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FAQs | | |  | |
What constitutes a quorum at the Annual Meeting?
The presence at the Annual Meeting, in person or represented by proxy, of the holders of a majority in voting power of the outstanding capital stock entitled to vote at the Annual Meeting is required to constitute a quorum to transact business at the Annual Meeting. Abstentions and broker non-votes will be counted toward the establishment of a quorum.
How many votes are required to approve each matter to be considered at the Annual Meeting?
| | | | | | |
Voting Item | | Voting Standard | | Treatment of Abstentions and
Broker Non-Votes | | Board
Recommendation |
Election of directors named in this proxy statement | | Majority of votes cast | | Not counted as votes cast and therefore will have no effect | | FOR |
| | | |
Advisory approval of our named executives’ compensation | | Majority of votes cast | | Not counted as votes cast and therefore will have no effect | | FOR |
| | | |
Auditor ratification | | Majority of votes cast | | Not counted as votes cast and therefore will have no effect | | FOR |
Who will count the vote?
Votes will be tabulated by Broadridge. The Board has appointed a representative of Broadridge to serve as the Inspector of Elections.
Will a list of stockholders be made available?
We will make a list of stockholders available for ten days prior to the Annual Meeting at our offices located at 777 Long Ridge Road, Stamford, Connecticut, 06902. Please contact Synchrony Financial’s Corporate Secretary by telephone at (203) 585-2400 if you wish to inspect the list of stockholders prior to the Annual Meeting. This list will also be available during the Annual Meeting at www.virtualshareholdermeeting.com/SYF2016.
PROXY SOLICITATION AND DOCUMENT REQUEST INFORMATION
Why did I receive a Notice of Internet Availability of Proxy Materials instead of printed proxy materials?
The Securities and Exchange Commission (the “SEC”) permits companies to furnish proxy materials to stockholders by providing access to these documents over the internet instead of mailing printed copies, which can reduce costs of printing and impact on the environment. Accordingly, we have mailed a Notice to some of our stockholders. All stockholders can access our proxy materials on the internet website referred to in the Notice. If you received a Notice and would like to receive a printed copy of our proxy materials, you should follow the instructions for obtaining such materials included in the Notice.
Multiple individuals residing at my address are beneficial owners of the Company’s common stock, so why did we receive only one mailing?
The SEC permits companies to deliver a single Notice or set of Annual Meeting materials to an address shared by two or more stockholders. This delivery method is referred to as “householding.” We have delivered only one such Notice or set of Annual Meeting materials to some stockholders who share an address, unless we received contrary instructions from the affected stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of such Notice or Annual Meeting materials to any stockholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of such Notice or Annual Meeting materials, please contact our Corporate Secretary by telephone at (203) 585-2400 or in writing at Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902.
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Synchrony Financial 2016 Proxy Statement | | | 3 | |
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| | FAQs |
If you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future Notices or Annual Meeting materials for your household, please contact the Company at the above phone number or address.
Who pays to prepare, mail and solicit the proxies?
We will bear the costs of solicitation of proxies for the Annual Meeting, including preparation, assembly, printing and mailing of the Notice, this proxy statement, the annual report, the proxy card and any additional information furnished to stockholders. We may reimburse persons representing beneficial owners of common stock for their costs of forwarding any solicitation materials to such beneficial owners. However, we do not reimburse or pay additional compensation to our own directors, officers or other employees for soliciting proxies. In addition, we have retained Georgeson, LLC to assist us in the solicitation of proxies for an aggregate fee of $15,000, plus reasonable out-of-pocket expenses.
INFORMATION ABOUT ATTENDING THE 2016 ANNUAL MEETING
How can I attend the Annual Meeting?
Stockholders as of the record date and/or their authorized representatives are permitted to attend our Annual Meeting. The Annual Meeting will be conducted entirely over an internet website, at the following address: www.virtualshareholdermeeting.com/SYF2016. Hosting a virtual meeting enables increased stockholder attendance and participation because stockholders can participate from any location. You may attend the Annual Meeting, vote and submit a question during the Annual Meeting by visiting www.virtualshareholdermeeting.com/SYF2016 and using your 16-digit control number, located on the Notice and the proxy card, to enter the meeting.
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4 | | Synchrony Financial2016 Proxy Statement |
CORPORATE GOVERNANCE
ITEM 1—ELECTION OF DIRECTORS
In November 2013, General Electric Company (“GE”) announced that it planned a staged exit from our business. The initial public offering of our common stock (the “IPO”) in July 2014 was the first step toward that exit. After the IPO, GE, through its subsidiaries, General Electric Capital Corporation (“GECC”) and GE Consumer Finance, Inc., beneficially owned 84.6% of our outstanding common stock. The second step toward GE’s exit from our business involved GE’s disposition of all of its remaining shares of our common stock through a split-off transaction.In October 2015, after we received approval from the Federal Reserve Board to become a stand-alone savings and loan holding company, GE commenced an offer to exchange all of its shares of our common stock for shares of GE common stock (the “exchange offer”). In November 2015, we announced the completion of the exchange offer and our separation from GE (the “Separation”).
Following the completion of the exchange offer, GE no longer owned any of our common stock, and we ceased to be a “controlled company” under the New York Stock Exchange (“NYSE”) corporate governance rules. In addition, all of GE’s rights that were contingent on GE owning 10% or more of our outstanding common stock, including the right to designate a certain number of persons for nomination for election as directors, were no longer applicable. Accordingly, effective on November 17, 2015, GE’s designees on the Board resigned from the Board and the Board committees on which they served, and the Board, based on the recommendations of its Nominating and Corporate Governance Committee, appointed Paget L. Alves, Arthur W. Coviello, Jr., William W. Graylin, Laurel J. Richie and Senator Olympia J. Snowe (together, the “New Directors”) as directors of the Company to fill the vacancies created by the resignations of the GE designees. Prior to their appointments, Senator Snowe had served as a non-voting observer to the Board since January 2015, and the other New Directors had served as non-voting observers to the Board since July 2015.
The Board currently consists of nine directors: our President and Chief Executive Officer (“CEO”), Margaret M. Keane; and eight directors who are “independent” under the listing standards of the NYSE and our own independence standards set forth in our Governance Principles. Messrs. Hartnack, Guthrie and Naylor and the New Directors were recommended by the Nominating and Corporate Governance Committee following an extensive search conducted with the assistance of a third party search firm and a review of these individuals’ experience, qualifications, attributes, skills and independence.
Under our Amended and Restated Bylaws (our “Bylaws”), our directors will be elected annually by majority vote. As discussed under “Committees of the Board of Directors” below, our Nominating and Corporate Governance Committee is responsible for recommending to our Board, for their approval, the director nominees to be presented for stockholder approval at the Annual Meeting.
Nominees for Election to the Board of Directors
Each of the nine director nominees listed below is currently a director of the Company.
The following biographies describe the business experience of each director nominee. Following the biographical information for each director nominee, we have listed specific qualifications that the Board considered in determining whether to recommend that the director be nominated for election at the Annual Meeting.
If elected, each of the director nominees is expected to serve for a term of one year or until their successors are duly elected and qualified. The Board expects that each of the nominees will be available for election as a director. However, if by reason of an unexpected occurrence one or more of the nominees is not available for election, the persons named in the form of proxy have advised that they will vote for such substitute nominees as the Board may nominate.
The Board recommends a voteFOR the following nominees for election as directors.
Our governance highlights include: | | | | | Synchrony Financial 2016 Proxy Statement | | | 5 | | | | | | | | | | | 
| | 9 out of 10 directors are independent | | | | | | | | | | | |
| | Experienced Board members with a diversity of skills and experiences | | | | | | | | | | | |
| | 6 out of 10 directors are women and/or minorities | | | | | | | | | | | |
| | Each Board committee is comprised exclusively of independent directors | | | | | | | | | | | |
| | Non-executive Chair of the Board | | | | | | | | | | | |
| | Regular meetings of independent directors in executive session without management | | | | | | | | | | | |
| | Annual election of all directors | | | | | | | | | | | |
| | Majority voting standard for directors in uncontested elections | | | | | | | | | | | |
| | Stockholder special meetings may be called upon the request of a majority of stockholders | | | | | | | | | | | |
| | Single-class voting structure (one share, one vote) | | | | | | | | | | | |
| | No stockholder rights plan | | | | | | | | | | | |
| | Stock ownership requirements for our executive officers and directors, including enhanced requirements adopted in 2018 for our CEO and CFO | | | | | | | | | | | |
| | Stockholder proxy access | | | | | | | | | | | |
| | Nominating and Corporate Governance Committee regularly reviews overall corporate governance framework and oversees the Company’s corporate, environmental and social responsibility efforts | | |
| | | | | Corporate Governance |
Synchrony | 2019 Annual Meeting and Proxy Statement 11
Proxy Summary Board of Directors We believe that our directors possess the highest personal and professional ethics, deep industry knowledge and expertise, and are committed to representing the long-term interests of our stockholders. We deliberately and thoughtfully formed an independent Board with diverse perspectives and experiences, which we believe is critical to effective corporate governance and to achieving our strategic goals. Today, nine of the 10 directors on our Board are independent, four of the directors are women and three of the directors are minorities. The composition of the Board reflects distinct and varied professional experience and cognitive diversity. Experience, Diversity and Independence 
12 Synchrony | 2019 Annual Meeting and Proxy Statement
Proxy Summary Board Qualifications | | | | | | | | | | Name | | Age | | Director
Since | | Independent | | Committee Membership | | | | | | Margaret M. Keane President and CEO of Synchrony Financial | | 59 | | 2014 | | | | | | | | | | Paget L. Alves Former Chief Sales Officer of Sprint Corporation | | 64 | | 2015 | |  | | Audit; Nominating and Corporate Governance; Technology | | | | | | Arthur W. Coviello, Jr. Former Executive Vice President of EMC Corporation Former Executive Chairman of RSA Security, Inc. | | 65 | | 2015 | | | | Risk; Technology (Chair) | | | | | | William W. Graylin Chairman and CEO of OV Loop, Inc. Former GlobalCo-General Manager of Samsung Pay, Samsung Electronics America, Inc. | | 50 | | 2015 | | | | Risk; Technology | | | | | | Roy A. Guthrie Former CEO of Renovate America Inc. Former Executive Vice President and Chief Financial Officer (“CFO”) of Discover Financial Services, Inc. | | 65 | | 2014 | | | | Risk (Chair) | | | | | | Richard C. Hartnack (Chair of the Board) Former Vice Chairman and Head, Consumer and Small Business Banking of U.S. Bancorp | | 73 | | 2014 | |
| | Management Development and Compensation (Chair) | | | | | | Jeffrey G. Naylor Former CFO and Chief Administrative Officer (“CAO”) of the TJX Companies, Inc. | | 60 | | 2014 | | | | Audit (Chair); Management Development and Compensation | | | | | | Laurel J. Richie Former President of the Women’s National Basketball Association LLC | | 60 | | 2015 | | | | Management Development and Compensation; Nominating and Corporate Governance | | | | | | Olympia J. Snowe Chairman and CEO of Olympia Snowe, LLC U.S. Senator from 1995–2013 and Member of U.S. House of Representatives from 1979–1995 | | 72 | | 2015 | | | | Audit; Nominating and Corporate Governance (Chair) | | | | | | Ellen M. Zane Former President and CEO of Tufts Medical Center and the Floating Hospital for Children | | 67 | | 2019 | | | | Audit |
Synchrony | 2019 Annual Meeting and Proxy Statement 13
Corporate Governance Item 1—Election of Directors | | | Name and present position,
if any, with the Company
| | Age, period served as a director and
other business experience
| | Margaret M. Keane | | | President and Chief
Executive Officer
| | Ms. Keane, 56, has beenThe Board currently consists of 10 directors: our President and CEO, since February 2014Margaret M. Keane, and has served as CEOnine directors who are “independent” under the listing standards of the New York Stock Exchange (“NYSE”) and President of GE’s North American retail finance business since April 2011. She has also beenour own independence standards set forth in our Governance Principles. The independent directors are Paget L. Alves, Arthur W. Coviello, Jr., William W. Graylin, Roy A. Guthrie, Richard C. Hartnack, Jeffrey G. Naylor, Laurel J. Richie, Senator Olympia J. Snowe and Ellen M. Zane (together, the “Independent Directors”). Under our Bylaws, our directors will be elected annually by a membermajority vote in uncontested elections. As discussed under “Committees of the Board since 2013of Directors” below, our Nominating and a memberCorporate Governance Committee is responsible for recommending to our Board, for its approval, the director nominees to be presented for stockholder approval at each annual meeting.
Nominees for Election to the Board of Directors Each of the board of directors of Synchrony Bank (the “Bank”) since 2009. From June 2004 to April 2011, Ms. Keane served as President and CEO10 director nominees listed below is currently a director of the Retail Card platformCompany. The following biographies describe the business experience of GE’s North American retail finance business. From January 2002each director nominee. Following the biographical information for each director nominee, we have listed specific qualifications that the Board considered in determining whether to May 2004, Ms. Keane served as Senior Vice President of Operationsrecommend that the director be nominated for election at the Annual Meeting. If elected, each of the Retail Card platformdirector nominees is expected to serve for a term of GE’s North American retail finance business. From January 2000 to December 2001, Ms. Keane served as Chief Quality Leaderone year or until their successors are duly elected and qualified. The Board expects that each of GECC. From October 1999 to December 1999, Ms. Keane served as Shared Services Leaderthe nominees will be available for GECC’s Mid-Market Leasing Businesses. Prior to that, Ms. Keane served in various operations and quality leadership roles at GECC and Citibank. Ms. Keane received a B.A. in Government and Politics and an M.B.A. from St. John’s University. We believe that Ms. Keane should serveelection as a memberdirector. However, if by reason of an unexpected occurrence one or more of the Board due to her extensive experiencenominees is not available for election, the persons named in the retail finance business andform of proxy have advised that they will vote for such substitute nominees as the perspective she brings as our President and CEO.Board may nominate.
| | Paget L. Alves | | | | | Mr. Alves, 61, has been a director since November 2015 and was a non-voting Board observer from July 2015 to November 2015. He served as Chief Sales Officer of Sprint Corporation, a wireless and wireline communications services provider, from January 2012 to September 2013 after serving as President of that company’s Business Markets Group since 2009. Prior thereto, Mr. Alves held various positions at Sprint Corporation, including President, Sales and Distribution, from 2008 to 2009, President, South Region, from 2006 to 2008, Senior Vice President, Enterprise Markets, from 2005 to 2006, and President, Strategic Markets from 2003 to 2005. Between 2002 and 2003, he served as President and Chief Operating Officer of Centennial Communications Corporation and from 2000 to 2001 served as President and CEO of PointOne Telecommunications, Inc. Mr. Alves currently serves on the boards of directors of International Game Technology PLC, a manufacturer and distributor of microprocessor-based gaming and video lottery products and software systems, and Ariel Investments LLC, an investment management company. He previously served on the boards of directors of GTECH Holdings Corporation from 2005 to 2006, Herman Miller, Inc. from 2008 to 2010 and International Game Technology Inc. from 2010 to 2015. Mr. Alves received a B.S. in Industrial and Labor Relations and a J.D. from Cornell University.
We believe that Mr. Alves should serve as a member of the Board due to his executive management and leadership experience and his extensive background in sales.
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14 Synchrony | 2019 Annual Meeting and Proxy Statement
| | | | | Corporate Governance Board Qualifications | | | | |
| | | Name and present position,
if any, with the Company
 | | Age, period served as a director and
other business experience
| | Arthur W. Coviello, Jr. | | | MARGARETM. KEANE President and Chief Executive Officer | | Mr. Coviello, 62, has been a director since November 2015 and was a non-voting Board observer from July 2015 to November 2015. He served as Executive Vice President, EMC Corporation and Executive Chairman, RSA, from 2011 to 2015, after serving as Executive Vice President/President, RSA Security Division of EMC Corporation, from 2006 to 2011. Prior thereto, Mr. Coviello held various executive positions at RSA Security, Inc. including President and CEO from 2000 to 2006, and President from 1999 to 2000. Prior to RSA, he had extensive financial and operating management expertise in several technology companies. Mr. Coviello currently serves on the board of directors at EnerNOC, Inc., a provider of cloud-based energy intelligence software. He also serves on the board of directors of Cylance, Inc., a private cyber security software company, and Bugcrowd, Inc., a private cyber security platform and services company. Mr. Coviello previously served on the board of directors of AtHoc, RSA Security, Inc., and Sana Security, Inc. He received a B.B.A. in Accounting from the University of Massachusetts.
We believe that Mr. Coviello should serve as a member of the Board due to his leadership experience, his extensive financial and accounting background and his considerable experience in cyber security.
| | William W. GraylinPAGET | | | | | Mr. Graylin, 47, has been a director since November 2015 and was a non-voting Board observer from July 2015 to November 2015. He is Global Co-General Manager of Samsung Pay, Samsung Electronics America, Inc. Prior thereto, Mr. Graylin was CEO of LoopPay, Inc. from 2012 to 2015. Between 2007 and 2012, he was Founder and CEO of Roam Data, Inc., from 2002 to 2007 was Founder, Chairman and CEO of Way Systems, Inc., and from 2000 to 2001 was Founder and CEO of Entitlenet, Inc. Mr. Graylin served in the United States Navy as a Nuclear Submarine Officer from 1992 to 1998. He currently serves on the boards of directors of ONvocal, Inc., an acoustics wearables company, Movylo, Inc. a mobile promotion SaaS company, and People Power, Inc. an Internet of Things company. Mr. Graylin previously served on the board of directors of Sinohub. He received a B.S. in Electrical Engineering & Computer Science, and a B.A. in Chinese Linguistics and Literature from the University of Washington, an M.B.A. from the Sloan School of Management, Massachusetts Institute of Technology, and an M.S. in Electrical Engineering & Computer Science from Massachusetts Institute of Technology.
We believe that Mr. Graylin should serve as a member of the Board due to his executive management and leadership experience and his extensive background in technology.
L. ALVES |
Name and present position, if any, with the Company | | | | | Synchrony Financial 2016 Proxy Statement | | | 7 | |
Age, period served as a director and other business experience Ms. Keane, 59, has been our President and CEO since February 2014 and previously served as CEO and President of GE’s North American retail finance business since April 2011. She has also been a member of the Board since 2013 and a member of the board of directors of Synchrony Bank (the “Bank”) since 2009. From June 2004 to April 2011, Ms. Keane served as President and CEO of the Retail Card platform of GE’s North American retail finance business. From January 2002 to May 2004, Ms. Keane served as Senior Vice President of Operations of the Retail Card platform of GE’s North American retail finance business. From January 2000 to December 2001, Ms. Keane served as Chief Quality Leader of GE Capital Corporation (“GECC”). From October 1999 to December 1999, Ms. Keane served as Shared Services Leader for GECC’sMid-Market Leasing Businesses. Prior to that, Ms. Keane served in various operations and quality leadership roles at GECC and Citibank. Ms. Keane serves on the board of directors of The Allstate Corporation, a publicly held personal lines insurer. Ms. Keane received a B.A. in Government and Politics and an M.B.A. from St. John’s University. We believe that Ms. Keane should serve as a member of the Board due to her extensive experience in the retail finance business and the perspective she brings as our President and CEO. Mr. Alves, 64, has been a director since November 2015 and was anon-voting Board observer from July 2015 to November 2015. He has also been a member of the board of directors of the Bank since January 2017. He served as Chief Sales Officer of Sprint Corporation, a wireless and wireline communications services provider, from January 2012 to September 2013 after serving as President of that company’s Business Markets Group from 2009 to 2012. Prior thereto, Mr. Alves held various positions at Sprint Corporation, including President, Sales and Distribution, from 2008 to 2009; President, South Region, from 2006 to 2008; Senior Vice President, Enterprise Markets, from 2005 to 2006; and President, Strategic Markets, from 2003 to 2005. Between 2002 and 2003, he served as President and Chief Operating Officer of Centennial Communications Corporation and from 2000 to 2001 served as President and CEO of PointOne Telecommunications, Inc. Mr. Alves currently serves on the boards of directors of Yum! Brands, Inc., a company that develops, operates, franchises, and licenses a system of quick-service restaurants; and International Game Technology PLC, a manufacturer and distributor of microprocessor-based gaming and video lottery products and software systems. He previously served on the boards of directors of GTECH Holdings Corporation from 2005 to 2006, Herman Miller, Inc. from 2008 to 2010 and International Game Technology Inc. from 2010 to 2015. In 2017, Savoy magazine recognized Mr. Alves among Savoy’s 2017 Most Influential Black Corporate Directors. Mr. Alves received a B.S. in Industrial and Labor Relations and a J.D. from Cornell University. We believe that Mr. Alves should serve as a member of the Board due to his executive management and leadership experience, including leadership roles with technology companies, his extensive background in sales, his financial expertise and his experience with strategic and business development. He also has experience with strategic corporate transactions, including mergers and acquisitions. The Board has determined that Mr. Alves qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of RegulationS-K.
Synchrony | 2019 Annual Meeting and Proxy Statement 15
| | | | | |
| | | Name and present position,
if any, with the Company
 | | Age, period served as a director and
other business experience
| | Roy A. Guthrie | | | | | Mr. Guthrie, 62, joined our Board at the time of the IPO in July 2014. From July 2005 to January 2012, Mr. Guthrie served as Executive Vice President, and from July 2005 to May 2011 as Chief Financial Officer (“CFO”), of Discover Financial Services, Inc. From September 2000 to July 2004, Mr. Guthrie served as President and CEO of various businesses of Citigroup Inc., including CitiFinancial International from 2000 to 2004 and CitiCapital from 2000 to 2001. From April 1978 to September 2000, Mr. Guthrie served in various roles of increasing responsibility at Associates First Capital Corporation. Mr. Guthrie serves on the board of directors of Nationstar Mortgage Holdings, Inc., an originator and servicer of real estate mortgage loans, OneMain Holdings, Inc., a financial services company, LifeLock, Inc., a company offering identity theft protection and detection services, and served on the board of directors of Discover Bank. Mr. Guthrie received a B.A. in Economics from Hanover College and an M.B.A. from Drake University.
We believe that Mr. Guthrie should serve as a member of the Board due to his leadership experience and extensive background in consumer finance (including the private label credit card industry), including more than 30 years of experience in finance and/or operating roles.
| | Richard C. Hartnack | | | | | Mr. Hartnack, 70, joined our Board at the time of the IPO in July 2014. From April 2005 to February 2013, Mr. Hartnack served as Vice Chairman and Head, Consumer and Small Business Banking of U.S. Bancorp. From June 1991 to March 2005, Mr. Hartnack served in various leadership roles at Union Bank, N.A. (formerly known as Union Bank of California, N.A.), including Vice Chairman, Director and Head, Community Banking and Investment Services from 1999 to 2005. From June 1982 to May 1991, Mr. Hartnack served in various leadership roles at First Chicago Corporation, including Executive Vice President and Head, Community Banking. Mr. Hartnack serves on the board of directors of Federal Home Loan Mortgage Corporation and has served on the board of directors of MasterCard International, Inc. (U.S. Region) and UnionBanCal Corporation. Mr. Hartnack received a B.A. in Economics from the University of California, Los Angeles and an M.B.A. from Stanford University.
We believe that Mr. Hartnack should serve as a member of the Board due to his leadership experience and extensive background in consumer finance and banking accumulated over the course of a 40-year career in the banking industry.
 |
Name and present position, if any, with the Company | | | 8 | | Synchrony Financial2016 Proxy Statement |
Age, period served as a director and other business experience Mr. Coviello, 65, has been a director since November 2015 and was anon-voting Board observer from July 2015 to November 2015. He has also been a member of the board of directors of the Bank since January 2017. Since 2015 he has been an independent cyber security consultant. He served as Executive Vice President of EMC Corporation, a cloud computing and information security company, and Executive Chairman of RSA Security, Inc. (“RSA”), the Security Division of EMC Corporation and a provider of security, risk and compliance solutions, from 2011 to 2015, after serving as Executive Vice President and President of RSA from 2006 to 2011. Prior thereto, Mr. Coviello held various executive positions at RSA, including President and CEO from 2000 to 2006, and President from 1999 to 2000. Prior to RSA, he had extensive financial and operating management expertise in several technology companies. Mr. Coviello currently serves on the boards of directors of Tenable Holdings, Inc., a provider of Cyber Exposure solutions, which is a discipline for managing and measuring cybersecurity risk; and two private companies, Capsule8, a security software platform for Linux, containers and microservices; and Bugcrowd, Inc., which uses tens of thousands of independent researchers to assist its customers in finding security vulnerabilities in their software. Mr. Coviello previously served on the boards of directors of EnerNOC, Inc., Gigamon, Inc., AtHoc, RSA, Sana Security, Inc. and Cylance, Inc. He received a B.B.A. in Accounting from the University of Massachusetts. We believe that Mr. Coviello should serve as a member of the Board due to his leadership experience, including as CEO of a publicly traded company, his extensive financial expertise and accounting background and his considerable experience in technology and cyber security. Mr. Graylin, 50, has been a director since November 2015 and was anon-voting Board observer from July 2015 to November 2015. He has been Chairman and CEO of OV Loop, Inc., a voice first communications and commerce company, since 2018. Prior thereto, Mr. Graylin was GlobalCo-General Manager of Samsung Pay, the mobile payment platform of Samsung Electronics America, Inc., from February 2015 to April 2018. From 2012 to 2015, he was Founder and CEO of LoopPay, Inc., a mobile payment company; from 2007 to 2012, he was Founder and CEO of Roam Data, Inc., a developer of mobile point of sale software; from 2002 to 2007, he was Founder, Chairman and CEO of Way Systems, Inc.; and from 2000 to 2001, he was Founder and CEO of Entitlenet, Inc. Mr. Graylin served in the United States Navy as a Nuclear Submarine Officer from 1992 to 1998. He currently serves on the boards of directors of several privately held high-tech startups including: Nucleus Scientific, Inc., an innovative EV and electrification company; People Power, Inc., an IoT (internet of things) services company managed by artificial intelligence for home automation, security and senior care; and PayFi, Inc., a real-time payment company. Mr. Graylin is currently a Connection Science Fellow with MIT’s Media Lab, where he teaches part time on FinTech and Entrepreneurship. He received a B.S. in Electrical Engineering and Computer Science and a B.A. in Chinese Linguistics and Literature from the University of Washington; an M.B.A. from the Sloan School of Management, Massachusetts Institute of Technology; and an M.S. in Electrical Engineering and Computer Science from Massachusetts Institute of Technology. We believe that Mr. Graylin should serve as a member of the Board due to his executive management and leadership experience, and his extensive background as an entrepreneur and innovator in technology. 16 Synchrony | 2019 Annual Meeting and Proxy Statement
| | | | | | | | | |
| | | Name and present position,
if any, with the Company
 | | Age, period served as a director and
other business experience
| | Jeffrey G. Naylor | | | | | Mr. Naylor, 57, joined our Board at the time of the IPO in July 2014. Mr. Naylor has served as Founder and Managing Director of Topaz Consulting, LLC, a financial consulting firm, since April 2014. From February 2013 to April 2014, Mr. Naylor served as Senior Corporate Advisor of the TJX Companies, Inc. From January 2012 to February 2013, Mr. Naylor served as Senior Executive Vice President and Chief Administrative Officer of the TJX Companies, Inc., from February 2009 to January 2012, he served as its Senior Executive Vice President, Chief Financial and Administrative Officer, from June 2007 to February 2009, he served as its Senior Executive Vice President, Chief Administrative and Business Development Officer, from September 2006 to June 2007, he served as its Senior Executive Vice President, Chief Financial and Administrative Officer, and from February 2004 to September 2006, he served as its CFO. From September 2001 to January 2004, Mr. Naylor served as Senior Vice President and CFO of Big Lots, Inc. From September 2000 to September 2001, Mr. Naylor served as Senior Vice President, Chief Financial and Administrative Officer of Dade Behring, Inc. From November 1998 to September 2000, he served as Vice President, Controller of The Limited, Inc. Mr. Naylor serves on the boards of directors of The Fresh Market, Inc., a grocery retailer, and Emerald Expositions, which conducts business and consumer trade shows. Mr. Naylor received a B.A. in Economics and Political Science and an M.B.A. from the J.L. Kellogg Graduate School of Management, Northwestern University.
We believe that Mr. Naylor should serve as a member of the Board due to his executive management and leadership experience, his extensive financial and accounting background and his considerable experience accumulated over the course of 25 years in the retail and consumer goods industries.
| | Laurel J. Richie | | | | | Ms. Richie, 57, has been a director since November 2015 and was a non-voting Board observer from July 2015 to November 2015. Ms. Richie served as President of the Women’s National Basketball Association LLC from 2011 to 2015. Prior to her appointment in 2011, she served as Chief Marketing Officer of Girl Scouts of the United States of America from 2008 to 2011. From 1984 to 2008, she held various positions at Ogilvy & Mather, including Senior Partner and Executive Group Director and founding member of its Diversity Advisory Board. She was named one of the 25 Most Influential Women in Business by The Network Journal and is a recipient of the YMCA Black Achievers in Industry award, Ebony magazine’s Outstanding Women in Marketing and Communications award, and Power 100 List. Most recently, Black Enterprise named her one of the Most Influential African Americans in Sports. Ms. Richie received a B.A. in Policy Studies from Dartmouth College. She was named as a Charter Trustee of her alma mater in 2012, and currently serves as board vice chair and chairman of the communications committee. She also serves as a Trustee of the Naismith Basketball Hall of Fame.
We believe that Ms. Richie should serve as a member of the Board due to her executive management and leadership experience and her considerable experience in communications and marketing.
 |
Name and present position, if any, with the Company | | | | | Synchrony Financial 2016 Proxy Statement | | | 9 | |
Age, period served as a director and other business experience Mr. Guthrie, 65, joined our Board and the board of directors of the Bank in connection with our initial public offering in July 2014 (the “IPO”). From October 2017 to September 2018, Mr. Guthrie served as CEO of Renovate America Inc., a privately-owned financial services company. From July 2005 to January 2012, Mr. Guthrie served as Executive Vice President, and from July 2005 to May 2011 as CFO of Discover Financial Services, Inc., a direct banking and payments company. From September 2000 to July 2004, he served as President and CEO of various businesses of Citigroup Inc., including CitiFinancial International from 2000 to 2004 and CitiCapital from 2000 to 2001. From April 1978 to September 2000, Mr. Guthrie served in various roles of increasing responsibility at Associates First Capital Corporation. Mr. Guthrie serves on the boards of directors of Nationstar Mortgage Holdings, Inc., an originator and servicer of real estate mortgage loans; OneMain Holdings, Inc., a financial services company; and Renovate America Inc. He previously served on the boards of directors of LifeLock, Inc. and Garrison Capital Inc. During his tenure with Discover Financial Services, Inc., he also served on the board of directors of Discover Bank. Mr. Guthrie received a B.A. in Economics from Hanover College and an M.B.A. from Drake University. We believe that Mr. Guthrie should serve as a member of the Board due to his leadership experience, including as CFO of two publicly traded companies and as a director of other publicly traded companies, financial expertise and accounting background, risk management experience and extensive experience in consumer finance (including the private-label credit card industry), including more than 30 years of experience in finance and/or operating roles. Mr. Hartnack, 73, joined our Board and the board of directors of the Bank in connection with the IPO in July 2014 and serves as thenon-executive Chair of the Board. From April 2005 to February 2013, Mr. Hartnack served as Vice Chairman and Head, Consumer and Small Business Banking of U.S. Bancorp, a financial services holding company. From June 1991 to March 2005, Mr. Hartnack served in various leadership roles at Union Bank, N.A. (formerly known as Union Bank of California, N.A.), including Vice Chairman, Director and Head, Community Banking and Investment Services from 1999 to 2005. From June 1982 to May 1991, Mr. Hartnack served in various leadership roles at First Chicago Corporation, including Executive Vice President and Head, Community Banking. Mr. Hartnack previously served on the boards of directors of Federal Home Loan Mortgage Corporation, MasterCard International, Inc. (U.S. Region) and UnionBanCal Corporation. Mr. Hartnack received a B.A. in Economics from the University of California, Los Angeles, and an M.B.A. from Stanford University. We believe that Mr. Hartnack should serve as a member of the Board due to his leadership experience and extensive background in consumer finance, banking and financial services regulatory matters that he accumulated over the course of a40-year career in the banking industry.
Synchrony | 2019 Annual Meeting and Proxy Statement 17
| | | Name and present position,
if any, with the Company
 | | Age, period served as a director and
other business experience
 |
Name and present position, if any, with the Company Age, period served as a director and other business experience Mr. Naylor, 60, joined our Board and the board of directors of the Bank in connection with the IPO in July 2014. From February 2013 to April 2014, Mr. Naylor served as Senior Corporate Advisor of the TJX Companies, Inc., a retail company of apparel and home fashions. From January 2012 to February 2013, Mr. Naylor served as Senior Executive Vice President and CAO of the TJX Companies, Inc.; from February 2009 to January 2012, he served as its Senior Executive Vice President, Chief Financial and Administrative Officer; from June 2007 to February 2009, he served as its Senior Executive Vice President, Chief Administrative and Business Development Officer; from September 2006 to June 2007, he served as its Senior Executive Vice President, Chief Financial and Administrative Officer; and from February 2004 to September 2006, he served as its CFO. From September 2001 to January 2004, Mr. Naylor served as Senior Vice President and CFO of Big Lots, Inc. From September 2000 to September 2001, Mr. Naylor served as Senior Vice President, Chief Financial and Administrative Officer of Dade Behring, Inc. From November 1998 to September 2000, he served as Vice President, Controller of The Limited, Inc. Mr. Naylor serves on the boards of directors of three other public companies: Dollar Tree, Inc., an operator of discount variety stores; Wayfair, Inc., ane-commerce retailer of home furnishings and decor; and Emerald Expositions, a company that conducts business to business trade shows. He also serves on the boards of directors of two private companies: Bargain Hunt, a discount retailer andSave-A-Lot, a discount grocery retailer. Mr. Naylor received a B.A. in Economics and Political Science and an M.B.A. from the J.L. Kellogg Graduate School of Management, Northwestern University. We believe that Mr. Naylor should serve as a member of the Board due to his executive management and leadership experience, including as CFO of a publicly traded company and as a director of other publicly traded companies, his extensive financial expertise and accounting background, and his considerable experience accumulated over the course of 25 years in the retail and consumer goods industries. The Board has determined that Mr. Naylor qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of RegulationS-K. Ms. Richie, 60, has been a director since November 2015 and was anon-voting Board observer from July 2015 to November 2015. Ms. Richie served as President of the Women’s National Basketball Association LLC, a professional sports league, from 2011 to 2015. From 2008 to 2011, Ms. Richie served as Chief Marketing Officer of Girl Scouts of the United States of America. From 1984 to 2008, she held various positions at Ogilvy & Mather, including Senior Partner and Executive Group Director and member of the agency’s Operating and Diversity Advisory Boards. Ms. Richie is currently engaged by severalFortune 100 companies to advisec-suite executives on matters of personal leadership and corporate culture. She also serves on the board of directors of Bright Horizons, a publicly-traded provider of high-quality child care and early education. Ms. Richie has been recognized as one of the 25 Most Influential Women in Business byThe Network Journal, one of the Most Influential African Americans in Sports byBlack Enterpriseand one of the Most Influential Black Corporate Directors bySavoy magazine. She is the recipient of numerous awards includingSports BusinessJournal’s Game Changer Award andEbony magazine’s Outstanding Women in Marketing and Communications Award. Ms. Richie earned a B.A. in Policy Studies from Dartmouth College. Ms. Richie is a former Trustee of the Naismith Basketball Hall of Fame; she was named a Charter Trustee of her alma mater in 2012; and she became Chair of the Board of Trustees of Dartmouth College in 2017. We believe that Ms. Richie should serve as a member of the Board due to her executive management and leadership experience and her considerable experience in communications and marketing. 18 Synchrony | 2019 Annual Meeting and Proxy Statement
Corporate Governance | Olympia J. Snowe | | |  | | Senator Snowe, 69, has been a director since November 2015 and was a non-voting Board observer from January 2015 to November 2015. She is currently chairman and CEO of Olympia Snowe, LLC, a policy and communications consulting firm, and a senior fellow at the Bipartisan Policy Center, where she is a member of the board and co-chairs its Commission on Political Reform. Senator Snowe served in the U.S. Senate from 1995-2013, and as a member of the U.S. House of Representatives from 1979-1995. While in the U.S. Senate, she served as chair and was the ranking member of the Senate Committee on Small Business and Entrepreneurship, and served on the Senate Finance Committee, the Senate Intelligence Committee, and the Senate Commerce Science and Technology Committee. She also served as chair of the Subcommittee on Seapower for the Senate Armed Services Committee. Senator Snowe serves on the boards of directors of T. Rowe Price Group, Inc., a financial services company, and Aetna, Inc., a diversified healthcare benefits company. Senator Snowe received a B.A. in political science from the University of Maine and has received honorary doctorate degrees from many colleges and universities.
We believe that Senator Snowe should serve as a member of the Board due to her broad range of valuable leadership and public policy experience.
 |
Name and present position, if any, with the Company Age, period served as a director and other business experience Senator Snowe, 72, has been a director since November 2015 and was anon-voting Board observer from January 2015 to November 2015. She has also been a member of the board of directors of the Bank since January 2017. She is currently Chairman and CEO of Olympia Snowe, LLC, a policy and communications consulting firm, and a senior fellow at the Bipartisan Policy Center, anon-profit organization focused on national policy solutions, where she is a member of the board andco-chairs its Commission on Political Reform. Senator Snowe currently serves on the board of directors of T. Rowe Price Group, Inc., a financial services company, and she previously served on the board of directors of Aetna, Inc., a diversified healthcare benefits company. Senator Snowe served in the U.S. Senate from 1995–2013, and as a member of the U.S. House of Representatives from 1979–1995. While in the U.S. Senate, she served as Chair and was the ranking member of the Senate Committee on Small Business and Entrepreneurship, and served on the Senate Finance Committee, the Senate Intelligence Committee, and the Senate Commerce Science and Technology Committee. She also served as Chair of the Subcommittee on Seapower for the Senate Armed Services Committee. Senator Snowe received recognition from the National Association of Corporate Directors as an NACD Directorship 100 “Class of 2015.” Senator Snowe received a B.A. in political science from the University of Maine and has received honorary doctorate degrees from many colleges and universities. We believe that Senator Snowe should serve as a member of the Board due to her broad range of valuable leadership and public policy experience, including more than 30 years as an elected member of the U.S. Congress. Her experiences provide her with an extensive background handling complex issues, including budget and fiscal responsibility, economic, tax and regulatory policy, and health care policy. Ms. Zane, 67, has been a director since February 2019 and was anon-voting Board observer from October 2018 to February 2019. She currently serves as CEO Emeritus and Vice Chair of the board of trustees at Tufts Medical Center and the Floating Hospital for Children, and from 2004 to 2011, she served as its President and CEO. From 1994 to 2004, Ms. Zane served as Network President for Partners Healthcare System, a physician/ hospital network sponsored by the Harvard affiliated Massachusetts General Hospital and Brigham and Women’s Hospital. Prior to 2004, Ms. Zane served as the CEO at Quincy Hospital. Ms. Zane serves on the boards of directors of Boston Scientific Corporation, a manufacturer of medical devices; Brooks Automation, a provider of automation, vacuum and instrumentation equipment for multiple markets, including semiconductor manufacturing, technology device manufacturing, and life sciences; and Haemonetics Corporation, a global provider of blood and plasma supplies and services. Ms. Zane received a Bachelor of Arts from George Washington University and a Master of Arts from Catholic University of America. She has an Advanced Professional Director Certification from the American College of Corporate Directors and she holds the following honorary degrees: Doctorate of Commercial Science from Bentley University, Doctorate of Business Administration from Stonehill College; and a Doctorate of Humane Letters from Curry College. We believe that Ms. Zane should serve as a member of the Board due to her executive experience in the health care industry, including as the CEO of a large medical center, in addition to her financial expertise and substantial experience as a director at other public companies. The Board has determined that Ms. Zane qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of RegulationS-K.
Synchrony | 2019 Annual Meeting and Proxy Statement 19
Corporate Governance Qualifications of Directors Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the stockholders. They must also have an inquisitive and objective perspective, practical wisdom and mature judgment. The Company will endeavor to have a Board representing a range of experience at policy-making levels in areas that are relevant to the Company’s activities. Although the Board does not have a specific diversity policy, the Nominating and Corporate Governance Committee takes into account a candidate’s ability to contribute to the diversity on the Board. It considers theeach candidate’s and the existing Board members’ race, ethnicity, gender, age, cultural background and professional experience. Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serve on the Board for an extended period of time. DirectorsOur Governance Principles maintain that directors who also serve as CEOs or in equivalent positions should not serve on more than two boards of public companies in addition to the Company’s Board, and other directors should not serve on more than fourthree boards of public companies in addition to the Company’s Board. Pursuant to theour Company’s Governance Principles, when a director’s principal occupation or job responsibilities change significantly during his or her tenure as a director, that director shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will recommend to the Board the action, if any, to be taken with respect to the resignation. The Board does not believe that arbitrary term limits on directors’ service are appropriate, nor does it believe that directors should expect to be renominated annually until they reach the mandatory retirement age. The Board self-evaluation process described belowNominating and Corporate Governance Committee will be an important determinantevaluate each director in connection with his or her renomination for board tenure.election at each annual meeting of stockholders. Except in special circumstances, directors will not be nominated for election to the Board after their 75th birthday. | | | 10 | | Synchrony Financial2016 Proxy Statement |
| | | | | Corporate Governance | | | | |
Process for Reviewing, Identifying and Evaluating Director Nominees The Nominating and Corporate Governance Committee is responsible for reviewing, identifying, evaluating and recommending director nominees to the Board after considering the qualifications described above and set forth in the Company’s Governance Principles. Upon recommendation of the Nominating and Corporate Governance Committee, the Board proposes a slate of nominees to the stockholders for election to the Board. Between annual stockholder meetings, the Board may fill vacancies and newly-creatednewly created directorships on the Board with directors who will serve until the next annual meeting. Other stockholders may also propose nominees for consideration by the Nominating and Corporate Governance Committee by submitting the names and other supporting information required under our Bylaws to: Corporate Secretary, Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902. The Nominating and Corporate Governance Committee will apply the same standards in considering director candidates recommended by stockholders that it applies to other candidates. In addition to recommending director candidates to the Nominating and Corporate Governance Committee, stockholders may also, pursuant to procedures established in our Bylaws, directly nominate one or more director candidates to stand for election by the stockholders. For information on how to nominate a person for election as a director at the 2020 Annual Meeting of Stockholders, including through the proxy access right to include such nominees in the Company’s proxy materials, please see the discussion under the heading “Additional Information—Stockholder Proposals for the 2020 Annual Meeting.” | | | | | Synchrony Financial 2016 Proxy Statement | | | 11 | |
20 Synchrony | 2019 Annual Meeting and Proxy Statement
| | | | | |
COMMITTEES OF THE BOARD OF DIRECTORSCommittees of the Board of Directors
The standing committees of the Board consist of anthe Audit Committee, athe Nominating and Corporate Governance Committee, a Management Developmentthe MDCC, the Risk Committee, and Compensation Committee (the “MDCC”), and a Riskthe Technology Committee. The duties and responsibilities of these standing committees are set forth below. The Board may also establish various other committees to assist it in its responsibilities. Our Board has adopted charters for each of its standing committees. Copies of the committees’ charters are available on our website at http://investors.synchronyfinancial.com under “Corporate Governance.” Each of the standing committees reports to the Board as they deemit deems appropriate and as the Board requests. | | | | | | | Committee Committees
| | Members | | Primary Responsibilities | | # of
Meetings
in 20152018 | | | | | Audit | | Mr. Naylor (Chair)
Mr. Alves
Senator Snowe
| | Mr. Naylor (Chair) Mr. Alves Senator Snowe Ms. Zane | | • Selecting, evaluating, compensating and overseeing the independent registered public accounting firm;firm | | 10 | | | • reviewing Receiving reports from our internal audit, risk management and independent liquidity review functions on the results of risk management reviews and assessments, including the Company’s internal control system over operational and regulatory controls and of the adequacy of the processes for controlling the Company’s activities and managing its risk | | | | | • Reviewing the audit plan, changes in the audit plan, the nature, timing, scope and results of the audit, and any audit problems or difficulties and management’s response;response | | | | | | | | | | | • overseeing Overseeing our financial reporting activities, including our annual report, and accounting standards and principles followed;followed (including any significant changes in such standards and principles) | | | | | | | | | | | • reviewing Reviewing and discussing with management and the independent auditor, as appropriate, the effectiveness of the Company’s internal control over financial reporting and the Company’s disclosure controls and procedures;procedures | | | | | | | | | | | • reviewing Reviewing our major financial risk exposures, the Company’s risk assessment and risk management practices and the guidelines, policies and processes for risk assessment and risk management;management | | | | | | | | | | | • in In conjunction with the Risk Committee, overseeing our risk guidelines and policies relating to financial statements, financial systems, financial reporting processes, compliance and auditing, and allowance for loan losses;losses | | | | | | | | | | | • approving Approving audit andnon-audit services provided by the independent registered public accounting firm;firm | | | | | | | | | | | • meeting Meeting with management and the independent registered public accounting firm to review and discuss our financial statements and other matters;matters required to be reviewed under applicable legal, regulatory or NYSE requirements | | | | | | | | | | | • establishing Establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls and auditing matters;matters | | | | | | | | | | | • overseeing Overseeing our internal audit function, including reviewing its organization, performance and audit findings, and reviewing our disclosure and internal controls; andcontrols | | | | | | | | | | | • overseeing Overseeing the Company’s compliance with legal, ethical and regulatory requirements (other than those assigned to other committees of the Board). and related processes and programs | | 13 |
| | | 12 | | Synchrony Financial2016 Proxy Statement |
| | | | | Corporate Governance | | | | |
Synchrony | 2019 Annual Meeting and Proxy Statement 21
Corporate Governance Committees of the Board of Directors | | | | | | | Committee Committees
| | Members | | Primary Responsibilities | | # of
Meetings
in 20152018 | | | | | Nominating and Corporate Governance | | Senator Snowe (Chair) Mr. Alves Ms. Richie | | • Developing, and recommending to our Board for approval, qualifications for director candidates, taking into account applicable regulatory or legal requirements regarding experience, expertise or other qualifications for service on certain of our Board’s committees;committees | | 8 | | • considering Considering potential director nominees properly recommended by the Company’s stockholders, leading the search for other individuals qualified to become members of the Board, recommending to our Board for approval the director nominees to be presented for stockholder approval at the annual meeting, and recommending to the Board nominations for any vacancies that may arise on the Board prior to the annual meeting;meeting | | | | | | | | | | | • reviewing Reviewing and making recommendations to our Board with respect to the Board’s leadership structure and the size and composition of the Board and the board committees;Board committees | | | | | | | | | | | • developing Developing and annually reviewing our corporate governance principles, including guidelines for determining the independence of directors;directors | | | | | | | | | | | • annually Annually reviewing director compensation and benefits;benefits | | | | | | | | | | | • developing Developing and recommending to the Board for its approval an annual self-evaluation process of the Board and the Board’s committees and overseeing the annual self-evaluation of our Board and its committees;committees | | | | | | | | | | | • reviewing Reviewing and, if appropriate, approving or ratifying any “transaction” between the Company and a “related person” required to be disclosed under SEC rules;Securities and Exchange Commission (“SEC”) rules and annually reviewing the use and effectiveness of such policy | | | | | | | | | | | • reviewing Reviewing our policies and procedures with respect to political spending;spending | | | | | | | | | | | • reviewing Reviewing actions in furtherance of our corporate, environmental and social responsibility;responsibility | | | | | | | | | | | • reviewing Reviewing and resolving any conflictconflicts of interest involving directors or executive officers;officers | | | | | | | | | | | • overseeing Overseeing the risks, if any, related to our corporate governance structure and practices; andpractices | | | | | | | | | | | • identifying Identifying and discussing with management the risks, if any, related to our environmental and social responsibility actions and public policy initiatives. initiatives | | 8 |
| | | | | Synchrony Financial 2016 Proxy Statement | | | 13 | |
22 Synchrony | 2019 Annual Meeting and Proxy Statement
| | | | | Corporate Governance |
Corporate Governance | | | | | | | Committee Committees
| | Members | | Primary Responsibilities | | # of
Meetings
in 20152018 | | | | | Management Development and Compensation | | Mr. Hartnack (Chair)
Mr. Naylor
Ms. Richie
| | Mr. Hartnack(Chair) Mr. Naylor Ms. Richie | | • Assisting our Board in developing and evaluating potential candidates for executive positions, including the CEO, and overseeing our management resources, structure, succession planning, development and selection process;process | | 7 | | • evaluating Evaluating the CEO’s performance and approving and, where required, recommending for approval by the independent members of our Board, the CEO’s annual compensation, including salary, bonus and equity andnon-equity incentive compensation;compensation | | | | | | | | | | | • evaluating Evaluating the performance of other senior executives and approving and, where required, recommending for approval by our Board, each senior executive’s annual compensation, including salary, bonus and equity andnon-equity incentive compensation, in each case, based on initial recommendations from the CEO;CEO | | | | | | | | | | | • reviewing Reviewing and overseeing incentive compensation arrangements with a view to appropriately balancing risk and financial results in a manner that does not encourage employees to expose us or any of our subsidiaries to imprudent risks, and are consistent with safety and soundness, and reviewing (with input from our Chief Risk Officer (“CRO”)) and the CRO of the Bank) the relationship among risk management policies and practices, corporate strategies and Senior Executive compensation; andsenior executive compensation | | | | | | | | | | | • reviewing Reviewing and overseeing equity incentive plans and other stock-based plans.plans | | 6 |
Synchrony | 2019 Annual Meeting and Proxy Statement 23
Corporate Governance Committees of the Board of Directors | | | | | | | Committees | | Members | | Primary Responsibilities | | # of Meetings
in 2018 | | | | | | Risk | | Mr. Guthrie
(Chair) Mr. Coviello Mr. Graylin
| | • Assisting our Board in its oversight of our enterprise-wide risk management framework, including as it relates to credit, investment, market, liquidity, operational (including cyber security), compliance and strategic risks;risks | | 8 | | | | | | | Mr. Graylin | | • reviewing Reviewing and, at least annually, approving our risk governance framework, and our risk assessment and risk management practices, guidelines and policies, including significant policies that management uses to manage credit and investment, market, liquidity, operational, compliance and strategic risks;risks | | | | | | | | | | | • reviewing Reviewing and, at least annually, recommending to our Board for approval, our enterprise-wide risk appetite, including our liquidity risk tolerance, and reviewing and | | 12 |
| | | 14 | | Synchrony Financial2016 Proxy Statement |
| | | | | Corporate Governance | | | | |
| | | | | | | Committee | | Members | | Primary Responsibilities | | # of
Meetings
in 2015 | | | | | | | | | approving our strategy relating to managing key risks and other policies on the establishment of risk limits as well as the guidelines and policies for monitoring and mitigating such risks;risks | | | | | | | | | | | • meeting Meeting separately, on a regular basisat least quarterly, with our CRO and the Bank’s CRO to discuss the Company’s risk assessment and risk management practices and related guidelines and policies;policies | | | | | | | | | | | • receiving Receiving periodic reports from management on the metrics used to measure, monitor and manage known and emerging risks, including management’s view on acceptable and appropriate levels of exposure;exposure | | | | | | | | | | | • receiving Receiving reports from our internal audit, risk management and independent liquidity review functions on the results of risk management reviews and assessments, including the Company’s internal control system over operational and regulatory controls and of the adequacy of the processes for controlling the Company’s activities and managing its risk;risk | | | | | | | | | | | • reviewing Reviewing and approving, at least annually, the Company’s enterprise-wideenterprise- wide capital and liquidity framework (including our contingency funding plan) for addressing liquidity needs during liquidity stress events and reviewing, | | | | | | | | | | | • Reviewing, at least quarterly, in coordination with the Bank’s Risk Committee, the Company’s allowance for loan losses methodology, liquidity, policy and risk appetite, regulatory capital policy and ratios, and internal capital adequacy assessment processes;processes and our annual capital plan and the Bank’s resolution plan | | | | | | | | | | | • reviewing, Reviewing, at least quarterly, information provided by senior management to determine whether we are operating within our established risk appetite;appetite | | | | | | | | | | | • reviewing Reviewing the status of financial services regulatory examinations;examinations | | | | | | | | | | | • reviewing Reviewing the independence, authority and effectiveness of our risk management function and independent liquidity review function;function | | | | | | | | | | | • approving Approving the appointment of, evaluating and, when appropriate, approving the replacement of the CRO; andCRO | | | | | | | | | | | • reviewing Reviewing the disclosure regarding risk contained in our annual and quarterly reports filed with the SEC. SEC | | |
24 Synchrony | 2019 Annual Meeting and Proxy Statement
Corporate Governance | | | | | | | Synchrony Financial 2016 Proxy Statement Committees
| | | 15Members | | Primary Responsibilities | | # of Meetings in 2018 |
| | | | Technology Committee | | Corporate GovernanceMr. Coviello
(Chair) | | • Reviewing and making recommendations to the Board on major strategies and other subjects relating to technology | | Not
Applicable.
Formed
in 2019. | | | Mr. Alves Mr. Graylin | | • Reviewing the Company’s approach to technology-related innovation, including the Company’s competitive position and relevant trends in technology and innovation | | | | | • Reviewing the technology development process to assure ongoing business growth | | | | | | | • Providing a forum for dialogue on existing and emerging technologies which present opportunities or threats to the Company’s strategic agenda | | |
Audit Committee Audit Committee
The Board has determined that each of Mr. Naylor, Mr. Alves and Ms. Zane qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of RegulationS-K, and the Board is satisfied that all members of our Audit Committee have sufficient expertise and business and financial experience necessary to effectively perform their duties as members of the Audit Committee. Management Development and Compensation Committee Each of Mr. Hartnack, Mr. Naylor and Ms. Richie qualifies as “outside directors” within the meaning of Section 162(m) (“Section 162(m)”) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and as “non-employee“non-employee directors” within the meaning of Rule16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Synchrony | 2019 Annual Meeting and Proxy Statement 25
Corporate Governance BOARD OF DIRECTORS’ LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHTBoard of Directors’ Leadership Structure and Role in Risk Oversight
The Board is led by ournon-executive Chair, Mr. Hartnack. We believe that having an independent director serve as the non-executive Chair of the Board is in the best interests of our stockholders. The separation of roles allows our Chair to focus on the organization and effectiveness of the Board. At the same time, it allows our CEO to focus on executing our strategy and managing our operations, performance and risk following our transition to being a fully stand-alone public company.risks. We manage our enterprise risk using an integrated framework that includes Board-level oversight, administration by a group of cross-functional management committees, andday-to-day implementation by a dedicated risk management team led by the CRO. The Board (with input from the Risk Committee) is responsible for approving the Company’s enterprise-wide risk appetite statement and framework, as well as certain other risk management policies, and oversees the Company’s strategic plan and enterprise-wide risk management program. The Board regularly devotes time during its meetings to review and discuss the most significant risks facing the Company and management’s responses to those risks. During these discussions, the CEO, the CFO, the CRO, the General Counsel and other members of senior management present management’s assessment of risks, a description of the most significant risks facing the Company and any mitigating factors and plans or practices in place to address and monitor those risks. The Board has also delegated certain of its risk oversight responsibilities to its committees. The Risk Committee of the Board has responsibility for the oversight of ourthe risk management program, and the three other board committees have other oversight roles with respect to risk management.management within their respective oversight areas. Several management committees and subcommittees have important roles and responsibilities in administering ourthe risk management program. This committee-focused governance structure provides a forum through which risk expertise is applied cross-functionally to all major decisions, including development of policies, processes policies and controls used by the CRO and risk management team to execute our risk management philosophy. OurThe enterprise risk management philosophy is to ensure that all relevant risks in our business activities are appropriately identified, measured, monitored and controlled. OurThe approach in executing this philosophy focuses on leveraging our strong credit risk cultureexpertise to drive enterprise risk management using a strong governance framework structure, a comprehensive enterprise risk assessment program and an effective risk appetite framework. Responsibility for risk management flows to individuals and entities throughout our Company, including ourthe Board, various boardBoard and management committees and senior management. We believe our creditThe corporate culture and values, in conjunction with the risk culturemanagement accountability incorporated into the integrated Enterprise Risk Government Framework, which includes a governance structure and three distinct “Lines of Defense” (as further described below), has facilitated, and will continue to facilitate, the evolution of an effective risk management presence across the Company. | | | 16 | | Synchrony Financial2016 Proxy StatementThe “First Line of Defense” is comprised of the business areas whoseday-to-day activities involve decision-making and associated risk-taking for the Company. As the business owner, the first line is responsible for identifying, assessing, managing and controlling that risk, and for mitigating our overall risk exposure. The first line formulates strategy and operates within the risk appetite and risk governance framework. The “Second Line of Defense,” also known as the independent risk management organization, provides oversight of first line risk-taking and management. The second line assists in determining risk capacity, risk appetite, and the strategies, policies and structure for managing risks. The second line owns the risk governance framework. The “Third Line of Defense” is comprised of Internal Audit. The third line provides independent and objective assurance to senior management and to the Board and Audit Committee that first and second line risk management and internal control systems and its governance processes are well-designed and working as intended. |
| | | | | Corporate Governance | | | | |
ATTENDANCE AT MEETINGSAttendance at Meetings
It is our policy that each director is expected to dedicate sufficient time to the performance of his or her duties as a director, including by attending meetings of the stockholders, and meetings of the Board and Board committees of which he or she is a member. In 2015,2018, the Board held 1411 meetings, including regularly scheduled and special meetings. All incumbent directors attended at least 75% of the aggregate of (i) the total number of meetings of the Board (held during the period for which he or she has been a director); and (ii) the total number of meetings held by all committees on which he or she served (during the periods for which he or she has served). All then-serving directors attended the 20152018 Annual Meeting of Stockholders. 26 Synchrony | 2019 Annual Meeting and Proxy Statement
Corporate Governance MEETINGS OF NON-MANAGEMENT AND INDEPENDENT DIRECTORSMeetings ofNon-Management and Independent Directors
In accordance with our Governance Principles, at the conclusion of every Board meeting, the Board hasindependent directors have an executive session without any management directors present. Periodically (and at least annually), the independent directors have executive sessions without any non-independent directors present. The Chair of the Board, Mr. Hartnack, presides at executive sessions. During executive sessions, the independent directors have complete access to Company personnel as they may request. COMMUNICATIONSWITH THE BOARD OF DIRECTORSCommunications With the Board of Directors
Stockholders and any interested parties who would like to communicate with the Board or its committees may do so by writing to them via the Company’s Corporate Secretary by email at corporate.secretary@synchronyfinancial.com or by mail at Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902 or by leaving a voicemail message at (800)275-3301. All communications directed to the Board, the Chair of the Board or any other members of the Board are initially reviewed by the Company’s Ombuds Leader. Any communications that allege or report fiscal improprieties or complaints about internal accounting controls or other accounting or auditing matters are immediately forwarded to the Chair of the Audit Committee, and the General Counsel and the Chief Audit Executive, and after consultation with the Chair of the Audit Committee, may be sent to the other members of the Audit Committee. Any communications that raise legal, ethical or compliance concerns about the Company’s policies or practices are immediately forwarded to the General Counsel and the Chief Compliance Officer. The Chair of the Board is advised promptly of any such communication that alleges misconduct on the part of the Company’s management or raises legal, ethical or compliance concerns about the Company’s policies or practices and that the General Counsel or the Chief Compliance Officer believes may be credible, and after consultation with the Chair of the Board, such communication may be reported to the other members of the Board or to a committee of the Board. On a quarterly basis, the Chair of the Board receives updates on other communications from stockholders that raise issues related to the affairs of the Company but do not fall into the two prior categories. The Chair of the Board determines which of these communications he would like to see. Typically, the Ombuds Leader will not forward to the Company’s directors communications from stockholders or other communications that are of a personal nature or not related to the duties and responsibilities of the Board, including: junk mail and mass mailings; routine customer service complaints; human resources matters; service suggestions; resumes and other forms of job inquiries; opinion surveys and polls; business solicitations; or advertisements. | | | | | Synchrony Financial 2016 Proxy Statement | | | 17 | |
| | | | | Corporate Governance |
CODE OF CONDUCTCode of Conduct
We have adopted a Code of Conduct that applies to anyone who works for or represents Synchrony, including all directors, officers and employees. A copy of this code is available on our website at http://investors.synchronyfinancial.com under “Corporate Governance”.Governance.” If we make any substantive amendments to this code or grant any waiver from a provision to our CEO, principal financial officer or principal accounting officer, we will disclose the nature of such amendment or waiver on our website or in a Current Report on Form8-K. GOVERNANCE PRINCIPLESGovernance Principles
Our Governance Principles provide the framework for the governance of the Company. The Nominating and Corporate Governance Committee is responsible for developing and implementing our Governance Principles, and periodically reviewing such Governance Principles and recommending any proposed changes to the Board for approval. A copy of our Governance Principles is available on our website at http://investors.synchronyfinancial.cominvestors.synchrony.com under “Corporate Governance.” SECTIONSection 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEBeneficial Ownership Reporting Compliance
Based upon a review of our records, we believe that all reports required to be filed by our directors, officers and holders of more than 10% of our common stock pursuant to Section 16(a) of the Exchange Act during 20152018 were filed on a timely basis. MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONManagement Development and Compensation Committee Interlocks and Insider Participation
The members of the Company’s MDCC are Mr. Hartnack, Mr. Naylor and Ms. Richie. None of Mr. Hartnack, Mr. Naylor and Ms. Richie was, during 20152018 or previously, an officer or employee of GE, the Company or any of their respective subsidiaries. William H. Cary, one of GE’s former designees on the Board, served as Chair of the MDCC in 2015, until November 17, 2015, when he resigned in connection with the Separation. Mr. Cary was not an officer or employee of the Company or any of its subsidiaries. During 2015,2018, there were no compensation committee interlocks required to be disclosed. In addition, no member of the MDCC had any relationship requiring disclosure under Item 404 of RegulationS-K under the Exchange Act. | | | 18 | | Synchrony Financial2016 Proxy Statement |
Synchrony | 2019 Annual Meeting and Proxy Statement 27
COMPENSATION MATTERSCompensation Matters
ITEMItem 2—ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATIONAdvisory Vote to Approve Named Executive
Officer Compensation In accordance with Section 14A of the Exchange Act, we are asking stockholders to approve the compensation paid to our named executive officers, as disclosed in this proxy statement on pages 23 to 4430–51 (the “Say on Pay“Say-on-Pay Vote”). Although the voting results are not binding, we value continuing and constructive feedback from our stockholders on compensation and other important matters, and the Company’s MDCC will consider the voting results when evaluating our executive compensation program. Consistent with the direction of our stockholders at our 2015 annual meeting, the Say on PaySay-on-Pay Vote is held on an annual basis until the nextnon-binding stockholder vote on the frequency with which the Say on PaySay-on-Pay Vote should be held. We believe that our executive compensation program aligns the interests of the Company’s executives and other key employees with those of the Company and its stockholders. The program is intended to attract, retain and motivate high caliber executive talent to enable the Company to maximize operational efficiency and long-term profitability. The program is also designed to differentiate compensation based upon individual contribution, performance and experience.
We ask for your advisory approval of the following resolution:
“RESOLVED, that the stockholders hereby approve, on an advisory basis, the compensation paid to Synchrony Financial’s named executive officers, as describedheld in this proxy statement on pages 23 to 44.”2021.
The Board recommends a voteFOR approval of the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement.
| | | | | Synchrony Financial 2016 Proxy Statement We believe that our executive compensation program aligns the interests of the Company’s executives and other key employees with those of the Company and its stockholders. The program is intended to attract, retain and motivate high-caliber executive talent to enable the Company to maximize operational efficiency and long-term profitability. The program is also designed to differentiate compensation based upon individual contribution, performance and experience. We ask for your advisory approval of the following resolution: | | | 19 | |
| |  | | | Compensation Matters“RESOLVED, that the stockholders hereby approve, on an advisory basis, the compensation paid to Synchrony Financial’s named executive officers, as described in this proxy statement on pages 30–51.” | | | |
MANAGEMENTManagement
The following table sets forth certain information concerning our executive officers (other than Ms. Keane).: Brian D. Doubles, Henry F. Greig, Neeraj Mehta, Jonathan S. Mothner, Paul Whynott, David P. Melito and Thomas M. Quindlen, as well as David Fasoli, who retired from his position as of January 1, 2019 and served in anon-executive officer role at Synchrony to assist in the transition of his duties until April 2019. For information concerning Ms. Keane, see “Corporate Governance—Election of Directors.” | | | Name and present position
with the Company | | Age, period served in present position and and other business experience | | Brian D. Doubles | | | Executive Vice President
and Chief Financial OfficerCFO | | Mr. Doubles, 40,43, has been our Executive Vice President and CFO since February 2014 and has served as CFO of GE’s North American retail finance business since January 2009 and a member of the board of directors of the Bank since 2009. From July 2008 to January 2009, Mr. Doubles served as Vice President of Financial Planning and Analysis of GE’s global consumer finance business. From March 2007 to July 2008, Mr. Doubles led the winddownwind-down of GE’s U.S. mortgage business as CFO and subsequently as CEO. From May 2006 to March 2007, Mr. Doubles served as Vice President of Financial Planning and Analysis of GE’s North American retail finance business. From January 2001 to May 2006, Mr. Doubles served in roles of increasing responsibility for GE’s internal audit staff. From February 1998 to January 2001, Mr. Doubles held various roles as part of a GEGeneral Electric Company (“GE”) management leadership program. Mr. Doubles received a B.S. in Engineering from Michigan State University. | David Fasoli Former Executive Vice President and CEO—CareCredit | | Mr. Fasoli, 60, was our Executive Vice President and CEO of the CareCredit platform from February 2014 until December 2018 and served as President and CEO of the CareCredit platform of GE’s North American retail finance business since March 2008. From June 2003 to March 2008, he served as General Manager of the Home and Recreational Products Business of GE’s North American retail finance business. Prior to June 2003, Mr. Fasoli served as Vice President of Client Development of GE’s North American retail finance business and held several positions of increasing responsibility within GE and GE’s North American retail finance business in finance, client development, business integration and quality. Mr. Fasoli received a B.S. in Business and Economics from the State University of New York at Albany. |
28 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters | | | Name and present position with the Company | | Age, period served in present position and other business experience | Henry F. Greig | | | Executive Vice President,
Chief Credit Officer and Chief Risk OfficerCapital Management Leader | | Mr. Greig, 53,56, has been our Executive Vice President, Chief Credit Officer and Capital Management Leader since April 2017. He previously served as our Executive Vice President and CRO sincefrom February 2014 and hasto April 2017. Mr. Greig served as CRO of GE’s North American retail finance business sincefrom October 2010 to February 2014, and the Bank sincefrom May 2011. He2011 to April 2017. Mr. Greig was also a member of the board of directors of the Bank from 2011 to January 2016. From June 2004 to October 2010, Mr. Greig served as CRO of the Retail Card platform of GE’s North American retail finance business. From December 2002 to June 2004, Mr. Greig served as Vice President of Risk for GE’s North American retail finance business. From June 2000 to December 2002, Mr. Greig served as Vice President of Information & Customer Marketing of GE’s North American retail finance business. Prior to that, Mr. Greig served in various business and risk positions with GE affiliates.affiliates of GE. Mr. Greig received an A.B. in Mathematics from Bowdoin College and an M.S. in Applied Mathematics from Rensselaer Polytechnic Institute. | Neeraj Mehta Executive Vice President, CEO—Payment Solutions and Chief Commercial Officer | | Mr. Mehta, 48, has been Executive Vice President and CEO of our Payment Solutions platform and our Chief Commercial Officer since January 2018. He previously served as our Executive Vice President of Business Strategy and Development from January 2015 to December 2017. From January 2012 to December 2014, Mr. Mehta served as President and CEO of GE Capital, Commercial Distribution Finance. From January 2008 to December 2011, Mr. Mehta served as President and CEO of GE Capital, Bank Loan Group and Managing Director of GE Capital Europe, Bank Loans. Mr. Mehta joined GE in 1996 where he held numerous executive roles. Mr. Mehta received a B.A. in Social Ecology from the University of California, Irvine and an M.B.A. in Finance and Accounting from Syracuse University. | David P. Melito Senior Vice President, Chief Accounting Officer and Controller | | Mr. Melito, 53, has been our Senior Vice President, Chief Accounting Officer and Controller since February 2014 and has served as Controller for GE’s North American retail finance business since March 2009. From January 2008 to March 2009, Mr. Melito served as Global Controller, Technical Accounting for GE Capital Aviation Services. From January 2001 to January 2008, Mr. Melito served as Global Controller, Technical Accounting for GE Capital Commercial Finance. Prior to that, Mr. Melito worked in public accounting. Mr. Melito holds a B.A. in Accounting from Queens College, City University of New York, and is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants. | Jonathan S. Mothner | | | Executive Vice President, General Counsel and Secretary | | Mr. Mothner, 52,55, has been our Executive Vice President, General Counsel and Secretary since February 2014 and has served as General Counsel for GE’s North American retail finance business since January 2009 and the Bank since September 2011. From December 2005 to July 2009, Mr. Mothner served as Chief Litigation Counsel and Chief Compliance Officer of GE’s global consumer finance business. From June 2004 to December 2005, Mr. Mothner served as Chief Litigation Counsel and head of the Litigation Center of Excellence of GE Commercial Finance. From May 2000 to June 2004, Mr. Mothner served as Litigation Counsel of GE’s global consumer finance business. Prior to joining GECC, Mr. Mothner served in various legal roles in the U.S. Department of Justice and a private law firm. Mr. Mothner received a B.A. in Economics from Hobart College and a J.D. from New York University School of Law. |
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| | | | | Compensation Matters | | | | |
| | | NameThomas M. Quindlen Executive Vice President and present position
with the CompanyCEO—Retail Card
| | Age, period served in present position and
other business experience
| | David P. Melito | | | Senior Vice President,
Chief Accounting Officer
and Controller | | Mr. Melito, 50, has been our Senior Vice President, Chief Accounting Officer and Controller since February 2014 and has served as Controller for GE’s North American retail finance business since March 2009. From January 2008 to March 2009, Mr. Melito served as Global Controller, Technical Accounting for GE Capital Aviation Services. From January 2001 to January 2008, Mr. Melito served as Global Controller, Technical Accounting for GE Capital Commercial Finance. Prior to that, Mr. Melito worked in public accounting. Mr. Melito holds a B.A. in Accounting from Queens College, City University of New York and is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants. | | Thomas M. Quindlen | | | Executive Vice President
and Chief Executive
Officer – Retail Card | | Mr. Quindlen, 53,56, has been our Executive Vice President and CEO of our Retail Card platform since February 2014 and has served as Vice President of the Retail Card platform for GE’s North American retail finance business since December 2013. From January 2009 to December 2013, Mr. Quindlen served as Vice President and CEO of GECC Corporate Finance. From November 2005 to January 2009, Mr. Quindlen served as President of GECC Corporate Lending, North America. From March 2005 to November 2005, Mr. Quindlen served as Vice President and CEO of GECC Commercial Financial Services. From May 2002 to March 2005, Mr. Quindlen served as President and CEO of GECC Franchise Finance. From September 2001 to May 2002, Mr. Quindlen served as Senior Vice President of GECC Global Six Sigma for Commercial Equipment Financing. Prior to that, Mr. Quindlen served in various sales, marketing, business development and financial positions with GE affiliates. Mr. Quindlen received a B.S. in Accounting from Villanova University. | | Glenn P. MarinoPaul Whynott
| | | Executive Vice President,
Chief ExecutiveRisk Officer –
Payment Solutions and
Chief Commercial Officer | | Mr. Marino, 59,Whynott, 48, has been our Executive Vice President and CEOCRO since April 2017. From May 2014 to April 2017, Mr. Whynott served as our Executive Vice President and Chief Regulatory Officer. Prior to joining Synchrony Financial, Mr. Whynott served as Senior Supervisory Officer, Financial Institution Supervision Group at the Federal Reserve Bank of our Payment Solutions platform and our Chief Commercial Officer since FebruaryNew York from April 2011 to May 2014 and has served as CEOhe held various leadership positions of the Payment Solutions platform and as Chief Commercial Leader of GE’s North American retail finance business since December 2011. From July 2002increasing responsibility from August 1992 to December 2011May 2014. Mr. Marino served as CEO of the Sales Finance platform of GE’s North American retail finance business. From March 1999 to July 2002, Mr. Marino served as CEO of Monogram Credit Services, a joint venture between GE and BankOne (now JPMorgan Chase & Co.). From February 1996 to March 1999, Mr. Marino served as CRO of the Visa/MasterCard division of GE’s North American retail finance business. Prior to that, Mr. Marino served as Vice President of Risk within Citigroup’s U.S. retail banking business. Mr. MarinoWhynott received a B.S.B.A. in BiologyEconomics from Syracuse UniversityConnecticut College and an M.B.A. in Finance from the UniversityColumbia School of Michigan.Business, Columbia University. |
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| | | | | Compensation Matters |
Synchrony | 2019 Annual Meeting and Proxy Statement 29
Compensation Matters Compensation Discussion and Analysis Executive Summary Business and Strategic Updates | | | We generated strong operational and financial results in 2018, including the acquisition
of the U.S. PayPal Credit program, which is the largest partner win in our history. While
we did not renew the Walmart program, we successfully renewed over 50 relationships,
including five of our largest ongoing programs—PayPal, Lowe’s, JC Penney and, in
January 2019, Amazon and Sam’s Club, a Walmart subsidiary. In addition to renewing
key partnerships, we won over 35 new business deals. We continued to grow our
Payment Solutions Car Care and HOME credit card networks. In addition, we expanded
our CareCredit network into 11 new specialties. We continue to invest in our digital
capabilities and expanded our network, focusing on ease of card use across platforms,
as well as card utility, and enhancing our competitive position in the rapidly changing
marketplace. Fiscal Year 2018 Financial Performance Highlights • 44.2% Increase in Net Earnings to $2.8 billion • 54.5% Increase in Diluted Earnings Per Share to $3.74 • Returned $2.4 billion in capital to stockholders ($1.9 billion in share repurchases and $0.5 billion in dividends) • Industry leading Efficiency Ratio* of 30.8% • Better 2018 Return on Assets than two out of three direct peers** • Increased Deposits 13.3% to $64.0 billion, now 73% of total funding * For Synchrony, Efficiency Ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income. ** Direct peers include American Express Company, Capital One Financial Corporation and Discover Financial Services. Stockholder Engagement and Responsiveness to 2018 Vote Following our 2018 Annual Meeting of Stockholders, the MDCC reviewed the results of
the stockholder advisory vote on executive compensation in which approximately 66%
of votes were cast in favor of the proposal, a decline from 97% in 2017. | | Grew Net Earnings 44% Name
Grew Diluted EPS 55%
Returned Capital to Stockholders $2.4B | The MDCC and present position
management conducted extensive outreach with our stockholders leading up to and following our 2018 Annual Meeting to better understand their perspectives on our compensation program, particularly for those who voted against oursay-on-pay proposal. In total, we reached out to our top 30 stockholders representing over 60% of our outstanding shares and had conversations with all stockholders who expressed interest in meeting with us (14 stockholders representing approximately 35% of our outstanding shares). We also engaged with proxy advisory firms. Richard Hartnack, Chair of the CompanyBoard and Chair of the MDCC, participated in the vast majority of the meetings with stockholders, and feedback received was regularly shared and discussed with our full Board. | | Age, period served in present position and
other business experience
| | David Fasoli | | | Executive Vice President
and Chief Executive
Officer – CareCredit | | Mr. Fasoli, 57, has been our Executive Vice President and CEO of our CareCredit platform since February 2014 and has served as President and CEO of the CareCredit platform of GE’s North American retail finance business since March 2008. From June 2003 to March 2008, he served as General Manager of Home and Recreational Products Business of GE’s North American retail finance business. Prior to June 2003, Mr. Fasoli served as Vice President of Client Development of GE’s North American retail finance business and held several positions of increasing responsibility within GE and GE’s North American retail finance business in finance, client development, business integration and quality. Mr. Fasoli received a B.S. in Business and Economics from the State University of New York at Albany. |
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| | | | | Compensation Matters | | | | |
COMPENSATION DISCUSSION AND ANALYSIS 30 Synchrony | 2019 Annual Meeting and Proxy Statement
Executive Summary
Our Named Executive Officers – The executive officers whose compensation we discuss in this
Compensation Discussion and Analysis and whom we refer to as our named executive officers (“NEOs”) are Margaret M. Keane, President and CEO; Brian D. Doubles, Executive Vice President, CFO; Glenn P. Marino, Executive Vice President, CEO – Payment Solutions; Jonathan S. Mothner, Executive Vice President, General Counsel and Secretary; and Thomas M. Quindlen, Executive Vice President and CEO – Retail Card. 2015 Performance– Synchrony Financial performed very well in 2015 compared to goals established by the MDCC at the beginning of the year as well as to our direct peers (Discover Financial Services, Capital One, American Express). We generated strong financial performance, growing our core business through all three sales platforms. We grew loan receivables by 11% over 2014, increased net income by 5% over 2014 and achieved our target efficiency ratio of less than 34%. We successfully completed our Separation from GE, becoming a fully stand-alone company in November. We forged new relationships, renewals and programs with major partners like Amazon, Chevron, PayPal, Citgo, The Container Store, Stash Hotel Rewards, Guitar Center and Mattress Firm. We continued to build for the future, successfully enabling the use of mobile payment technology, including Apple Pay and Samsung Pay, and enhancing our Customer Relationship Management analytics and loyalty capabilities. We maintained a strong balance sheet with robust capital and liquidity levels and diversified funding sources, growing direct deposits by 51% over 2014.Matters
The following charts showMDCC considered several potential changes to the compensation program and discussed them with the full Board and with investors during our performance in 2015 compared to 2014.  
The following charts show our performance in 2015 compared to direct peers.
 
| | | | | | | | Synchrony Financial 2016 Proxy Statement Areas of Focus
| | Actions We Took | | | 23 | |
| | | AvoidOne-Time Special Equity Grants | | Compensation Matters• The MDCC determined that it would not make specialone-time
|
Compensation Philosophy – One of the key principles guiding Synchrony’s executive compensation program is that compensation programs should measure business and individual performance against both qualitative and quantitative goals and objectives. Synchrony’s executive compensation program is intended to discourage excessive or imprudent risk-taking while at the same time promoting and supporting our key compensation principles, which include our performance, our values, market competitiveness, internal equity, fair customer treatment and employees’ ability to raise concerns. The program is also designed to be consistent with our safety and soundness and to identify, measure, monitor and control incentive compensation arrangements.
Major Compensation Programs – In November 2015, we became a fully stand-alone company following the successful completion of GE’s offer to exchange all of the Synchrony shares it owned for shares of GE common stock. From a compensation standpoint, effective as of November 18, 2015, our U.S. employees stopped participating in any GE compensation and benefit plans and began participating in Synchrony compensation and benefit plans. Accordingly, the only components of our NEOs’ 2015 compensation that were based on GE/GECC plans are interest amounts accrued on GE deferred compensation amounts, the accrual of GE pension benefits and GE perquisites, all from January 1 to November 17, as well as the formulaic payout of GE’s Long-Term Performance Award (“LTPA”) for 2013-2015, which were granted to our NEOs in 2013 when we were a wholly-owned subsidiary of GECC. Since our IPO in July 2014, our employees have been granted equity awards based on our common stock pursuant to the Synchrony Financial 2014 Long-Term Incentive Plan. The chart below shows our NEOs’ participation in major compensation programs for 2015.
| | | | | 24 Emphasize Alignment of Pay for Performance | | • Our CEO voluntarily agreed with the MDCC to forfeit $1 million in RSUs granted to her in 2018 • Our CEO received no increase in any component of her direct total pay for 2018 Synchrony Financial2016 Proxy Statement• While the Company delivered strong financial performance in 2018, given thenon-renewal of the Walmart program and the Company’s annual TSR for 2018 relative to peers, the MDCC applied a 10% decrease in the AIP award for all executives
| | |
| | | | | Compensation Matters Further Align Incentive
Metrics with Stockholders, Including by Adding Relative TSR Performance Measure | | • The MDCC added a TSR modifier to our long-term PSUs to be granted in 2019 that will be linked to stockholder returns relative to peers over the 2019–2021 performance period • We increased the weight of Net Earnings in our annual cash bonus awards under the AIP (1/3 in 2017, 45% in 2018 and 50% in 2019) | | | | | | Add Transparency to Disclosure | | • We enhanced disclosure of our pay metrics in this proxy statement, providing minimum, target and maximum funding goals for both our annual cash bonus awards under the AIP and the 2016–2019 PSUs | | |
Synchrony | 2019 Annual Meeting and Proxy Statement 31
Compensation Matters Mix of Pay – A majority of our NEOs’ compensation is performance-based and therefore at risk. The only fixed compensation paid is base salary, which represents approximately 11% of the CEO’s total direct compensation and no more than 28% of the other NEOs’ total direct compensation. The mix of targetdirect pay in 2015as of the end of 2018 for our CEO and CFO was as follows:is shown below.  
In 2016,
32 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters Align Incentives with Stockholders The MDCC evaluates several financial and operational achievements against our peers, including return measures, growth metrics, efficiency ratio and TSR. Performance during 2018 against our peers ranked first or second out of our direct peers for Efficiency Ratio and Return on Assets. 
During the mix of pay will reflect an SYF long-term performance program that pays out based on performance versus pre-established financial goals over a three-year performance period. This plan will raise the incentive-based target pay forfive-year period from 2014 through 2018, our NEOs.annualized receivables growth rate and annualized earnings growth rate ranked first compared to our direct peers: Strong Governance– Our
Synchrony | 2019 Annual Meeting and Proxy Statement 33
Compensation Matters Best Practice Compensation Programs and Policies The MDCC has implemented the following governance measures as part of our executive compensation programs: No employment agreements for executive officers
| | | | | | | | | | | | | | | | | What We Do: | | | | | | | | What We Don’t Do: | | | | | | | | | | | | | | | | | | |  Substantial portion of executive pay based on performance against goals set by the MDCC
| | | | | |  No hedging or pledging of Company stock
| | | | | | | | Risk governance framework underlies compensation decisions | | | | | | No employment agreements for executive officers | | | | | | | | Updated: Enhanced stock ownership requirements for executive officers | | | | | | No taxgross-ups for executive officers | | | | | | | | Minimum vesting of 12 months for any options or stock appreciation rights | | | | | | No discretion to accelerate the vesting of awards | | | | | | | | Minimum vesting of 12 months for any restricted stock or RSUs | | | | | | No cash buyouts of stock options or stock appreciation rights with exercise prices that are notin-the-money | | | | | | | | Limited perquisites | | | | | | No payout of dividends on unvested equity prior to the vesting date | | | | | | | | Use of peer company benchmarking | | | | | | No backdating or repricing of stock option awards | | | | | | | | | | Double-trigger vesting of equity and long-term incentive plan awards upon change in control | | | | | | | | | | | | | | | | | | | | Updated: Compensation subject to claw-back in the event of misconduct and expanded to “no fault” in the case of financial restatements | | | | | | | | | | | | | | | | | | | | One-year“Say-on-Pay” frequency | | | | | | | | | | | | | | | | | | | | Updated: New independent compensation consultant advises the MDCC | | | | | | | | | | |
Double-trigger vesting of equity and long-term incentive plan awards upon change in control
Stock ownership requirements for executive officers
Compensation subject to clawback in the event of misconduct
Risk governance framework underlies compensation decisions
No backdating or pricing of stock option awards
No hedging or pledging of company stock
Independent compensation consultant advises the MDCC
Compensation Philosophy Synchrony Program Principles One of the key principles guiding Synchrony’s executive compensation program is that compensation programs should measure business and individual performance against both qualitative and quantitative goals and objectives. Synchrony’s executive compensation program is intended to discourage excessive or imprudent risk-taking while at the same time promoting and supporting the key principles outlined below. The program is also designed to be consistent with our safety and soundness and to identify, measure, monitor and control incentive compensation arrangements.
The key principles guiding this program and underlying the oversight of thisour program by Synchrony’s MDCC are: Performance –Performance—compensation programs should measureare linked to business and individual performance against both qualitative and quantitative goals and objectives;
Values – Values—compensation programs should beare also linked to how employees go about their work or, more specifically, how they demonstrate the behaviors we expectand values expected of our employees;
| | | | | Synchrony Financial 2016 Proxy Statement | | | 25 | |
| | | | | Compensation Matters |
Stockholder Alignment—compensation program should be designed to align management incentives with the creation of stockholder returns over the long-term; Market Competitiveness –Competitiveness—compensation programs should be competitive with the external labor markets; 34 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters Internal Equity –Equity—compensation programs should be internally equitable, subject to the employee’s experience, performance and other relevant factors; Prudent Risk – Risk—compensation programs, particularly in the form of incentive compensation, must not encourage employees to expose the Company to inappropriate or excessive risks and should be based in part on the long-term performance outcomes of risks taken. RiskEmployees should always be takentake risks only within approved policy limits, in accordance with the MDCC charter and key practices and in consideration of Synchrony’s ability to effectively identify and manage such risks, including credit, operational and reputational risks; Fair Customer Treatment– Treatment—compensation programs should encourage employees to follow established companyCompany procedures and to treat customers fairly; and Reporting Concerns –Concerns—compensation programs should be designed in such a way as to encourage employees to raise concerns without fear of retaliation. The consistent application of these design principles enables Synchrony to maintain compensation programs that are reasonable, balanced and effectively attract, retain, motivate and engage employees who strive to achieve the mission, goals and objectives of Synchrony in a way that is compatible with effective risk management controls.controls and long-term stockholder value. A robust performance review process is a critical element in all reward decisions. Key Considerations in Setting Compensation For 2015,2018, we used the following considerations in setting compensation for our NEOs: Consistent and sustainable performance.Sustainable Performance—Our executive compensation program provides the greatest pay opportunity forwhen executives who demonstrate superior performance for sustained periods of time. It also rewards executives for executing our Company’s strategy through business cycles, so that the achievement of long-term strategic objectives is not compromised by short-term considerations. The emphasis on consistent performance affects annual salary and equity incentive compensation. With the prior year’s salary and grant serving as an initial basis for consideration, such awardsthe final determinations for salary and grants is are determined based on an assessment of an executive’s past performance and expected future contributions. Because current-year, past and sustainable performance are incorporated into compensation decisions, any percentage increase or decrease in the amount of total annual compensation tends to be more gradual than in a framework that is focused solely or largely on current-year performance. Future pay opportunity versus current pay.Balanced Compensation Approach—We strive to provide an appropriate mix of compensation elements to achieve a balance between currentshort versus long-term deferred compensation, cash versus equity incentive compensation and other features that cause the amounts ultimately received by the NEOs to appropriately reflect risk and risk outcomes. Cash payments primarily, but not exclusively, reward more recent performance, whereas equity awards encourage our NEOs to continue to deliver results over a longer period of time, align our executives’ interests with the interests of our stockholders and serve as a retention tool. We believe that the compensation paid or awarded to our NEOs should be more heavily weighted towardstoward rewards based on our Company’s sustained operating performance as well as our stock price performance over the long-term.
Qualitative and quantitative factors.Quantitative Factors—Quantitative formulas are not used exclusively in determining the amount of compensation. While quantitative calculations and formulas set the funding and cap award levels for our performance-based programs, the MDCC can use qualitative factors such as performance in the context of the economic environment relative to other companies, a track recordrisk considerations, execution of integrity, good judgment, the visionour strategic plan and ability to create further growth, the ability to lead others, and other considerations that cause the amounts ultimately received by the NEOs to appropriately reflect risk and risk outcomes.leadership competencies/values. | | | 26 | | Risk Mitigation— Synchrony Financial2016 Proxy Statement |
| | | | | Compensation Matters | | | | |
Consideration of risk.Our compensation program is balanced, focused on the long term and takes into consideration the full range and duration of risks associated with an NEO’s activities. Under this structure, the highest amount of compensation can be achieved through consistent superior performance but only within the limits of our stated risk appetite. In addition, significant portions of compensation are earned only over the longer term and may be adjusted during the vesting period for risk outcomes. This provides strong incentives for executives to manage our Company for the long term while avoiding excessive risk-taking in the short term. As discussed further below under “Compensation and Risk,” Synchrony’s MDCC reviews the relationship between our risk management policies and practices and the incentive compensation provided to our NEOs.
Peer Company Pay.Pay—We also considered compensation levels and pay practices at our direct peers and other peer companies when makingsetting target pay levels in 2018. The peer group was selected to reflect publicly traded financial services companies headquartered in the United States considering assets, annual revenue and market capitalization equal to approximatelyone-half totwo-times Synchrony’s size. At the time of the peer group selection, Synchrony Financial equity grantswas at the peer 29th percentile in 2015. assets, 76th percentile in revenue and 55th percentile in market capitalization, based on financial information from the most recent fiscal year prior to the meeting.
Synchrony | 2019 Annual Meeting and Proxy Statement 35
Compensation Matters The list of peer companies used for understanding industry pay practicesto provide market reference and set target pay levels for 2015 includes2018 was as follows: | | | | | Consumer Finance | | Data Processing | | Commercial Banks | | | | Ally Financial Inc. | | MasterCard Incorporated | | BB&T Corporation | American Express Company | | PayPal Holdings, Inc. | | Citizens Financial Group, Inc. | Capital One Financial Corporation | | Visa Inc. | | Comerica Incorporated | Discover Financial Services | | | | Fifth Third Bancorp | | | | | Huntington Bancshares Incorporated | | | | | KeyCorp | | | | | M&T Bank Corporation | | | | | The PNC Financial Services Group, Inc. | | | | | Regions Financial Corporation | | | | | SunTrust Banks, Inc. | | | | | Zions Bancorporation |
For 2019, upon the following financial services companies. recommendation of Meridian Compensation Partners, LLC (“Meridian”), the MDCC’s new independent advisor, the MDCC intends to update Synchrony’s peer group to include more data processors and consumer finance companies (Santander Consumer Finance Ally Financial Inc.
American Express Company
Capital One Financial Corporation
CIT Group Inc.
Discover FinancialUSA Holdings, Fidelity National Information Services,
Navient Corporation
Alliance Data Processing MasterCard Incorporated
Visa Inc.
Commercial Banks
BB&T Corporation
Comerica Incorporated
Fifth Third Bancorp
Huntington Bancshares Incorporated
KeyCorp
M&T Bank Corporation
Systems, Fiserv, and Total System Services) and eliminate banks with limited consumer focus (i.e., The PNC Financial Services Group, Inc. and Comerica Incorporated). As a result, the list of peer companies for 2019, as set forth below, better reflects our business model. Regions Financial Corporation
| | | | | Consumer Finance | | Data Processing | | Commercial Banks | | | | Ally Financial Inc. | | MasterCard Incorporated | | BB&T Corporation | American Express Company | | PayPal Holdings, Inc. | | Citizens Financial Group, Inc. | Capital One Financial Corporation | | Visa Inc. | | Fifth Third Bancorp | Discover Financial Services | | Fidelity National Information Services | | Huntington Bancshares Incorporated | Santander Consumer USA Holdings | | Alliance Data Systems | | KeyCorp | | | Fiserv | | M&T Bank Corporation | | | Total System Services | | Regions Financial Corporation | | | | | SunTrust Banks, Inc. |
SunTrust Banks, Inc.
U.S. Bancorp
20152018 Compensation Elements
The following summarizes the compensation elements used in 20152018 to reward and retain our NEOs. Base Salary Base salaries for our NEOs depend on a number of factors, including the size, scope and impact of their role, the market value associated with their role,data, leadership skills, and values, length of service and individual performance and contributions. Decisions regarding salary increases are affected The MDCC meets each January to review base salaries and benchmark data provided by the NEOs’ current salary andMDCC’s independent compensation consultant. In January 2018, the amounts paidMDCC determined to their peers within and outside our Company. | | | | | Synchrony Financial 2016 Proxy Statement | | | 27 | |
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keep base salaries flat for all NEOs. Similarly, at the January 2019 meeting, the MDCC also determined to not increase NEO base salaries for the second year in a row. AnnualNon-Equity Incentive Plan Award Annualnon-equity incentive plan awards to our NEOs are granted pursuant to Synchrony Financial’sSynchrony’s Annual Incentive Plan and, for 2015,2018, were based on three equally-weightedequally weighted quantitative metrics, each as determinedcalculated in accordance with GAAP. Minimum,U.S. generally accepted accounting principles (“GAAP”). These metrics are designed to promote a balanced focus on profit, growth, risk and expenses: Net Earnings—align the interests of executives with the interests of stockholders; Receivables Growth—focus executives on expanding the business to drive future net earnings; and Efficiency Ratio—drive cost discipline. The MDCC established minimum, target and maximum performance levels are established for each metricbased on Synchrony’s business plan and result in funding levels thatfinancial and economic outlook which are applied to an executive’s target annual incentive. The MDCC may make negative adjustments to the weighted funding based on views of companyCompany and individual performance, such as performance as compared to peers, risk outcomes and other considerations. The goals for target payout require continued performance above historical peer median levels (in the case of Receivables Growth and Efficiency Ratio) or achieving our operating plan (in the case of Net Earnings). Metric weighting, funding 36 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters The metrics, weights, goals, actual performance and the payout fundingpayouts for 20152018 are shown below:below. While all the financial metrics exceeded target, reflecting a strong year of operational success, after taking into account the Company’s TSR for 2018 relative to peers,the MDCC exercised its authority to apply negative discretion to reduce the formulaic amount by 10%. | | | | | | | Goals | | | Associated Payout | | Calculation | | | | | | | | | | | | | | | | | | | | Metric | | Weight | | | 100% Payout
Target | | Actual
Performance | | Calculated
Payout* | | | Weight | | | Min | | | Target | | | Max | | | Min | | | Target | | | Max | | Performance | | Payout | | | | | | | | | | | Net Earnings | | | 1/3 | | | $ | 2.05B | | | $ | 2.21B | | | 150 | % | | | 45% | | | | $2,300 | | | | $2,600 | | | | $2,800 | | | | 50% | | | | 100% | | | 150% | | $2,790 | | | 148% | | Loan Receivables Growth | | | 1/3 | | | | 6 | % | | 11 | % | | 145 | % | | Return on Assets | | | 1/3 | | | | 2.5 | % | | 2.9 | % | | 137 | % | | | | | | | | | | | Receivables Growth | | | | 30% | | | | 10% | | | | 13.5% | | | | 17% | | | | 50% | | | | 100% | | | 150% | | 13.7% | | | 102% | | | | | | | | | | | Efficiency Ratio | | | | 25% | | | | 32% | | | | 31% | | | | 30% | | | | 50% | | | | 100% | | | 150% | | 30.8% | | | 109% | | | | | | | | | | | | | | | | | | | Weighted Average: | | | 124% | | | | | | | | | | | | MDCC Negative Discretion Adjustment: | | | -10% | | | | | | | | | | | | | | | | | | Final Payout: | | | 114% | |
* | Payout if threshold performance achieved ranges from 50% to 150% of target. |
Annual RSUEquity Awards (RSUs and Option AwardsStock Options) In 2015, our2018, the NEOs received annual grants of Synchrony Financial RSUs and stock options under the 2014 Synchrony Financial 2014 Long-Term Incentive Plan. The amount of RSUs and stock options awarded to each NEO is based on target incentive levels for each executive, based on the competitive market for their role and subject to adjustment by the MDCC. The 20152018 awards were divided between RSUs (70%) and stock options (30%), with both awardseach vesting 20% per year over 5five years. Synchrony Financial usesused grants of stock options to focus its executives on delivering long-term value to its stockholders, because options have value only to the extent that the price of Synchrony stock on the date of exercise exceeds the stock price on the grant date, as well as to retain its executives. Synchrony Financial also grants RSUs to reward and retain executives by offering them the opportunity to receive shares of Synchrony Financial stock on the date the restrictions lapse as long as they continue to be employed by the Company. For 2019, based on industry trends and stockholder feedback, the MDCC determined to change annual grants from 70% RSUs and 30% stock options to 100% RSUs to further discourage excessive or imprudent risk taking and incentivize sustained operating and stock price performance over the long-term. Long-Term Performance Awards (PSUs) (2018–2020) Under the Synchrony Financial Transaction Award2014 Long-Term Incentive Plan, we issued performance-based, long-term PSUs in 2018 that vest based on financial performance over the 2018–2020 performance period. The PSUs will be paid in shares of common stock if we achievepre-defined goals relating to our cumulative annual diluted earnings per share and average return on equity, each weighted 50%. The MDCC selected and approved the metrics and the goals for threshold, target and stretch with the ultimate award ranging from 0% (if threshold performance is not achieved) up to 150% for achieving stretch performance levels. Target payout levels set for the 2018–2020 performance period require a significant increase in EPS growth over the prior3-year PSU grant metric goals and top quartile return on equity performance relative to historical peer performance levels. Performance below threshold results in forfeiture of the shares allocated to the corresponding performance measure. Dividend equivalents are accrued but not paid until the end of the performance period based on the actual number of shares earned. These performance metrics align the interests of our executives with the interests of stockholders by encouraging growth while ensuring that growth does not come at the cost of lower returns on assets. Grants of PSUs will vest at the end of the three-year period in the event performance conditions are met. In connection with our IPO,2019, the MDCC added a relative TSR metric to provide an incentivethe PSUs for the 2019–2021 performance period in response to our management teamstockholder feedback. Long-Term Performance Awards (PSUs) (2016–2018) In 2016, the MDCC granted performance-based, long-term PSUs that vested based on financial performance over the 2016–2018 performance period. The metrics used during the3-year cycle were chosen to remain dedicatedbalance executives’ focus on profitability, returning capital to investors, and to continue their employment with, our Company, we granted them transaction awards, pursuant togrowing the company. Target payouts set for the 2016–2018 performance period required 4% growth of EPS over the period which each recipient, including our NEOs, received an amount equal to 100% of their base salary in effect aswas above peer growth levels at that time and 2.4% return on assets which was top quartile among peers at that time.
Synchrony | 2019 Annual Meeting and Proxy Statement 37
Compensation Matters The charts below show (i) the performance over the last three years against goals approved at the beginning of the dateperiod and (ii) adjustments to GAAP that neutralize the impact of their award plus their 2012 bonus, with 50%extraordinary items (such as the favorable corporate tax rate change for 2018): | | | | | | | | | | | | | | | | | | | | | | | | 2016–2018 Performance | | | | | | | | | | | | | | | | | | | Goals | | Associated Payout | | Calculation | | | | | | | | | | | Metric | | Weight | | Min | | Target | | Max | | Min | | Target | | Max | | Performance | | Payout | | | | | | | | | | | Cumulative EPS | | 50% | | $7.95 | | $8.60 | | $9.25 | | 50% | | 100% | | 150% | | $8.57 | | 97% | | | | | | | | | | | Return on Assets | | 50% | | 2.0% | | 2.4% | | 2.8% | | 50% | | 100% | | 150% | | 2.52% | | 114% | | | | | | | | | | | | | | Weighted Average: | | 106% |
| | | | | | | Adjustments to GAAP | | | | | Metric | | GAAP | | Tax and Other* Impact | | AdjustedNon-GAAP | | | | | Cumulative EPS | | $8.87 | | ($.30) | | $8.57 | | | | | Return on Assets | | 2.53% | | (.01%) | | 2.52% |
* Other consists of the transaction award paidimpact of new program wins not contemplated in August 2014 following the completion of the IPO and the remaining 50% paid shortly following the date GE ceased to own at least 50% of our outstanding common stock, which was November 17, 2015. The second half of these awards is reported in the Bonus column in the 2015 Summary Compensation Table.operating plan. Synchrony Financial Restoration Plan TheNEOs participate in the Synchrony Financial Restoration Plan, mirrorswhich provides retirement benefits that mirror the Company’s qualified 401(k) plan. The plan by providingprovides a continuation of Company contributions on salary and bonus that would have been made to our 401(k) plan but for various limitations imposed by the Internal Revenue Code of 1986 (the “Code”), along with additional Company contributions that cannot be made to the 401(k) plan. The plans include Company contributions of (i) a 3% core contribution, (ii) a 4% match, and (iii) as of December 31, 2018, up to 6% additional contribution in 2018 for former participants of GE pension plans, which declines to 4% in 2019. The Restoration Plan account is forfeited if an executive leaves voluntarily prior to age 60. For 2015,2018, each of our NEOs received a credit incontributions to his or her Restoration Plan account, which isare reported in the “All Other Compensation” column in the 20152018 Summary Compensation Table.
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Other Compensation
For the period from January 1 to November 17, 2015, our NEOs received other benefits from GE, reflected in “– 2015 All Other Compensation Table,” consistent with thoseIn 2018, Synchrony provided to certain GE executives, such as a leased car, financial counseling and tax preparation. In 2016, Synchrony Financial will provide its executive officers with (i) financial counseling andand/or tax preparation services, (ii) supplementary life insurance, and (iii) annual physical examinations, but not leased cars.
GE LTPAs
In 2013, as part of a broader 3-year GE performance program, GE granted contingent LTPAs to its executives across GE, including our NEOs, which were payable if GE achieved, on an overall basis for a three-year period (2013 through 2015), specified goals based on four equally weighted GE-specific performance metrics. These performance metrics were: (i) cumulative operating earnings per share, (ii) cumulative total cash generation, (iii) 2015 industrial earnings as a percentage of total GE earnings and (iv) 2015 return on total capital. The awards are based on achieving threshold, target or maximum levels for any of the performance metrics, with payments prorated for performance between the established levels. For each NEO, the award was based on a multiple of base salary and incentive compensation.
GE has reported that it achieved near-target performance levels for the 2013-2015 period. As a result, the LTPAs were paid out to our NEOs at 124% of the target payout, which corresponds to a .93X multiple (base salary + bonus, subject to a cap of 125% of an executive’s 2014 bonus) for Ms. Keane and a .62X multiple for our other NEOs. The LTPAs are reported in the Non-Equity Incentive Plan Awards“All Other Compensation” column in the 20152018 Summary Compensation Table.
In 2016, we adopted our own performance-based, long-term incentive program, ultimately payable in shares The supplementary life insurance policies are intended to maintain benefits that existed for certain executives as GE employees prior to the completion of our common stock, linkedsplit-off from GE and in lieu of life insurance benefits that are provided to financial performance overother Synchrony employees. These policies were frozen in value and participation upon Synchrony’s IPO. While Synchrony could have “bought out” the 2016-2018 performance period.value of these polices upon IPO, the Company chose to freeze the insurance amount and maintain the policies to help retain senior management through Synchrony’s transition away
from GE. The policies require an executive to stay with Synchrony through age 60 to receive the full value of the benefit. The face value of the supplementary life insurance policies for all participants is less than the value of the standard life insurance program for Synchrony employees. GE Deferred Compensation
GE periodically offers both a deferred salary plan and a deferred bonus plan, with only the deferred salary plan providing for payment of an “above-market” rate of interest as defined by the SEC. These plans are available to eligible employees in GE’s executive band and above, including our NEOs. These plans are described in further detail in the narrative accompanying the “– 2015 NonqualifiedSynchrony Deferred Compensation Table.” Because of the Separation from GE, payouts for our NEOs will begin to occur in 2016 and in accordance with participants’ payout elections.Plan
In 2015, effective for 2016, we adopted our own deferred compensation plan, which willOur Deferred Compensation Plan does not pay an “above-market” rate of interest.
GE Pension Plans
Through November 17, 2015, our NEOs were eligibleinterest and is available to participate ina select group of management and highly compensated employees of Synchrony and any of its participating affiliates. Under the same GE Pension Plan, GE Supplementary Pension Plan and GE Excess Benefits Plan in which other eligible GE executives and employees participate. The GE Pension Plan is a broad-based tax-qualified plan, under which eligible employees may, retire at age 60elect to defer up to 80% of their base salary and bonus. The plan administrator will designate two or later. Unlikemore investment benchmarks which participants can choose between to determine the GE Pension Plan,rate of return or loss applicable to their deferred compensation amounts. Participants can also make elections regarding the GE Supplementary Pension Plantime and the GE Excess Benefits Plan are unfunded, unsecured obligationsform of GE and are not qualified for tax purposes. These plans are described in further detail in the narrative accompanying the “– 2015 GE Pension Benefits Table.” Our NEOs’ benefits under these plans continued to accrue until the Separation, at which time the benefits vested and stopped accruing any additional value. We will reimburse GE for the payment of pension benefitstheir deferral under the GE Supplementary Pension Plan andplan, in accordance with Section 409A of the GE Excess Benefits Plan when our NEOs are entitledCode. We have established notional unfunded accounts attributable to receive them.participants’ deferrals, which will be adjusted based on participants’ investment elections.
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We do not have and do not intend to establish our own tax-qualified defined benefit pension plan for our employees, including our NEOs.
Performance Objectives and Evaluations for Our Named Executive Officers for 20152018 At the beginning of 2015,2018, the Board approved, with Ms. Keane developed theKeane’s input, specific objectives that shethey believed should be achieved for our Company to be successful. These objectives includeincluded both quantitative financial measurementsmeasures and qualitative factors, including strategic, operational and risk management considerations and are focused on the factors that Ms. Keane believes create long-term shareowner value. The MDCC evaluated Ms. Keane’s 20152018 performance was evaluated and measured against these goals by Synchrony’s MDCC to develop a recommendation as to the appropriatedetermine her incentive compensation awards for her.awards. The 38 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters amount of her incentive compensation was ultimately approved by Synchrony’sthe MDCC, based on their discretion and judgment. Ms. Keane did not participate in the determination of her compensation. During 2015, ourOur other NEOs reported directlyalso had objectives that reflected goals specific to Ms. Keane, who developed their objectives based on our Company’s objectives.roles at the Company. Each of our other NEOs’ objectives include both quantitative financial measurementsmeasures and qualitative strategic, operational and risk management considerations affecting our Company and the sales platforms or functions that they lead. Each of our other NEOs’ 20152018 performance was evaluated and measured against their respective goals by Synchrony’sthe MDCC, as well as by Ms. Keane. The amount of their incentive compensation was ultimately approved by Synchrony’sthe MDCC, based on theirthe Company’s performance against goals established by the MDCC at the beginning of the year and based on the MDCC’s discretion and judgment. None of our other NEOs participated in the determination of their compensation.
20152018 CEO Performance Objectives and Achievements
The MDCC believes that Ms. Keane’s strong leadership resulted in strong core financials, continued growth and execution of key strategic achievements. Under Ms. Keane’s leadership, managementSynchrony delivered the following results on the qualitative and quantitative performance goals set for our Company by Ms. Keane with respect to 2015:2018: Grow core business across all three sales platforms (Retail Card, Payment Solutions and CareCredit)—As of December 31, 2018, across all three platforms, we grew loan receivables by 14% and purchase volume by 7%, compared to December 31, 2017. We completed the acquisition of the U.S. PayPal Credit program, which is the largest partner win in our history, and successfully renewed over 50 key relationships and won over 35 new programs across all platforms. In addition, we further expanded Synchrony Car Care via Discover white label capability to enable acceptance at 500,000 merchants. For our Synchrony HOME credit card, we executed an IT build that will enable us to execute a 5 million cardre-issue in 2019. CareCredit acceptance for pharmacy and personal care items was expanded at Walmart, Sam’s Club and Walgreens, and CareCredit expanded into 11 new specialty healthcare markets. While we did not renew the Walmart program, we successfully delivered these new program wins, renewals and strategic initiatives, as well as the renewal of Amazon and Sam’s Club announced in early 2019. Operate with a strong balance sheet and financial profile—We delivered strong operating and financial performance in 2018. We reported record net earnings of $2.8 billion, or $3.74 earnings per share on a diluted basis, and grew loan receivables by 14% at December 31, 2018 as compared to December 31, 2017. We continue to invest in our direct banking activities to grow our deposit | | • | | Execute Separation from GE. In November, we successfully completed our Separation from GE and became a fully stand-alone company. To achieve this milestone, we built upon our strong foundation, augmenting itbase, with additional infrastructure and talent, increased our capital and liquidity levels and strengthened and expanded our control operations. We also effectively developed and marketed the Synchrony brand for our customers and our employees. |
| • | | Grow core business on all three sales platforms. We extended our Retail Card program agreements with Amazon, Chevron, Dick’s Sporting Goods and PayPal, launched our new program with BP, and announced our new partnerships with Citgo and Stash Hotel Rewards. Program agreements accounting for nearly 90% of Retail Card platform revenue for the year ended December 31, 2015 currently have an expiration date in 2019 and beyond. We also added key Payment Solutions programs with Guitar Center, Mattress Firm, Newegg and The Container Store, and extended our program agreements with Discount Tire, Sleepy’s, P.C. Richard & Son, Conn’s, Polaris Industries, Mohawk Flooring, Art Van Furniture and MEGA Group USA. In our CareCredit network, we increased the number of provider locations by approximately 9,000 locations, comparedtotal deposits increasing 13% to December 31, 2014, including acceptance of our CareCredit credit card at nearly 4,600 Rite Aid locations. |
| • | | Operate with strong balance sheet and financial profile.We grew loan receivables by 11.4% at December 31, 2015 as compared to December 31, 2014. We maintained stable credit metrics and remained disciplined on underwriting. For 2015, we reported a strong net interest margin of 15.8% and achieved an efficiency ratio of 33.5%, which was below our 34% target. We also maintained a strong balance sheet with robust capital and liquidity levels and diversified funding sources, growing direct deposits by 51% to $29.7$64 billion at December 31, 2015, compared2018. In addition, we returned $2.4 billion of capital to December 31, 2014.stockholders through growth and the execution of our capital plan, including share repurchases and dividends. |
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Leverage strong capital position—We had strong deposit growth in an increasingly competitive market. We launched a new securitization trust, maintained strong liquidity and executed on our capital plan, returning $2.4 billion of capital to stockholders through $1.9 billion in share repurchases and $0.5 billion in dividends. Expand robust data analytics and digital capabilities—We completed and implemented a single-customer view across all platforms and relationships, leveraging this to collect on delinquent accounts and using this for credit risk management purposes including credit line increase strategies and to even further improve the customer experience in our call centers and through our digital servicing tools. We completed multiple digital marketing technology investments which support advanced content personalization via Agile marketing strategies,in-house agency depth and increased analytic insights. Across platforms, we ran 20% more marketing activities with incrementally fewer marketing pieces delivered direct to customers. | • | | Build for the future.We successfully enabled our Dual Card products for use in mobile wallets, provided the capability to offer private label cards through Apple Pay, and enabled the use of our Payment Solutions and CareCredit cards in Samsung Pay. We enhanced our Customer Relationship Management analytics and loyalty capabilities. We continued to invest in the Bank’s deposit and digital bank platforms, improving our Net Promoter Score® by 18 points as compared to 2014. |
| • | | Invest in talent and strengthen culture. We established a new leadership program for our employees. We also hosted our inaugural Diversity Network event and increased the number of diverse senior employees. We recruited strong independent directors to our Board of Directors and smoothly managed the transition from a GE-majority board to a majority independent board. We also established and rolled out our new purpose and values throughout the organization. |
2015 Compensation DecisionsPosition our business for long-term growth—We executed onmid-market acquisition and investment opportunities and expanded further into thee-tailing space. We acquired Loop Commerce as part of our diversification strategy, and invested in 5 venture investments. We were named to the list of Fortune 100 Best Companies to Work in 2018, spotlighting the Company’s strong culture. We continued our strong focus on diversity and inclusion, with external recognition by Forbes, Fortune, Great Place to Work and others of our commitment to building a supportive workplace for all employees. We also executed on our executive succession plan.
2018 Other NEO Achievements Ms. Keane
Synchrony’s MDCC believes that Ms. Keane performed very well in 2015 in executing on the performance framework and 2015 financial objectives outlined above.
Mr. Doubles In addition to Mr. Doubles’ contributions toward our Company’s objectives described above, Ms. Keane specifically recognized that Mr. Doubles provided strong leadership of our finance organization, including – leading key aspects of the Separation from GE, such as obtaining regulatory approvals for the Separation, marketing GE’s exchange offer and completing Separation projectsdriving excellent financial discipline across the finance organization; driving strong deposit growth and successful debt offerings to build a strong balance sheet with diversified funding sources;business; playing a key role in developing our first independent strategic plan focused onnew program wins and renewals; supporting growth and capital allocation; establishing performance analytics tools to help drive insightsstrategic investment opportunities; maintaining strong controllership and sustainablerisk management; driving strong deposit growth; continuing to buildincreasing Synchrony’s dividend and share repurchase program; maintaining strong investor relations; further expanding his relationships with investors and analysts; adding significant expertise toour key finance functions;customers; and promoting career development and diversity.
Synchrony | 2019 Annual Meeting and Proxy Statement 39
Compensation Matters Mr. MarinoGreig In addition to hisMr. Greig’s contributions toward our Company’s objectives described above, Ms. Keane specifically recognized that Mr. MarinoGreig provided strong leadership of the Credit and Capital Management organization, including delivering on critical credit loss and fraud metrics while supporting strategic business initiatives to drive smart growth and enhance the consumer experience. Mr. Greig led initiatives to acquire new data and apply machine learning to solve escalating fraud incidents and improve underwriting. He continues to work closely with IT to leverage new technology to transform credit lending and improve the experience for the customer. Mr. Mehta In addition to Mr. Mehta’s contributions toward our Company’s objectives described above, Mr. Mehta provided strong leadership of the Payment Solutions sales platform, including – expandinggrowing the platform’s presence inplatform within approved risk tolerances and delivering on critical growth metrics, retaining and deepening key industries by signingpartnerships, and adding new dealsrelationships with Guitar Center, Mattress Firm, Neweggmajor retailers and The Container Store; increasing repeat sales efforts; renewing key program agreements, including Discount Tire, Sleepy’s, P.C. Richard & Son, Conn’s, Polaris Industries, Mohawk Flooring, Art Van Furnituremerchants. Mr. Mehta is also responsible for leading innovative new products and MEGA Group USA;markets like unsecured installment lending, ecommerce solutions, gifting and driving deeper digital adoption; migrating off of all GE contractsmore. He contributes as an external thought leader across the industry. He is a champion for diversity inclusion, talent development, and technology; increasing participation in SYF’s People with Disabilities Network; enhancing sales controls across all of our platforms;recruitment inside and expanding partner training across 100K+ client locations.outside the Company. Mr. MothnerQuindlen In addition to hisMr. Quindlen’s contributions toward our Company’s objectives described above, Ms. Keane specifically recognized that Mr. Mothner provided strong leadership of our legal organization, including – leading key aspects of the Separation from GE, including obtaining regulatory approvals for the Separation, preparing the SEC filings for GE’s exchange offer and implementing the legal separation of our operations from GE; driving governance and regulatory excellence, including the process for recruiting and onboarding our new independent directors and building out our public company corporate governance infrastructure; successfully managing litigations and investigations; providing legal support for our broad organic and inorganic growth; and building a strong corporate securities and capital markets legal team. | | | | | Synchrony Financial 2016 Proxy Statement | | | 31 | |
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Mr. Quindlen
In addition to his contributions toward our Company’s objectives described above, Ms. Keane specifically recognized that Mr. Quindlen provided strong leadership of the Retail Card sales platform, –including growing the platform within approved risk tolerances including extendingand delivering on critical growth metrics; building strong relationships with keyexisting Retail Card partners representing 11% ofand adding new partnerships as well; leading Retail Card’s loan receivables, as well as winning two new partners; building for the future by entering into co-brand relationships in new industries; preparing for our Separation from GE by helping to support our compliance and risk culture and tone at the top; driving engagement with and promoting diverse leadership.the development of the Retail Card organization’s talent; and driving diversity through hiring and promotion practices.
Other Compensation Practices Stock Ownership Guidelines We establishedEffective October 2018, we increased our stock ownership guidelines. The stock ownership guidelines in 2014 to require the Company’s CEO and Executive Vice Presidents to own significant amounts of our common stock, thereby aligning theirhelping to ensure alignment of executives’ interests with the interestthose of our stockholders. The enhanced stock ownership guideline for our CEO is 5was increased from five times base salary to six times base salary and thefor our CFO was increased from three times base salary to five times base salary. The stock ownership guideline for Executive Vice Presidents, including the other 4three NEOs, is 3three times base salary.
Equity Grant Practices
The exerciseguidelines are to be met within five years of being subject to the policy and/or promotion. For the purposes of our stock ownership guidelines, all shares of common stock and RSUs held by our executives are credited toward ownership levels. All of our NEOs’ stock ownership far exceeds the ownership guidelines, aligning our executive team with our stockholders. Based on our closing stock price on March 1, 2019 of each Synchrony Financial stock option granted to$32.46, our NEOs in 2015 washad the closing price of Synchrony Financial’s stock on the date of grant, which was April 1, 2015. Synchrony’s MDCC has delegated to the CEO the ability to grant equity-based awards to executives outside of the CEO’s staff to allow the Company to make timely decisions on hiring, performancefollowing ownership base-salary multiples: | | | | | | | | | | | Name of Executive | | Required
Multiple | | Ownership as of
March 1, 2019* | | | | Margaret Keane | | 6.0X | | 15.0X | | | | Brian Doubles | | 5.0X | | 8.6X | | | | Henry Greig | | 3.0X | | 7.4X | | | | Neeraj Mehta | | 3.0X | | 5.0X | | | | Tom Quindlen | | 3.0X | | 4.8X |
| * | Changes to ownership levels from 2018 primarily reflect the (i) MDCC’s enhancement of stock ownership guidelines to no longer count PSUs toward ownership levels and (ii) withholding of shares of common stock for tax purposes in connection with the vesting of Founders’ Grants in July 2018. |
Hedging and retention. HedgingAnti-Pledging Restrictions
Our Compensation Key Practices,Code of Conduct, which applyapplies to all of our employees includeand directors, includes anti-hedging provisions that prohibit all employees and directors from engaging in transactions in derivatives of or short sellingshort-selling of Synchrony Financial securities, including buying and writing options. We also maintain an anti-pledging policy that prohibits pledging activity in Synchrony securities. Clawback Policy Effective October 2018, the MDCC expanded the existing clawback policy beyond conduct detrimental to the Company, to include “no fault” financial restatements for all of our named executive officers. Under the revised policy, in the event that the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under the securities laws, the Company will take action to recover from any current or former executive officer who received any annual or long-term incentive compensation paid, awarded, or granted during the3-year period preceding the date on which the Company is required to prepare an accounting restatement, based on the erroneous data, in excess of what would have been paid to the executive officer under the accounting restatement. Additionally, under the Company’spre-existing policy, if it is determined that an employee at or above a designated executive grade under the Company’s compensation structure has engaged in conduct detrimental to the Company, the Bank or any of the Company’s other subsidiaries, Synchrony’sthe MDCC or, in the case of a Bank employee, the Bank’s Development and Compensation Committee, may take a range of actions to remedy the misconduct, prevent its recurrence, and impose such discipline as would be appropriate. Discipline may vary 40 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters depending on the facts and circumstances, and may include, without limitation, (a) termination of employment, (b) initiating an action for breach of fiduciary duty, (c) reducing, cancelling or seeking reimbursement of any paid or awarded compensation, and (d) if the conduct resulted in a material inaccuracy in the Company’s financial statements or performance metrics that affects the executive’s compensation, seeking reimbursement of any portion of incentive compensation paid or awarded to the executive that is greater than what would have been paid or awarded if calculated based on the accurate financial statements or performance metrics. If it is determined that an executive engaged in fraudulent misconduct, Synchrony’sthe MDCC or, in the case of a Bank employee, the Bank’s Development and Compensation Committee, will seek such reimbursement. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.authorities, or as otherwise required by any agreement with a stock exchange on which the Company’s securities are listed. Compensation and Risk 20152018 Risk Review Process
Synchrony’s risk management culture is strongly supported by a thorough risk review process that focuses on whether the risks we take are within our risk appetite framework. In 2015,2018, working cross-functionally, our CEO and senior executives from our risk and human resource teams identified the individuals considered to be Material Risk | | | 32 | | Synchrony Financial2016 Proxy Statement |
| | | | | Compensation Matters | | | | |
Takers (“MRTs”) or Material Risk Controllers (“MRCs”). These individuals were required to have annual goals and objectives specifically tied to risk and compliance standards. DuringAs part of the fourth quarter,annual process, our Control Function Leaders, our CEO, our Audit Committee, MDCC and Risk Committee conducted assessments on MRTs and MRCs, which took into consideration MRT/MRC behavior in relation to their annual goals and objectives as well as any adverse risk outcomes during the year. These assessments wereare included in each MRT/MRC’s annual performance evaluation. By conducting these risk review processes as well as maintaining full transparency on all of our risk management policies and procedures, we believe that we have been able to discourage inappropriate risk taking.risk-taking. Review of Incentive Compensation to NEOs Related to Risk Management In 2015, Synchrony’s2018, the MDCC reviewed the relationship between our risk management policies and practices and the incentive compensation provided to our NEOs to confirm that their incentive compensation appropriately balances risk and reward and determined that our compensation policies and practices are not reasonably likely to have a material adverse effect on our Company. Synchrony’sThe MDCC met with the CRO to discuss the annual risk assessment conducted with respect to incentive compensation plans in which all employees (including the NEOs) participate, including whether these arrangements had any features that might encourage excessive risk-taking that could threaten the value of the Company. The CRO also discussed the risk mitigation factors reviewed in the annual risk assessment, including the balance between financial andnon-financial measures as well as the short-term and long-term oriented measures. Synchrony’sThe MDCC also continues to monitor a separate, ongoing risk assessment by senior management of our broader employee compensation practices consistent with the federal banking regulators’ guidance on sound incentive compensation policies. Risk Review of Incentive Plans Each year, we conduct a risk analysis on each of our incentive plans using a risk analysis tool. This analysis covered 100% of our incentive eligible population and allowed us to gauge the degree to which our plans contribute to excessive risk taking.risk-taking. The tool looks at six assessment categories (incentive design, strategic alignment/goal setting, pay opportunity, process, monitoring and administration) for each plan and assigns a rating score based on results. All of our incentive plans were rated such that they conform to or exceed key standards for risk management. Additionally, all incentive plans are reviewed each year and approved by our Chief Risk and Chief Human Resource Officers. We also conduct a risk analysis of third-party incentive plans at our clients and vendors related to our credit products. This assessment also covers design, strategic alignment/goal setting, pay opportunity, process, monitoring and administration. Each of the third-party incentive plans reviewed were rated such that they exceed risk management standards. Role of Independent Compensation Consultant Under its charter, the MDCC has the authority to retain such compensation consultants, outside counsel and other advisors as the MDCC may deem appropriate in its sole discretion. During 2017 and for the early part of 2018, the MDCC engaged Pay Governance to serve as its independent advisor, particularly regarding early 2018 pay decisions. In September 2018, the MDCC engaged Meridian as its independent advisor, regardingyear-end pay decisions and 2019 program design. Both firms provided advice regarding market pay levels, strong pay practices and other executive compensation matters. Pay Governance also provided advice to the Nominating and Corporate Governance Committee regarding director compensation. Neither Pay Governance nor Meridian provided any other services to the MDCC or to Synchrony. The MDCC determined that both Pay Governance and Meridian are independent and do not have any conflicts of interest.
Synchrony | 2019 Annual Meeting and Proxy Statement 41
Compensation Matters Tax Considerations Prior to December 22, 2017 when the Tax Act was signed into law, Section 162(m) of the Internal Revenue Code providesprovided that no U.S. income tax deduction iswas allowable to a publicly held corporation fornon-performance-based compensation in excess of $1 million paid to a “covered employee” (generally, the NEOs (otherother than the CFO)). “Performance-based The Tax Act includes numerous changes to existing law, including (1) eliminating the exclusions for commissions or performance-based compensation” paid to “covered employees” under Code Section 162(m), (2) expanding the definition of “covered employee” to include anyone serving as CFO or CEO at any point during the year, as well as the three most highly compensated officers, and (3) providing that status as a covered employee continues to apply if the person was ever a covered employee for years ending after December 31, 2016. The Act is effective for tax years beginning after 2017, though it includes a transition rule for compensation paid pursuant to certain written binding contracts in place on November 2, 2017 which are not materially modified. Where we believe awards or payments are eligible for relief under this transition rule, our policy generally is exempt from the $1 million limitation, must be payable based upon meeting pre-established and objective performance goals established by our MDCC under a planto preserve that has been approved by shareholders and meets other tax code requirements.eligibility. Our policy generally ishad been to seek to qualify various elements of the compensation payable to executives as “performance-based compensation,” although we may pay non-deductiblecompensation” to the extent possible. However, as described above, the exemptions from Section 162(m)’s deduction limit have been eliminated as a result of the Tax Act, effective for taxable years beginning after December 31, 2017, such that all compensation paid to our covered executive officers (including the CFO) in order to preserveexcess of $1 million will not be deductible unless it qualifies for the MDCC’s abilitytransition relief referenced above. Although the MDCC has historically intended to structure various elements of the compensation payable to executives in a manner intended to qualify as “performance-based compensation” for purposes of Section 162(m), because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief under the Tax Act, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) in fact will satisfy such requirements. Further, the MDCC reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with our executive compensation program to meet the objectives discussed above, including to reward individual and team performance.business needs. | | | | | Synchrony Financial 2016 Proxy Statement | | | 33 | |
| | | | | Compensation Matters |
COMPENSATION COMMITTEE REPORTCompensation Committee Report
The Management Development and Compensation CommitteeMDCC of the Board of Directors of Synchrony Financial have reviewed and discussed the Compensation Discussion and Analysis with Synchrony Financial’sSynchrony’s management, and based on our review and discussions with management, we recommend to Synchrony Financial’sSynchrony’s Board of Directors that this Compensation Discussion and Analysis be included in this proxy statement. Respectfully submitted by the Management Development and Compensation CommitteeMDCC of the Board. Richard C. Hartnack, Chair
Jeffrey G. Naylor
Laurel J. Richie
| | | 34 | | Synchrony Financial2016 Proxy Statement |
| | | | Richard C. Hartnack, Chair | | Jeffrey G. Naylor | | Laurel J. Richie |
42 Synchrony | 2019 Annual Meeting and Proxy Statement
| | | | | 2015 EXECUTIVE COMPENSATION2018 Executive Compensation
The following table contains 20152018 compensation information for our NEOs.
20152018 Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | | Salary | | | Bonus(1) | | | Stock
Awards(2) | | | Option
Awards(2)/(3) | | | Non-Equity
Incentive
Plan
Awards(4) | | | Change in Pension
Value and Nonqualified Deferred Comp.
Earnings(5) | | | All Other
Comp.(6) | | | SEC Total | | | SEC Total Without Change in Pension Value | |
Margaret Keane | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
President and | | | 2015 | | | $ | 933,893 | | | $ | 912,500 | | | $ | 1,400,016 | | | $ | 599,742 | | | $ | 5,318,600 | | | $ | 3,077,387 | | | $ | 108,812 | | | $ | 12,350,949 | | | $ | 9,282,693 | |
Chief Executive Officer | | | 2014 | | | $ | 881,250 | | | $ | 2,287,500 | | | $ | 6,156,088 | | | $ | 2,636,436 | | | $ | 0 | | | $ | 2,708,286 | | | $ | 114,101 | | | $ | 14,783,661 | | | $ | 12,083,638 | |
| | | | 2013 | | | $ | 825,000 | | | $ | 1,150,000 | | | $ | 0 | | | $ | 1,130,000 | | | $ | 0 | | | $ | 563,573 | | | $ | 95,255 | | | $ | 3,763,828 | | | $ | 3,207,733 | |
Brian Doubles | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Executive Vice President | | | 2015 | | | $ | 631,394 | | | $ | 427,500 | | | $ | 456,758 | | | $ | 195,672 | | | $ | 1,561,500 | | | $ | 376,728 | | | $ | 38,631 | | | $ | 3,688,184 | | | $ | 3,312,266 | |
and Chief Financial Officer | | | 2014 | | | $ | 555,000 | | | $ | 877,500 | | | $ | 3,256,773 | | | $ | 1,394,589 | | | $ | 0 | | | $ | 694,487 | | | $ | 28,292 | | | $ | 6,806,641 | | | $ | 6,112,900 | |
| | | | 2013 | | | $ | 527,500 | | | $ | 330,000 | | | $ | 0 | | | $ | 339,000 | | | $ | 0 | | | $ | 57,570 | | | $ | 29,657 | | | $ | 1,283,727 | | | $ | 1,226,845 | |
Glenn Marino | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Executive Vice President, | | | 2015 | | | $ | 712,077 | | | $ | 577,500 | | | $ | 394,813 | | | $ | 169,127 | | | $ | 1,723,000 | | | $ | 943,196 | | | $ | 113,799 | | | $ | 4,633,512 | | | $ | 3,715,171 | |
Chief Executive Officer – | | | 2014 | | | $ | 682,500 | | | | 1,152,500 | | | $ | 2,451,326 | | | $ | 1,049,687 | | | $ | 0 | | | $ | 1,558,558 | | | $ | 98,126 | | | $ | 6,992,697 | | | $ | 5,456,653 | |
Payment Solutions and | | | 2013 | | | $ | 665,000 | | | $ | 530,000 | | | $ | 0 | | | $ | 339,000 | | | $ | 0 | | | $ | 277,460 | | | $ | 120,309 | | | $ | 1,931,769 | | | $ | 1,674,705 | |
Chief Commercial Leader | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jonathan Mothner | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Executive Vice President, | | | 2015 | | | $ | 660,447 | | | $ | 425,000 | | | $ | 364,008 | | | $ | 155,939 | | | $ | 1,431,900 | | | $ | 623,537 | | | $ | 43,447 | | | $ | 3,704,279 | | | $ | 3,080,742 | |
Secretary and | | | 2014 | | | $ | 600,000 | | | $ | 825,000 | | | $ | 1,932,702 | | | $ | 827,541 | | | $ | 0 | | | $ | 839,288 | | | $ | 33,785 | | | $ | 5,058,316 | | | $ | 4,219,028 | |
General Counsel | | | 2013 | | | $ | 562,500 | | | $ | 375,000 | | | $ | 0 | | | $ | 158,200 | | | $ | 0 | | | $ | 51,290 | | | $ | 29,868 | | | $ | 1,176,858 | | | $ | 1,125,568 | |
Tom Quindlen | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Executive Vice President | | | 2015 | | | $ | 782,825 | | | $ | 730,000 | | | $ | 502,434 | | | $ | 215,232 | | | $ | 2,313,400 | | | $ | 1,226,711 | | | $ | 108,802 | | | $ | 5,879,404 | | | $ | 4,690,928 | |
and Chief Executive | | | 2014 | | | $ | 750,000 | | | $ | 1,545,000 | | | $ | 3,144,956 | | | $ | 1,346,753 | | | $ | 0 | | | $ | 2,568,861 | | | $ | 73,951 | | | $ | 9,429,521 | | | $ | 6,895,429 | |
Officer – Retail Card | | | 2013 | | | $ | 670,000 | | | $ | 760,000 | | | $ | 0 | | | $ | 497,200 | | | $ | 0 | | | $ | 31,623 | | | $ | 67,155 | | | $ | 2,025,978 | | | $ | 2,025,978 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name & Principal Position | | Year | | Salary | | Bonus | | Stock Awards (1) | | Option
Awards (2) | | Non-Equity
Incentive
Plan Comp. | | All Other
Comp. (3) | | Total | | | | Adjusted Total (4) |
| | | | | | | | | | |
Margaret Keane | | 2018 | | | $ | 1,175,000 | | | | $ | 0 | | | | $ | 6,800,052 | | | | $ | 1,200,023 | | | | $ | 2,681,400 | | | | $ | 592,663 | | | | $ | 12,449,138 | | | | | | $ | 11,449,138 | |
President and | | 2017 | | | $ | 1,168,654 | | | | $ | 0 | | | | $ | 7,800,060 | | | | $ | 1,199,408 | | | | $ | 2,655,500 | | | | $ | 701,881 | | | | $ | 13,525,503 | | | | | | $ | 13,525,503 | |
Chief Executive Officer | | 2016 | | | $ | 1,092,923 | | | | $ | 0 | | | | $ | 4,675,026 | | | | $ | 825,428 | | | | $ | 2,923,800 | | | | $ | 743,180 | | | | $ | 10,260,358 | | | | | | $ | 10,260,358 | |
| | | | | | | | | | |
Brian Doubles | | 2018 | | | $ | 750,000 | | | | $ | 0 | | | | $ | 1,700,038 | | | | $ | 300,006 | | | | $ | 855,800 | | | | $ | 276,983 | | | | $ | 3,882,827 | | | | | | $ | 3,882,827 | |
Executive Vice | | 2017 | | | $ | 750,000 | | | | $ | 0 | | | | $ | 2,164,536 | | | | $ | 205,402 | | | | $ | 847,500 | | | | $ | 228,046 | | | | $ | 4,195,484 | | | | | | $ | 4,195,484 | |
President and Chief Financial Officer | | 2016 | | | $ | 680,077 | | | | $ | 0 | | | | $ | 1,077,760 | | | | $ | 195,853 | | | | $ | 910,400 | | | | $ | 275,294 | | | | $ | 3,139,384 | | | | | | $ | 3,139,384 | |
| | | | | | | | | | |
Henry Greig | | 2018 | | | $ | 625,000 | | | | $ | 0 | | | | $ | 1,062,566 | | | | $ | 187,506 | | | | $ | 713,100 | | | | $ | 173,069 | | | | $ | 2,761,241 | | | | | | $ | 2,761,241 | |
Executive Vice | | 2017 | | | $ | 606,308 | | | | $ | 0 | | | | $ | 986,022 | | | | $ | 173,915 | | | | $ | 706,300 | | | | $ | 204,155 | | | | $ | 2,676,700 | | | | | | $ | 2,676,700 | |
President, Chief Credit Officer and Capital Management Leader | | 2016 | | | $ | 547,000 | | | | $ | 0 | | | | $ | 911,224 | | | | $ | 160,889 | | | | $ | 770,800 | | | | $ | 234,642 | | | | $ | 2,624,555 | | | | | | $ | 2,624,555 | |
| | | | | | | | | | |
Neeraj Mehta | | 2018 | | | $ | 735,000 | | | | $ | 0 | | | | $ | 1,245,204 | | | | $ | 293,646 | | | | $ | 827,200 | | | | $ | 237,802 | | | | $ | 3,338,852 | | | | | | $ | 3,338,852 | |
Executive Vice President, Chief Executive Officer— Payment Solutions and Chief Commercial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Tom Quindlen | | 2018 | | | $ | 850,000 | | | | $ | 0 | | | | $ | 1,182,503 | | | | $ | 215,347 | | | | $ | 941,300 | | | | $ | 281,976 | | | | $ | 3,471,126 | | | | | | $ | 3,471,126 | |
Executive | | 2017 | | | $ | 840,500 | | | | $ | 0 | | | | $ | 1,152,068 | | | | $ | 215,235 | | | | $ | 932,300 | | | | $ | 342,842 | | | | $ | 3,482,945 | | | | | | $ | 3,482,945 | |
Vice President and Chief Executive Officer—Retail Card | | 2016 | | | $ | 812,000 | | | | $ | 0 | | | | $ | 1,152,082 | | | | $ | 215,453 | | | | $ | 1,096,400 | | | | $ | 383,443 | | | | $ | 3,659,379 | | | | | | $ | 3,659,379 | |
| (1) | For 20132018, these amounts include the grant date fair value of three-year PSUs based on the probable outcome of the performance conditions: Ms. Keane ($4,000,028); Mr. Doubles ($1,000,032); Mr. Greig ($625,033); Mr. Mehta ($560,018); and 2014, this column includesMr. Quindlen ($680,022). The value of these awards, assuming that the annual bonus paid under the GECC Executive Incentive Compensation Planhighest level of performance conditions will be achieved as follows: Ms. Keane ($6,000,043); Mr. Doubles ($1,500,048); Mr. Greig ($937,549); Mr. Mehta ($840,027); and awards under GECC Extraordinary Performance Program. Values shown for 2014 and 2015 include Transaction Awards. See “2015 Compensation Elements – Synchrony Financial Transaction Awards” for additional information.Mr. Quindlen ($1,020,033). |
| (2) | For 2014, these amounts include Founders’ Grants, consisting of Synchrony Financial RSUs and stock options with a four-year cliff vesting period, issued to our NEOs and other officers and select employees in connection with our IPO to promote retention and alignment with our new public stockholders. |
(3) | This column represents the aggregate grant date fair value of stock options. Synchrony Financial stock options granted in 2015 and 2014 and the GE stock options granted in 2013 in accordance with SEC rules. Synchrony and GE measuremeasures the fair value of each stock option grant at the date of grant using aBlack-Scholes option pricing model. The grant-date fair value of options granted during 2015in 2018 was $9.44. The$7.67, based on the following assumptions were used in arriving at the fair value of Synchrony Financial options granted during 2015:assumptions: risk-free interest rate of 1.6%2.65%; dividend yield of 1.5%2.09%; expected volatility of 34.7%24.87%; and expected lives of 6.5 years. |
| See the “– 2015“—2018 Grants of SYFSynchrony Plan-Based Awards Table” for further information on stock options granted in 2015. For2018. |
| (3) | See the “— 2018 All Other Compensation Table” for additional information on the assumptions usedabout All Other Compensation paid in valuing Synchrony Financial stock options granted in 2014 and GE stock options granted in 2013, see note 3 to the 2014 Summary Compensation Table in the proxy statement for our 2015 Annual Meeting of Stockholders.2018. |
| (4) | For 2015, this column includesReflects Ms. Keane’s voluntary agreement with the following annual non-equity incentive plan awards and amounts paid pursuantMDCC to the 2013-2015 GE Long-Term Performance Awards (LTPAs):forfeit $1 million of RSUs granted to her in 2018. |
| | | | | | | | | | | | |
| Name of Executive | | SYF Annual Non-Equity
Incentive Plan Awards | | | 2013-2015 GE Long-Term
Performance Awards | | | Total | |
Margaret Keane | | $ | 2,903,000 | | | $ | 2,415,600 | | | $ | 5,318,600 | |
Brian Doubles | | $ | 894,000 | | | $ | 667,500 | | | $ | 1,561,500 | |
Glenn Marino | | $ | 842,000 | | | $ | 881,000 | | | $ | 1,723,000 | |
Jonathan Mothner | | $ | 759,000 | | | $ | 672,900 | | | $ | 1,431,900 | |
Tom Quindlen | | $ | 1,188,000 | | | $ | 1,125,400 | | | $ | 2,313,400 | |
