to vest on their original schedule, with performance stock units subject to actual performance and, in each case, subject to Mr. Van Saun not engaging in competitive activity during the remaining vesting period or specified detrimental activity for 12 months post-termination. |
The above payments are subject to the following conditions: (i) Mr. Van Saun has not been offered or accepted a position with the acquirer that is at least as equivalent to his position immediately prior to the sale; (ii) in our opinion, Mr. Van Saun has not materially underperformed against agreed-upon performance objectives and plans; (iii) circumstances do not exist that would warrant a termination of Mr. Van Saun by us or the acquirer for “cause”; and (iv) there has been no clawback triggered under equity plans resulting in the reduction of Mr. Van Saun’s awards.
Voluntary Termination Other Than for “Good Reason”
Mr. Van Saun can terminate his employment voluntarily (other than for “good reason”) at any time upon giving six-months’ notice. We may, in our sole discretion, either place Mr. Van Saun on “garden leave” during such notice period (during which Mr. Van Saun will continue to receive his base salary and Pension Benefits Funding) or pay him an amount equal to six months of his base salary in lieu of the notice period (to be paid in installments on regularly scheduled payroll dates and reduced to offset other income received during this period).
Following the date on which Mr. Van Saun completes five years of service (which occurred on September 8, 2014), Mr. Van Saun will also be treated as a “good leaver’ by reason of redundancy under the equity plans (which would result in him receiving his awards on the original schedule, subject to satisfaction of the applicable performance conditions and pro-ration for performance based awards), provided he has given at least six-months’ notice in the event of a voluntary termination of employment, the board of directors does not determine that he committed any act warranting termination for “cause” and he does not commence employment with certain enumerated companies during the vesting period (which may be waived).
Termination due to Retirement, Death or Disability
Upon his termination of employment due to death or retirement, Mr. Van Saun or his estate will be entitled to, in each case, through the end of the month in which termination occurs:
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
Upon his termination due to disability, he will be entitled to receive the same payments except through the date on which he will first become eligible to receive payment of long-term disability benefits under our employee benefit plans as then in effect.
Termination for “Cause”
If Mr. Van Saun’s employment is terminated for “cause,” Mr. Van Saun will receive his unpaid salary and Pension Benefits Funding through his termination date and will not be entitled to any additional payments or benefits.
Restrictive Covenants
Mr. Van Saun is subject to a perpetual confidentiality covenant. During his employment and for a period of six months following termination from us other than for “good reason” (less any time spent on “garden leave”),In addition, Mr. Van Saun cannot holdis subject tonon-competition andnon-solicitation covenants. Thenon-competition covenant applies for six months post-termination, concurrent with any notice period, in the event of a positiontermination without cause or resignation for good reason. For this purpose, competitors are defined to include the following companies: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, US Bancorp, Regions Financial Corp., M&T Bank Corp., PNC, Fifth Third, Sun Trust, Comerica, KeyCorp, BB&T, Capital One and TD Bank. Thenon-solicitation covenant prohibits solicitation of employees as employee, director, officer, consultant, partner, agentwell as customers and prospective clients for twelve months post-termination, concurrent with any notice period, in the event of a termination without cause or principal in certain enumerated companies deemedresignation for good reason.
The agreement includes the following definitions of cause and good reason:
“Cause” includes: (i) any indictment for, conviction of, plea of guilty or nolo contendere to be a competitor of RBS or us, without the prior consent of RBS and the Company. During his employment and for a period of 12 months following his termination of employment from us (less any time spent on “garden leave”),by Mr. Van Saun also cannot solicitfor the commission of: (a) any felony, (b) any criminal offense within the scope of Section 19 of the Federal Deposit Insurance Act, 12 U.S. C. § 1829; or hire employees of RBS or us or solicit any of our customers or prospective clients or persuade or attempt to persuade any such customers or clients to divert business from us.
Definitions
“Cause” generally means(c) a misdemeanor involving dishonesty; (ii) if Mr. Van Saun’s (i) willfulSaun willfully commits a material breach of any of his obligations under his employment agreement; (ii)agreement or repeats or continues after written warning any material breach of his obligations under his employment agreement, or is, in the opinion of RBS’sthe board, of directors, being guilty of gross misconduct which brings him or usthe company or any other member of RBSits affiliates into disrepute; (iii) if Mr. Van Saun is guilty of dishonesty in the conduct of his duties; (iv)duties under his employment agreement, gross incompetence, willful neglect of duty, or of mismanagement of his financial affairs through failure to observe ourthe company’s rules and procedures for the operation of bank accounts and/or borrowing; (v) being found guilty of, or entering a plea of nolo contendere to, any felony or misdemeanor involving dishonesty; (vi) committing(iv) if Mr. Van Saun commits any act of bankruptcy or takingtakes advantage of any statute for the time being in force offering relief to insolvent debtors; or (vii) being(v) if, as a result of any default on the part of Mr. Van Saun, he is prohibited by law from acting as ouran officer of the company or any other member of the RBS due to any default on his part.its affiliates.
“Good reason” generally means (i)Reason” includes a material breach of Mr. Van Saun’sthe employment agreement by the company, or (ii) a substantial diminution or other substantial adverse change, not consented to by Mr. Van Saun, in the nature or scope of his base salary or responsibilities, authorities, powers, functions or duties.duties or in his base salary, except that removal of the role of chairman of the company from his duties shall not amount to good reason.
Employment Agreements I Offer Letters of Messrs. Aboaf, Conner and Gannon and Ms. Shanikwith Other Active NEOs
Each of Messrs. Aboaf,Woods, McCree, Conner and Gannon and Ms. ShanikGriggs has entered into an employment agreement or offer letter with us or one of our subsidiaries.the Company. These arrangementsagreements generally provide for the terms of each executive’s compensation arrangement, including salary and variable compensation, vacation and eligibility for other health and welfare benefits. Under each executive’s employment agreement, or offer letter, the executive is subject to a notice period of 90 days with regard to his or her intent to leave our or one of our subsidiaries’ employ for any reason.reason (120 days for Messrs. Woods, McCree and Conner and 90 days for Mr. Griggs). In addition, each of the arrangementsagreements contains covenants regarding thenon-solicitation of customers and employees that apply for 12 months following a termination of employment for any reason.
The agreements of Messrs. Conner and Gannon and Ms. Shanik each provide that the executive is entitled to a minimum payment of 26 weeks of base salary in the event he or she is made redundant or is terminated by usthe Company without cause and for reasons unrelated to poor performance,“cause” (as defined in the agreements), subject to the execution andnon-revocation of a release in our favor.
The employment agreement entered into with Mr. Aboaf in 2015 provides for an initial base salary of $700,000 and a role based allowance of $800,000 on an annual basis. In the event that we discontinue role based allowances (as we have, effective January 1, 2016), Mr. Aboaf’s total compensation opportunity in any full calendar year must be no less than $3,000,000. Mr. Aboaf’s employment agreement also provided for a guaranteed minimum variable compensation award for the 2015 performance year of $1,756,481 and a buy-out award in consideration of his forfeiture of equity awards in respect of his prior employer, which was granted in the form of deferred cash and restricted stock units under our Omnibus Plan, each of which will vest in accordance with the original schedulesfavor of the prior awards.Company. This level of severance is consistent with severance available to all executives. In addition, Mr. Aboaf’s employment agreement provides thatthe agreements each provide for double trigger severance in the event of a qualifying termination following a change of control. The decision to provide this severance was made in 2017
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
following a review of peer practice and to achieve parity among members of senior management. In the event of a termination by the Company without cause, he is entitled to receive his 2015 guaranteed variable compensation award (to the extent not yet paid), 26 weeks of base salary and, only for terminations occurring during 2015, 52 weeks of his role-based allowance less the amount of the role-based allowance actually paid during 2015. In addition,“cause” (as defined in the event Mr. Aboaf is terminated during calendar year 2016agreement) or resignation by the executive with “good reason” (as defined in connection withthe agreement) within 24 months following a change of control, each of Messrs. Woods, McCree, Conner and Griggs will receive severance consisting of: (i) two times the Company, he would be entitled to receive his 2015 guaranteed variable compensation award (to the extent not yet paid) and 200%sum of his fixed pay (which includes hiscurrent base salary and his 2015 roleaverage cash bonus received during the prior three years, plus (ii) apro-rata cash bonus for the year in which termination occurs, also based allowance). Lastly, Mr. Aboaf’s employment agreementon the average cash bonus during the prior three years.
The agreements in place for Messrs. Woods and McCree also providesprovide that, for purposes of calculating retirement eligibility under the Company’s various plans, heeach executive will be credited with an additional five years of service.
Pursuant to Mr. Gannon’s employmentWoods’ agreement, also provides that if, prior to RBS’ ownership dropping below 50%, he is made redundant solely as a result of the sale of the Company other than through an initial public offering, he will be entitled to receive a payment equal to 150% of his fixed pay. This provision lapsed effective as of March 30, 2015, when RBS’ interests in the Company fell below 50%.
Separation Agreement of Mr. Fawcett
Mr. Fawcett entered into a separation agreement with the Company in connection with the separation of his employment as of April 30, 2015.
In connection with that agreement, Mr. Fawcett received the following payments and benefits, subject to his execution and non-revocation of a release of claims in favor of the Company: (i) payment of $500,000 in lieu oftarget variable compensation is $2.7 million and he was granted a $7 millionbuy-out award in order to compensate him for the 2015 performance year; (ii) paymentbonus which would have otherwise been paid to him by his former employer for the 2016 year and the value of $25,000 to defray medical expense during the first year post-termination; (iii) payment of $12,500 for legal fees incurredawards he forfeited in connection with his separation;resignation. Of that amount, $3 million was paid in cash on March 31, 2017 and (iv) payment$4.66 million was granted in the form of $23,333 for accrued paid time off. In addition, in connectionrestricted stock units with his separation, Mr. Fawcett’s outstanding equitya three year vesting schedule (as of December 31, 2018 there were two remaining installments – March 1, 2019 (40,018 units) and deferred cash awards were treated in accordanceMarch 1, 2020 (32,956 units)), with the termsincrease in award value from $4 million to $4.66 million due to the difference between the initial valuation and conditions applicable to each such award, which resultedthe grant date values.
The agreements include the following definitions of cause and good reason:
“Cause” includes (i) any conviction (including a plea of guilty or of nolo contendere or entry into apre-trial diversion program) for the commission of a felony or any conviction of any criminal offense within the scope of Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. § 1829; (ii) an act of gross misconduct, fraud, embezzlement, theft or material dishonesty with the executive’s duties or in $3,023,891the course of value remaining outstanding. This amount been determined by addingemployment with the value of deferred cash awards and share-based awards that will remain outstanding post-termination (inCompany or an affiliate; (iii) failure on the case of share-based awards, by multiplying the number of shares underlying awards at his separation date by the closing price of Company common stock on April 30, 2015, which was $26.05 per share). In addition, as part of executive to perform his employment duties in any material respect, which is not cured to the negotiations, the equity portion of Mr. Fawcett’s incentive compensation in respectreasonably satisfaction of the 2014 performance year was awardedCompany within thirty (30) days after the executive receives written notice of such failure; (iv) the executive’s violation of the provisions of his employment agreement relating tonon-solicitation, confidentiality, ownership of materials, duty to return company property or intellectual property rights; and/or (v) the executive makes any material false or disparaging comments about the Company or any Company affiliate, or any Company or Company affiliate employee, officer, or director, or engages in non-performance-based awards. Mr. Fawcett’s agreement also contains covenants regarding non-solicitationany such activity which in the opinion of customers andthe Company is not consistent with providing an orderly handover of the executive’s responsibilities.
“Good Reason” includes a material diminution in the executive’s authority, duties, or responsibilities, a material diminution in the executive’s base salary other than a general reduction in base salary that affects all similarly situated employees, that apply for 12 months post-termination.or a relocation of the executive’s principal place of employment by more than fifty (50) miles from his current principal place of employment, unless the new principal place of employment is closer to the executive’s home address.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
Potential Payments Table
The following table summarizes estimated payments and benefits that would be provided to our NEOs (other than Mr. Fawcett) pursuant to their employment agreements, our severance practice their employment agreements or offer letters (as applicable) and the terms of outstanding equity awards, in connection with a termination of employment under various scenarios or a change of control, assuming such event occurred on December 31, 2015. The payments and benefits received by Mr. Fawcett in connection with his separation from employment are described above in“—Employment AgreementslOffer Letters with our NEOs—Separation Agreement of Mr. Fawcett.”2018.
For the summary of the material terms of the outstanding equity awards, ourthe severance practiceto which NEOs’ would be entitled, and the terms and conditions of our NEOs’ employment agreements, or offer letters, as applicable, see “—“—Equity Awards”Awards”, —Severance Practice”“—Severance” and “—Employment AgreementslOffer LettersAgreements with our NEOs” above.
Name | Voluntary Termination ($) | Voluntary Termination with Good Reason ($) | Not for Cause Termination ($) | For Cause Termination ($) | Change in Control Not for Cause Termination ($) | Change in Control Good Reason Resignation ($) | Change in Control Only (No Related Termination) ($) | Death ($) | Disability ($) | Retirement ($) | Voluntary Termination ($) | Voluntary Termination with Good Reason ($) | Not for Cause Termination ($) | For Cause Termination ($) | Change in Control Not Termination ($) | Change in Control Good Reason Resignation ($) | Change in | Death ($) | Disability ($) | Retirement ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bruce Van Saun | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment | 0 | (6) | 5,113,715 | (7) | 4,089,250 | (8) | 0 | 6,700,108 | (9) | 6,700,108 | (9) | 0 | 0 | 1,024,465 | (10) | 0 | 4,106,500 | (6) | 5,227,900 | (7) | 5,227,900 | (7) | - | 13,476,600 | (8) | 13,476,600 | (8) | - | 2,253,900 | (9) | 743,500 | (10) | 4,106,500 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards(1)(2) | 12,945,822 | 12,945,822 | 11,817,995 | 0 | 10,805,680 | 10,805,680 | 4,871,979 | 12,945,822 | 12,945,822 | 12,945,822 | 10,996,830 | 15,559,701 | 15,559,701 | - | 15,559,701 | 15,559,701 | - | 15,559,701 | 15,559,701 | 10,996,830 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Cash Awards(2) | 597,450 | 597,450 | 597,450 | 0 | 597,450 | 597,450 | 0 | 597,450 | 597,450 | 597,450 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Health Benefits(3) | 0 | 1,121 | 1,121 | 0 | 1,121 | 1,121 | 0 | 0 | 0 | 0 | - | 1,258 | 1,258 | - | 1,258 | 1,258 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(4) | 0 | 4,378 | 4,378 | 0 | 4,378 | 4,378 | 0 | 0 | 0 | 0 | - | 8,500 | 8,500 | - | 8,500 | 8,500 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 13,543,272 | 18,662,486 | 16,510,194 | 0 | 18,108,737 | 18,108,737 | 4,871,979 | 13,543,272 | 14,567,737 | 13,543,272 | 15,103,330 | 20,797,359 | 20,797,359 | - | 29,046,059 | 29,046,059 | - | 17,813,601 | 16,303,201 | 15,103,330 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eric Aboaf | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John F. Woods | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment | 0 | 0 | 2,329,849 | (11) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 350,000 | (11) | - | 3,965,000 | (12) | 3,965,000 | (12) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards(1)(5) | 0 | 0 | 1,810,489 | 0 | 1,810,489 | 1,810,489 | 0 | 1,810,489 | 1,810,489 | 1,810,489 | - | - | 2,538,318 | - | 3,460,334 | 3,460,334 | - | 3,460,334 | 3,460,334 | 3,460,334 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Cash Awards(5) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Health Benefits(3) | 0 | 0 | 1,072 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 1,152 | - | 1,152 | 1,152 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(4) | 0 | 0 | 4,378 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 8,500 | - | 8,500 | 8,500 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 0 | 0 | 4,145,788 | 0 | 1,810,489 | 1,810,489 | 0 | 1,810,489 | 1,810,489 | 1,810,489 | - | - | 2,897,970 | - | 7,434,986 | 7,434,986 | - | 3,460,334 | 3,460,334 | 3,460,334 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Donald H. McCree III | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment | - | - | 350,000 | (11) | - | 4,197,500 | (12) | 4,197,500 | (12) | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards(1)(5) | - | - | 2,874,623 | - | 3,958,847 | 3,958,847 | - | 3,958,847 | 3,958,847 | 3,958,847 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Health Benefits(3) | - | - | 1,213 | - | 1,213 | 1,213 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(4) | - | - | 8,500 | - | 8,500 | 8,500 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | - | - | 3,234,336 | - | 8,166,060 | 8,166,060 | - | 3,958,847 | 3,958,847 | 3,958,847 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brad L. Conner | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment | 0 | 0 | 350,000 | (12) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 350,000 | (11) | - | 3,470,000 | (12) | 3,470,000 | (12) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards(1)(5) | 414,326 | 414,326 | 2,621,959 | 0 | 2,989,719 | 1,733,883 | 815,216 | 3,037,673 | 2,621,959 | 2,621,959 | - | - | 2,615,943 | - | 3,409,882 | 3,409,882 | - | 3,409,882 | 3,409,882 | 3,409,882 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Cash Awards(5) | 90,282 | 90,282 | 219,632 | 0 | 219,632 | 219,632 | 0 | 219,632 | 219,632 | 219,632 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Health Benefits(3) | 0 | 0 | 1,121 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 1,151 | - | 1,151 | 1,151 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(4) | 0 | 0 | 4,378 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 8,500 | - | 8,500 | 8,500 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 504,608 | 504,608 | 3,197,090 | 0 | 3,209,351 | 1,953,515 | 815,216 | 3,257,305 | 2,841,591 | 2,841,591 | - | - | 2,975,594 | - | 6,889,533 | 6,889,533 | - | 3,409,882 | 3,409,882 | 3,409,882 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stephen T. Gannon | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Malcolm Griggs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment | 0 | 0 | 300,000 | (12) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 262,500 | (11) | - | 2,812,000 | (12) | 2,812,000 | (12) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards(1)(5) | 0 | 0 | 162,614 | 0 | 511,098 | 511,098 | 0 | 511,098 | 162,614 | 162,614 | - | - | 1,530,233 | - | �� | 1,830,387 | 1,830,387 | - | 1,830,387 | 1,830,387 | 1,830,387 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Cash Awards(5) | 0 | 0 | 154,000 | 0 | 154,000 | 154,000 | 0 | 154,000 | 154,000 | 154,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Health Benefits(3) | 0 | 0 | 1,120 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 1,258 | - | 1,258 | 1,258 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(4) | 0 | 0 | 4,378 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 8,500 | - | 8,500 | 8,500 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 0 | 0 | 622,112 | 0 | 665,098 | 665,098 | 0 | 665,098 | 316,614 | 316,614 | - | - | 1,802,491 | - | 4,652,145 | 4,652,145 | - | 1,830,387 | 1,830,387 | 1,830,387 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nancy L. Shanik | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment | 0 | 0 | 287,500 | (12) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards(1)(5) | 537,838 | 537,838 | 2,414,110 | 0 | 2,711,576 | 1,606,436 | 632,326 | 2,748,771 | 2,414,110 | 2,414,110 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Cash Awards(5) | 119,367 | 119,367 | 250,827 | 0 | 250,827 | 250,827 | 0 | 250,827 | 250,827 | 250,827 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Health Benefits(3) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(4) | 0 | 0 | 4,378 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 657,205 | 657,205 | 2,956,815 | 0 | 2,962,403 | 1,857,263 | 632,326 | 2,999,598 | 2,664,937 | 2,664,937 |
(1) | These amounts reflect the value of |
December 31, |
(2) | For a description of the |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
(3) | These amounts reflect the cost of COBRA benefit continuation coverage for one month under the plan in which the particular executive is enrolled, less the monthly active employee |
(4) | These amounts reflect the cost for us to provide outplacement services for executive level employees for 12 months under our outplacement policy. |
(5) | For a description of the treatment of |
Control—Equity Awards.”
(6) |
This amount |
This amount reflects the sum of (i) two times |
(8) | This amount reflects (i) three times the sum of Mr. Van Saun’s (a) base salary and (b) 2018 target cash bonus, plus (ii) apro-rata portion of his target cash bonus for 2018. Because the assumed termination date is December 31, 2018, the full award is reflected, based on the amount of his variable compensation and related mix for the 2018 performance year. |
(9) | This amount reflects apro-rata portion of Mr. Van Saun’s target cash bonus for 2018. Because the assumed termination date is December 31, 2018, the full target award is |
(10) | This amount reflects six months of base salary, |
(11) |
This amount reflects 26 weeks of base salary. |
(12) | This amount reflects (i) two times the sum of (a) base salary and (b) the average cash bonus paid for 2018, 2017 and 2016, plus (ii) apro-rata portion of the average cash bonus paid for 2018, 2017 and 2016. Because the assumed termination date is December 31, 2018, the full award is reflected, based on the amount of each NEO’s variable compensation and related mix for the 2018 performance year. |
The Compensation Committee has performed a review of compensation policies and practices for all of our employees and has concluded that our compensation policies and practices are not reasonably likely to have a material adverse impact on the Company.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Bruce Van Saun, our Chief Executive Officer:
For 2018, our last completed fiscal year:
the median of the annual total compensation of all employees of our company (other than our CEO) was $59,748; and
• | the annual total compensation of our CEO, as reported in the2018 Summary Compensation Table included in this Proxy Statement, was $9,405,933. |
Based on this information, for 2018 the reasonably estimated ratio of the annual total compensation of Mr. Van Saun, our Chief Executive Officer, to the median of the annual total compensation of all employees, calculated in a manner consistent with Item 402(u) of RegulationS-K, was 157 to 1. |
Because our 2017 median employee is no longer employed by the Company, a new median employee has been selected consistent with the methodology used to select the median employee last year. Specifically, consistent with applicable rules, to identify the median employee we reviewed our employee population as of November 30, 2018 and the amount of their compensation for the period of January 1, 2018 through November 30, 2018 as would be reported to the Internal Revenue Service on FormW-2 in Box 1, which we determined reasonably reflects the compensation of our employees.This calculation included all of our part-time and full time-employees as of such date. We did not annualize the compensation for any of our employees who were employed by the Company for less than the full 2018 year. In addition, because all our employees are located in the United States, as is our CEO, we did not make anycost-of-living adjustments in identifying the median employee.
Once we identified our median employee, we calculated and combined all of the elements of this employee’s compensation for the full 2018 year in accordance with the requirements of Item 402 of RegulationS-K. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our2018 Summary Compensation Table included in this proxy statement.
In connection with our initial public offering, we adopted the
The Citizens Financial Group, Inc.Non-Employee Director Compensation Policy (“Director Compensation Policy”). Effective governs the compensation of ournon-employee directors. The Director Compensation Policy is reviewed on an annual basis by the Compensation Committee, together with its independent compensation consultant, CAP. The Compensation Committee reviews CAP’s report and considers the consultant’s advice on industry best practice when making decisions regarding director compensation. Any changes to director compensation are approved by the Compensation Committee, the Nominating and Corporate Governance Committee, and the Board. Following the annual review during 2018, modest increases were made to our annual cash retainer (increased $5,000 to $85,000) and equity retainer (increased $5,000 to $125,000) in order to further align our director compensation offering with the same compensation peer group used for executive compensation and performance purposes. These changes were effective as of October 1, 2015, our Boardannual meeting of Directors amended the Director Compensation following its annual review, in conjunction with the Compensation Committee’s independent compensation consultant.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
stockholders held on, April 26, 2018. Below is a summary of the changes made to the Director Compensation Policy made during 2015.elements of our director compensation program:
Element of Compensation |
|
| ||
Annual Cash Retainer | $ | |||
Annual Restricted Stock Unit Retainer | $ | |||
Lead Director Cash Retainer | $30,000 | |||
Audit Committee Member Retainer | $10,000 | |||
Audit Chair Cash Retainer | $35,000 | |||
Risk Chair Cash Retainer | $30,000 | |||
Other Committee Chair Cash Retainers | $20,000 | |||
| ||||
|
Non- employee directors receive their cash retainers payable in quarterly installments, in advance. In addition, each non-employee director who attends more than six meetings of any committee of our Board of Directors in any calendar year also receives an additional cash fee of $1,500 for each such additional meeting attended (regardless of whether attended in person or by telephone).
Each non-employee director also receives, onOn the date of each annual meeting of our stockholders, an annualeachnon-employee director receives a grant of restricted stock units under the Citizens Financial Group, Inc. 2014Non-Employee Directors Compensation Plan (“Directors Plan”), having a “fairfair market value” (defined undervalue of $125,000, as compensation for their service until the Directors Plannext annual meeting. Restricted stock unit awards vest immediately as the closing price of a share of our common stock on the day prior to the grant date) of $100,000. Each annual award will vest 100% on the first anniversary of the grant date, subject to the terms and conditions of the Directors Plan and the applicable award agreement thereunder. During 2015, in additionagreement. Director awards are subject to mandatory deferral and are not settled until a director’s cessation of service. To the annualextent dividends are declared between the grant made in May, a make-up grant was made to directors effective as of October 1, 2015 in order to effectuate the increase in the annual equity retainer for the period of October 1, 2015 to April 28, 2016 (theand ultimate settlement date, of the 2016 shareholders meeting). The grants ofdividend equivalents are reinvested into additional restricted stock units will fully vest upon a “change of control” (as defined inwith the above description of the Omnibus Plan) or a non-employee director’s separation from service from our Board of Directors for any reason (other than under circumstances which would constitute “cause” under the terms of our bylaws or applicable law).
During 2015, our Compensation Committee and Board of Directors approved thesame terms and conditions of director stock awards to be granted starting in 2016, which will require mandatory deferral of settlement until directors retire fromas the Board of Directors.related award.
In addition, our directors are eligible to receive matching charitable contributions up to $5,000 per year, as part of our general matching charitable contribution program. Under our charitable contribution policy, we match charitable contributions dollar-for-dollar up to the maximum matching contribution. Our non-employee directors do not participate in our employee benefit programs.
Directors may defer up to 100% of their cash retainers and other cash feescompensation under our Directors Deferred Compensation Plan. No Company contributions are made to this plan. Contributions to this plan are credited with interest on a monthly basis, based on the applicable interest crediting rate applicable for the month interest is to be posted. The interest crediting rate is the annualized average yield on the United States Treasury bond10-year constant maturity for the immediately preceding calendar quarter plus two percent (2%), which is then divided by 12 to determine the monthly interest crediting rate. There are no Company contributions to this plan and no above-market or preferential earnings on compensation deferred pursuant to this plan.
Directors also receive reimbursement of business expenses incurred in connection with their attendance at meetings.
As discussed in above in“Compensation Discussion and Analysis—Stock Ownership and Retention Guidelines”,non-employee directors are required to hold shares with a value at least equal to four times their annual cash retainer (which was increased from three times during 2015).retainer.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
2018 Director Compensation Table
The following table lists the individuals who served asshows 2018 compensation for ournon-employee directors during 2015 and summarizes2018. As described above, the compensation earned by each directorDirector Compensation Policy was amended effective April 26, 2018. Prior to that date, directors were compensated in 2015. Directors who are alsoaccordance with the prior version of our employees are not compensated for their service on our Board of Directors.Director Compensation Policy.
Name | Fees Earned or Paid in Cash | Stock Awards(1) | Other Compensation(2) | Total Compensation | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Other Compensation($)(2) | Total Compensation($) | ||||||||||||||||||||||||
Mark Casady | 75,686 | 89,188 | — | 164,874 | 83,333 | 127,668 | 5,000 | 216,001 | ||||||||||||||||||||||||
Christine M. Cumming | 18,750 | 56,776 | — | 75,526 | 83,333 | 127,668 | - | 211,001 | ||||||||||||||||||||||||
Anthony Di lorio | 86,186 | 89,188 | — | 175,374 | 93,333 | 127,668 | - | 221,001 | ||||||||||||||||||||||||
Robert Gillespie(4) | 63,186 | 89,188 | — | 152,374 | ||||||||||||||||||||||||||||
William P. Hankowsky | 84,686 | 89,188 | — | 173,874 | 93,333 | 127,668 | - | 221,001 | ||||||||||||||||||||||||
Howard W. Hanna III(5) | 86,186 | 89,188 | — | 175,374 | ||||||||||||||||||||||||||||
Howard W. Hanna III(3) | 93,333 | 127,668 | - | 221,001 | ||||||||||||||||||||||||||||
Leo I. Higdon | 86,186 | 89,188 | 5,000 | 180,374 | 93,333 | 127,668 | 5,000 | 226,001 | ||||||||||||||||||||||||
Charles J. Koch | 107,368 | 89,188 | — | 196,556 | 123,333 | 127,668 | - | 251,001 | ||||||||||||||||||||||||
Arthur F. Ryan | 111,459 | 89,188 | — | 200,647 | 133,333 | 127,668 | 5,000 | 266,001 | ||||||||||||||||||||||||
Shivan S. Subramaniam(6) | 87,027 | 89,188 | 5,000 | 181,215 | ||||||||||||||||||||||||||||
Wendy A. Watson(6) | 109,573 | 89,188 | 5,000 | 203,761 | ||||||||||||||||||||||||||||
Shivan Subramaniam(4) | 103,333 | 127,668 | 5,000 | 236,001 | ||||||||||||||||||||||||||||
Wendy A. Watson(4) | 128,333 | 127,668 | 5,000 | 261,001 | ||||||||||||||||||||||||||||
Marita Zuraitis | 75,686 | 89,188 | — | 164,874 | 83,333 | 127,668 | - | 211,001 |
(1) | Ournon-employee directors were granted restricted stock units |
(2) | Amounts in this column reflect matching charitable contributions made by |
(3) |
Mr. Hanna elected to defer 50% of the fees paid to him during |
(4) | Each of Mr. Subramaniam and Ms. Watson elected to defer all of their board |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – COMPENSATION MATTERS |
EQUITY COMPENSATION RISK ASSESSMENTPLANS
The following table provides information as of December 31, 2018 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.
Plan Category | Number of | Weighted- | Number of | |||||||||
Equity compensation plans approved by security holders | 2,893,281 | - | 55,997,894 | |||||||||
Equity compensation plans not approved by security holders | - | - | - | |||||||||
Total | 2,893,281 | - | 55,997,894 |
(1) | Represents the number of shares of common stock associated with outstanding time-based and performance-based restricted stock units. |
(2) | The Company had no outstanding options. |
(3) | Represents the number of shares remaining available for future issuance under the Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan (48,240,777 shares), the Citizens Financial Group, Inc. 2014 Employee Share Purchase Plan (6,255,128 shares), and the Citizens Financial Group, Inc. 2014Non-Employee Directors Compensation Plan (1,501,989 shares). |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – AUDIT MATTERS |
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Deloitte & Touche LLP (“Deloitte”), an independent registered public accounting firm, as the independent auditor to perform an integrated audit of the Company for the fiscal year ending December 31, 2019. Deloitte served as our independent auditor for the fiscal year ended December 31, 2018 and has served as our independent auditor since becoming a public company in 2014 and prior to that as a privately held company since 2000.
The Audit Committee periodically considers the rotation of the external auditor to ensure independence. In determining whether to retain Deloitte, the Audit Committee considers, among other things, the firm’s independence, objectivity, professional skepticism, qualifications, expertise and performance on the Company’s audit. In addition, the Audit Committee oversees the rotation of the lead audit partner as mandated by SEC requirements and is directly involved in the selection of a new lead audit partner. The current lead audit partner was appointed in 2016 and the next rotation is scheduled for 2021. The Audit Committee also has oversight of the audit firm fee negotiation process and is responsible for approving audit fees.
The Board believes that the reappointment of Deloitte as the independent registered public accounting firm for fiscal year 2019 is in the best interests of the Company and its stockholders. Neither our Bylaws nor other governing documents or law require stockholder ratification of the selection of Deloitte as our independent registered public accounting firm. However, the Board believes that obtaining stockholder ratification of the appointment is a sound corporate governance practice. If the stockholders do not vote in favor of Deloitte, the Audit Committee will reconsider the appointment and in doing so, assess the impact of changing the auditor and the appropriate timing for doing so. The Audit Committee may retain Deloitte or hire another firm without resubmitting the matter for stockholders to approve. The Audit Committee retains the discretion at any time to appoint a different independent auditor.
Representatives of Deloitte are expected to be present at the annual meeting, available to respond to appropriate questions and will have the opportunity to make a statement if they desire.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR FISCAL YEAR 2019.
The purpose of the Audit Committee is to assist Citizens Financial Group, Inc.’s (the “Company”) Board of Directors (the “Board”) in its oversight of (i) the integrity of the financial statements of the Company, (ii) the appointment, compensation, retention and evaluation of the qualifications, independence, performance of the Company’s independent external auditor, (iii) the performance of the Company’s internal audit function and (iv) compliance by the Company with legal and regulatory requirements.
The Audit Committee operates pursuant to a Charter that was last amended and restated by the Board on February 14, 2019. As set forth in the Charter, management of the Company is primarily responsible for the adequacy and effectiveness of the Company’s financial reporting process, systems of internal accounting and financial controls. Deloitte & Touche LLP (“Deloitte”), the
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – AUDIT MATTERS |
Company’s independent auditor for 2018, is responsible for expressing opinions on the conformity of the Company’s audited financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting.
In this context, the Audit Committee has reviewed and discussed with management and Deloitte the audited financial statements for the year ended December 31, 2018.
The Audit Committee has discussed with Deloitte the matters that are required to be discussed under the Public Company Accounting Oversight Board (“PCAOB”) standards. Deloitte has provided to the Audit Committee the written disclosures and the PCAOB-required letter regarding the independent accountant’s communications with the Committee concerning independence, and the Committee has discussed with Deloitte their independence giving consideration to the provision of audit andnon-audit services and fees paid to the firm.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements for the year ended December 31, 2018 be included in the Company’s 2018 Annual Report on Form10-K, for filing with the Securities and Exchange Commission. This report is provided by the following independent directors, who comprise the Audit Committee:
Wendy A. Watson (Chair) | Anthony Di lorio | |
William P. Hankowsky | Howard W. Hanna III | |
Leo I. Higdon | Charles J. Koch | |
February 14, 2019 |
PRE-APPROVAL OF INDEPENDENT AUDITOR SERVICES
The Audit Committee approves in advance all audit, audit-related, tax, and other services performed aby the independent auditors. The Audit Committeepre-approves specific categories of services up topre-established fee thresholds. Unless the type of service has previously beenpre-approved, the Audit Committee must approve that specific service before the independent auditors may perform it. In addition, separate approval is required if the amount of fees for anypre-approved category of service exceeds the fee thresholds established by the Audit Committee. The Audit Committee may delegate to the chair or any independent member of the Audit Committeepre-approval authority with respect to permitted services, provided that the member must report anypre-approval decisions to the Audit Committee at its next scheduled meeting. All fees described below werepre-approved by the Audit Committee.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – AUDIT MATTERS |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
The following table presents fees paid by the Company for services performed by its independent registered public accounting firm, Deloitte, and its affiliates for the years ended December 31, 2018 and 2017.
2018 | 2017 | |||||||
Audit fees | $ | 5,597,000 | $ | 5,480,250 | ||||
Audit-related fees(1) | 983,665 | 979,823 | ||||||
Tax fees(2) | 417,496 | 393,107 | ||||||
All other fees(3) | - | 5,685 | ||||||
|
|
|
| |||||
Total | $ | 6,998,161 | $ | 6,858,865 | ||||
|
|
|
|
(1) | Includes required compliance services associated with several of the Company’s lending programs (e.g., Ginnie Mae, Housing and Urban Development (HUD), Uniform Single Attestation Program (USAP) and the Family Education Loan Program) and Statement on Standards for Attestation Engagements (SSAE) No. 16 reports for the Company’s cash management and investment management clients, and services provided in conjunction with the Company’s 401k and Pension audits. |
(2) | Includes aggregate fees billed for tax services, including tax compliance, planning and consulting. |
(3) | Represents fee for access to the independent accounting firm’son-line research library. |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – BENEFICIAL OWNERSHIP MATTERS |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, the Company’s directors and executive officers and persons who beneficially own more than 10% of the outstanding shares of common stock are required to report their beneficial ownership of the common stock and any changes in that beneficial ownership to the SEC and the NYSE. Based solely on its review of compensation policies and practices forthe copies of such forms received by it, or written representations from certain reporting persons, the Company believes that these filing requirements were satisfied by all of our employeesits directors and has concluded that our compensation policiesofficers and practices are not reasonably likely to have a material adverse impact on the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates information as of March 1, 2016 regarding the beneficial ownership of our common stock by:
each person whom we know to own beneficially more than 5% of our common stock;
each of the directors and named executive officers individually; and
all directors and executive officers as a group.
In accordance with SEC rules, beneficial ownership includes sole or shared voting or investment power with respect to securities and includes the shares issuable pursuant to restricted stock units and performance stock units that will become vested within 60 days of the date of determination, which in the case of the following table is March 1, 2016.determination. Under these rules, one or more persons may be a deemed beneficial owner of the same securities and a person may be deemed a beneficial owner of securities to which such person has no economic interest. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
The number of shares and percentage of beneficial ownership is based on 527,826,071of each person whom we know to own beneficially more than 5% of our common stock are as of December 31, 2018.
The number of shares and percentage of beneficial ownership for each of the directors and named executive officers individually and all directors and executive officers as a group are as of February 28, 2019. As of February 28, 2019 there were 460,390,006 shares of our common stock outstanding as of March 1, 2016.outstanding.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – BENEFICIAL OWNERSHIP MATTERS |
Information with respect to beneficial ownership has been furnished by each director, officer, or beneficial owner of more than 5% of the shares of our common stock. Except as otherwise noted below, the address for each person listed on the table is c/o Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901.
Name of Beneficial Owner | Number of Shares | Percent | Number of Shares | % | ||||||||||
5% Stockholders | ||||||||||||||
BlackRock, Inc.** | 32,407,435 | 6.14 | ||||||||||||
The Vanguard Group, Inc*** | 35,104,416 | 6.65 | ||||||||||||
Wellington Management Group LLP**** | 28,998,652 | 5.49 | ||||||||||||
The Vanguard Group, Inc** | 51,267,214 | 10.95 | ||||||||||||
BlackRock, Inc.*** | 42,041,794 | 9.0 | ||||||||||||
State Street Corporation**** | 23,398,414 | 5.0 | ||||||||||||
Directors and Named Executive Officers | ||||||||||||||
Bruce Van Saun | 486,796 | * | 625,070 | * | ||||||||||
Eric Aboaf | 22,004 | * | ||||||||||||
Brad L. Conner | 115,504 | * | 162,964 | * | ||||||||||
John J. Fawcett | 95,684 | * | ||||||||||||
Stephen T. Gannon | 15,116 | * | ||||||||||||
Nancy L. Shanik | 102,546 | * | ||||||||||||
Malcolm Griggs | 60,616 | * | ||||||||||||
Donald H. McCree III | 133,048 | * | ||||||||||||
John F. Woods | 67,686 | * | ||||||||||||
Mark Casady | 9,745 | * | 20,194 | * | ||||||||||
Christine M. Cumming | 2,416 | * | 12,865 | * | ||||||||||
Anthony Di lorio | 18,045 | * | 28,494 | * | ||||||||||
William P. Hankowsky | 20,545 | * | 30,994 | * | ||||||||||
Howard W. Hanna III | 14,545 | * | 24,994 | * | ||||||||||
Leo I. Higdon | 7,565 | * | 18,037 | * | ||||||||||
Terrance J. Lillis | 830 | * | ||||||||||||
Charles J. Koch | 25,545 | * | 49,994 | * | ||||||||||
Edward J. Kelly III | 830 | * | ||||||||||||
Arthur F. Ryan | 50,545 | * | 60,994 | * | ||||||||||
Shivan S. Subramaniam | 20,545 | * | ||||||||||||
Shivan Subramaniam | 38,994 | * | ||||||||||||
Wendy A. Watson | 9,545 | * | 15,994 | * | ||||||||||
Marita Zuraitis | 7,545 | * | 17,994 | * | ||||||||||
All directors and executive officers as a group (20 persons) | 1,186,023 | * | ||||||||||||
All directors and executive officers as a group (21 persons) | 1,453,047 | * |
* | Less than 1% |
** | Represents shares beneficially owned by The Vanguard Group, Inc., 100 Vanguard Blvd., Malvern, PA 19355. The Vanguard Group, Inc. has sole voting power with respect to |
*** | Represents shares beneficially owned by |
**** | Represents shares beneficially owned by State Street Corporation, State Street Financial Center, One Lincoln Street, Boston, MA |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – INFORMATION FOR STOCKHOLDERS |
AUDIT MATTERSINFORMATION FOR STOCKHOLDERS
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING
This proxy statement and proxy card are furnished in connection with the solicitation of proxies to be voted at our Annual Meeting, which will be held on April 25, 2019, at 9:00 a.m. Eastern Time, at the Company’s headquarters located at One Citizens Plaza, Providence, Rhode Island 02903.
Why am I receiving this proxy statement and proxy card?
You have received these proxy materials because our board of directors is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement describes issues on which we would like you to vote at our Annual Meeting. It also gives you information on these issues so that you can make an informed decision.
Because you own shares of our common stock, our board of directors has made this proxy statement and proxy card available to you on the Internet, in addition to delivering printed versions of this proxy statement and proxy card to certain stockholders by mail.
When you vote by using the Internet or (if you received your proxy card by mail) by signing and returning the proxy card, you appoint each of Bruce Van Saun, Stephen T. Gannon and Robin S. Elkowitz (with full power of substitution) as your representatives at the Annual Meeting. They will vote your shares at the Annual Meeting as you have instructed them or, if an issue that is not on the proxy card comes up for vote, in accordance with their best judgment. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by using the Internet or (if you received your proxy card by mail) by signing and returning your proxy card. If you vote by using the Internet, you do not need to return your proxy card.
Audit Committee ReportWhy did I receive a Notice of Internet Availability of Proxy Materials in the mail instead of a printed set of proxy materials?
The purposePursuant to rules adopted by the SEC, we are permitted to furnish our proxy materials over the Internet to our stockholders by delivering a Notice in the mail. If you received a Notice by mail, you will not receive a printed copy of the Audit Committeeproxy materials in the mail. Instead, the Notice instructs you on how to access and review the proxy statement and annual report over the Internet. The Notice also instructs you on how to electronically access and review all of the important information contained in this proxy statement and the annual report and how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials contained in the Notice.
Stockholders who receive a printed set of proxy materials will not receive the Notice but may still access our proxy materials and submit their proxies over the Internet by following the instructions provided on their proxy card.
Who is entitled to vote?
Holders of our common stock at the close of business on February 28, 2019 (the “Committee”)record date) are entitled to vote. In accordance with Delaware law, a list of stockholders entitled to vote at the meeting will be available in electronic form at the Annual Meeting site on April 25, 2019 and will be accessible in electronic form for ten days before the meeting at our principal place of business located at One Citizens Plaza, Providence, Rhode Island 02903, between the hours of 9:00 a.m. and 5:00 p.m. Eastern Time.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – INFORMATION FOR STOCKHOLDERS |
How many votes is each share of common stock entitled to?
Holders of common stock are entitled to assistone vote per share. As of February 28, 2019, there were 460,390,006 shares of our common stock outstanding.
What is the difference between a stockholder of record and a “street name” holder?
Many of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially.
Stockholder of Record. If your shares are registered directly in your name with the Company’s transfer agent, Computershare, you are considered, with respect to those shares, the stockholder of record, and these proxy materials are being sent directly to you by the Company. As the stockholder of record, you have the right to grant your voting proxy directly to certain officers of Citizens Financial Group, Inc.’s (the “Company”) Board of Directors (the “Board”) or to vote in its oversight of (i)person at the integrity of the financial statements of theAnnual Meeting. The Company (ii) the appointment, qualifications, independence, performance and retention of the Company’s independent external auditor, (iii) the performance of the Company’s internal audit function, and (iv) compliance by the Company with legal and regulatory requirements. The Committee operates pursuanthas enclosed or sent a proxy card for you to a Charter that was last amended and restated by the Board on August 22, 2014. As set forth in the Charter, management of the Company is primarily responsible for the adequacy and effectiveness of the Company’s financial reporting process, systems of internal accounting and financial controls. Deloitte and Touche LLP (“Deloitte”), the Company’s independent auditor for 2015, is responsible for expressing opinionsuse. You may also vote on the conformity of the Company’s audited financial statements with generally accepted accounting principles.
In this context, the Committee has reviewed and discussed with management and Deloitte the audited financial statements for the year ended December 31, 2015. The Committee has discussed with Deloitte the matters that are required to be discussed under PCAOB standards. Deloitte has provided to the Committee the written disclosures and the PCAOB-required letter regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Committee has discussed with Deloitte that firm’s independence.
Based on the review and discussions referred to above, the Committee recommended to the Board that the audited financial statements for the year ended December 31, 2015 be included in the Company’s 2015 Annual Report on Form 10-K, for filing with the Securities and Exchange Commission. This report is provided by the following independent directors, who comprise the Committee:
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February 24, 2016
Pre-approval of Independent Auditor Services
The Audit Committee approves in advance all audit, audit-related, tax, and other services performed by the independent auditors. The Audit Committee pre-approves specific categories of services up to pre-established fee thresholds. Unless the type of service had previously been pre-approved, the Audit Committee must approve that specific service before the independent auditors may perform it. In addition, separate approval is required if the amount of fees for any pre-approved category of service exceeds the fee thresholds established by the Audit Committee. The Audit Committee may delegate to the chair or any independent member of the committee pre-approval authority with respect to permitted services, provided that the member must report any pre-approval decisions to the Audit Committee at its next scheduled meeting. All feesInternet, as described below under the heading “How do I vote?”
Beneficial Owner or “Street Name” Holder. If your shares are held in an account at a broker, bank or other nominee, like many of our stockholders, you are considered the beneficial owner of shares held in street name, and these proxy materials were pre-approvedforwarded to you by that organization. As the Audit Committee.
Independent Registered Public Accounting Firm Fees
The following table presentsSince a beneficial owner is not the Company’s fees for services performed by its independent registered public accounting firm, Deloitte & Touche LLP, and its affiliates for the years ended December 31, 2015 and 2014.
2015 | 2014 | |||||||
Audit fees | $ | 5,592,000 | $ | 5,596,500 | ||||
Audit-related fees(1) | 1,195,600 | 2,426,796 | ||||||
Tax fees(2) | 333,141 | 305,269 | ||||||
All other fees(3) | 5,700 | 7,500 | ||||||
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Total | $ | 7,126,441 | $ | 8,336,065 | ||||
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PROPOSAL 1: ELECTION OF DIRECTORS
The Board has nominated the twelve persons named below for election as directorsstockholder of record, you may not vote your shares in person at the Annual Meeting unless you obtain a “legal proxy” from the broker, bank, or other nominee that is the stockholder of record of your shares giving you the right to serve untilvote the 2017 annualshares at the Annual Meeting. If you do not wish to vote in person or you will not be attending the Annual Meeting, you may vote by proxy. You may vote by proxy by completing, signing and returning the proxy card or by using the Internet or by telephone, as described below under the heading “How do I vote?”.
How do I vote?
Stockholders of record may vote by using the Internet or (if you received a proxy card by mail) by mail as described below. Stockholders also may attend the meeting and vote in person. If you hold shares through a bank or until their respective successorsbroker, please refer to your proxy card, Notice or other information forwarded by your bank or broker to see which voting options are duly electedavailable to you.
• | You may vote by using the Internet. The address of the website for Internet voting can be found on your proxy card or Notice. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on April 24, 2019.Easy-to-follow instructions allow you to vote your shares and confirm that your instructions have been properly recorded. |
• | You may vote by telephone. Dial the number listed on your proxy card or your voting instruction form. You will need the control number included on your proxy card or voting instruction form. |
• | You may vote by mail. If you received a proxy card by mail and choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope. |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – INFORMATION FOR STOCKHOLDERS |
The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. Written ballots will be passed out to anyone who wants to vote at the Annual Meeting. If you hold your shares in “street name,” you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the Annual Meeting.
What if I change my mind after I return my proxy?
You may revoke your proxy and qualified. Eachchange your vote at any time before the polls close at the Annual Meeting. You may do this by:
submitting a subsequent proxy by using the Internet, telephone or by mail with a later date;
sending written notice of revocation to our Corporate Secretary, Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901; or
voting in person at the Annual Meeting.
If you hold shares through a bank or broker, please refer to your proxy card, Notice or other information forwarded by your bank or broker to see how you can revoke your proxy and change your vote.
Attendance at the meeting will not by itself revoke a proxy.
How many votes do you need to hold the Annual Meeting?
The presence, in person or by proxy, of the holders of a majority of the total voting power of all outstanding securities entitled to vote at the Annual Meeting will constitute a quorum. If a quorum is present, we can hold the Annual Meeting and conduct business.
On what items am I voting?
You are being asked to vote on three items:
1. | the election of each of the twelve directors nominated by the Board and named in the proxy statement to serve until the 2020 annual meeting or until their successors are duly elected and qualified; |
2. | advisory vote to approve the Company’s executive compensation, commonly referred to as a “say on pay” vote; and |
3. | ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2019. |
No cumulative voting rights are authorized, and dissenters’ rights are not applicable to these matters.
How does the board of directors recommend that I vote?
The Board recommends that you vote as follows:
1. | FOR the twelve director nominees; |
2. | FOR the approval, on an advisory basis, of the Company’s executive compensation; and |
3. | FOR the ratification of the appointment of our independent registered public accounting firm. |
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – INFORMATION FOR STOCKHOLDERS |
How may I vote in the election of directors, and how many votes must the nominees receive to be elected?
With respect to the election of directors, you may:
vote FOR the twelve nominees for director;
vote FOR any of the nominees for director is currently servingand vote AGAINST or ABSTAIN from voting on the Board.other nominees for director;
vote AGAINST the twelve nominees for director; or
ABSTAIN from voting on all of the nominees for director.
Our Bylaws provide for the election of directors by an affirmative majority of the votes cast in an uncontested election. This means each of the twelve individuals nominated for election to the board of directors must receive more votes cast “FOR” than “AGAINST” (among votes properly cast in person, electronically or by proxy) to be elected. Abstentions and brokernon-votes are not considered votes cast for the foregoing purpose, and will have no effect on the election of nominees. If anythe election of directors is a contested election, then the directors are elected by a plurality of the votes cast.
What happens if a nominee does not receive a majority of “FOR” votes?
If a nominee does not receive a majority of “FOR” votes, he or she shall tender to the Board, via the Chair of the Nominating and Corporate Governance Committee, his or her resignation. The Nominating and Corporate Governance Committee will consider the resignation and make a recommendation to the Board whether to accept or reject the tendered resignation no later than 60 days following the date of the Annual Meeting in accordance with the specific requirements outlined in our Corporate Governance Guidelines.
What happens if a nominee is unable to serve asstand for election?
If a director, which we do not anticipate,nominee is unable to stand for election, the Board by resolution may either:
reduce the number of directors that serve on the Board; or choose
designate a substitute nominee.
If the Board designates a substitute nominee, shares represented by proxies voted for the nominee who is unable to stand for election will be voted for the substitute nominee.
NomineesHow may I cast my advisory vote for Directorthe proposal to approve the Company’s executive compensation?
With respect to this proposal, you may:
For biographical information aboutvote FOR the nominees for director, including information about their qualifications to serve as a director, see “Directors, Executive Officers and Corporate Governance—Nominees” beginning on page 11.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE ELECTION TO THE BOARD
OF EACH OF THE TWELVE NOMINEES FOR DIRECTOR.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Audit Committee has appointed Deloitte & Touche LLP, an independent registered public accounting firm, as the independent auditors to perform an integrated audit of the Company for the fiscal year ending December 31, 2016. Deloitte & Touche LLP served as our independent auditors for the fiscal year ending December 31, 2015.
Neither our Bylaws nor other governing documents or law require stockholder ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm. However, the Board believes that obtaining stockholder ratification of the appointment is a sound corporate governance practice. If the stockholders do not voteapproval, on an advisory basis, in favor of Deloitte & Touche LLP, the Audit Committee will reconsider whether to hire the firm and may retain Deloitte & Touche LLP or hire another firm without resubmitting the matter for stockholders to approve. The Audit Committee retains the discretion at any time to appoint a different independent auditor.
Representatives of Deloitte & Touche LLP are expected to be present at the annual meeting, available to respond to appropriate questions, and will have the opportunity to make a statement if they desire.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
THE COMPANY FOR FISCAL YEAR 2016.
PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we provide our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission.
As described in the “Compensation Discussion and Analysis” we seek to closely align the interests of our named executive officers with the interests of our stockholders. During 2015, our compensation decisions were made within the confines of UK and European remuneration regulations that applied to us, including decisions related to the compensation disclosed in the2015 Summary Compensation Table. Following RBS’ sale of its remaining equity interest in the Company in November 2015, we have made several changes to our compensation structure that are effective in 2016 in order to further align executive compensation with our strategic objectives, the interests of our stockholders and practices at our regional bank peers, which is discussed in the “Compensation Discussion and Analysis”.
We encourage you to review the complete description of our executive compensation programs provided in this proxy statement, including the “Compensation Discussion and Analysis” that begins on page 30 and the compensation tables and accompanying narrative.
Accordingly, we ask our stockholders to vote on the following resolution at the Annual Meeting:
RESOLVED, that the Company’s stockholders approve, on a nonbinding, advisory basis, the compensation of the Company’s executive officers named incompensation;
vote AGAINST the Summary Compensation Table,approval, on an advisory basis, of the Company’s executive compensation; or
ABSTAIN from voting on the proposal.
In accordance with applicable law, this vote is “advisory,” meaning it will serve as disclosed pursuanta recommendation to Item 402 of Regulation S-K (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and accompanying narrative).
Although the vote on this proposal is advisory and, therefore, isBoard, but will not binding, thebe binding. The Compensation Committee will carefully consider the stockholderoutcome of this vote when determining future executive compensation arrangements. Abstentions and brokernon-votes will not count as votes cast.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – INFORMATION FOR STOCKHOLDERS |
How may I vote for the proposal to ratify the appointment of our independent registered public accounting firm, and how many votes must this proposal receive to pass?
With respect to this proposal, you may:
vote FOR the ratification of the accounting firm;
vote AGAINST the ratification of the accounting firm; or
ABSTAIN from voting on this matter, including whether any actionsthe proposal.
In order to pass, the proposal must receive the affirmative vote of a majority of the votes cast at the Annual Meeting by the holders who are present in person or by proxy. Abstentions will not count as votes cast.
What happens if I sign and return my proxy card but do not provide voting instructions?
If you return a signed card but do not provide voting instructions, your shares will be necessary to addressvoted as follows:
1. | FOR the twelve director nominees; |
2. | FOR the approval, on an advisory basis, of the Company’s executive compensation; and |
3. | FOR the ratification of the appointment of our independent registered public accounting firm. |
Will my shares be voted if I do not vote by using the concerns,Internet, telephone or by signing and returning my proxy card?
If you do not vote by using the Internet, telephone or (if you received a proxy card by mail) by signing and returning your proxy card, then your shares will not be voted and will not count in deciding the matters presented for stockholder consideration at the Annual Meeting.
If your shares are held in street name through a bank or broker, your bank or broker may vote your shares under certain limited circumstances if any,you do not provide voting instructions before the Annual Meeting, in accordance with the NYSE rules that govern banks and brokers. These circumstances include voting your shares on “routine matters,” such as the ratification of the appointment of our stockholders.independent registered public accountants described in this proxy statement. With respect to the proposal to ratify the appointment of our independent registered public accounting firm, therefore, if you do not vote your shares, your bank or broker may vote your shares on your behalf or leave your shares unvoted.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FORThe election of directors and approval, on an advisory basis, of the Company’s executive compensation are not considered routine matters under the NYSE rules relating to voting by banks and brokers. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.” Broker non-votes that are represented at the Annual Meeting will be counted for purposes of establishing a quorum, but not for determining the number of shares voted for or against the non-routine matter.
APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION.We encourage you to provide instructions to your bank or brokerage firm by voting your proxy. This action ensures your shares will be voted at the meeting in accordance with your wishes.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – INFORMATION FOR STOCKHOLDERS |
What is the vote required for each proposal to pass and what is the effect of abstentions or withheld votes and uninstructed shares on the proposals?
Our Bylaws provide for the election of directors by an affirmative majority of the votes cast in an uncontested election. This means that the twelve individuals nominated for election to the board of directors must receive more votes “FOR” than “AGAINST” (among votes properly cast in person, electronically or by proxy) to be elected. Abstentions and broker non-votes are not considered votes cast for the foregoing purpose, and will have no effect on the election of nominees. If the election of directors is a contested election then the directors are elected by a plurality of the votes cast.
For each other proposal to pass in accordance with our Bylaws, the proposal must receive the affirmative vote of a majority of the votes cast in person, electronically or by proxy at the Annual Meeting. Abstentions and broker non-votes are not counted as votes cast.
What do I need to show to attend the Annual Meeting in person?
You will need proof of your share ownership (such as a recent brokerage statement or letter from your broker showing that you owned shares of the Company’s common stock as of February 28, 2019 if you hold your shares through a broker) and a form ofgovernment-issued photo identification. If you do not have proof of ownership and valid photo identification, you may not be admitted to the Annual Meeting.
If you are the legal representative of a stockholder, you must also bring a letter from the stockholder certifying (a) the beneficial ownership you represent and (b) your status as a legal representative. We will determine in our sole discretion whether the letter presented for admission meets the above requirements.
No cameras, laptops, tablets, recording equipment, large bags, backpacks, briefcases, and similar items are permitted in the meeting room. Cell phones may not be used during the meeting and we reserve the right to remove individuals who do not adhere to these requirements.
Who bears the cost of the proxy materials?
The Company pays for preparing, printing and mailing this proxy statement and the annual report. Officers and employees of the Company may solicit the return of proxies, but will not receive additional compensation for those efforts. The Company will request that brokers, banks, custodians, nominees and other fiduciaries send proxy materials to all beneficial owners and upon request will reimburse them for their expenses. Solicitation may be made by mail, telephone or other means.
Can I receive future proxy materials and annual reports electronically?
Yes. Instead of receiving future paper copies in the mail, you can elect to receive our future annual reports and proxy materials electronically. Opting to receive your proxy materials electronically will save us the cost of producing and mailing documents to your home or business and will reduce the environmental impact of our annual meetings. If you are a stockholder of record and wish to enroll in the electronic proxy delivery service for future meetings, you may do so by going to the website provided on your proxy card and following the prompts.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – INFORMATION FOR STOCKHOLDERS |
OTHER INFORMATION FOR STOCKHOLDERSBUSINESS
The board of directorsBoard is not aware of any other matters to be presented at the Annual Meeting. If any other matter proper for action at the meeting should be presented, the holders of the accompanying proxy will vote the shares represented by the proxy on such matter in accordance with their best judgment. If any matter not proper for action at the meeting should be presented, the holders of the proxy will vote against consideration of the matter or the proposed action.
Proposals for 20172020 ANNUAL MEETING AND STOCKHOLDER PROPOSALS
The Company will review for inclusion in next year’s proxy statement stockholder proposals submitted pursuant to SEC Rule 14a-8 that are received by November 8, 2016.11, 2019. In order for a stockholder proposal or director nomination to be considered for inclusion in our proxy materials for theour annual meeting of stockholders, expected to be held in April 2020, the proposal or director nomination must be received by our Corporate Secretary, Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901, on or before the close of business on November 8, 2016,11, 2019, and must comply with the rules and regulations promulgated by the SEC. These stockholder notices also must comply with the requirements of our Bylaws and will not be effective otherwise.
Our Bylaws impose some procedural requirements on stockholders who wish to nominate directors, propose that a director be removed, propose any repeal or change in our Bylaws or propose any other business to be brought before an annual or special meeting of stockholders.
Under these procedural requirements, in order to bring a proposal before a meeting of stockholders, a stockholder must deliver timely notice of a proposal pertaining to a proper subject for presentation at the annual meeting to our Corporate Secretary.
To be timely, a stockholder’s notice for proposals outside of SEC Rule 14a-8 must be delivered to the Corporate Secretary at 600 Washington Boulevard, Stamford, Connecticut, 06901 not less than 120 days or more than 150 days prior to the first anniversary of the preceding year’s annual meeting. Therefore, to be presented at our annual meeting of stockholders to be held in 2016,2020, such a proposal must be received on or after November 29, 2016,27, 2019, but not later than December 29, 2016.27, 2019. In the event that the date of the annual meeting of stockholders to be held in 20172020 is advanced by more than 30 days or delayed by more than 70 days from the anniversary date of this year’s annual meeting of stockholders, such notice by the stockholder must be so received no earlier than 120 days prior to the annual meeting of stockholders to be held in 20172020 and not later than 70 days prior to such annual meeting of stockholders to be held in 20172020 or 10 days following the day on which public announcement of the date of such annual meeting is first made.
A stockholder’s notice to the Corporate Secretary shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (as amended, together with the rules and regulations promulgated thereunder, the “Exchange Act”) including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws, the text of the proposed amendment), the reasons for conducting such business and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made:
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – INFORMATION FOR STOCKHOLDERS |
the name and address of such stockholder (as they appear on the Company’s books) and any such beneficial owner;
the number of shares of capital stock of the Company that are held of record or are beneficially owned by such stockholder and by any such beneficial owner;
a description of any agreement, arrangement or understanding between or among such stockholder and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business;
a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or any such beneficial owner or any such nominee with respect to the Company’s securities;
a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to bring such nomination or other business before the meeting;
a representation as to whether such stockholder or any such beneficial owner intends or is part of a group that intends to (i) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Company’s outstanding capital stock required to approve or adopt the proposal or to elect each such nominee and/or (ii) otherwise to solicit proxies from stockholders in support of such proposal or nomination;
any other information relating to such stockholder, beneficial owner, if any, or director nominee or proposed business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies in support of such nominee or proposal pursuant to Section 14 of the Exchange Act; and
such other information relating to any proposed item of business as the Company may reasonably require to determine whether such proposed item of business is a proper matter for stockholder action.
Annual Report for 2015ANNUAL REPORT FOR 2018
The fiscal 20152018 Annual Report to Stockholders is being mailed with this proxy statement to those stockholders that receivedreceiving a copy of the proxy materials in the mail. Stockholders that receivedreceiving the Notice of Internet Availability of Proxy Materials can access this proxy statement and our fiscal 20152018 Annual Report at www.edocumentview.com/CFG. Requests for copies of our Annual Report to Stockholders may also be directed to Investor Relations, Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901.
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – INFORMATION FOR STOCKHOLDERS |
Householding of Annual Disclosure DocumentsHOUSEHOLDING OF ANNUAL DISCLOSURE DOCUMENTS
In some cases, stockholders holding their shares in a brokerage or bank account who share the same surname and address and have not given contrary instructions are receiving only one copy of our annual report and this proxy statement. This reduces the volume of duplicate information received at your household and helps to reduce costs. If you would like to have additional copies of these documents mailed to you, please call or write to Investor Relations at (203) 900-6854 or 600 Washington Boulevard, Stamford, Connecticut 06901. If you want to receive separate copies of the proxy statement, annual report to stockholders or Notice of Internet Availability of Proxy Materials in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder.
BY ORDER OF THE BOARD OF DIRECTORS |
Robin S. Elkowitz |
Executive Vice President, Deputy General |
Counsel and Secretary |
Stamford, Connecticut
March 8, 20162019
2019 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT – APPENDIX A |
RECONCILIATION OF - KEY PERFORMANCE METRICS, NON-GAAP FINANCIAL MEASURE
Non-GAAP Reconciliation
(Excluding restructuring charges and special items)MEASURES & RECONCILIATIONS
$s in millions, except share and per share data | FULL YEAR | 2015 vs 2014 | ||||||||||||||||
2015 | 2014 | Change | % Change | |||||||||||||||
EARNINGS PER COMMON SHARE DATA | ||||||||||||||||||
Diluted earnings per common share: | ||||||||||||||||||
Net income available to common stockholders, excluding restructuringcharges and special items: | ||||||||||||||||||
Net income available to common stockholders (GAAP) | A | $833 | $865 | ($32 | ) | (4 | )% | |||||||||||
Add: Restructuring charges and special items, net of income tax expense (benefit) | 31 | (75 | ) | 106 | 141 | % | ||||||||||||
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Net income available to common shareholders, excludingrestructuring charges and special items (non-GAAP) | B | $864 | $790 | $74 | 9 | % | ||||||||||||
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Total weighted-average basic shares outstanding | 535,599,731 | 556,674,146 | (21,074,415 | ) | (4 | )% | ||||||||||||
Add: Weighted-average dilutive shares | 2,621,167 | 1,050,790 | 1,570,377 | NM | ||||||||||||||
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Total weighted-average diluted shares outstanding | C | 538,220,898 | 557,724,936 | (19,504,038 | ) | (3 | )% | |||||||||||
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Net income per share - diluted (GAAP)(1) | A/C | $1.55 | $1.55 | $— | — | % | ||||||||||||
Net income per share, excluding restructuring charges and special items - diluted (non-GAAP)(1) | B/C | $1.61 | $1.42 | $0.19 | 13 | % |
Key performance metrics,non-GAAP financial measures and reconciliations (in millions, except share,per-share and ratio data) |
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||
4Q18 Change | 2018 Change | |||||||||||||||||||||||||||||||||||||
4Q18 | 3Q13 | 3Q13 | 2018 | 2017 | 2017 | |||||||||||||||||||||||||||||||||
$/bps | % |
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Total revenue, Underlying: | ||||||||||||||||||||||||||||||||||||||
Total revenue (GAAP) | A | $ | 1,593 | $ | 1,153 | $ | 440 | 38 | % | $ | 6,128 | $ | 5,707 | $ | 421 | 7 | % | |||||||||||||||||||||
Less: Notable items | (5 | ) | — | (5 | ) | (100 | ) | (5 | ) | 6 | (11 | ) | (183 | ) | ||||||||||||||||||||||||
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Totalrevenue, Underlying (non-GAAP) | B | $ | 1,598 | $ | 1,153 | $ | 445 | 39 | % | $ | 6,133 | $ | 5,701 | $ | 432 | 8 | % | |||||||||||||||||||||
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Noninterest expense, Underlying: Noninterest expense (GAAP) | C | $ | 951 | $ | 788 | $ | 163 | 21 | % | $ | 3,619 | $ | 3,474 | $ | 145 | 4 | % | |||||||||||||||||||||
Less: Notable items | 45 | — | 45 | 100 | 54 | 55 | (1 | ) | (2 | ) | ||||||||||||||||||||||||||||
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Noninterest expense,Underlying (non-GAAP) | D | $ | 906 | $ | 788 | $ | 118 | 15 | % | $ | 3,565 | $ | 3,419 | $ | 146 | 4 | % | |||||||||||||||||||||
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Net income, Underlying: Net income (GAAP) | E | $ | 465 | $ | 144 | 5321 | 223 | % | $ | 1,721 | $ | 1,652 | 569 | 4 | % | |||||||||||||||||||||||
Add: Notable items, net of income tax expense (benefit) | 9 | — | 9 | 100 | 16 | (340 | ) | 356 | 105 | |||||||||||||||||||||||||||||
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Net income, Underlying(non-GAAP) | F | $ | 474 | $ | 144 | $ | 330 | 229 | % | $ | 1,737 | $ | 1,312 | $ | 425 | 32 | % | |||||||||||||||||||||
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Net income available to common stockholders, Underlying: Net income available to common stockholders (GAAP) | G | $ | 450 | $ | 144 | $ | 306 | 213 | % | $ | 1,692 | $ | 1,638 | 554 | 3 | % | ||||||||||||||||||||||
Add: Notable items, net of income tax expense (benefit) | 9 | — | 9 | 100 | 16 | (340 | ) | 356 | 105 | |||||||||||||||||||||||||||||
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Net income available to common stockholders, Underlying(non-GAAP) | H | $ | 459 | $ | 144 | $ | 315 | 219 | % | $ | 1,708 | $ | 1,298 | $ | 410 | 32 | % | |||||||||||||||||||||
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Efficiency ratio and efficiency ratio, Underlying: Efficiency ratio | C/A | 59.69 | % | 68.49 | % | (880 | ) bps | 59.06 | % | 60.87 | % | (181 | ) bps | |||||||||||||||||||||||||
Efficiency ratio, Underlying(non-GAAP) | D/B | 56.70 | 68.49 | (1,179 | ) bps | 58.13 | 59.96 | (183 | ) bps | |||||||||||||||||||||||||||||
Return on average tangible common equity and return on average tangible common equity, Underlying: | ||||||||||||||||||||||||||||||||||||||
Average common equity (GAAP) | I | $ | 19,521 | $ | 19,627 | $ | (106 | ) | (1 | %) | $ | 19,645 | $ | 19,618 | 527 | — | % | |||||||||||||||||||||
Less: Average goodwill (GAAP) | 6,946 | 6,876 | 70 | 1 | 6,912 | 6,883 | 29 | — | ||||||||||||||||||||||||||||||
Less: Average other intangibles (GAAP) | 32 | 9 | 23 | NM | 14 | 2 | 12 | NM | ||||||||||||||||||||||||||||||
Add: Average deferred tax liabilities related to goodwill (GAAP) | 364 | 325 | 39 | 12 | 359 | 534 | (175 | ) | (33 | ) | ||||||||||||||||||||||||||||
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Average tangible common equity | J | $ | 12,907 | $ | 13,067 | $ | (160 | ) | (1 | %) | $ | 13,078 | $ | 13,267 | $ | (189 | ) | (1 | %) | |||||||||||||||||||
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Return on average tangible common equity | G/J | 13.85 | % | 4.34 | % | 951 bps | 12.94 | % | 12.35 | % | 59 bps | |||||||||||||||||||||||||||
Return on average tangible common equity, Underlying(non-GAAP) | H/J | 14.11 | 4.34 | 977 bps | 13.06 | 9.79 | 327 bps | |||||||||||||||||||||||||||||||
Net income per average common share - basic and diluted and net income per average common share - basic and diluted, Underlying: | ||||||||||||||||||||||||||||||||||||||
Average common shares outstanding - basic (GAAP) | K | 467,338,825 | 559,998,324 | (92,659,499 | ) | (17 | %) | 478,822,072 | 502,157,440 | (23,335,368 | ) | (5 | %) | |||||||||||||||||||||||||
Average common shares outstanding - diluted (GAAP) | L | 469,103,134 | 559,998,324 | (90,895,190 | ) | (16 | ) | 480,430,741 | 503,685,091 | (23,254,350 | ) | (5 | ) | |||||||||||||||||||||||||
Net income per average common share - basic (GAAP) | G/K | $ | 0.96 | $ | 0.26 | $ | 0.70 | NM | $ | 3.54 | $ | 3.26 | $ | 0.28 | 9 | |||||||||||||||||||||||
Net income per average common share - diluted (GAAP) | G/L | 0.96 | 0.26 | 0.70 | NM | 3.52 | 3.25 | 0.27 | 8 | |||||||||||||||||||||||||||||
Net income per average common share - basic, Underlying(non-GAAP) | H/K | 0.98 | 0.26 | 0.72 | NM | 3.57 | 2.59 | 0.98 | 38 | |||||||||||||||||||||||||||||
Net income per average common share - diluted, Underlying(non-GAAP) | H/L | 0.98 | 0.26 | 0.72 | NM | 3.56 | 2.58 | 0.98 | 38 |
q000004 PLEASE FOLD ALONG THE PERFORATION,
ENDORSEMENT_LINE______________ SACKPACK_____________
MR A SAMPLE
DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6
C123456789
000000000.000000
ext
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ext
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000000000.000000
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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.
Annual Meeting Proxy Card
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qA Proposals — The Board of Directors recommends a vote FOR all nominees in Proposal 1 and FOR Proposals 2 and 3.
1. Election of Directors:
For
Against
Abstain
For
Against
Abstain
For
Against
Abstain
01—Bruce Van Saun
02—Mark Casady
03—Christine M. Cumming
04—William P. Hankowsky
05—Howard W. Hanna III
06—Leo I. (“Lee”) Higdon
07—Edward J. (“Ned”)
08—Charles J. (“Bud”) Koch
09—Terrance J. Lillis
Kelly III
10—Shivan Subramaniam
11—Wendy A. Watson
12—Marita Zuraitis
2. Advisory vote on executive compensation.
For
Against
Abstain
For
Against
Abstain
3. Ratification of the appointment of Deloitte & Touche LLP as our
independent registered public accounting firm for 2019.
B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below.
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) — Please print date below.
Signature 1 — Please keep signature within the box.
Signature 2 — Please keep signature within the box.
C 1234567890 J N T
1UPX 410555
MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
02ZPDB
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For | Against | Abstain | For | Against | Abstain | |||||||||||||||||
2. | Ratify the appointment of our independent registered public accounting firm. | ¨ | ¨ | ¨ | 3. | Advisory vote on executive compensation. | ¨ | ¨ | ¨ |
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Citizens Financial Group, Inc. 20162019 Annual Meeting of Stockholders
April 28, 2016,25, 2019, at 9:00 a.m. Eastern Time.
Time One Citizens Plaza, Providence, Rhode Island 02903.
02903q PLEASE FOLD ALONG THE PERFORATION,IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qProxy – Citizens Financial Group, Inc.
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Notice of 20162019 Annual Meeting of Shareholders
Stockholders
Proxy Solicited by Board of Directors for Annual Meeting – April 28, 2016
25, 2019
Bruce Van Saun, Stephen T. Gannon and Robin S. Elkowitz or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Citizens Financial Group, Inc. to be held on April 28, 201625, 2019 at 9:00 a.m. Eastern Time, at One Citizens Plaza, Providence, Rhode Island 02903 or at any postponement or adjournment thereof.
Shares represented by this proxy will be voted as specified by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR all nominees in Proposal 1 and FOR Proposals 2 and 3.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side.)
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Change of Address— Please print | Comments— Please print your comments below. | Meeting Attendance | ||||||||
Mark | ||||||||||
you plan to attend the | ||||||||||
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