UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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SVB FINANCIAL GROUP
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NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
Thursday, April 27, 2017
Thursday, April 25, 2019 4:30 P.M. (Pacific Time) 3005 Tasman Drive Santa Clara, California 95054 Dear Stockholders: Elect eleven (11) directors to serve for the ensuing year and until their successors are Approve the Company’s Amended and Restated Certificate of Incorporation to eliminate cumulative voting; Approve, on an advisory basis, our executive compensation (“Say on Pay”); Approve our 2006 Equity Incentive Plan, as amended and restated, to reserve an additional 2,500,000 shares of common stock for issuance thereunder and extend the plan expiration date to April 24, 2029; Ratify the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, Transact such other business as may properly come before the meeting. Thank you for your continued support of SVB Financial Group. BY ORDER OF THE BOARD OF DIRECTORS, /s/ Roger F. Dunbar Roger F. Dunbar Chairman of the Santa Clara, California March YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD, OR VOTE OVER THE TELEPHONE OR THE INTERNET AS PROMPTLY AS POSSIBLE, IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING. IF YOU HAVE RECEIVED PRINTED PROXY MATERIALS, A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR YOUR CONVENIENCE. EVEN IF YOU HAVE VOTED BY PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. WE ENCOURAGE YOU TO VOTE: (I) FOR THE ELECTION OF ALL ELEVEN (11) NOMINEES FOR DIRECTOR, 4:30 P.M.DATE: TIME: LOCATION: On behalf of the Board of Directors, I amWe are pleased to invite you to attend the 2017SVB Financial Group’s 2019 Annual Meeting of Stockholders of SVB Financial Group, a Delaware corporation, whichStockholders. At this year’s meeting, you will be held at our offices located at 3005 Tasman Drive, Santa Clara, California 95054, on Thursday, April 27, 2017 at 4:30 p.m., Pacific Time. The purposes ofasked to take the meeting are to:following actions, as more fully described in the Proxy Statement: 1. elected,elected; 2. 3. 4. 5. 2017,2019; and 3.Approve, on an advisory basis, our executive compensation (“Say on Pay”),4.Approve, on an advisory basis, the frequency of future Say on Pay votes, and5.6.The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Your vote is very important.To assure your representation at the meeting, you are encouraged to vote your shares as soon as possible. This Notice and the Proxy Statement provide instructions on how you can vote your shares online or by telephone, or if you have received a printed copy of the proxy materials and a proxy card, by mail. You may attend the meeting and vote in person even if you have previously voted by proxy.Only stockholdersYou are entitled to vote at this year’s meeting (or any postponement or adjournment thereof) if you are a stockholder of record at the close of business on February 27, 2017 may vote at25, 2019.meeting or any postponement or adjournment thereof.BoardBY ORDER OF THE BOARD OF DIRECTORS,/s/ Roger F. DunbarRoger F. DunbarChairman of the Board9, 201711, 2019(II) FOR AN ANNUAL FREQUENCY OF FUTURE SAY ON PAY VOTES AND (III)(II) IN FAVOR OF THE ABOVE REMAINING PROPOSALS.
PROXY STATEMENT—TABLE OF CONTENTS
◾ | Indicates matters to be voted on at the Annual |
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2018 PERFORMANCE AND PROXY STATEMENT SUMMARY |
This summary highlights our 20162018 performance, as well as information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should review this entire Proxy Statement, as well as our Annual Report on Form10-K, for the year 2016.ended December 31, 2018.
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2018 FINANCIAL PERFORMANCE HIGHLIGHTS
We are proud of our financial performance for 2018:
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Nearly doubled our diluted earnings per share (“EPS”) and total net income; |
We achieved another year of record diluted earnings per common shareReturn on average equity (“EPS”ROE”) was notably 20.57%, a 66% year-over-year increase; and net income, and we maintained
Maintained steady multi-year growth of our average total assets, loans (net of unearned income), and client funds (deposits and client investment funds).
SELECTED 2018 BUSINESS HIGHLIGHTS
We are proud2018 reflected another year of robust business activities and healthy growth, focusing on our healthy business growth in 2016, as we continuedmission to serve the innovation economy. Selected 2018 business highlights include:
We joined theS&P 500 Indexin March 2018.
We acquiredLeerinkPartners, a life science and healthcare investment banking firm (closed January 4, 2019).
We implemented a $500 millionstock repurchase program (completing $147 million in repurchases byyear-end).
We continued to focus on enhancinggainmarket share, adding nearly 5,000 core commercial clients.
We further extended our client relationships and buildingglobal reach, opening our brand, as well as expanding our platform, capabilities and global reach. Somelending branch in Germany. We announced the opening of our business highlights from 2016, comparedCanada lending branch in early March 2019.
We continued to 2015, include:
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grow our fee income business, achieving a year-over-year increase of 36% in core fee income driven by our foreign exchange and client investment businesses.
ii | 2019 PROXY STATEMENT |
ANNUAL MEETINGAND PROXY STATEMENT INFORMATION
Annual Meeting
Time and Date: | 4:30 p.m. (Pacific Time), April | Record Date: | February | |||
Place: | SVB Financial Group – Corporate Headquarters 3005 Tasman Drive, Santa Clara, California 95054 | Voting: | Stockholders as of the record date are entitled to vote |
Proposals and Voting Recommendations
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Proposal | Board Recommendation | Page Reference | ||
Proposal No. 1 | For all nominees | 2 | ||
Proposal No. 2 | For | 27 | ||
Proposal No. 3 — Advisory(Non-Binding) Vote on Executive Compensation | For | 32 | ||
Proposal No. 4 — Approval of 2006 Equity Incentive Plan, as Amended and Restated | For | 55 | ||
Proposal No. 5 — Ratification of KPMG LLP as Auditors for | For |
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Director Nominees
We are seeking your vote FORelection of the eleven (11) directors described below, all of the director nominees below:whom are current incumbent directors.
Committee Membership* |
| Committee Membership* | ||||||||||||||||||||||||||||||||||||||||||
Name | Age | Year First Elected By Stockholders | Principal Occupation | # of Other Public Company Boards | Audit | Compensation | Credit | Finance | Governance | Risk | Age | Year First Elected By Stockholders | Principal Occupation | |||||||||||||||||||||||||||||||
Greg W. Becker | 49 | 2011 | President and Chief Executive Officer, SVB Financial Group | — |
| 51
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| 2011
| President and Chief Executive Officer, SVB Financial Group
| —
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Eric A. Benhamou | 61 | 2005 | Chairman and Chief Executive Officer, Benhamou Global Ventures, LLC | 2 | X | C | X |
| 63
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| 2005
| Chairman and Chief Executive Officer, Benhamou Global Ventures, LLC
| 2
| X
| C
| X
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David M. Clapper | 65 | 2005 | Chief Executive Officer, Minerva Surgical, Inc. | — | X | C | X | |||||||||||||||||||||||||||||||||||||
John S. Clendening
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56
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2018
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President and CEO, Blucora, Inc.
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1
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X
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X
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Roger F. Dunbar | 71 | 2005 | Board Chairman SVB Financial Group; Former Global Vice Chairman, Ernst & Young, LLP | — | X | X | X | C |
| 73
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| 2005
| Board Chairman SVB Financial Group;
| —
| X
| X
| X
| C
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Joel P. Friedman | 69 | 2005 | Former President, Business Process Outsourcing, Accenture | 1 | C | X | X |
| 71
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| 2005
| Former President, Business Process Outsourcing, Accenture
| —
| C
| X
| X
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Lata Krishnan | 56 | 2008 | Chief Financial Officer, Shah Capital Partners | — | X | X | ||||||||||||||||||||||||||||||||||||||
Kimberly A. Jabal
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50
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2018
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Chief Financial Officer, Unity Technologies ApS
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1
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X
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Jeffrey N. Maggioncalda | 48 | 2012 | Former Chief Executive Officer, Financial Engines | — | X | X |
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50
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2012
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Chief Executive Officer, Coursera Inc.
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—
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X
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X
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Mary J. Miller | 61 | 2016 | Former Under Secretary for Domestic Finance, U.S. Department of Treasury | — | X | X |
| 63
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| 2016
| Former Under Secretary for Domestic Finance, U.S. Department of Treasury
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—
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X
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X
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Kate D. Mitchell | 58 | 2010 | Co-Founder and Managing Director, Scale Venture Partners | 1 | C | X | X |
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60
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2010
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Co-Founder and Partner, Scale Venture Partners
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1
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C
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X
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X
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John F. Robinson | 70 | 2011 | Former Deputy Comptroller of the Currency and former Executive Vice President, Washington Mutual Bank | 1 | C | X | X | X |
| 72
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| 2011
| Former Deputy Comptroller of the Currency and former Executive Vice President, Washington Mutual Bank
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| C
| X
| X
| X
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Garen K. Staglin | 72 | 2012 | Proprietor, Staglin Family Vineyard | 1 | X | X |
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74
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2012
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Proprietor, Staglin Family Vineyard
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1
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C
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X
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X
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* “C” denotes committee chairperson; all memberships are as of the date of this Proxy Statement.
iii | 2019 PROXY STATEMENT |
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Board and Corporate Governance Highlights
Board Accountability | ||||
• Total of 11 current directors — all independent directors, except for CEO director • Separate Board Chairperson and CEO roles • Independent Board Chairperson • Independent chairpersons and members of all Board committees • Seasoned Board with diverse experience, including innovation economy industries, banking/financial services, global, finance/accounting, risk oversight/management and Government/Regulatory • Limited public company directorships outside of the Company (no director “overboarding” concerns) |
| • Annual election of directors • New majority voting standard with director resignation policy • Annual Board and committee evaluations • Regularly-held executive sessions ofnon-management directors • Robust executive and director equity ownership guidelines • Independent Board evaluation of CEO performance • Independent Board approval of CEO compensation • Ongoing director nominee identification and selection process • Limit on director compensation under equity plan |
Board Composition Director Qualifications
Board Accountability
experience:
Stockholder Interests
Risk Management
Risk Management | ||||
• Active stockholder engagement practices • Annual Say on Pay vote • New proxy access under Bylaws • Stockholders may act by written consent • Eliminated supermajority voting requirements under Bylaws • One single voting class — common stock class • No poison pill | • Board and individual committee oversight of risk • Separate Board Risk Committee focused on enterprise-wide risk management framework • Risk Committee comprised of the chairpersons of the Board and all six Board committees • Risk management guided by Risk Appetite Statement (reviewed on an annual basis by the full Board) |
iv | 2019 PROXY STATEMENT |
2019 Organizational Documents Review; Proposed Elimination of Cumulative Voting
In 2018, in light of the Company joining the S&P 500 Index, the Governance Committee conducted a review of the Company’s governance practices under its organizational documents. As a result, the Board has proposed for stockholder approval the elimination of cumulative voting in the election of directors from the Company’s Certificate of incorporation, as further discussed under “Proposal No. 2 – Approval of the Company’s Amended and Restated Certificate of Incorporation to Eliminate Cumulative Voting for Director Elections.” The Board believes that cumulative voting is inconsistent with the practices of other S&P 500 companies and views cumulative voting as incompatible with a majority vote standard and not a corporate governance best practice.
The Board also adopted various changes to the Company’s Bylaws in February 2019, including, among other changes, the implementation of proxy access rights, the adoption of a majority vote standard for director elections (in uncontested election); and the elimination of a “supermajority” voting threshold for stockholder bylaw amendments. For more information, see “Corporate Governance and Board Matters.”
Independent Auditor Matters
As a matter of good corporate practice, we are seeking your ratification of KPMG LLP as our independent registered public accounting firm for the 20172019 fiscal year. If our stockholders do not ratify the selection of KPMG LLP, the Audit Committee may reconsider its selection.
For 2016, 82.9%2018, the total fees for services provided by KPMG LLP were $10,435,207, of total 2016 feeswhich 93.6% represented audit and audit-related fees. (For more information, see page 53.“Independent Auditor Matters”.)
Executive Compensation
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Consistent with our Board’s recommendation and our stockholders’ preference, we submit an advisory vote to approve our executive compensation (otherwise known as “Say on Pay”) on an annual basis. Accordingly, we are seeking your approval, on an advisory basis, of the compensation of our Named Executive Officers, as further described in the “Compensation Discussion and Analysis” section of this Proxy Statement.
2016 NamedCD&A Executive Officers (“NEOs”)
2016 Compensation Highlights
Compensation Governance and Practices
For a summary of the highlights of our 20162018 executive compensation and key features of our executive compensation governance and practices, please refer to the Executive Summary of the “Compensation Discussion and Analysis” section of this Proxy Statement on page 27.Statement.
Equity Plan Amendment
The Board has also proposed for stockholder approval the Company’s 2006 Equity Incentive Plan, as amended and restated, to reserve an additional 2,500,000 shares of common stock for issuance thereunder and extend the plan expiration date to April 24, 2029. The plan was previously approved by stockholders in 2014, which included the plan’s last increase in shares reserved for issuance.
Important Dates for 2020 Annual Meeting
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Stockholder proposals for inclusion in our 20182020 proxy statement pursuant to SEC Rule14a-8 must be received by us by November 9, 2017.12, 2019. Notice of stockholder proposals for the 20182020 annual meeting outside of SEC Rule14a-8 must be received by us no earlier than December 24, 201727, 2019 and no later than January 23, 2018.26, 2020.
* * * *
CORPORATE GOVERNANCE
We are committed to having sound corporate governance principles. These principlespractices, as governed by our organizational documents, as well as our Corporate Governance Guidelines and other applicable policies. Our practices are important to the way in whichhow we manage our business and to maintainingmaintain our integrity in the marketplace. In setting our practices, we balance our corporate and stockholder interests, as well as applicable market practices and trends.
Our Corporate Governance Guidelines provideset forth a framework for our Company with respect to specific corporate governance principles andpractices. The guidelines are reviewed at least annually by the Governance Committee, as well as amended from time to time to continue to enhanceevolving our governance structure.practices. A copy of our guidelines is available atwww.svb.com under “About Us—Investor Relations—Corporate Governance.”
2019 Organizational Documents Review
In 2018, in light of the Company joining the S&P 500 Index, the Governance Committee conducted a review of the Company’s governance practices under its organizational documents, taking into consideration market trends and practices relevant to other S&P 500 companies and larger financial institutions. As a result of that review and based on the Governance Committee’s recommendation, the Board Independence and Leadershipadopted various changes to the Company’s Bylaws in February 2019, including, among other changes:
Implementation of proxy access to enable three percent stockholders or stockholder groups to nominate director nominees;
Adoption of majority vote standard for director elections (in uncontested elections); and
Elimination of a “supermajority” voting threshold for stockholder bylaw amendments.
In addition, as discussed under “Proposal No. 2 – Approval of the Company’s Amended and Restated Certificate of Incorporation to Eliminate Cumulative Voting for Director Elections,” the Board is proposing the elimination of cumulative voting in the election of directors from the Company’s Certificate of Incorporation for stockholder approval. As further discussed under the proposal, cumulative voting is inconsistent with the practices of other S&P 500 companies and the Board views cumulative voting as incompatible with a majority vote standard and not a corporate governance best practice.
BOARD INDEPENDENCEAND LEADERSHIP
The Board has determined that, with the exception of Mr. Becker, our President and CEO, all of our current directors and director nominees are “independent” within the meaning of the director independence standards set by The NASDAQ Stock Market LLC (“NASDAQ”) and the Securities Exchange Commission (the “SEC”).
Additionally, our Bylaws provide that the Board shall not have more than two (2) directors who do not meet the definition of an “Outside Director.” For these purposes, an Outside Director is any director who meets the independence and experience requirements of NASDAQ and the SEC, and who, in the opinion of the Board, has the ability to exercise independent judgment in carrying out the responsibilities of a director of the Company. All of our current directors, except for our CEO, are considered Outside Directors.
Separate Chairperson and CEO Roles
The Board has determined that it is in the best interests of the Company to continue to maintain the Board chairperson and CEO positions separately. We believe that having an outside, independent director serve as chairperson is the most appropriate leadership structure for the Board at this time, as it enhances the Board’s independent oversight of management and strategic planning, reinforces the Board’s ability to exercise its independent judgment to represent stockholder interests and strengthens the objectivity and integrity of the Board. Moreover, we believe an independent chairperson can more effectively lead the Board in objectively evaluating the performance of management, including the CEO, and guide the Board through appropriate governance processes. The Board |
Independence and Leadership Structure
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The Board has determined that Mr. Dunbar, our current Chairman of the Board, is independent within the meaning of the director independence standards described above. Subject to his election, Mr. Dunbar is expected to serve as the Board’s Chairman for the 2017-20182019-2020 director term.
Executive Sessions
The Company’s independent directors meet in regularly scheduled executive sessions at which only independent directors are present.
Board Risk Oversight and Risk Committee
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BOARD RISK OVERSIGHTAND RISK COMMITTEE
Oversight of the Company’s risk management is one of the Board’s key priorities and is carried out by the Board as a whole, as well as by each of its various committees. The committees routinely report back to the Board has formed a committee to specifically focusabout key risk-related matters.
The Risk Committee of the Board focuses primarily on the Company’s risk management. Our Risk Committee is comprised of the chairpersons of each of the Board and the Audit, Compensation, Credit, Finance and Governance Committees. The Risk Committee has primary oversight responsibility of the Company’s enterprise-wide risk management framework, including the oversight of risk management policies, and the monitoring of the Company’s risk profile. In addition, it is responsible for overseeingTo allow cross-committee coordination of risk management, the Company’s compliance with its risk appetite statement, which sets forth the tolerance levels with respect to the amount and types of risks underlying the Company’s business. The Risk Committee also reviews,is comprised of the chairpersons of each of the Board and recommends any changes for Board approvalthe Audit, Compensation, Credit, Finance and Governance Committees. The Chief Risk Officer of the Company reports to both the Company’s risk appetite statement. OurRisk Committee and the Chief Executive Officer.
Each of the other Board committees also share responsibility for the risk appetite statement by overseeing and approving applicable risk metrics, including risk limits and thresholds, for each of their relevant areas of responsibility.
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Additionally, each Board committee is engaged in overseeing the Company’s risks as they relate to that committee’s respective areas of oversight. For example, the Audit Committee regularly oversees our risks relating to our accounting and financial reporting, as well as legal, information technology and cybersecurity and other security-related risks. The Compensation Committee engages in periodic risk assessments to review and evaluate risks in relation to our compensation programs. The Finance Committee actively oversees our capital liquidity and financialliquidity management and the associated risks (whether as an ongoing matter or as it relates specifically to a transaction, such as an equity or debt securities offering). Our Governance Committee oversees our compliance functions and routinely reviews our compliance risks, including Bank Secrecy Act compliance.risks. Moreover, the Credit Committee routinely oversees our management of credit risks. Each committee chairperson regularly reports to both the Risk Committee and the full Board on its risk oversight activities. In addition, the Board routinely engages in discussions with management about the Company’s risk profile.
Risk Appetite Statement
The Board oversees, and approves on at least an annual basis, the Company’s Risk Appetite Statement, which sets forth the tolerance levels with respect to the amount and types of key risks underlying the Company’s business. The Risk Committee is responsible for recommending changes to the Risk Appetite Statement for approval by the Board, as well as overseeing the Company’s compliance with the statement. Our other Board committees also share responsibility for the Risk Appetite Statement by overseeing and approving applicable risk metrics, including risk limits and thresholds, for each of their relevant areas of responsibility.
Annual Board Evaluation
ANNUAL BOARD EVALUATIONS
The Governance Committee of the Board, in coordination with the full Board, conducts a periodic evaluation of the Board’s performance and effectiveness, either the Board as a whole and/or on an individual director basis. The Governance Committee develops and implements a process for such evaluation and review, which may involve outside consultants or advisers and may include a review of how certain attributes affect Board effectiveness, such as Board size, meeting frequency, quality and timing of information provided to the Board, director communication, director education, director skills and qualifications, director independence and Board strategy sessions. The results of the evaluation are discussed with the Board. The Governance Committee also leads an evaluation of the performance and effectiveness of each of the Board’s committees. All Board and committee evaluations are typically conducted on an annual basis. See “Board Committees—Committee Governance”below.
OVERSIGHTOF CEOAND EXECUTIVES
Annual CEO Performance Evaluations
The independent members of the Board evaluate the performance of our CEO on an annual basis. Each year, the Governance Committee approves a process to solicit feedback from each individual independent director. Our Chairman of the Board, together with the chairpersons of the Governance and Compensation Committees, then lead discussions with the Board (without the CEO present) to evaluate the CEO’s performance, both generally as well as against predetermined annual goals.
CEO and Executive Succession Planning
As a matter of sound governance, the Board, as a whole or from time to time through a special committee, reviews and discusses the Company’s contingency or long-term plans for CEO and executive succession. These efforts involve seeking input from our current CEO and our Chief Human Resources Officer, as well as external advisors, as the Board deems appropriate. Succession plans are reviewed and discussed by the Board on at least an annual basis.
15 | 2019 PROXY STATEMENT |
DIRECTOR MATTERS
Outside Directorships
We encourage all directors to carefully consider the number of other company boards of directors on which they serve, taking into account the time required for board attendance, conflicts of interests, participation, and effectiveness on these boards. Directors are asked to report all directorships, including advisory positions, accepted, as well as to notify the Governance Committee in advance of accepting any invitation to serve on another public company board.
Director Education and Orientation
The Board believes that ongoing director education is important for maintaining a current and effective Board. Accordingly, the Board encourages directors to be continually educated on matters pertinent to their respective service on the Board. It is the Board’s view that continuing education may be achieved in various ways as appropriate for each individual director, including, among other things, participation in formal education programs, conferences or seminars (the reasonable expenses of which are reimbursable by the Company) or through independent study or outside reading. In addition, from time to time, management may also bring education opportunities to the Board through management presentations, additional education materials or outside speakers.
New directors joining the Board also participate in a director orientation program, which involves a variety of informational sessions about our business, strategy and governance with Board members and members of executive and senior management. New directors typically join at least one Board committee upon joining the Board and are also invited to participate as a guest director at the meetings of the other Board committees.
MEETING ATTENDANCE
Board and Committee Meetings; Annual Meeting of Stockholders
The Board and its standing committees held a total of sixty-eight (68) meetings during 2018. The Board itself held ten (10) meetings during the year, including atwo-day annual session focused on strategic planning. Each director attended in person or via teleconference 75% or more of the total number of meetings of the Board and the committees on which he or she served during 2018.
It is the Board’s policy that each director employs his or her best efforts to attend our annual stockholder meetings. Ten (10) of our incumbent Board members attended our 2018 Annual Meeting of Stockholders.
2018 Meetings | |||||
Board | 10 | ||||
Audit | 16 | ||||
Compensation | 11 | ||||
Credit | 5 | ||||
Finance | 16 | ||||
Governance | 5 | ||||
Risk | 5 |
BOARD REFRESHMENT; CONSIDERATIONOF DIRECTOR NOMINEES
Board Refreshment and Succession Planning
The Governance Committee primarily oversees the refreshment or succession planning of Board membership. SuccessionBoard succession planning takes into account the importance of balancing the appropriate representation of experience and skills on the Board, with the benefits of Board refreshment. Identification of possible director candidates that possess the appropriate qualifications, desire to serve on a financial services public company board and are able to complement our existing Board can be a lengthy process. As such and as an ongoing matter, the Governance Committee discusses recruiting strategies and actively considers potential director candidates, whether or not there is an immediate vacancy on the Board to fill. It may from time to time use outside recruiters to assist with identifying potential candidates. The Governance Committee also reports to, and discusses director succession planning with, the full Board.
OversightBoard Diversity; Selection and Evaluation of CEODirector Candidates
Annual CEO Performance Evaluation
While the Board has not formally adopted a policy governing board diversity, it is focused on assembling a well-rounded, diverse body of directors. The independent membersGovernance Committee, with the participation of the full Board, is primarily responsible for reviewing the composition of the Board evaluateand identifying candidates for membership on the performanceBoard in light of our CEOongoing requirements, the committee’s assessment of the Board’s performance and any input received from stockholders or other key constituencies. The Governance Committee makes determinations as to whether to recommend directors forre-election or director candidates for nomination to the Board based on an annual basis. Each year,such individual’s skills, character, judgment and business experience, as well as his or her ability to diversify and add to the Board’s existing strengths. Overall, the Governance Committee approves a processtypically seeks an appropriate mix of individuals with diverse backgrounds and skills complementary to solicitour business and strategic direction. Please see the Board’s feedback. Our Chairman of the Board, together with the chairpersons of the Governance and Compensation Committees, then lead discussions with the Board (without the CEO present) to evaluate the CEO’s performance, both generally as well as against certain predetermined annual goals.
description under “CEO Succession PlanningDirector Qualifications
As a matter of sound governance, the Board, as a whole or through a special committee, reviews and discusses the Company’s contingency or long-term plans” above for CEO succession. These efforts involve seeking input from our current CEO and our Head of Human Resources, as well as external advisors, as appropriate. Any plans are reviewed and discussed with the Board.
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Meeting Attendance
BoardStockholder Nominees and Committee Meetings
The Board held nine (9) meetings during fiscal year 2016. (For the number of committee meetings held in 2016, see “Board Committees—Committee Chairpersons/Membership, Responsibilities and Meetings” below.) Each director attended in person or via teleconference 75% or more of the total number of meetings of the Board and the committees on which he or she served during 2016.
Stockholder Meetings
It is the Board’s policy that each director employs his or her best efforts to attend each of our annual stockholder meetings. Eight (8) of our eleven (11) then-serving Board members attended our 2016 Annual Meeting of Stockholders.
Consideration of Director Nominees
Stockholder NomineesProxy Access
The Governance Committee considers director candidates it identifies, but will also consider Board nominees proposed by stockholders. The Governance Committee has no formal policy with regard to stockholder nominees and considers all nominees on their merits, as discussed below. Any stockholder nominations proposed for consideration by the Governance Committee should include the nominee’s name and qualifications for Board membership, and should be addressed to: SVB Financial Group, 3003 Tasman Drive, Santa Clara, California 95054, Attn: Corporate Secretary, Facsimile:(408) 969-6500.
In addition, our Bylaws permit stockholders to nominate directors for consideration at an annual stockholder meeting. meeting, provided such stockholders and the nominees satisfy the requirements specified in our Bylaws.
In February 2019, we amended our Bylaws to also permit eligible stockholders with a significant long-term interest in the Company to include their own director nominees in our annual proxy materials. Under the proxy access bylaw, a stockholder, or a group of up to twenty stockholders, owning three percent or more of the Company’s outstanding stock continuously for at least three years, may nominate and include in our annual proxy director nominees constituting the greater of two and twenty percent of the Board, so long as the stockholder(s) and the nominee(s) satisfy the requirements specified in our Bylaws.
For a description of the process for nominating directors in accordance with the Bylaws, including proxy access, please see “Stockholder Proposals and Director Nominations” below.
Board Diversity; Selection and Evaluation of Director Candidates
While the Board has not formally adopted a policy governing board diversity, it recognizes the importance of assembling a well-rounded, diverse body of directors. The Governance Committee, with the participation of the full Board, is primarily responsible for reviewing the composition of the Board and identifying candidates for membership on the Board in light of our ongoing requirements, the committee’s assessment of the Board’s performance and any input received from stockholders or other key constituencies. The Governance Committee makes determinations as to whether to recommend directors forre-electionCOMMUNICATIONSWITHTHE BOARD or director candidates’ for nomination to the Board based on such individual’s skills, character, judgment and business experience, as well as his or her ability to diversify and add to the Board’s existing strengths. Overall, the Governance Committee typically seeks an appropriate mix of individuals with diverse backgrounds and skills complementary to our business and strategic direction. Please see the description under “Director Qualifications” above for additional information.
Communications with the Board
Individuals who wish to communicate with our Board may do so by sending ane-mail to our Board at bod@svb.com. Any communications intended fornon-management directors should be sent to thee-mail address above to the attention of the Board Chairman. Board-related communications are reviewed by the Chairperson of the Board and shared with the full Board as appropriate.
Code of Ethics
CODEOF ETHICS
We maintain a Code of Ethics for the Principal Executive Officer and Senior Financial Officers (the “Code of Ethics”) that applies to our CEO, Chief Financial Officer, Chief Accounting Officer and other senior members of the Finance staff. A copy of the Code of Ethics is available on our website at www.svb.com under “About Us—Investor Relations—Corporate Governance,” or can be obtained without charge by any person requesting it. To request a copy of our Code of Ethics, please contact: Corporate Secretary, SVB Financial Group, 3003 Tasman Drive, Santa Clara, California 95054, or by telephone(408) 654-7400. We intend to disclose any waivers from, or changes to, our Code of Ethics by posting such information on our website. No waivers or substantive changes were made during fiscal year 2016.2018.
ENVIRONMENTAL, SOCIALAND GOVERNANCE (ESG)
We are committed to excellence in our environmental, social and governance (“ESG”) practices, with our Governance Committee assuming primary oversight of our efforts in ESG matters. We both continually assess our practices to ensure we are meeting or exceeding industry and peer standards and continually seek opportunities to enhance the communities where we operate through corporate giving, employee volunteering, workforce development, participating in the political and public policy process, and environmental sustainability programs.
Our efforts have been recognized, including through our inclusion in: (i) the Bloomberg Gender-Equality Index, which qualifies companies based on their efforts to promote gender equality internally, engagement with their communities, and products and services, and (ii) the Goldman Sachs’ JUST US Large Cap Equity ETF, a fund focused on companies that demonstrate just business behavior recognized by JUST Capital. We have also been recognized as one ofForbes’ Global 2000: World’s Best Employers,Barron’s 100 Most Sustainable U.S. Companies 2019 and a Top Corporate Philanthropist by theBay Area Business Journals.
We recognize that understanding our efforts to improve ESG practices is increasingly important to our stockholders, customers and associates and have included some highlights below to share our ongoing commitments in these areas.
• | Community Development Lending –As a financial institution focused on supporting innovation and entrepreneurship, we have contributed to community development by collaborating with local organizations to offer lending solutions for small businesses in our communities, including collaborating with the Opportunity Fund, which provides microloans, along with education and support, to underserved small business owners, and partnering with Grameen America, which provides microloans and education tolow-income female entrepreneurs. In addition, we have contributed funds and provided lending support to affordable housing efforts, including those of the Housing Trust Silicon Valley and various developers of affordable housing forvery-low andlow-income families, seniors, veterans and formerly homeless individuals in the San Francisco Bay Area. We also finance affordable housing in the San Francisco Bay Area as part of our commitment to the Community Reinvestment Act. |
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• | Education Initiatives – In 2017, we launched our Access to Innovation program, which seeks to increase access to the innovation economy for underserved and underrepresented individuals by providing career training and mentoring programs, including internships in information technology and related areas. Through our Access to Innovation program, we have partnered with Year Up, an organization providing intensive,one-year programs for young adults, and Career Ready, an organization in the UK that links schools and colleges with employers to help young people prepare for the working world. In addition to our Access to Innovation program, we host the SVB Trek, an annualfour-day program inviting entrepreneurially minded college students from across the world to travel to Silicon Valley to meet top entrepreneurs, investors and technology industry leaders for talks, interviews and workshops to help launch promising young leaders to the next stage in their career development. We have also created a financial literacy online course for students, United and Counting, which has reached thousands oflow- and moderate-income students in the San Francisco Bay Area, helping the next generation learn the principles of saving, banking, credit card use and other basic financial skills. |
• | Giving Programs – We believe strongly in giving back to our communities, both by community service and monetary gifts. In 2018, we joined the Pledge 1% movement and committed to give 1% of our time to charitable causes. We have also partnered with TUGG (Technology Underwriting Greater Good) since 2011 to sponsor and expand participation in Tech Gives Back, the tech industry’s largest single day of community service spanning events across the country. Since 2004, we have partnered with Best Buddies International, an organization dedicated to building community with those with intellectual and developmental disabilities, raising funds through active events across the country and hiring members of the Best Buddies jobs program at SVB. |
• | Diversity and Inclusion – As recognized by our inclusion in the Bloomberg Gender Equality Index, we have focused on fostering diversity and promoting inclusion at the company and beyond. We have accomplished this through corporate-wide initiatives, including hosting trainings and workshops on unconscious bias, sponsoring leading conferences focused on professional development for women, and serving as founding partner and global sponsor to theBoardlist, a resource designed to help recruit women for corporate board positions. In 2018, we joined Paradigm for Parity, a coalition of business leaders seeking to achieve corporate gender parity by 2030, and helped launch All Raise, a movement to double the percentage of women in venture capital partner roles over the next decade and grow funding for female founders to 25% in the next five years, as a founding partner and sponsor. Our UK branch has also promoted diversity in the innovation sector by sponsoring Backstage Capital’s accelerator program, a program that supports underrepresented founders throughout the world, and sponsored Diversity VC, a group of UK venture capitalists that focus on helping change the ratio at both venture capital firms and the companies they invest in, and is a member of Stonewall, an organization that helps employers make LGBTQ employees feel included at work. |
• | Political Activities – Our corporate responsibility includes participating in the political and public policy process, specifically in areas that impact the innovation economy and the banking industry, as well as our clients, stockholders, employees, communities, and business. It is important that we engage with legislators and policymakers, where appropriate, or support initiatives to advocate constructively for the long term interests of SVB and our key constituents. Our political activities are subject to the oversight of our Governance Committee, who recognize the importance of appropriate governance and risk management of our corporate political activities, and reviews our activities for alignment with SVB’s business, strategy, reputation and mission, as well as compliance with applicable laws and regulations. Political contributions are made primarily through a federal political action committee. Political contributions utilizing corporate funds are limited and subject to restrictions and disclosure pursuant to our policies. |
• | Environmental Sustainability – As recognized by our inclusion inBarron’s list of 100 Most Sustainable U.S. Companies 2019, we have also invested in environmental sustainability both by implementing energy efficiencies internally that have significantly reduced carbon emissions and promoting sustainable practices in certain of our workplaces and by supporting companies that are developing energy and resource efficiency solutions. For example, our headquarters in Santa Clara has sustainable food sourcing, reduces waste by using compostable materials and gives back to the community through a food donation program. In addition, our Salt Lake City, Utah office utilizes carpets made of 100 percent recycled materials, while our San Francisco office incorporatesbio-walls that actively reduce indoor air pollution. In addition, we support sustainability by financing companies that are developing energy and resource efficiency solutions, including Crop Enhancement, which is providing environmentally-friendly biodegradable crop protectants, and OhmConnect, whose software encourages consumers to reduce electricity consumption and find cleaner sources. |
For further information regarding our ESG practices, please see our website under “About Us—Living Our Values.”
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BOARD
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We believe our Board has created a sound committee structure designed to help the Board carry out its responsibilities in an effective and efficient manner. ThereWhile the Board may form from time to time ad hoc or other special purpose committees, there are six (6) core standing Board committees: Audit, Compensation, Credit, Finance, Governance and Risk.
Committee Independence and Audit Committee Financial Experts
COMMITTEE INDEPENDENCEAND AUDIT COMMITTEE FINANCIAL EXPERTS
The Board has determined that each of the current members of the Audit Committee, Compensation Committee, Credit Committee, Governance Committee and Risk Committee are “independent” within the meaning of applicable SEC rules, NASDAQ director independence standards and other regulatory requirements, to the extent applicable.
In addition, the Board has determined that each of Messrs. Robinson and Dunbar and Ms. KrishnanJabal are “audit committee financial experts,” as defined under SEC rules, and possess “financial sophistication,”sophistication” as defined under the rules of NASDAQ.
Committee GovernanceCOMMITTEE GOVERNANCE
Committee Charters
Each committee is governed by a charter that is approved by the Board, which sets forth each committee’s purpose and responsibilities. The Board reviews the committees’ charters, and each committee reviews its own charter, on at least an annual basis, to assess the charters’ content and sufficiency, with final approval of any proposed changes required by the full Board. The charters of each committee are available on our website, www.svb.com under “About Us—Investor Relations—Corporate Governance.”
The charters provide that each committee have adequate resources and authority to discharge its responsibilities, including appropriate funding for the retention of external consultants or advisers, as the committee deems necessary or appropriate.
Annual Committee Evaluations
The Governance Committee, in coordination with the Board, implements and develops a process to assess committee performance and effectiveness. Typically, theThe assessments are conducted on an annual basis and include a self-assessment by each committee. The review includes an evaluation of various areas that may include committee size, composition, performance, coordination among committee members and among the standing committees, and involvement with the full Board. The results of the committee performance assessments are reviewed by each committee, as well as by the Governance Committee, and discussed with the full Board.
Committee Chairpersons/Membership, Responsibilities and Meetings
COMMITTEE CHAIRPERSONS/MEMBERSHIP, RESPONSIBILITIESAND MEETINGS
All committee chairpersons of our six standing committees are independent and appointed annually by the Board of Directors. Each chairperson presides over committee meetings; oversees meeting agendas; serves as liaison between the committee members and the Board, as well as between committee members and management; and works actively and closely with executive and senior management on all committee matters, as appropriate.
Each of the committeescommittee meets regularly, at least on a quarterly basis. The committees, typically through their committee chairpersons, routinely report their activitiesactions to, and discuss their recommendations with, the full Board. In addition, certain committees periodically hold extended meetings dedicated to discussing key strategic matters or other business items that are relevant or subject to the committee’s oversight responsibilities on a morein-depth basis.
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The names of the members (chairpersons’ names in bold) and highlights of some of the key oversight responsibilities of the Board Committees are set forth below:
Audit Committee –John Robinson, Roger Dunbar, Kim Jabal and Mary Miller
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Quality and integrity of our financial statements, including internal controls over financial reporting.
Independent auditor of the Company, including its qualification, independence, engagement, compensation and performance.
Internal audit function of the Company, as well as other key areas including information technology, security (including cybersecurity), litigation and regulatory enforcement matters.
Compensation Committee –Garen Staglin, John Clendening, Jeff Maggioncalda and John Robinson
Overall compensation strategies, plans, policies and programs.
Executive and director compensation approval.
Compensation risk management, including annual compensation-related risk assessments.
Credit Committee –Kate Mitchell, John Clendening, Jeff Maggioncalda and John Robinson
Credit and lending strategies, objectives and risks, primarily of the Bank.
Credit risk management, including reviewing internal credit policies and establishing portfolio limits.
Quality and performance of the credit portfolio.
Finance Committee –Joel Friedman, Eric Benhamou, Roger Dunbar and Mary Miller
Financial strategies, objectives and risks relating to capital and liquidity management, investments, derivative activities, and funds management.
Annual budget of the Company, and recommendation to the Board for approval.
Compliance with certain applicable financial regulatory requirements, including capital adequacy/planning.
Material corporate development matters that may result in a significant financial impact.
Governance Committee –Eric Benhamou, Roger Dunbar, Joel Friedman, Kate Mitchell and Garen Staglin
Corporate governance practices, including our Corporate Governance Guidelines.
Annual performance evaluation processes of our Board and its committees and the CEO.
Identification and nomination of director candidates.
Regulatory compliance function of the Company, including financial crimes risk management.
Risk Committee –Roger Dunbar, Eric Benhamou, Joel Friedman, Kate Mitchell, John Robinson and Garen Staglin
Enterprise-wide risk management policies of the Company.
Operation of our enterprise-wide risk management framework.
Risk Appetite Statement of the Company, including recommendations to the Board regarding any changes.
Overall risk profile of the Company.
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REPORT OF THE AUDIT COMMITTEE OF THE BOARDREPORT
The Report of the Audit Committee of the Board shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Act”“Act”), or under the Securities Exchange Act of 1934, as amended (the “Exchange Act”“Exchange Act”), except to the extent that we specifically incorporate the information contained in the report by reference, and shall not otherwise be deemed filed under such acts.
The Audit Committee is governed by a Board-adopted charter, a copy of which is available on our website atwww.svb.com. The charter specifies, among other things, the scope of the committee’s responsibilities and how those responsibilities are performed. All members of the Audit Committee are “independent” as defined by NASDAQ and the requirements of the Exchange Act and meet the applicable heightened independence criteria under SEC rules. In addition, Messrs. Robinson and Dunbar and Ms. KrishnanJabal meet the “audit committee financial expert” requirement as defined in RegulationS-K under the Exchange Act, and possess “financial sophistication,”sophistication” as defined under the rules of NASDAQ.
Responsibilities of the Audit Committee
The primary responsibility of the Audit Committee is to act on behalf of the Board in fulfilling the Board’s responsibility with respect to overseeing our accounting and reporting practices, the quality and integrity of our financial statements and reports and our internal control over financial reporting. The committee is responsible for the appointment (or reappointment) and the compensation of our independent registered public accounting firm, as well as for the review of the qualifications, independence and performance of the registered public accounting firm engaged as our independent auditors. Specifically, in reappointing KPMG LLP as the Company’s independent registered public accounting firm for 2016,2019, the Audit Committee considered, among other factors: KPMG’sKPMG LLP’s performance on prior audits; the quality, efficiency and cost of KPMG’sKPMG LLP’s services; KPMG’sKPMG LLP’s knowledge of the Company’s business and the banking industry; and KPMG’s overall relationship with the Audit Committee and management. (See “Other Proxy Proposals – “Proposal No. 5 — Ratification of Appointment of Independent Registered Public Accounting Firm—Principal Audit Fees and Services Services”for more information about the Audit Committee’s oversight of KPMG’sKPMG LLP’s audit and permissiblenon-audit fees.fees.)
In addition, the Audit Committee oversees our Internal Audit function, as well as other management functions including information technology and security.security (including cybersecurity). To the extent applicable, the committee also oversees the Company’s material litigation matters, regulatory enforcement actions, and other legal proceedings.
The Audit Committee meets regularly in executive session with our independent auditor and our Head of Internal Audit (both separately and together), as appropriate.
Responsibilities of Management, Independent Auditor and Internal Audit
Management has the primary responsibility over the Company’s financial statements and the reporting process, as well as our internal controls. Our independent registered public accounting firm, KPMG LLP, is responsible for expressing an opinion on the conformity of our audited financial statements with U.S. generally accepted accounting principles, as well as an opinion on the effectiveness of our internal control over financial reporting in accordance with the requirements promulgated by the Public Company Accounting Oversight Board (the “PCAOB”). KPMG LLP has served as our independent auditor since 1994.
Our Head of Internal Audit reports directly to the Audit Committee (and administratively to the CEO). Under his direction, our Internal Audit function is responsible for preparing an annual audit plan and conducting internal audits intended to evaluate the Company’s internal control structure and compliance with applicable regulatory requirements.
Financial Reporting for 20162018
The Audit Committee has reviewed and discussed with management its assessment and report on the effectiveness of our internal control over financial reporting as of December 31, 2016,2018, which it made using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control –— Integrated Framework (2013).” The committee also has reviewed and discussed with KPMG LLP its review and report on our internal control over financial reporting.
Moreover, the Audit Committee has reviewed and discussed with management and the independent auditors the audited consolidated financial statements as of and for the year ended December 31, 2018. The Audit Committee discussed with the independent auditor the matters required to be discussed by PCAOB Auditing Standard No. 1301,Communications with AuditCommittees. In addition, the Audit Committee received from the independent auditors the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, including Rule 3526,Communication with Audit Committees Concerning Independence, and has discussed with the independent auditor the auditor’s independence from us and our management.
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In reliance on the reviews and discussions referred to above, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report onForm 10-K for the fiscal year ended December 31, 2018, for filing with the SEC.
This report is included herein at the direction of the members of the Audit Committee.
AUDIT COMMITTEE
John Robinson ( | Roger Dunbar | Mary Miller |
This Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Act or the Exchange Act, except to the extent that we specifically incorporate the information contained in the report by reference, and shall not otherwise be deemed filed under such acts. The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Proxy Statement. Based on this review and these discussions, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form10-K for the year ended December 31, 2018 and this Proxy Statement. This report is included herein at the direction of the members of the Compensation Committee. COMPENSATION COMMITTEE
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Compensation Committee Interlocks and Insider Participation
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During 2016,2018, the Compensation Committee or the 162(m) Committee performed all executive compensation-related functions of the Board, except for the approval of CEO compensation, which was approved by the independent members of the Board based on the Compensation Committee’s recommendation. See discussion above under“Board Committees – Committees—Committee Chairpersons/Membership, Responsibilities and Meetings”for additional information on the Compensation Committee. Mr. Becker does not participate in any of the Board or Compensation Committee discussions related to the evaluation of his performance or the recommendation or determination of his compensation. See descriptions of related transactions between us and each of the members of the Compensation Committee, if any, under “Certain Relationships and Related Transactions” below. See also “Compensation Discussion and Analysis – Executive Benefits and Other Executive Compensation-Related Matters – Section 162(m)” for a description of the composition of the 162(m) Committee.
None of the members of the Compensation Committee has ever been one of our officers or employees and none of our executive officers serves, or in the past fiscal year served, as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving on our Board.
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OVERVIEW
Our compensation for ournon-employee directors is designed to be competitive with other financial institutions that are similar in size, complexities or business models. In addition, our director compensation is designed to be tied to business performance and stockholder returns, and to align director and stockholder interests through director ownership of the Company’s stock. The Compensation Committee oversees and approves our director compensation. In doing so, the Compensation Committee reports to and, as appropriate, consults with, the full Board on all relevant matters. Our CEO, the only employee director on the Board, does not receive any payment for his services as a director.
2018 Director Compensation Highlights
In May 2018, the Compensation Committee reviewed the director compensation structure for the 2018-2019 director term and made certain changes to better align with its peer and S&P 500 index company practices and pay levels. Those changes included:
Elimination of Committee Meeting Fees – replaced committee meeting fees with annual committee member retainer fees (Board meeting fees were previously eliminated in 2017), as described in the Schedule of Director Fees below;
Retainer Adjustments – adjusted each director’s annual equity and cash retainer awards as follows:
¡ | Equity Award Value (had not changed in over 10 years) - increased from $100,000 to $125,000 (except Board Chair); and |
¡ | Cash Retainer - increased from $60,000 to $70,000. |
COMPENSATION FOR DIRECTORSEquity Award Calculation Methodology – to align with the methodology for determining executives’ equity grants, the determination of the number of shares to be granted to directors based on their equity award value was changed to be based on the30-day average stock price from date of grant, instead of the grant date stock price.
2018 director compensation reflected not only the adjustments in retainer amounts, but also: (i) partial-year payments of committee meeting fees (under the prior compensation framework applicable to the 2017-2018 director term) and payment of committee member retainer fees for the full 2018-2019 director term; and (ii) the impact of the actual value of equity granted due to the volatility of our stock price, which resulted in a30-day average stock price of $254.00 (as compared to the grant date closing stock price of $305.46). No further material changes are expected for the 2019-2020 director term.
Compensation also reflects compensation for each director’s memberships for their various Board committee assignments. The following tableDirector’s Compensation Table below sets forth the current committee membership assignments, as well as the amounts earned or paid to eachnon-employee member of our Board of Directors during the year ended December 31, 2016.
Overview2018.
Our compensation for ournon-employee
The Compensation Committee oversees and
Our CEO, the only employee director on the | Name | Fees Earned or Paid in Cash | Stock Awards ($) (1) | Total | ||||||||||
Roger F. Dunbar | $ | 217,000 | | $ | 200,093 | $ | 417,093 | |||||||
Eric A. Benhamou | | 98,250 | | 100,046 | 198,296 | |||||||||
David M. Clapper | 113,000 | 100,046 | 213,046 | |||||||||||
Joel P. Friedman | 94,500 | 100,046 | 194,546 | |||||||||||
Lata Krishnan | 95,250 | 100,046 | 195,296 | |||||||||||
Jeffrey N. Maggioncalda | 84,000 | 100,046 | 184,046 | |||||||||||
Mary J. Miller | 82,500 | 100,046 | 182,546 | |||||||||||
Kate D. Mitchell | 113,250 | 100,046 | 213,296 | |||||||||||
John F. Robinson | 135,000 | 100,046 | 235,046 | |||||||||||
Garen K. Staglin | 79,500 | 100,046 | 179,546 | |||||||||||
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(1) Values indicated for annual director equity awards reflect the fair value of restricted stock units granted during the fiscal year. Such values were computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718. The actual value realized is subject to our stock price performance on the date of settlement.
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Elements of Director Compensation
Board Committee Membership | ||||||||||||||||||||||||
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Roger F. Dunbar (Board Chair) | X | X | X | C | 247,500 | 240,397 | 487,897 | |||||||||||||||||
Eric A. Benhamou | X | C | X | 122,000 | 150,286 | 272,286 | ||||||||||||||||||
David M. Clapper(2) | 13,500 | - | 13,500 | |||||||||||||||||||||
John S. Clendening | X | X | 87,674 | 150,286 | 237,960 | |||||||||||||||||||
Joel P. Friedman | C | X | X | 125,000 | 150,286 | 275,286 | ||||||||||||||||||
Kimberly A. Jabal | X | 95,000 | 150,286 | 245,286 | ||||||||||||||||||||
Lata Krishnan(2) | 6,500 | - | 6,500 | |||||||||||||||||||||
Jeffrey N. Maggioncalda | X | X | 98,250 | 150,286 | 248,536 | |||||||||||||||||||
Mary J. Miller | X | X | 117,500 | 150,286 | 267,786 | |||||||||||||||||||
Kate D. Mitchell | C | X | X | 117,250 | 150,286 | 267,536 | ||||||||||||||||||
John F. Robinson | C | X | X | X | 161,750 | 150,286 | 312,036 | |||||||||||||||||
Garen K. Staglin | C | X | X | 124,250 | 150,286 | 274,536 |
Compensation for our non-employee directors reflects a combination of cash (annual retainer fees and committee meeting fees) and equity (annual restricted stock unit awards). In April 2016, the CompensationC – denotes Committee eliminated meeting fees for meetings of the full Board, and increased the annualnon-employee director retainer from $35,000 to $60,000.Chairperson
(1) | Values indicated for annual director equity awards reflect the fair value of restricted stock units based on the grant date closing stock price of $305.46, rather than the equity award calculation methodology, at the time of grant for the 2018-2019 director term. |
(2) | Retired from the Board of Directors in April 2018 after 2017-2018 director term. |
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Elements of Director Compensation Compensation for our non-employee directors Additionally, directors are eligible for reimbursement | Schedule of Director Fees (Effective May 2018) | |||
Annual Director Retainer Fee | $ | |||
Annual Chairperson Fee | $90,000, Board $20,000, Audit Committee $15,000, Compensation, $12,000, Credit | |||
Annual Committee | $ $ $
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Annual Equity Retainer Award | Grant of restricted stock units subject to annual vesting with a total value of |
The members of the Board are also eligible for reimbursement for their reasonable expenses incurred in connection with attendance at meetings or the performance of their director duties in accordance with Company policy.
Director Equity Compensation; Deferral ElectionsElection
Our annual equity retainer awards are typically granted to directors in the form of restricted stock units. The awards are approved by the Compensation Committee and typicallyare granted approximately one monthshortly after the Company’s annual meeting of stockholders. The awards typically vest in full upon the completion of the annual director term on the date of the next annual meeting. In 2016,For 2018, the directorsBoard Chair and each other director were each granted an aggregate787 and 492 shares, respectively, of 10,835 restrictedour Common Stock on May 1, 2018. As noted above, the number of shares granted was based on the30-day average stock units with a scheduled vesting dateprice of the upcoming Annual Meeting.$254.00.
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Non-employee directors may elect an irrevocable deferral of the settlement of restricted stock unit awards until the earliest of: (i) a specific future settlement date that meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, (ii) separation from service, (iii) the date of a change in control, (iv) death or (v) the date of disability. Elections will apply to restricted stock unit awards received during 2016. Mses. KrishnanMs. Mitchell and MitchellMr. Staglin have elected to defer the settlement of their 20162018 equity grants of 985 restricted stock units each.grants.
Equity Plan Limits Applicable to Directors
Equity grants to directors are subject to the terms of our 2006 Equity Incentive Plan, as amended (the “2006 Equity Incentive Plan”)and restated, including the following limitations (as provided under the plan):
Nonon-employee director may be granted, in any fiscal year, awards covering shares having an initial value greater than $500,000.
Annual director grants may become fully vested no earlier than the last day of the director’s then current annual term of service, subject to certain limited exceptions as provided under the plan.
Determination of Director Compensation
Each year, the Compensation Committee, together with its independent compensation consultant, conducts a comprehensive review of director compensation, taking into consideration our overall compensation philosophy, as well as competitive compensation data from the Company’s 2016 Peer Group for the applicable year and other relevant and comparable market data and trends. The committee routinely reviews, on at least an annual basis, each of the various pay components, the form and amount of payment, as well as the cash/equity compensation mix. Based on such review and any recommendations from its independent compensation consultant, the Compensation Committee may make changes to director compensation to the extent it deems appropriate.
Director Equity Ownership Guidelines
DIRECTOR EQUITY OWNERSHIP GUIDELINES
Under the current equity ownership guidelines for ournon-employee directors, eachnon-employee member of the Board of Directors is expected to hold, within five years of becoming a director, shares of our Common Stock that have a minimum value equivalent to 600% of his or her annual retainer fee.
The Compensation Committee is responsible for setting and periodically reviewing the equity ownership guidelines. Equity ownership requirements for directors are established based upon a competitive review and subsequent recommendations by the committee’s independent compensation consultant. The Governance Committee is responsible for overseeing director compliance with these guidelines and reviews directors’ holdings on a quarterly basis. Any exceptions to meeting the guidelines due to personal financial or other reasons are reviewed and determined by the Governance Committee.
As of December 31, 2016,2018, allnon-employee directors had attained the applicable ownership requirements or otherwise remained on target to meet such requirements within the established compliance time frame.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSRELATED PARTY TRANSACTIONS POLICY
Related Party Transactions Policy
Our policy on related party transactions (“Related Party Policy”) governs transactions involving us and certain related persons that are required to be disclosed under Item 404 of SEC RegulationS-KS-K. (“S-K 404”). We regularly monitor our business dealings and those of our directors and executive officers, as appropriate, to determine whether any such dealings would constitute a related party transaction under the Related Party Policy. Generally, under the policy, any transaction, arrangement or relationship will be considered an interested transaction subject to the review or approval of the Audit Committee if: (i) we are a participant in the transaction; (ii) the aggregate transaction amount involved will or may be expected to exceed $120,000 in any calendar year; and (iii) a related person or party has or will have a direct or indirect material interest in the transaction. The following persons are considered “Related Parties” under the Related Party Policy: (i) any director or executive officer of the Company; (ii) any nominee for director of the Company; (iii) any holder of more than 5% of our Common Stock; and (iv) any immediate family member of any of the above.
We have implemented a framework to help identify potential related party transactions, which may include, from time to time, loan transactions by the Company or the Bank, investment transactions, compensation arrangements, or other business transactions involving us or our subsidiaries. Under this framework, we have processes in place that are designed to identify, review and escalate, as appropriate, proposed transactions involving a potential Related Party. Employees are also expected to escalate any transaction involving potential conflicts of interests pursuant to our Code of Conduct.
The Audit Committee has primary responsibility for reviewing these transactions, as well as certain related party loan transactions as described below, for potential conflicts of interestsinterest and approving them (or denying approval, as the case may be). Under the Related Party Policy, the Audit Committee’s approval may be granted in advance, ratified or based on certain standing approvals previously authorized by resolution. The Audit Committee may delegate its approval authority under the Related Party Policy to the committee chairperson. Additionally, the Credit Committee reviews and approves certain related party loan transactions as described below, and the Governance Committee takes into consideration related party transactions involving our directors as part of its annual director independence review.
Insider Loan Policy
INSIDER LOAN POLICY
We also have in place a policy that permits the Bank to make loans (“Insider Loans”) to directors, executive officers and principal stockholders of the Bank or its affiliates and the related interests of those Insiders (“Insiders”), pursuant to the applicable requirements of Regulation O of the Federal Reserve Act (“Regulation O”). Insider Loans qualify for an exemption from Section 402 of the Sarbanes-Oxley Act of 2002, as they are made by the Bank and subject to Regulation O.
Pursuant to Regulation O, our Insider Loan policy authorizes the Bank to make Insider Loans if such Insider Loans: (i) are approved in advance by a majority of the Board of Directors of the Bank, if the aggregate amount of all outstanding extensions of credit to the Insider and to all related interests of the Insider exceeds $500,000; (ii) are extended under substantially the same terms and conditions and rates as those prevailing at the time of the Insider Loan for comparable transactions withnon-Insider Bank clients; and (iii) do not have more than a normal risk of failure of repayment to the Bank or other unfavorable features. The Insider whose credit extension is subject to Board approval may not participate either directly or indirectly in the voting to approve such extension of credit.
Related Party TransactionsRELATED PARTY TRANSACTIONS
Ordinary Course Loan Transactions
Except as described below, during 20162018, the Bank made loans to Related Parties, including certain companies in which certain of our directors or their affiliated venture funds are beneficial owners of 10% or more of the equity securities of such companies. Such loans:companies, that were (i) were made in the ordinary course of business;business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons;persons, and (iii) did not involveinvolving more than the normal risk of collectability or present other unfavorable features.
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Employee Matters
SVB also maintains an Employee Home Ownership Program (“EHOP”), a benefit program that allows eligiblenon-executive employees of the Bank and its affiliates to receive mortgage loans at preferred rates. Generally, executive officers may not participate in the EHOP unless they have received a loan prior to their appointment as executive officers, as was the case for Messrs. John China and Phil Cox. In March 2009, Mr. China received an EHOP mortgage loan in the amount of approximately $1.2 million, which became due as of April 1, 2016. The loan was fully repaid on April 8, 2016. No late fees or other penalties were incurred pursuant to the terms of the loan. In September 2011, Mr. Cox received an EHOP mortgage in the amount of approximately $311,000, which matures in October 2018.
In 2016, Mr. Jon Wolter, a vice-president of SVB and theson-in-law of Ms. Joan Parsons, also received a mortgage loan through our EHOP in the amount of approximately $1.2 million, which matures in December 2023. In addition, Mr. Wolter‘s total compensation for 2016 was approximately $189,100 (including his base salary, bonuses, company contributions to his 401(k)/ESOP account, but excluding other normal benefits provided to all employees). His compensation is in accordance with our standard employment and compensation practices applicable to employees with similar qualifications and responsibilities. Ms. Parsons does not participate in matters related to Mr. Wolter’s employment or compensation.
We also maintain a series of employee-funded investment funds known as Qualified Investors Funds (“QIFs”), which invest employees’ own capital in certain funds, including certain SVB Capital funds. We pass on the cost of external expenses to the QIF participants and do not charge a management fee. Participating employees must meet certain eligibility qualifications pursuant to applicable regulatory requirements. Of our executive officers, Messrs. Beck, Becker, Cadieux, China, Cox, Descheneaux, WallaceDreyer and Zuckert and Mdmes.Ms. Draper and Parsons have each made commitments to QIFs in aggregate commitment amounts ranging from $50,000 to $250,000.$1,025,000 depending on the number of QIF funds they participate in.
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Vendor Arrangements
Cachematrix, a cash management platform provider for the Bank’s Cash Sweep Program, is controlled by BlackRock, Inc., which, together with its affiliates, is a greater than 5% owner of our outstanding voting securities. In 2016,2018, we also entered into an engagementpaid fees totaling approximately $670 thousand to Cachematrix. Additionally, we offer certain BlackRock investment funds, among other third party investment funds, under our Cash Sweep Program. In connection with offering BlackRock Financial Management, Inc. to perform certain independent compliance testing servicesfunds in our Cash Sweep Program, we earned approximately $16.8 million in fee sharing and related torevenue for 2018. Client investments in the effectiveness of the Company’s Volcker Rule compliance program, for a fee of approximately $150,000. Cash Sweep Program are initiated and directed by clients themselves.
In addition, we have engaged The Vanguard Group, which, together with its affiliates, is a greater than 5% owner of our outstanding securities, as the record-keeper and trustee of our 401(k) and Employee Stock Ownership Plan, as well as the record-keeper of our Deferred Compensation Plan. Our transition to Vanguard became effective in January 2017, and as such, no fees were incurred in connection with these arrangements during the 2016 fiscal year. Each of BlackRock, Inc. andWe paid The Vanguard Group together with their respective affiliates, is a greater than 5% owner of our outstanding voting securities.approximately $254 thousand in fees relating to these services rendered in 2018.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe, based on a review of Forms 3, 4 and 5 and amendments thereto filed with the SEC and other information known to us, that during fiscal year 20162018 our directors, officers (as defined in the rules under Section 16 of the Exchange Act), and any greater than 10% stockholders have complied with all Section 16(a) filing requirements in a timely manner.
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The Board of Directors Recommends a Vote “FOR” the approval of our Amended and Restated Certificate of Incorporation
PROPOSALFOR APPROVAL
We are asking our stockholders to approve the Company’s Amended and Restated Certificate of Incorporation to eliminate cumulative voting in director elections. The Board has approved the amendment, subject to approval from our stockholders at the Annual Meeting.
Summary of Amendment and Background
The Fifth Article of our Certificate of Incorporation currently requires cumulative voting in director elections if any stockholder requests it. Cumulative voting enables a stockholder to concentrate his or her voting power by allocating to one nominee a number of votes equal to the number of directors to be elected, multiplied by the number of shares entitled to vote held by such stockholder, or to distribute those votes among two or more nominees using the same principle. As a result, a stockholder or group of stockholders holding a relatively small number of shares may be able to elect one or more directors by cumulating votes, even if a majority of stockholders oppose their election. Under Delaware law, stockholders do not have the right to vote their shares cumulatively in any election of directors unless a company’s certificate of incorporation provides otherwise.
The amendment would eliminate cumulative voting in elections of directors by deleting the relevant provision in the Fifth Article. A copy of the proposed Amended and Restated Certificate of Incorporation, as amended and restated (the “Amended and Restated Certificate of Incorporation”), is included as Appendix A to this Proxy Statement, marked with strike-outs to show the relevant deletions. If the Amended and Restated Certificate of Incorporation is approved by our stockholders, all director elections would be conducted using a standard voting method in which stockholders may cast only one vote per share per nominee, and directors would be elected using a majority voting standard, as described below.
Reasons for Amendment
The Board has determined that it is in the best interests of the Company and its stockholders to eliminate cumulative voting in all director elections for the following reasons:
• | Cumulative Voting is Not Standard Practice.After joining the S&P 500, the Governance Committee conducted a review of the Company’s governance practices under its organizational documents against market trends and practices of other S&P 500 companies, determining that cumulative voting is not standard market practice. Extremely few S&P 500 companies currently provide for cumulative voting, and none of our peer group of 18 other companies has cumulative voting. |
• | Incompatible with Majority Voting.In February 2019 our Board amended our Bylaws to, among other changes aimed at enhancing our corporate governance practices, provide for a majority voting standard in uncontested director elections. Under a majority voting standard, nominees need to receive more “for” votes than “against” votes to be elected. Cumulative voting is incompatible with a majority voting standard and requires the use of a plurality voting standard. Cumulative voting is also fundamentally at odds with the objective of majority voting because it allows a relatively small number of stockholders to elect directors who may not be supported by a majority of the Company’s stockholder base. A voting method in which each share entitles its holder to one vote “for” or “against” a nominee promotes a democratic election of directors for all stockholders. |
• | Directors Should Represent All Stockholders.Cumulative voting increases the chances that certain directors may be focused on the special interests of those minority stockholders who cumulated votes to elect them, which could impair the Board’s ability to operate effectively. The Company and the Board believe that each director should represent the interests of all stockholders rather than the interests of a minority stockholder or a special constituency. |
• | Part of Our Corporate Governance Enhancements.As part of our continuous efforts to review and improve the Company’s corporate governance practices, in February 2019, the Board adopted amendments to our Bylaws. In addition to adopting a majority voting standard in director elections as described above, the amendments provide enhancements to the rights of our stockholders, including giving stockholders a proxy access right and eliminating supermajority requirements for our stockholders to amend certain sections of the Bylaws. The Board believes that the removal of cumulative voting, which brings the Company in line with its peers and the vast majority of other large U.S. public companies, is appropriate and complementary with these recent changes. |
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EXECUTIVE OFFICERS AND COMPENSATIONIn light of the recent enhancements enacted by the Company to protect stockholder rights and the adverse consequences cumulative voting could produce, the Board believes this proposal to eliminate cumulative voting is in the best interests of the Company and our stockholders. If stockholders approve this Proposal No. 2, the Company’s Amended and Restated Certificate of Incorporation will become effective upon its filing with the Delaware Secretary of State, which we anticipate doing as soon as practicable following stockholder approval.
INFORMATION ON EXECUTIVE OFFICERSOur Board of Directors recommends that stockholders vote “FOR” the approval of the Company’s Amended and Restated Certificate of Incorporation to eliminate cumulative voting for director elections.
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EXECUTIVE OFFICERS AND COMPENSATION |
Our executive officers perform policy-making functions for us within the meaning of applicable SEC rules. They may also serve as officers of the Bank and/or our other subsidiaries. There are no family relationships among our directors or executive officers.
The following information outlines the name and age of each of our executive officers, as of the date of this Proxy Statement, and his or her principal occupation with the Company, followed by biographical information of each such executive officer:
Name | Age | Principal Occupation | ||||||
Greg W. Becker | 51 | President and Chief Executive Officer | ||||||
Dan J. Beck | 46 | Chief Financial Officer | ||||||
Marc C. Cadieux | 52 | Chief Credit Officer | ||||||
John D. China | 53 | Head of Technology Banking | ||||||
Philip C. | 52 | Head EMEA and President of the UK Branch | ||||||
Michael R. Descheneaux | President, Silicon Valley Bank | |||||||
Michelle A. Draper | 51 | Chief Marketing Officer | ||||||
Michael L. | 55 | Chief Operations Officer | ||||||
Christopher D. Edmonds-Waters | ||||||||
Laura H. Izurieta | 58 | Chief Risk Officer | ||||||
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Michael S. Zuckert | 60 | General Counsel |
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EXECUTIVE BIOGRAPHIES |
Greg W. Becker’s biography can be found under “Proposal No. 1—Election of Directors” above.
Marc C. CadieuxDan J. Beck,Chief Financial Officer,joined us in 1992June 2017 and is responsible for our finance, treasury and accounting functions. Before joining the Company in 2017, Mr. Beck served as an Assistantthe Chief Financial Officer for Bank of the West, a subsidiary of BNP Paribas Group, from June 2015 to May 2017 and as Executive Vice President and has held a variety of positions of increasing responsibility in the areas of credit administration, business development and relationship management duringCorporate Controller from June 2008 to June 2015. Prior to his tenure with the Company. Mr. Cadieux was previously the Division Risk Manager for SVB’s Eastern Division, where he was responsible for overseeing our commercial lending activities in the United States, Canada, the United Kingdom and Israel. Mr. Cadieux was appointed as Assistant Chief Credit Officer in 2009 and was later appointed as Chief Credit Officer in 2013, where he currently oversees our credit administration function. Prior to joining the Company, Mr. Cadieux held several credit-related positions with Pacific Western Bank andat Bank of New England.the West, Mr. CadieuxBeck held various finance and accounting roles with Wells Fargo Bank, the Federal Home Loan Mortgage Corporation, E*TRADE Financial Corporation and Deloitte & Touche LLP. Mr. Beck holds a Bachelor’s degree in EconomicsAccounting from Colby College.
John D. China joined us in 1996 as Senior Relationship ManagerVirginia Commonwealth University and has since held a variety of positions with the Company, including Head of Venture Capital Group and Head of Private Equity Group. Mr. China was appointed as the Head of Relationship Management in 2010, and in 2014, as the Head of Relationship Banking (currently Head of Technology Banking), where he focuses on our core technology banking clients. Mr. China is a member of the advisory board of DEMO, and serves on the boards of ASTIA, anon-profit organization dedicated to the success ofwomen-led, high-growth ventures, and the California Israel Chamber of Commerce. Mr. China holds a Bachelor’s degree in Industrial EngineeringBiology from Stanford University.
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Philip C. Cox joined us in 2009 as Head of UK, Europe & Israel, where he was responsible for the overall strategic direction of the Company in the UK, EuropeVirginia Polytechnic Institute and Israel, as well as the establishment of our UK Branch banking business. Mr. Cox was appointed as Head of Europe, Middle East and Africa and President of the UK Branch in 2012, where he is focused on the international development of our business and is responsible for our UK branch. Prior to joining the Company, Mr. Cox was Head of Commercial Banking at the Bank of Scotland in London, a division of Lloyds Banking Group (2008-2009) and the Chief Executive Officer of Torex Retail PLC (2005-2008). Prior to that, Mr. Cox spent approximately 23 years with NatWest/RBS Group and held a variety of positions, including Managing Director of Transport and Infrastructure Finance, Regional Managing Director of the North of England Region and the same position for the South West and Wales business. Mr. Cox is a member of the Chartered Institute of Bankers (UK) and the Association of Corporate Treasurers (UK).
Michael R. Descheneaux joined us in 2006 as Managing Director of Accounting and Financial Reporting, and was appointed as Chief Financial Officer in 2007, where he is responsible for all our finance, treasury, accounting and legal functions, as well as our funds management business. Prior to joining the Company, Mr. Descheneaux was a managing director of Navigant Consulting (2004-2006) and held various leadership positions with Arthur Andersen (1995-2002). Mr. Descheneaux holds a Bachelor’s degree in Business Administration from Texas A&M University. He is also a certified public accountant licensed by the Texas State Board of Public Accountancy.
Michelle A. Draper joined us in 2013 as Chief Marketing Officer, and is responsible for the strategy and execution of our global marketing initiatives. Prior to joining us, Ms. Draper held various senior-level marketing positions at Charles Schwab & Co. from 1992-2013, including as Senior Vice President of Institutional Services Marketing, where she oversaw advertising, brand management and other key marketing strategies. Prior to that, Ms. Draper also served as a director of Investor Services Segment Marketing and Vice President of Advisor Services Marketing Programs, developing marketing strategies for both the retail and institutional sides of the Charles Schwab business. Ms. Draper holds a Bachelor’s degree in Journalism from California Polytechnic State University – San Luis Obispo, as well as Series 7 General Securities Representative and Series 24 General Securities Principal licenses.
Michael L. Dreyer joined us in 2015 as Chief Operations Officer, where he is responsible for the Company’s global technology and infrastructure functions. Most recently, he served as the Chief Operations Officer and President of the Americas for Monitise, where he was responsible for the design, build and operations of Monitise’s technology globally, as well as its Americas business (2014-2015). Prior to that, Mr. Dreyer was the Chief Information Officer at Visa Inc., where he was responsible for company’s systems and technology platforms (1998-2014). Mr. Dreyer has also held various senior-level positions at American Express, Prime Financial, Inc., the Federal Deposit Insurance Corporation (FDIC) and Bank of America. He has been on the board of directors of Finisar Corporation (FNSR: NASDAQ) since 2015, and F5 Networks Inc. (FFIV: NASDAQ), since 2012. Mr. Dreyer holds a Bachelor’s degree in Psychology and a Master’s degree in Business Administration from Washington State University.
ChristopherMarc C. Cadieux, D. Edmonds-Waters joined us in 2003 as Director of Organization Effectiveness, and in 2007, was appointed to his current role as Head of Human Resources, where he oversees our human resources function, which includes our compensation, global mobility, recruiting and learning and development functions. Prior to joining the Company, Mr. Edmonds-Waters held various senior-level human resources positions at Charles Schwab & Co. from 1996-2003, and began his career at Macy’s California where he held various merchandising as well human resources roles. Mr. Edmonds-Waters holds a Bachelor’s in Intercultural Communications from Arizona State University and a Master’s in Human Resources and Organization Development from the University of San Francisco.
Laura Izurietajoined us in August 2016 as Chief Risk Officer, and is responsible for leading our enterprise-wide risk management, corporate compliance and regulatory functions. Prior to joining the Company, Ms. Izurieta held various roles of increasing responsibility at Capital One (2000-2016). Most recently, Ms. Izurieta served as the Executive Vice President and Chief Risk Officer, Retail and Direct Bank at Capital One. Prior to that, she held various senior-level roles at Capital One, including Senior Vice President of Enterprise Risk Management, Vice President of Corporate Reputation and Governance, Vice President of Capital One Home Loans and Vice President of Information Technology. Prior to her tenure at Capital One, Ms. Izurieta also held positions at Freddie Mac and Bank of America. Ms. Izurieta holds a Bachelor’s degree in Business Administration from Towson University and a Master’s degree in Applied Behavioral Science from John Hopkins School of Business.
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Roger E. Leone joined us in 2015 as Head of IT Infrastructure Engineering and Operations, and in September 2015, was appointed to his current role as Chief Information Officer, where he oversees our information technology functions. Prior to joining us, he served in a range of technology positions, including as an independent consultant from (2011-2014) and Vice President, Global IT Services at Yahoo! (2010-2011). Prior to that, Mr. Leone held various senior-level IT positions at Pfizer (1996-2010), including as Vice President of Americas Regional Shared Services, where he managed a team of over 400 IT professionals supporting over 26,000 clients in the Americas. Prior to his time at Pfizer, Mr. Leone spent approximately 20 years with Bank of America in a variety of IT positions. Mr. Leone holds a Bachelor’s degree in Mathematics from Utica College of Syracuse University.
Bruce E. Wallace joined us in 2008 as Head of Global Services, where he was responsible for our operations, product management, global transaction banking and service delivery. He was later appointed Chief Operations Officer in 2011, where he was responsible for leading all bank andnon-bank operations and information technology services. In 2015, Mr. Wallace was appointed to his current role as Chief Digital Officer, where he is responsible for the Company’s digital banking functions and the Company’sfee-based product businesses. Prior to joining the Company, Mr. Wallace spent more than 20 years in a variety of management positions in banking operations with Wells Fargo & Company, most recently as Senior Vice President and Manager of Treasury Management Operations (2005-2008). Mr. Wallace holds a Bachelor’s degree in Accounting from California State University, Sacramento.
Michael S. Zuckert joined us in 2014 as General Counsel and is responsible for all our legal matters. Prior to joining us, he served in a wide range of legal positions within the financial services industry. Most recently, he served as Deputy General Counsel of Citigroup (2009-2014), where he served as general counsel for the company’snon-core assets business, Citi Holdings, and focused on mergers and acquisitions. Prior to his time at Citigroup, Mr. Zuckert held various senior-level positions at Morgan Stanley & Co. Inc., and was Vice President and General Counsel at TheStreet.com, Inc., an online financial news provider. Mr. Zuckert has also been a director of the Law Foundation of Silicon Valley since 2015 and a member of the leadership counsel of Tech:NYC since 2017. He holds Bachelor’s degrees in History and Law and Society from Brown University and a Juris Doctor from New York University School of Law.
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) discusses our 2016 executive compensation program, as it relates to our five “named executive officers” listed below.
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Chief Credit Officer, oversees our credit administration function. Mr. Cadieux joined us in 1992 and has held a variety of positions of increasing responsibility in the areas of credit administration, business development and relationship management during his tenure with the Company. Mr. Cadieux was previously the Division Risk Manager for SVB’s Eastern Division, where he was responsible for overseeing our commercial lending activities in the United States, Canada, the United Kingdom and Israel. Mr. Cadieux was appointed as Assistant Chief Credit Officer in 2009 and was later appointed as Chief Credit Officer in 2013. Prior to joining the Company, Mr. Cadieux held several credit-related positions with Pacific Western Bank and Bank of New England. Mr. Cadieux holds a Bachelor’s degree in Economics from Colby College.
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Michelle A. Draper,Chief Marketing Officer, is responsible for the strategy and execution of our global marketing initiatives. Prior to joining us in 2013, Ms. Draper held various senior-level marketing positions at Charles Schwab & Co. from 1992-2013, including as Senior Vice President of Institutional Services Marketing, where she oversaw advertising, brand management and other key marketing strategies. Prior to that, Ms. Draper also served as a director of Investor Services Segment Marketing and Vice President of Advisor Services Marketing Programs, developing marketing strategies for both the retail and institutional sides of the Charles Schwab business. Ms. Draper holds a Bachelor’s degree in Journalism from California Polytechnic State University – San Luis Obispo, as well as Series 7 General Securities Representative and Series 24 General Securities Principal licenses. |
Michael L. Dreyer,Chief Operations Officer, is responsible for the Company’s global technology and infrastructure functions. Prior to joining us in 2015, Mr. Dreyer served as the Chief Operations Officer and President of the Americas for Monitise, where he was responsible for the design, build and operations of Monitise’s technology globally, as well as its Americas business(2014-2015). Prior to that, Mr. Dreyer was the Chief Information Officer at Visa Inc., where he was responsible for company’s systems and technology platforms (1998-2014). Mr. Dreyer has also held various senior level positions at American Express, Prime Financial, Inc., the Federal Deposit Insurance Corporation (FDIC) and Bank of America. He has been on the board of directors of Finisar Corporation since 2015, and F5 Networks Inc., since 2012, and joined the Board of Deep Labs as an independent director in 2018. Mr. Dreyer holds a Bachelor’s degree in Psychology and a Master’s degree in Business Administration from Washington State University.
Laura H. Izurieta, |
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We ask our stockholders to indicate their support for our executive compensation program for our NEOs and vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.” Because your vote is advisory, it will not be binding upon the Board or the Compensation Committee and may not be construed as overruling any decision by the Board or the Compensation Committee. However, the Board and Compensation Committee value the opinion of our stakeholders and will take into consideration the outcome of this advisory vote when considering future executive compensation arrangements. Stockholders are encouraged to carefully review the following “Compensation Discussion and Analysis” and “Compensation for Named Executive Officers” sections for a detailed discussion of our executive compensation program for our NEOs. Approval, on an advisory basis, of our executive compensation requires the affirmative vote of the holders of a majority of the Common Stock represented and entitled to vote at the Annual Meeting. Our Board of Directors recommends that stockholders vote “FOR” the approval of the Company’s executive compensation.
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2018 CEO COMPENSATION HIGHLIGHTS 2018 Company Performance The Compensation Committee considers a variety of factors on a formulaic, as well as discretionary, basis, in funding and determining actual CEO and executive compensation. As further detailed in the Proxy Summary Information section at the beginning of this Proxy Statement, the Company delivered outstanding performance in 2018. In particular, EPS and total net income nearly doubled, reflecting increases of 97% and 99%, respectively, compared to the prior year of 2017. The Company’s annual ROE for 2018 was 20.57%, reflecting a 66% year-over-year increase.
2018 CEO Pay Summary
CEO Target Pay Design - Continued Emphasis on Long-Term, Performance-Based Pay
EXECUTIVE COMPENSATIONAND PRACTICES - SUMMARY Highlights of our executive compensation program and practices are set forth below:(details are further discussed in this CD&A section) Compensation Oversight and Governance
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| The Compensation Committee meets on a regular basis, and routinely meets in executive session without management present. During 2018, the committee held 11 meetings. Role of the Independent Board Members Subject to the recommendation of the Compensation Committee, all of the independent directors of the Board (all Board members except the CEO, acting as a committee) review and approve the compensation for the CEO. Such review and approval are conducted during the executive sessions, where neither the CEO nor any other member of management is present. Role of Chief Executive Officer At the Compensation Committee’s request, our CEO will attend portions of the Compensation Committee’s meetings and executive sessions to discuss the Company’s performance and compensation-related matters, as well as his input and recommendations for compensation for the executive officers of the Company (excluding himself). He does not participate in any deliberations relating to his own compensation. The committee considers the CEO’s input and recommendations, but retains full discretion to approve allnon-CEO executive compensation. Role of Compensation Committee Consultant The Compensation Committee retained Pay Governance LLC, an independent executive compensation consultant, to provide advice and recommendations on all compensation matters under its oversight responsibilities as defined in the committee’s charter. The Compensation Committee in its sole discretion selects the consultant and determines its compensation and the scope of its responsibilities. In 2018, Pay Governance assisted the Compensation Committee with: advice and recommendations regarding the Company’s compensation philosophy and strategies; advice on director and executive compensation levels and practices, including review and recommendations on director, CEO and other executive compensation and evaluation of CEO pay and Company performance; assessment of realizable pay and performance; advice on the Company’s peer group; guidance on the design of our compensation plans and policies, including recoupment policy and executive/director stock ownership guidelines; evaluation of performance metrics and peer performance; assistance with the Compensation Committee’s annual review of potential risks associated with our compensation programs; recommendations regarding our 2006 Equity Incentive Plan; and periodic reports to the Compensation Committee Pay Governance provides services only to the Compensation | ||||||||||||||||||||||
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Compensation Risk Management A primary area of focus of the Compensation Committee is compensation risk management. The committee, together with its compensation consultant, conducts annual risk assessments of our compensation program, which include process, tone and culture. Our compensation risk management processes also include involvement from our Internal Audit and ERM functions. Based on these various steps, we do not believe that our compensation program creates risks that are reasonably likely to Moreover, our compensation programs and risks are routinely discussed at the Board level, both with and without the CEO present. In particular, the chairperson of our Compensation Committee reports to and discusses compensation risk issues with the full Board and the Risk Committee. The chairperson of the Compensation Committee and one other member of the committee (who also serves as the chairperson of the Audit Committee) are members of the Risk Committee of the Board of Directors. Additionally, certain compensation matters |
ANNUAL SAYON PAY; FOCUSON S |
We In 2018, over 96.6% of the votes cast approved our 2017 executive compensation program (as described in our 2018 proxy statement). In light of the strong voting support and the extent of other feedback we have solicited from our stockholders, the Compensation Committee remained consistent with our executive compensation philosophy, policies or overall program, and did not make any material changes. Nevertheless, we continue to carry out our executive compensation program based on our key philosophy and objectives as described above. The Compensation Committee will continue to consider changes to the program on an ongoing basis, as appropriate, in light of evolving factors such as our corporate strategy, the business environment and competition for talent, as well as stockholder feedback.
We are focused on the interests of our stockholders. Our
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Competitive Benchmarking Against Peers For 2018, the Compensation Committee benchmarked and compared our compensation and performance | |
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Our executives’ equity awards are made under our 2006 Equity Incentive Plan and have the following features/practices:
General Features/Practices:
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Stock Options:
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Our typical practice for executives is vesting over 4 years
Full Value Awards:
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The key compensation philosophy and objectives of our executive compensation program and practices are as follows:
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Our compensation philosophy and program take into consideration our business objectives (including our long-term global growth); the relative complexity our business diversity represents in an organization of our size; stockholder interests; appropriate risk management practices; emerging trends in executive compensation (particularly for financial institutions); applicable regulatory requirements; and market practices.
Role of Compensation Committee; Committee Meetings
All members of the Compensation Committee are “independent” under applicable NASDAQ rules. The Compensation Committee has primary oversight of our executive compensation program as provided in its charter, including the design and administration of executive compensation plans in a manner consistent with the executive compensation philosophy described above. The committee: (i) reviews and recommends for independent Board approval the compensation of the CEO, and (ii) reviews and approves the compensation of all othernon-CEO executive officers. In carrying out its oversight responsibilities, the committee regularly reports to the Board on the actions it has taken, as well as confers with the Board on compensation matters, as necessary. The Compensation Committee also makes recommendations for all other compensation-related matters that require full Board approval. Additionally, the committee coordinates with other Board committees, as appropriate, including discussing: (i) compensation risk management with the Risk Committee, and (ii) financial items proposed for exclusion from the funding of our ICP with the Audit Committee. Membership of the Risk Committee includes the chairperson of the Compensation Committee, as well as one other member of the Compensation Committee who also serves as the chairperson of the Audit Committee.
The Compensation Committee meets on a regular basis, and routinely meets in executive session without management present. During 2016, the Compensation Committee held twelve (12) meetings, including an extended annual session where the Compensation Committee met with the Board Chair, as well as key members of executive management, including the CEO, the Chief Financial Officer, the Head of Human Resources and the General Counsel, to discuss considerations for reviewing and enhancing compensation strategy in light of the Company’s strategic objectives, as well as relevant market trends.
Role of the Independent Board Members
Subject to the recommendation of the Compensation Committee, all of the independent directors of the Board (all Board members except the CEO, acting as a committee) review and approve the compensation for the CEO. Such review and approval are conducted during the executive sessions, where neither the CEO nor any other member of management is present.
Role of Chief Executive Officer
At the Compensation Committee’s request, our CEO will attend portions of the Compensation Committee’s meetings and executive sessions to discuss the Company’s performance and compensation-related matters. While he does not participate in any deliberations relating to his own compensation, he shares his assessment of the performance of the other executive officers with the Compensation Committee. Based on his assessment and the Company’s overall performance, our CEO makes recommendations to the Compensation Committee on any compensation decisions or changes for the other executive officers. The committee considers the CEO’s recommendations, as well as data and analyses provided by the Compensation Committee’s independent consultant (and to a lesser extent, management), but retains full discretion to approve, or recommend for the independent members of the Board to approve, all executive compensation.
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Role of Compensation Committee Consultant
The Compensation Committee has continued to retain Pay Governance LLC, an independent executive compensation consultant, to provide advice and recommendations on all compensation matters under its oversight responsibilities as defined in the Compensation Committee’s charter. The Compensation Committee in its sole discretion selects the consultant, and determines its compensation and the scope of its responsibilities.
In 2016, Pay Governance assisted the Compensation Committee with: advice and recommendations regarding the Company’s compensation philosophy and strategies; advice on executive and director compensation levels and practices, including review and recommendations on CEO and other executive compensation and evaluation of CEO pay and Company performance; advice on the Company’s 2016 Peer Group; guidance on the design of our compensation plans and executive/director stock ownership guidelines; evaluation of performance metrics and peer performance; assistance with the Compensation Committee’s annual review of potential risks associated with our compensation programs; recommendations regarding our 2006 Equity Incentive Plan; and periodic reports to the Compensation Committee on market and industry compensation trends and regulatory developments. The Compensation Committee did not engage Pay Governance for any additional services outside of executive and director compensation consulting during 2016. In addition, the Compensation Committee does not believe there were any potential conflicts of interest that arose from any work performed by Pay Governance during 2016.
We submit an advisory vote on executive compensation, or Say on Pay, to our stockholders on an annual basis. In 2016, over 98.5% of the votes cast approved our 2015 executive compensation program (as described in our 2016 proxy statement). In light of the strong support and other feedback we have solicited from our stockholders, the Compensation Committee made no material changes to our compensation philosophy, policies or overall program. Nevertheless, we continue to carry out our executive compensation program based on our key philosophy and objectives as described above. The Compensation Committee will continue to consider changes to the program on an ongoing basis, as appropriate, in light of evolving factors such as our corporate strategy, the business environment and competition for talent, as well as stockholder feedback.
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For 2016, the Compensation Committee benchmarked and compared our compensation and performance with our peer companies, in a manner consistent with prior years. Our2016Peer Group companies are companies that are similarly sized, have certain business model similarities and compete with us for our talent. (See below for a list of our 15 peer group companies for 2016.)
The Compensation Committee, with its compensation consultant and management, reviews on at least an annual basis, the composition of the peer group. In determining the composition, the Compensation Committee considers various factors and characteristics including,
extent they compete with us for talent. It is important to note that in determining executive compensation, the Compensation Committee does not solely rely on comparative data from the
approach, in determining executive pay levels. The Compensation Committee also utilizes other resources, including published compensation surveys (from Towers Watson and McLagan) and other available proxy and compensation data. All such comparative peer data and supplemental resources are considered, along with the Company’s pay for performance and internal parity objectives. All applicable information is reviewed and considered in aggregate, and the Compensation Committee does not place any particular weighting on any one factor.
Performance One of the primary areas of focus of the Compensation Committee is on the design of performance-based compensation, including selecting and setting appropriate performance metrics and measuring actual performance against those metrics. The committee devotes much of their meeting time throughout the year on monitoring performance of current year performance-based awards, as well as designing and planning performance metrics for the following and future years. In designing performance metrics, the committee reviews market and peer practices, as well as seeks the input of the CEO to take into account key areas of strategic and business focus. As further discussed in this CD&A section, specific performance metrics for annual and long-term incentive awards include ROE, TSR, selected fee income (for long-term performance-based awards granted prior to 2018), and relative performance against peers. For 2018, the Compensation Committee introduced an additional PRSU performance metric to drive our strategic business objectives, focusing on improving our future operating leverage through transforming key business processes and implementation of scalable solutions.
Individual Performance In making compensation decisions or recommendations for individual executives, the Compensation Committee takes into consideration the performance reviews conducted for each executive officer, which includes the executive’s self-review of the prior year’s performance. The committee meets and discusses with the CEO his assessment of the performance of the other executive officers, based on such self-reviews and the CEO’s own evaluation. The independent members of the Board meet and discuss, without the CEO present, their collective performance assessment of the CEO, taking into consideration his self-review and the individual evaluation provided by each Board member. Executives are evaluated based on individual performance and overall contributions, in addition to Company performance against the broader corporate performance metrics discussed above. Specifically, individual evaluation criteria may include, among other things: skills and expertise, demonstrated leadership, development of strategy, span of responsibility, achievement of corporate and personal goals, risk management, talent management, regulatory compliance, and alignment with the Company’s core values. The overall performance assessment by the Compensation Committee (or the Board) of each individual executive is also taken into consideration in setting his or her total target compensation for the following year. Committee Decisions The performance metrics utilized for executive compensation, where applicable, are largely used for funding determination purposes. Subject to that funding, the determination of actual awards to executive officers are decided by the Compensation Committee (or in the case of the CEO, the independent members of the Board), based on its discretion. We believe that discretion is a vital part of our compensation decision processes, as it allows the Compensation Committee (or in the case of the CEO, the Board) to better link executive pay to actual performance. Discretion, both positive and negative, allows directors to make appropriate pay decisions based on their informed business judgment, particularly in circumstances where there may be other relevant performance factors or unforeseen circumstances that should be considered beyond the actual performance metrics. With that said, discretion is carefully considered and judiciously applied. For example, the Compensation Committee (or the Board) exercises discretionary judgment in determining items to be excluded from ICP funding (see “Annual Cash Incentives (ICP) – ICP Funding Methodology” below), which in 2018, resulted in the reduction of overall ICP funding. Or, despite having the discretion to adjust awards, the Compensation Committee has (since inception of the3-year design) followed the formulaic funding design in determining the performance-based vesting of the PRSU awards. The Compensation Committee continues to believe that a balanced utilization of performance metrics and committee discretion leads to appropriately calibrated compensation for executives.
In designing compensation for our executives,
Base Salary
In Annual Cash Incentives (ICP)
Each
Exclusions/Adjustments
2018 ICP Pool Funding For 2018, the Compensation Committee approved the funding of the total ICP pool at 167% of total target, based on: Budget Performance – the Company achieved annual ROE (as adjusted) of 19.71% against the annual target ROE of 15.73%, resulting in the funding of 151% for 2/3 of the total pool; and Relative Peer Performance – the Company ranked in the first position against our 2018 Peer Group, resulting in the maximum funding of 200% for 1/3 of the pool.
In determining
performance of the Company and the respective areas of oversight of each NEO in 2018, and (ii) each NEO’s contributions to our business and financial results, execution of our
Specifically for Mr. Becker, key factors considered included:
Strong
Strong execution of the Company’s strategy Continued focus on the growth of the core banking business domestically and internationally, including the opening of our German branch and continued progress to open our Canada branch Acquisition of Leerink Partners, a life science and healthcare investment banking firm Strengthening of the corporate brand and steadfast focus on client satisfaction, including net promoter scores Continued focus on risk management and regulatory compliance Continued focus on employee engagement and diversity and inclusion initiatives Ongoing development and succession planning of executive andnon-executive leadership Key factors considered by the Compensation Committee for the other NEOs, included: (i) for Mr. Beck, excellence in execution of overall financial management and outstanding leadership in the Leerink acquisition and key initiatives to improve our operating leverage; (ii) for Mr. Descheneaux, his exceptional leadership of our core banking business (including business growth, global expansion and strategic execution), as well as the expansion of the SVB Capital platform; (iii) for Mr. China, his effective leadership of our Technology Banking business, and continued focus on client relationships and strategic partnerships for the bank; and (iv) for Mr. Dreyer, his strong leadership in the continued strengthening of the Company’s operations, technology and infrastructure to enable scalable growth and to increase efficiencies. Long-Term Equity Incentives
Stock Options and Restricted Stock Units (RSUs) Stock options and
Performance-based Restricted Stock Units (PRSUs) PRSUs are earned based on the achievement of certain performance metrics, as determined by the Compensation Committee. These metrics typically measure the Company’s performance on an absolute basis, as well as relative to peers. After the end of the specified performance period, the committee will determine whether (and to what extent) the NEOs earned the PRSUs, subject to a maximum total payout of 150% of target award. For 2018 and as further described below, the Compensation Committee applied two performance metrics for the PRSUs: (i) to TSR relative to peers (same as prior years), and (ii) certain strategic business objectives. The NEOs were granted, effective as of May 1, 2018, PRSUs that were subject to performance-based vesting over a3-year period (from 2018 through 2020) based on the performance criteria described below. To the extent earned, these awards are subject to additional time-based vesting through January 29, 2021. 2018 represents the first year of a3-year performance period, hence none of the PRSUs granted in 2018 have been earned yet. The performance metrics for the 2018 PRSUs are as follows:
Previously Granted PRSU Awards for Performance Period Ended in 2018 In 2016, Messrs. Becker, Descheneaux and China were granted PRSU awards subject to performance over a3-year performance period (2016-2018). (Messrs. Beck and Dreyer did not participate in this grant.) The 2016 PRSUs were subject to the following performance metrics: (i) 50% of the award was subject to the Company’s TSR performance relative to peers (similar to the 2018 PRSU awards), and (ii) 50% of the award was subject to the Company’s ROE (funding threshold) and foreign exchange and credit card fee income (“Selected Fee Income”) performance. Upon completion of the3-year performance period, the Compensation Committee (and in the case of the CEO, the Board) determined that: (i) the Company’s relative TSR performance ranked in the second position against the applicable 2016 peer 2 TSR is measured based on the average closing stock price for the last two months of the applicable performance period and the average closing stock price for the two months immediately preceding the start of the performance period, with dividends reinvested.
group (15 companies), and (ii) the 5% minimum average annual ROE funding threshold was met, and the Company achieved 98%, 95%, and 109% of its Selected Fee Income target for 2016, 2017 and 2018, respectively. Consequently, the committee determined that 126% of the target PRSU awards were earned. The awards were also subject to a brief time-based vesting requirement, and were fully vested as of January 30, 2019. Messrs. Becker, Descheneaux and China each received 20,999, 8,128 and 5,080 shares, respectively, of our Common Stock upon vesting. Other Equity Compensation for Executive In EXECUTIVE BENEFITSAND OTHER EXECUTIVE COMPENSATION-RELATED MATTERS
Executive Benefits Employee Retirement Benefits Our NEOs are eligible to participate in our SVB Financial Group 401(k) (“401(k) Plan”) and Employee Stock Ownership Plan (“ESOP”), our combined qualified retirement and profit sharing plan that is generally available to all of the Company’s U.S. employees. Our NEOs participate in the plan on the same terms as all other eligible employees. Other than our 401(k) Plan, we do not provide any pension, excess retirement or Under our 401(k) Plan, our U.S. employees, including our NEOs, may make voluntarypre-tax and/or traditional/Rothpost-tax deferrals up to the maximum provided for by IRS regulations. The Company providesdollar-for-dollar matching contributions up to a maximum of 5% of cash compensation or the Internal Revenue Section 401(a) compensation limit, whichever is less. Company 401(k) matching contributions vest immediately upon deposit into the individual’s 401(k) account. The plan also includes a profit sharing component. Under the ESOP, we may make discretionary annual contributions for U.S. employees, as determined by the Compensation Committee. ESOP contributions may be in the form of cash,
Deferred Compensation We do not provide NEOs with any Company-funded deferred compensation benefits. However, in order to help them achieve their retirement objectives, we offer each NEO the opportunity totax-defer a portion of their income, beyond what is allowed to be deferred in the Company’s qualified retirement plan. Specifically, under our DCP, each individual may defer 5% to 50% of their base pay and 5% to 100% of eligible incentive payments during each plan year. The DCP is an unfunded plan, and participating executives bear the risk of forfeiture in the event that we cannot fund DCP liabilities. We do not match executive deferrals to the
We establish and maintain a bookkeeping account for each participant that reflects compensation deferrals made by the executive along with any associated earnings, expenses, gains and losses. The amount in a participant’s account is adjusted for hypothetical investment earnings or losses in an amount equivalent to the gains or losses reported by the investment options selected by the participant from among the investment options designated for this purpose by the Company. A participant may, in accordance with rules and procedures we establish, change the investments to be used for the purpose of calculating future hypothetical investment adjustments to the participant’s account. The account of each participant is adjusted each business day to reflect: (a) the hypothetical investment earnings and/or losses described above; (b) participant deferrals; and (c) distributions or withdrawals from the account. Distributions or withdrawals from the DCP shall be made in full accordance with the requirements of Internal Revenue Code Section 409A.
Health and Welfare Benefits/Time Away From Work Our NEOs are eligible to participate in our standard health and welfare benefits program, which provides medical, dental, life, accident and disability coverage to all of our eligible U.S.-based employees. We do not provide executives with any health and welfare benefits that are not generally available to other Company employees. Additionally, under our “time away from work” policy, U.S. exempt employees, including our NEOs, do not accrue vacation benefits. Rather, such employees are expected to manage their time away from work, subject to the demands and needs of their jobs.Non-exempt U.S. employees and othernon-U.S. employees continue to accrue vacation benefits formulaically. Executive Termination Benefits See “Compensation for Named Executive Officers—Other Post-Employment Payments”below. Perquisites We do not have any executive perquisite programs. Other than our executive Change in Control Plan, we do not have any special executive programs that offer benefits exclusively to our executives. Our executives receive the same retirement, health, welfare and other benefits that are generally available to our employees, and may also participate in certain programs that are available to members of senior management, such as our Deferred Compensation Plan. From time to time and on a limited Stock Option and Other Equity Practices Grant Practices for Executive Officers The Compensation Committee approved all equity grants in For newly-hired executive officers, the Compensation Committee approves an equity grant amount prior to, or shortly after, the executive’s start of employment, and the effective grant date is typically set during an open trading window after they commence employment. Grant Practices for Other Employees The Board has delegated authority to the Equity Awards Committee to make equity grants tonon-executive employees under our 2006 Equity Incentive Plan. The Equity Awards Committee is a committee of two, comprised of our Chief Executive Officer and the
Tuesday of such month. The Equity Awards Committee approves grants on a quarterly basis, and must approve all grants in writing on or before the date of grant, subject to the respective employee remaining an employee as of the date of grant. Finally, management updates the Compensation Committee regarding all grants made by the Equity Awards Committee on a regular basis. Any grant that does not meet the requirements established for the Equity Awards Committee must be made by the Board, the Compensation Committee or other authorized committee. The Compensation Committee typically approves annual grants to all eligible employees, as well as any other grants that the Equity Awards Committee is not authorized to approve.
Prohibitions Against Hedging Pursuant to our Insider Trading Policy, our directors, executive officers (including our NEOs) and employees are not permitted to “hedge” ownership by selling puts in or selling short any of the Company’s publicly-traded securities at any time. Additionally, we discourage, and have not permitted, Employment Agreements Except for ourat-will offer letters or as required by law, we do not have any individual employment agreements for our executives. None of our NEOs have an employment agreement. Compensation Recovery
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)
Equity Ownership Guidelines for Executive Officers
The Governance Committee monitors compliance with these guidelines and reviews executive equity holdings on a quarterly basis. In evaluating whether executives are meeting the ownership guidelines, the Governance Committee considers the following as shares owned: (1) shares actually held, (2) shares owned through investment in the Company’s stock fund in the SVB Financial Group 401(k) and Employee Stock Ownership Plan, and (3) earned but unvested awards of restricted stock awards and restricted stock units (subject to either time-based or performance-based vesting). Neither vested nor unvested stock options count towards the ownership guidelines. Exceptions to meeting the guidelines due to personal financial or other reasons are reviewed and determined by the Governance Committee. As of December 31,
The following table sets forth the compensation paid to our NEOs for the years ended December 31, 2018, 2017 and 2016,
(1) For Mr. Becker, the amount reflects the value of our standard cash gift card for employees reaching 25 years of service. For Mr. Beck, the 2018 amount reflects a cash bonus and the 2017 amount reflects a signing bonus paid following his hire in 2017.
GRANTSOF PLAN-BASED AWARDS The following table sets forth all plan-based awards, including equity awards andnon-equity incentive awards, made to our NEOs during the year ended December 31,
OPTION EXERCISESAND STOCK VESTED The following table sets forth the number of securities underlying equity awards that vested (in the case of restricted stock) or were exercised (in the case of stock options) by the NEOs during the year ended December 31,
OUTSTANDING EQUITY AWARDSAT FISCAL YEAR END The following tables set forth all outstanding equity awards to the NEOs as of December 31,
PENSION BENEFITS We do not maintain any defined benefit pension plans in which any of our executive officers participate. NON The following table sets forth information about executive contributions to, earnings from, and distributions ofnon-qualified deferred compensation under our Deferred Compensation Plan. There were no above-market or preferential earnings on any compensation that was deferred. We do not maintain any othernon-qualified deferred compensation program for our NEOs.
OTHER POST-EMPLOYMENT PAYMENTS There are certain circumstances in which our NEOs may be entitled to post-employment payments, which are discussed in further detail below: Change in Control Severance Plan Our Change in Control Severance Plan (the “Change in Control Plan We did not make any amendments or changes to the The The circumstances that constitute a “change in control” are set forth in the Change in Control Plan. Generally, a change in control includes a merger or consolidation, other than a merger or consolidation in which the owners of our voting securities own 50% or more of the voting securities of the surviving entity; a liquidation or dissolution or the closing of the sale or other disposition of all or substantially all of our assets; an acquisition by any person, directly or indirectly, of 50% or more of our voting securities; and an acquisition by any person, directly or indirectly, of 25% or more of our voting securities and, within 12 months of the occurrence of such event, a change in the composition of the Board occurs as a result of which 60% or fewer of the directors are incumbent directors.
Our Change in Control Plan includes a number of restrictive covenants that govern the executives’ rights to receive benefits under the plan. Generally, unless we provide otherwise in writing, the executive must not directly or indirectly engage in, have any ownership in or participate in the financing, operation, management or control of any person, firm, corporation or business that competes with us or our affiliates, or any of our customers or
of most other covered executives. In addition, unless we provide otherwise in writing, the executive may not directly or indirectly solicit, recruit, otherwise hire or attempt to hire any of our employees or cause any such person to leave his or her employment during the periods described in the previous sentence. Finally, the executive must execute a general release of claims in our favor covering all claims arising out of the executive’s involuntary termination of employment (as defined in the Change in Control Plan) and employment with us and our affiliates. Any benefits payable to an executive under this plan are reduced by any severance benefits we may pay to that executive under any other policy, plan, program or arrangement, including our Group Severance Benefit Policy. Severance Benefit Policy Our Severance Benefit Policy provides severance pay and benefits to eligible employees who are involuntarily terminated from employment due to staff reduction, position elimination, closure of a business unit, organization restructuring or such other circumstances, as we deem appropriate for the payment of severance benefits. The policy is intended to promote our ability to modify our workforce and structure, while providing a reasonable level of certainty and job security to our employees. The policy covers all regular full-time and part-time employees, including the NEOs. The Severance Benefit Policy provides for a cash severance payment based onjob-level. For NEOs, this benefit is equal to six weeks’ pay per year of service including apro-rata amount for each partial year worked, with a minimum benefit of six months’ pay and a maximum benefit of one year’s pay. In addition, under the policy, we continue to makeco-payments for COBRA medical, dental, and vision coverage during the severance pay period and pay designated outplacement services provided by a Company-selected external vendor. Any benefits payable to an executive under this policy are reduced by any severance benefits we pay to that executive under any other policy, plan, program, or arrangement, including our Change in Control Plan discussed above. 2006 Equity Incentive Plan Our 2006 Equity Incentive Plan, in which the NEOs participate, provides for full vesting of outstanding awards in the event of a change in control (as defined in the plan) of the Company in the event that a successor corporation does not assume or substitute an equivalent option or right for the original equity awards under the plan. In addition, effective as of January 7, 2015, we amended the equity awards agreements under the plan to provide for certain vesting of outstanding awards upon the termination of a participant’s employment due to death or disability as follows: (i) full vesting of any outstanding stock option awards, restricted stock unit awards subject to time-based vesting, restricted stock awards and stock appreciation rights awards; and(ii) pro-rated vesting for any outstanding restricted stock unit awards subject to performance conditions based on the level of achievement of the applicable performance conditions as of the date of termination. These changes apply to all outstanding awards on a retrospective basis, as well as to any new grants made under the applicable amended form of award agreement on a prospective basis. Certain Executive Severance Arrangements In connection with Mr. Descheneaux’s promotion to the role of President, Silicon Valley Bank in 2017, we provided Mr. Descheneaux with a limited severance arrangement. Under the arrangement, in the event Mr. Descheneaux is terminated other than for cause or by reason of his death or disability following his appointment, but on or before July 1, 2019, he will be entitled to receive the greater of: (A) the direct cash amount he would be eligible to receive under the Company’s Severance Benefit Policy (and if applicable, the Company’s Change in Control Severance Plan) or (B) if the termination occurs on or after (i) the effectiveness of his appointment through December 31, 2017, a multiple of two times his annual base salary and incentive compensation; (ii) January 1, 2018 through July 1, 2018, a multiple of one andone-half times his base salary and incentive compensation; (iii) July 2, 2018 through December 31, 2018, a multiple of one times his base salary and incentive compensation; or (iv) January 1, 2019 through July 1, 2019, a multiple ofone-half times his base salary and incentive compensation, each as in effect at such time. Following July 1, 2019, Mr. Descheneaux will only be eligible to receive severance benefits in accordance with the plans, programs or policies of the Company as may be in effect from time to time.
PAYMENTSUPON TERMINATIONOF EMPLOYMENT The following tables summarize the payments that would be payable to our NEOs, as of December 31,
RATIO BASEDON 2018 COMPENSATION As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Greg Becker, our President and Chief Executive Officer. For 2018, our last completed fiscal year: (i) the median of the annual total compensation of all employees of the company (other than the CEO) was $135,614; and (ii) the annual total compensation of our CEO, as reported in the “Summary Compensation Table”, was $7,648,576. Based on this information, for 2018, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 56 to 1. Please note that the provided pay ratio is a reasonable estimate calculated in accordance with Item 402(u) of RegulationS-K. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments and estimates that we used is described below. We selected October 31, 2018 (which is a date within the last 3 months of our last completed fiscal year) as the date upon which we would identify the “median employee”. This date was chosen to allow sufficient time to identify the median employee given the global scope of our operations. As of October 31, 2018, our employee population (excluding the CEO) consisted of 2,869 individuals, including employees in the United States, United Kingdom, Ireland, Germany, Israel, China, Hong Kong, Canada and India. All 2,869 of these employees were included when identifying our “median employee”. No employees were excluded due to data privacy restrictions in our determination of the “median employee,” and allnon-U.S. employees were included in the determination of the “median employee.” To identify the “median employee” from our employee population, we utilized payroll and equity plan records for November 1, 2017 through October 31, 2018 (the “compensation measure”). Given that prior year payroll earnings reports would not be available untilmid-January and prior-year bonus and profit sharing amounts would not be available until late-February, we measured compensation for the employees in our sample using the12-month period ended October 31, 2018. The payroll records included all earnings paid, except most benefit programs, realized equity compensation earnings, deferred compensation payments, andnon-taxable per diem payments. Equity plan records included the grant date fair value of all equity grants (with performance-based equity awards assumed to be achieved at target). Additionally, we did not annualize compensation for employees who were not active for the entire period between November 1, 2017 and October 31, 2018. Employees who did not receive compensation during this period were excluded (for example, recent hires who did not receive a paycheck by October 31, 2018). In identifying the “median employee”, we did not make anycost-of-living adjustments. Amounts paid in foreign currency were converted into United States dollars using third party foreign exchange rates as of October 31, 2018. We identified our “median employee” using a standard median formula based on the compensation measure, which was consistently applied to all of our employees included in this calculation. With respect to the annual total compensation of the “median employee,” we identified and calculated the elements of such employee’s compensation for 2018 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K, resulting in annual total compensation of $135,614. With respect to the annual total compensation for the CEO, we used the amount reported in the “Total” column of our 2017 Summary Compensation Table.
Equity Plan Features and Practices Our Equity Plan includes the following features and practices, as further described in this “Proposal No. 4 – Approval of 2006 Equity Incentive Plan, as Amended and Restated” section:
* As of December 31, 2018 (as disclosed under Note 4 (Share-Based Compensation) in the “Notes to Consolidated Financial Statements” under Part II, Item 8 in our 2018 Annual Report on Form10-K). This number does not include the proposed increase to the Equity Plan’s share reserve that is the subject of this Proposal No. 4.
PROPOSALFOR APPROVAL We are asking our stockholders to approve an amendment to our 2006 Equity Incentive Plan (the “Equity Plan”) so that we can continue to use it to achieve our goals. The Compensation Committee (the “Committee”) of our Board of Directors has approved the amended Equity Plan, subject to approval from our stockholders at the Annual Meeting. Our named executive officers and directors have an interest in this proposal. We are requesting approval to amend the Equity Plan to increase the number of shares of our Common Stock (“shares”) that may be issued under the Equity Plan by 2,500,000. We are also requesting approval by our stockholders of a new ten (10) year term for the Equity Plan. We believe strongly that the increase in shares issuable under the amended Equity Plan is essential to our continued success and therefore is in the best interests of the Company and our stockholders. Our employees are our most valuable assets. The Committee believes that grants of stock options and other equity awards available under the Equity Plan help create long-term equity participation in the Company and thereby assist us in attracting, retaining, motivating and rewarding employees, directors, and consultants. Background Our Equity Plan is administered by the Committee. The Committee reviewed the amended Equity Plan and discussed in detail management’s recommendations of the proposed plan changes, feedback from the Committee’s outside compensation consultant, the extent of feedback received from key stockholders of the Company regarding the plan, and a review of certain Institutional Shareholder Services policies. The Committee subsequently approved the amended Equity Plan, subject to approval by our stockholders. In determining the number of shares reserved for issuance under the amended Equity Plan, the Committee considered a number of factors, including:
Equity Burn Rate. Since 2006, we have maintained our equity utilization below our previous annual equity burn rate limit. Under that limit, the total number of shares of our Common Stock subject to Awards granted under the Equity Plan during a fiscal year could not exceed 2.5% of the total number of shares of Common Stock outstanding as of the beginning of such fiscal year. In 2019 and effective as of such year, given the continuing growth of the Company, potential stock price volatility, and the need for increased year-over-year flexibility in equity utilization, the Committee revised the annual 2.5% limit to a target guideline of a3-year average annual 2.5% limit. Specifically, the average number of shares of Common Stock subject to Awards granted under the Equity Plan annually during a given three (3) year period may not exceed 2.5% of the total number of shares of Common Stock outstanding at the beginning of the last fiscal year in such three (3) year period. For purposes of this guideline: (i) each share of Common Stock subject to any Full Value Award will count as though two (2) shares are granted, and (ii) with respect to any performance-based Award under which the number of shares issuable may be greater or less than the stated number of shares, the shares issuable will be counted based on the number of shares issuable at achievement of target performance (or twice such number if the Award is a full value Award). We may, in the Committee’s discretion, change this guideline in the future, or make exceptions where necessary, including for potential corporate acquisitions, if any, where equity retention or incentive awards may be granted to acquired personnel (such as our recent acquisition of SVB Leerink, our investment banking business).
Summary of the Amended and Restated 2006 Equity Incentive Plan The following is a summary of the principal features of the Equity Plan, as amended and restated, and its operation. The summary is qualified in its entirety by reference to the Equity Plan itself set forth in Appendix B. The Equity Plan provides for the grant of the following types of incentive awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance shares and performance units, and (vi) other cash or stock awards. Each of these is referred to individually as an “Award.” Those who will be eligible for Awards under the Equity Plan include employees, directors and consultants who provide services to the Company and its affiliates. As of December 31, 2018: (i) approximately 477 employees and directors were eligible to participate in the Equity Plan, and (ii) 451 current employees and directors actually received grants during 2018. No consultants received any grants under the Equity Plan in 2018. Number of Shares of Common Stock Available Under the Amended Equity Plan. Subject to the provisions of the Equity Plan, the maximum aggregate number of shares of our Common Stock that may be awarded and sold under the Equity Plan is 12,028,505 shares. Included in this total is our proposed increase of 2,500,000 shares of our Common Stock for issuance under the Equity Plan which has been approved by the Committee, but is subject to receipt of stockholders’ approval. Shares subject to Awards granted with an exercise price, if any, less than the fair market value on the date of grant, which would include Awards of restricted stock, restricted stock units, performance shares and performance units (“Full Value Awards”), count against the share reserve as two (2) shares for every one (1) share subject to such an Award. To the extent that a share that was subject to a Full Value Award that counted as two (2) shares against the Equity Plan reserve pursuant to the preceding sentence is returned to the Equity Plan, the Equity Plan reserve will be credited with two (2) shares that will thereafter be available for issuance under the Equity Plan. If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to restricted stock, restricted stock units, performance shares or performance units, is forfeited to or repurchased by the Company, the unpurchased shares (or for Awards other than options or stock appreciation rights, the forfeited or repurchased shares) which were subject thereto will become available for future grant or sale under the Equity Plan (unless the Equity Plan has terminated). With respect to stock appreciation rights, all of the shares covered by the Award (that is, shares actually issued pursuant to a stock appreciation right, as well as the shares that represent payment of the exercise price) will cease to be available under the Equity Plan. Shares that have actually been issued under the Equity Plan under any Award will not be returned to the Equity Plan and will not become available for future distribution under the Equity Plan; except that if shares issued pursuant to restricted stock, restricted stock units, performance shares or performance units are repurchased by the Company or are forfeited to the Company, such shares will become available for future grant under the Equity Plan. Shares used to pay the exercise price of an Award will not become available for future grant or sale under the Equity Plan. Shares used to satisfy the tax withholding obligations related to an Award (other than an option or stock appreciation right) will become available for future grant or sale under the Equity Plan. To the extent an Award under the Equity Plan is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares available for issuance under the Equity Plan. If we declare a stock dividend or engage in a reorganization or other change in our capital structure, including a merger, the Administrator (as defined below) will adjust the number and class of shares available for issuance under the Equity Plan, and/or the number, class and price of shares covered by each outstanding Award, and theper-person limits on Awards. Administration of the Amended Equity Plan. Under the terms of the Equity Plan, the Board, or a committee of directors or of other individuals satisfying applicable laws and appointed by the Board, administers the Equity Plan. Subject to the terms of the Equity Plan, the Board or its committee has the sole discretion to select the employees, consultants, and directors who will receive Awards, determine the terms and conditions of Awards, and interpret the provisions of the Equity Plan and outstanding Awards. Subject to the terms of the Equity Plan, the Board or committee may accelerate certain vesting provisions. The Board or other committee administering the Equity Plan is referred to below as the “Administrator.” The Board has delegated its authority to the Committee to administer the Equity Plan. Limitations.The Equity Plan contains the following limitations:
Options. The Administrator is able to grant nonstatutory stock options and incentive stock options under the Equity Plan. Subject to the limitations contained in the Equity Plan, the Administrator determines the number of shares subject to each option. The Administrator determines the exercise price of options granted under the Equity Plan, provided the exercise price must be at least equal to the fair market value of our Common Stock on the date of grant. The term of an option may not exceed seven (7) years. After a termination of service with the Company, a participant will be able to exercise the vested portion of his or her option for the period of time stated in the Award agreement. If no such period of time is stated in the participant’s Award agreement, the participant will generally be able to exercise his or her option for (i) three (3) months following his or her termination for reasons other than death or disability, and (ii) twelve (12) months following his or her termination due to death or disability. If a participant is terminated for cause, the option will immediately terminate. In no event may an option be exercised later than the expiration of its term. Stock Appreciation Rights. The Administrator is able to grant stock appreciation rights, which are the rights to receive the appreciation in fair market value of Common Stock between the exercise date and the date of grant. The Company can pay the appreciation in cash, shares of Common Stock or a combination thereof. Stock appreciation rights will become exercisable at the times and on the terms established by the Administrator, subject to the terms of the Equity Plan. The Administrator, subject to the terms of the Equity Plan, will have complete discretion to determine the terms and conditions of stock appreciation rights granted under the Equity Plan, provided, however, that the exercise price may not be less than 100% of the fair market value of a share on the date of grant. The term of a stock appreciation right may not exceed seven (7) years. After termination of service with the Company, a participant will be able to exercise the vested portion of his or her stock appreciation right for the period of time stated in the Award agreement. If no such period of time is stated in a participant’s Award agreement, a participant generally will be able to exercise his or her stock appreciation right for (i) three (3) months following his or her termination for reasons other than cause, death, or disability, and (ii) twelve (12) months following his or her termination due to death or disability. If a participant is terminated for cause, the stock appreciation right will immediately terminate. In no event will a stock appreciation right be exercised later than the expiration of its term. Restricted Stock. Awards of restricted stock are rights to acquire or purchase shares of our Common Stock, which vest in accordance with the terms and conditions established by the Administrator, subject to the terms and conditions of the Equity Plan. For example, the Administrator may set restrictions based on the achievement of specific performance goals. Subject to the terms of the Equity Plan, the restrictions will lapse at a rate determined by the Administrator. Subject to the provisions of the Equity Plan, the Administrator may provide at the time of or following the grant of the Award for accelerated vesting for an Award of restricted stock. The Award agreement will generally grant the Company a right to repurchase or reacquire the shares upon the termination of the participant’s service with the Company. Unless the Administrator provides otherwise, and subject to the restrictions in the Equity Plan, participants holding shares of restricted stock will have the right to vote the shares and receive
any dividends paid, except that dividends or other distributions paid in shares will be subject to the same restrictions on transferability and forfeitability as the original Award. Subject to the limitations of the Equity Plan, the Administrator will determine the number of shares granted pursuant to an Award of restricted stock. Restricted Stock Units. Awards of restricted stock units result in a payment to a participant only if the vesting criteria the Administrator establishes, subject to the terms and conditions of the Equity Plan, is satisfied. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the Administrator in its sole discretion. Notwithstanding the foregoing, and subject to the provisions of the Equity Plan, the Administrator, in its sole discretion, may provide at the time of or following the date of grant for accelerated vesting for an Award of restricted stock units. Upon satisfying the applicable vesting criteria, the participant will be entitled to the payout specified in the Award agreement. The Administrator, in its sole discretion, may pay earned restricted stock units in cash, shares, or a combination thereof. Restricted stock units that are fully paid in cash will not reduce the number of shares available for grant under the Equity Plan. On the date set forth in the Award agreement, all unearned restricted stock units will be forfeited to the Company. Subject to the limitations of the Equity Plan, the Administrator determines the number of restricted stock units granted to any participant. Performance Units and Performance Shares. The Administrator will be able to grant performance units and performance shares, which are Awards that will result in a payment to a participant only if the performance goals or other vesting criteria the Administrator may establish in accordance with the terms and conditions of the Equity Plan are achieved or the Awards otherwise vest. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the Administrator in its sole discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to participants. Subject to the terms of the Equity Plan, the performance units and performance shares will vest at a rate determined by the Administrator. Notwithstanding the foregoing, and subject to the provisions of the Equity Plan, the Administrator, in its sole discretion, may provide at the time of or following the date of grant for accelerated vesting for an Award of performance units or performance shares. Performance units will have an initial dollar value established by the Administrator on or before the date of grant. Performance shares will have an initial value equal to the fair market value of a share of our Common Stock on the grant date. Transferability of Awards. Awards granted under the Equity Plan are generally not transferable, and all rights with respect to an Award granted to a participant generally will be available during a participant’s lifetime only to the participant. Change of Control. In the event of a merger of the Company with or into another company or change of control of the Company (subject to the next sentence of this paragraph and any vesting acceleration provisions in an Award or other agreement), outstanding Awards will be treated in the manner provided in the agreement relating to the change in control, including without limitation, that Awards may be assumed, continued, or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation. In the event that the successor corporation, or the parent or subsidiary of the successor corporation, refuses to assume, continue or substitute for the Award, the participant will fully vest in and have the right to exercise all of his or her outstanding options or stock appreciation rights, including shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on restricted stock will lapse, and, with respect to restricted stock units, performance shares and performance units, all performance goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an option or stock appreciation right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a change in control, the Administrator will notify the participant in writing or electronically that the option or stock appreciation right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the option or stock appreciation right will terminate upon the expiration of such period. Amendment and Termination of the Equity Plan. The Administrator will have the authority to amend, alter, suspend or terminate the Equity Plan, except that stockholder approval will be required for any amendment to the Equity Plan to the extent required by any applicable laws. No amendment, alteration, suspension or termination of the Equity Plan will impair the rights of any participant, unless mutually agreed otherwise between the participant and the Administrator and which agreement must be in writing and signed by the participant and the Company. The Equity Plan will terminate on April 24, 2029, unless the Board or Committee terminates it earlier.
Equity Plan Information The following table provides certain information as of December 31, 2018 with respect to our 2006 Equity Incentive Plan:
Number of Awards Granted to Employees, Consultants, and Directors The number of Awards that an employee or consultant may receive, or that an outside director may receive, under the Equity Plan is in the discretion of the Administrator and therefore cannot be determined in advance. The following table sets forth (a) the aggregate number of shares of Common Stock subject to options or other awards (if any) granted under the Equity Plan during the last fiscal year, (b) the average per share exercise price of such options (or other awards (if any), and (c) the dollar value of such shares based on $189.92 per share, the fair market value as of December 31, 2018:
The following paragraphs are a summary of the general federal income tax consequences to U.S. taxpayers and use of Awards granted under the Equity Plan. Tax consequences for any particular individual may be different. Nonstatutory Stock Options. No taxable income is reportable when a nonstatutory stock option with an exercise price at least equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the option. Any taxable income recognized in connection with an option exercise by an employee of the Company is subject to tax withholding by us. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.
Incentive Stock Options. No taxable income is reportable when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax, in which case taxation is the same as for nonstatutory stock options). If the participant exercises the option and then later sells or otherwise disposes of the shares more than two (2) years after the grant date and more than one (1) year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two (2)- or one (1)-year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option. Stock Appreciation Rights. No taxable income is reportable when a stock appreciation right with an exercise price equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss. Restricted Stock, Restricted Stock Units, Performance Units and Performance Shares. A participant generally will not have taxable income at the time an Award of restricted stock, restricted stock units, performance shares or performance units, are granted. Instead, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the Award becomes either (i) freely transferable, or (ii) no longer subject to substantial risk of forfeiture. However, the recipient of a restricted stock Award may elect to recognize income at the time he or she receives the Award in an amount equal to the fair market value of the shares underlying the Award (less any cash paid for the shares) on the date the Award is granted. Tax Effect for Us. We generally will be entitled to a tax deduction in connection with an Award under the Equity Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Special rules limit the deductibility of compensation paid to our Chief Executive Officer and to “covered employees” within the meaning of Section 162(m). As a result of the Tax Cuts and Jobs Act, and except for certain grandfathered arrangements under Section 162(m) of the Code, any compensation over $1,000,000 paid to the covered employees is not deductible by the Company. In light of these changes, we have modified the Equity Plan to remove certain provisions that related to the granting, administration and terms of Awards intended to qualify as “performance-based compensation” under Section 162(m) as previously in effect, including regarding administration by a committee composed to meet prior requirements related to “performance-based compensation”, the detailing of specific performance goals that could be applied to Awards intended to qualify as “performance-based compensation” and specific terms, conditions and requirements related to such Awards. Section 409A. Section 409A of the Internal Revenue Code, or Section 409A, which was added by the American Jobs Creation Act of 2004, provides certain requirements onnon-qualified deferred compensation arrangements. These include requirements with respect to an individual’s election to defer compensation and the individual’s selection of the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual’s separation from service, a predetermined date, or the individual’s death). Section 409A imposes restrictions on an individual’s ability to change his or her distribution timing or form after the compensation has been deferred. For certain individuals who are officers, subject to certain exceptions, Section 409A requires that such individual’s distribution commence no earlier than six (6) months after such officer’s separation from service. Awards granted under the Equity Plan with a deferral feature will be subject to the requirements of Section 409A. If an Award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that Award may recognize ordinary income on the amounts deferred under the Award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an Award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as possible interest charges and penalties. In addition, certain states such as California have adopted similar provisions. It is the Company’s intention to structure all Awards to comply with, or be exempt from, Section 409A. THE FOREGOING IS ONLY A SUMMARY OF THE EFFECTS OF FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO AWARDS UNDER THE AMENDED EQUITY PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE. Approval of the 2006 Equity Incentive Plan, as amended and restated, requires the affirmative vote of the holders of a majority of the Common Stock represented and entitled to vote at the Annual Meeting. Our Board of Directors recommends that stockholders vote “FOR” the approval of the 2006 Equity Incentive Plan, as amended and restated, to increase the number of shares reserved for issuance thereunder and extend the plan expiration date to April 24, 2029.
The following table sets forth information regarding beneficial ownership as of the Record Date of our Common Stock by: (i) each of our directors,
The following table sets forth information regarding the beneficial ownership of our Common Stock as of December 31,
The Board of Directors Recommends a Vote “FOR” the Ratification of the Appointment of KPMG LLP as the Company’s Independent Registered Public Accounting Firm The Audit Committee has appointed KPMG LLP We expect a representative from KPMG LLP to be present at the Annual Meeting. The representative will be afforded the opportunity to make a statement if they desire to do so and is expected to be available to respond to stockholder questions. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm requires the affirmative vote of the holders of a majority of the Common Stock represented and entitled to vote at the Annual Meeting. Our Board of Directors recommends that stockholders vote “FOR” the ratification of the appointment of KPMG LLP as the Company’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2019.
The following table sets forth fees
In accordance with its charter, the Audit Committee must explicitly approve the engagement of
Holders of our Whether you hold shares in your name or through a broker, bank or other nominee, you may vote without attending the Annual Meeting. You may vote by granting a Proxy or, for shares held through a broker, bank or other nominee, by submitting voting instructions to that nominee. Instructions for voting by telephone, by using the Internet or by mail are on your Proxy Card or “Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting,” as applicable. For shares held through a broker, bank or other nominee, follow the voting instructions included with your materials. If you provide specific voting instructions, your shares will be voted as you have instructed for each proposal enumerated in this Proxy Statement and as the Proxy Holders may determine within their discretion for any other matters that properly come before the meeting. If you hold shares in your name and you sign and return a Proxy Card without giving specific voting instructions, your shares will be voted as recommended by our Board on all matters set forth in this Proxy Statement and as the Proxy holders may determine in their discretion with respect to any other matters that properly come before the meeting. If you hold your shares through a broker, bank or other nominee and you do not provide instructions on how to vote, your broker or other nominee may have authority to vote your shares on certain matters. See“Quorum; Abstentions; BrokerNon-Votes”below.
The required quorum for the transaction of business at the Annual Meeting is a majority of the shares of Common Stock issued and outstanding on the Record Date. Shares voted are treated as being present at the Annual Meeting for purposes of establishing a quorum and are treated as shares present at the Annual Meeting with respect to such matter. Except in the case of the election of directors in which cumulative voting has been properly invoked and the Brokernon-votes occur on a matter when a broker, bank or other nominee is not permitted to vote on that matter without instructions from the beneficial owner and the beneficial owner does not give instructions. Without such voting instructions, for example, your broker or other nominee cannot vote your shares on“non-routine” matters such as the election of directors, and the advisory
VOTING REQUIRED The vote required for each proposal and the effect of uninstructed shares and abstentions on each proposal is as follows:
REVOCABILITYOF PROXIES Any person giving a Proxy in the form accompanying this Proxy Statement has the power to revoke the Proxy at any time prior to its use. A Proxy is revocable prior to the Annual Meeting by delivering either a written instrument revoking it or a duly executed Proxy bearing a later date to our Corporate Secretary. A Proxy is also automatically revoked if the stockholder is present at the Annual Meeting and votes in person.
SOLICITATION This solicitation of Proxies is made by, and on behalf of, our Board. We will bear the entire cost of preparing, assembling, printing, mailing and otherwise making available Proxy materials furnished by the Board to stockholders. Copies of Proxy materials will be furnished to brokerage houses, fiduciaries and custodians to be forwarded to the beneficial owners of our Common Stock, as requested. In addition to the solicitation of Proxies by mail, some of our officers, directors and employees may (without additional compensation) solicit Proxies by telephone or personal interview, the costs of which we will bear. Unless otherwise instructed, each valid returned Proxy that is not revoked will be voted:
“FOR” each of our nominees to the Board of Directors,
“FOR”
“FOR” ratification of the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2019, and
At the Proxy holders’ discretion on such other matters, if any, as may properly come before the Annual Meeting (including any proposal to adjourn the Annual Meeting).
DELIVERYOF PROXY MATERIALS In accordance with the rules adopted by the SEC, commonly referred to as “Notice and Access,” we have decided to provide access to our Proxy materials over the Internet instead of mailing a printed copy of the materials to every stockholder. We believe this helps to promote more cost-effective and efficient delivery of our Proxy materials to stockholders while reducing our environmental impact. As a result, you will not receive printed copies of the Proxy materials unless you request them. Instead, a Notice Regarding the Availability of Proxy Materials (the “Notice”) was mailed to stockholders of record (other than stockholders
who previously requested electronic or paper delivery of proxy materials) on or about March If you will receive printed copies of the Proxy materials, you may receive more than one set of materials, including multiple copies of this Proxy Statement and multiple Proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one Proxy Card. Please follow the instructions on your Proxy Card(s) and vote accordingly.
HOWTO OBTAINA SEPARATE SETOF PROXY MATERIALS You may request to receive Proxy materials in printed form by mail or electronically by email on an ongoing basis. If you sign up to receive Proxy materials electronically, you will receive an email with links to the materials. If you choose to receive future Proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy-voting site. Your election to receive Proxy materials by email will remain in effect until you terminate it. If you share an address with another stockholder, you may receive only one set of Proxy materials (including our SVB Financial Group 3003 Tasman Drive Santa Clara, California 95054 Attention: Corporate Secretary Telephone:(408) 654-7400 Facsimile: (408)969-6500 Email: bod@svb.com Similarly, if you share an address with another stockholder and have received multiple copies of our Proxy materials, you may write or call us at the above address and phone number to request delivery of a single copy of these materials.
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STOCKHOLDER PROPOSALS
You may submit proposals, including director nominations, for consideration at future stockholder meetings.
Stockholder Proposals
For a stockholder proposal to be considered for inclusion in our Proxy Statement for the annual meeting next year pursuant to Exchange Act Rule14a-8,the written proposal must be received by our Corporate Secretary at our principal executive offices no later than November 9, 2017.12, 2019. If the date of next year’s annual meeting is moved more than 30 days before or after the anniversary date of this year’s annual meeting, the deadline for inclusion of proposals in the Company’s Proxy Statement is instead a reasonable time before SVB Financial Group begins to print and mail its Proxy materials for the annual meeting next year. Such proposals will need to comply with the SEC regulations underRule 14a-8 regarding the inclusion of stockholder proposals in Company-sponsored proxy materials. Proposals should be addressed to:
Corporate Secretary
SVB Financial Group
3003 Tasman Drive
Santa Clara, California 95054
Facsimile: (408)969-6500
67 | 2019 PROXY STATEMENT |
For a stockholder proposal that is not intended to be included in our Proxy Statement underRule 14a-8, the stockholder must deliver a Proxy Statement and form of Proxy to holders of a sufficient number of shares of our Common Stock to approve that proposal, provide the information required by our Bylaws and give timely notice to our Corporate Secretary in accordance with our Bylaws. In general, our Bylaws require that the notice be received by our Corporate Secretary:
Not earlier than the close of business on December 24, 2017,27, 2019, and
Not later than the close of business on January 23, 2018.26, 2020.
However, if the date of the stockholder meeting is moved more than 30 days before or 60 days after the first anniversary of our annual meeting for the prior year, then notice of a stockholder proposal that is not intended to be included in our Proxy Statement underRule 14a-8 must be received no earlier than the close of business 120 days prior to the meeting and no later than the close of business on the later of the following two dates:
90 days prior to the meeting, and
10 days after public announcement of the meeting date.
Nomination of Director Candidates
NOMINATIONOF DIRECTOR CANDIDATES
You may propose director candidates for consideration by the Board’s Governance Committee. Any such recommendations should include the nominee’s name and qualifications for Board membership and should be directed to our Corporate Secretary at the address of our principal executive offices set forth above.
Our Bylaws permit a stockholder, or a group of up to twenty stockholders, owning three percent or more of the Company’s outstanding stock continuously for at least three years, to nominate and include in the Company’s annual proxy materials director nominees constituting the greater of two and twenty percent of the Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in our Bylaws. Notice of director nominees submitted pursuant to these proxy access Bylaw provisions must be delivered, or if sent by mail, received by our Corporate Secretary at our principal executive offices no earlier than October 13, 2019 and no later than November 12, 2019. If the date of next year’s annual meeting is moved more than 30 days before or after the anniversary date of this year’s annual meeting, the deadline is the later of 180 days prior to next year’s annual meeting date or 10 days following the date the next year’s meeting date is first publicly announced or disclosed. The notice of director nominees must include all of the information required by our Bylaws.
In addition, our Bylaws permit stockholders to nominate directors for election at an annual stockholder meeting.meeting but not for inclusion in our proxy statement. To nominate a director, the stockholder must deliver a Proxy Statement and form of Proxy to holders of a sufficient number of shares of our Common Stock to elect such nominee, and the stockholder and nominee must provide the information required byand satisfy other requirements as specified in our Bylaws, as well as a statement by the nominee acknowledging that he or she will owe a fiduciary obligation to us and its stockholders.Bylaws. In addition, the stockholder must give timely notice to our Corporate Secretary in accordance with our Bylaws, which, in general, require that the notice be received by our Corporate Secretary within the time period described above under “Stockholder Proposals.”
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COPY OF BYLAW PROVISIONS2018 ANNUAL REPORTAND BYLAWS
You may contact our Corporate Secretary at our principal executive offices for a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. Our Bylaws also are available through the SEC’s website atwww.sec.gov.
Stockholders who wish to obtain, copieswithout charge, a copy of our Annual Report onForm 10-K for the year ended December 31, 2016, without charge,2018, should address a written request to Attention: Corporate Secretary, SVB Financial Group, 3003 Tasman Drive, Santa Clara, California 95054 (Facsimile: (408)969-6500). The report is also available electronically atwww.svb.com/proxy.proxy.
A copy of our Bylaws may also be obtained by contacting the Corporate Secretary at the address above, should stockholders wish to review the relevant provisions regarding the requirements for making stockholder proposals, nominating director candidates, or other provisions. Our Bylaws are also available through the SEC’s website atwww.sec.gov.
The Board knows of no other matters to be presented for stockholder action at the Annual Meeting. However, if other matters do properly come before the Annual Meeting, the Board intends that the persons named in the proxies will vote upon such matters in accordance with their best judgment.
68 | 2019 PROXY STATEMENT |
AMENDED ANDRESTATED CERTIFICATE OF INCORPORATION OF
SILICON VALLEY BANCSHARESSVB FINANCIAL GROUP
Silicon Valley BancsharesSVB Financial Group, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:
1. Thepresentname of the Corporation isSilicon Valley Bancshares.SVB Financial Group. The name under which the Corporation originally incorporated was Silicon Valley Bancshares, Inc., and the Corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on March 22, 1999. The Corporation then filed a Certificate of Merger with the Secretary of State of the State of Delaware on April 23, 1999, pursuant to which the Corporation merged with Silicon Valley Bancshares, a California corporation, in accordance with Section 252 of the Delaware General Corporation, and the name of the merged corporation was Silicon Valley Bancshares. The Corporation also filed a Restated Certificate of Incorporation with the Secretary of State of the State of Delaware on May 25, 2005 and changed its name from Silicon Valley Bancshares to SVB Financial Group.
2. This Restated Certificate of Incorporation was duly adopted by the Corporation’s Board of Directors and stockholders in accordance with Sections 242 and 245 of the Delaware General Corporation Law. The Restated Certificate of Incorporation restates, integrates and further amends the provisions of the Certificate of Incorporation of the Corporation.
3. The text of the Certificate of Corporation as heretofore amended is hereby further amended and restated in its entirety, to read in its entirely as follows:
FIRST: The name of this corporation is SVB FINANCIAL GROUP (the “Corporation”).
SECOND: The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name and address of the registered agent of the Corporation in the State of Delaware is The Corporation Trust Company, 1209 Orange, Street in the City of Wilmington, County of New Castle.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is 170,000,000, consisting of 150,000,000 shares of Common Stock, $.001 par value per share (“Common Stock”), and 20,000,000 shares of Preferred Stock, $.001 par value per share. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized to fix or alter the voting rights, designations, powers, preferences and relative and other special rights, and the qualifications, limitations and restrictions of any wholly unissued series of Preferred Stock, and the number of shares constituting any such series, or any of them, and to increase or decrease the number of shares of any such series subsequent to the issue of shares of that series, but not the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of that series.
FIFTH: The business and affairs of the Corporation shall be managed by and under the direction of the Board of Directors. The exact number of directors of the Corporation shall be fixed by the Board of Directors or in the manner provided in the bylaws of the Corporation (the “Bylaws”).Subject to the requirements of the next sentence, every stockholder entitled to vote at any election for directors shall have the right to cumulate such stockholder’s votes and give one candidate a number of votes equal to the number of directors to be elected, multiplied by the number of votes to which such stockholder’s shares are entitled, or to distribute his or her votes on the same principal among as many candidates as the stockholder shall think fit. No stockholder shall be entitled to cumulate votes unless the name of the candidate or candidates for whom votes would be cast has been placed in nomination prior to the voting and at least one stockholder has given notice at the meeting, prior to the voting, of the stockholder’s intention to cumulate his or her votes. The candidate receiving the highest number of affirmative votes of shares entitled to be voted for them, up the number of directors to be elected, shall be elected. Votes against the directors and votes withheld shall have no legal effect.
A-1 | 2019 PROXY STATEMENT |
59
Sixth: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized:
(a) to adopt, repeal, rescind, alter or amend in any respect the Bylaws, and to confer in the Bylaws powers and authorities upon the directors of the corporation in addition to the powers and authorities expressly, conferred upon them by statute;
(b) from time to time to set apart out of any funds or assets of the Corporation available for dividends an amount to be reserved as working capital or for any other lawful purpose and to abolish any reserve so created and to determine whether any, and, if any, what part, of the surplus of the Corporation or its net profits applicable to dividends shall be declared in dividends and paid to its stockholders, and all rights of the holders of stock of the Corporation in respect of dividends shall be subject to the power of the Board of Directors so to do;
(c) subject to the laws of the State of Delaware, from time to time to sell, lease or otherwise dispose of any part or parts of the properties of the Corporation and to cease to conduct the business connected therewith or again to resume the same, as it may deem best; and
(d) in addition to the powers and authorities hereinbefore and by the laws of the State of Delaware conferred upon the Board of Directors, to execute all such powers and to do all acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the express provision of said laws of the Certificate of Incorporation of the Corporation and its Bylaws.
Seventh:SIXTH: Any action required or permitted to be taken by the stockholders of the Corporation may be effected at a duly called annual or special meeting of stockholders of the Corporation or by any consent in writing by such stockholders, provided that all other requirements of applicable law and the Bylaws have been satisfied.
Eighth:SEVENTH: ��Each director shall serve until his or her successor is elected and qualified or until his or her death, resignation or removal, and no decrease in the authorized number of directors shall shorten the term of any incumbent director.
Ninth:EIGHTH:Meetings of stockholders of the Corporation may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision of applicable law) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws.
Tenth:NINTH: A director of the Corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, as the same exists or hereafter may be amended, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Delaware General Corporation Law. No amendment to or repeal of this Article Tenth shall apply to or have an effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omission of such director occurring prior to such amendment or repeal.
Eleventh:TENTH: The Corporation reserves the right to adopt, repeal, rescind, alter or amend in any respect any provision contained in the Certificate of Incorporation in the manner now or hereafter prescribed by applicable law, and all rights conferred on stockholders herein are granted subject to this reservation.
Twelfth:ELEVENTH: The Corporation shall not be subject to the provisions of Section 203 of the Delaware General Corporation Law.
4. The amendments to the Corporation’s Restated Certificate of Incorporation, as amended to date, which are incorporated in thisAmended and Restated Certificate of Incorporation have been duly adopted by the Corporation’s Board of Directors in accordance with Section 242 of the General Corporation Law of the State of Delawareand by the stockholders of the Corporation at the Corporation’s annual meeting of stockholders held onApril 21, 2005, , 2019, in accordance with Section 242 of the General Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, thisAmended andRestated Certificate of Incorporation, which restates and integrates and further amends the provisions of the Certificate of Incorporation of the Company as amended to date, has been duly executed and attested by the Secretary this25th day of May, 2005. , 2019.
SVB FINANCIAL GROUP | ||
By: |
| |
Name: Greg Becker
|
SVB FINANCIAL GROUP
RECONCILIATIONOF CERTAIN GAAPTO NON-GAAP FINANCIAL INFORMATION
The following table provides a summary ofnon-GAAP core fee income, for the year ended December 31, 2016:
(Dollars in thousands) | Year ended December 31, 2016 | |||
GAAP noninterest income | $ | 456,552 | ||
Less: gains on investment securities, net | 51,740 | |||
Less: gains on derivative instruments, net | 48,581 | |||
Less: other noninterest income | 40,061 | |||
|
| |||
Non-GAAP core fee income (1) | $ | 316,170 | ||
|
| |||
Non-GAAP core fee income (1): | ||||
Foreign exchange fees | $ | 104,183 | ||
Credit card fees | 68,205 | |||
Deposit service charges | 52,524 | |||
Lending related fees | 33,395 | |||
Client investment fees | 32,219 | |||
Letters of credit and standby letters of credit fees | 25,644 | |||
|
| |||
Total non-GAAP core fee income (1) | $ | 316,170 | ||
|
|
|
In discussing our financial performance, we use certainnon-GAAP measures. These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures by other companies in our industry.Non-GAAP financial measures are not in accordance with or an alternative for, GAAP. Generally, anon-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Anon-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirement.
Specifically in this Proxy Statement, we report ournon-GAAP core fee income, which is a part of our noninterest income, as reported in accordance with GAAP. We believe thisnon-GAAP financial measure, when taken together with the corresponding GAAP financial measures (as applicable), provides meaningful supplemental information regarding our performance by excluding from our noninterest income certain line items where performance is typically subject to market or other conditions beyond our control, such as gains (losses) on investment securities, net, gains (losses) on derivative instruments, net, and other noninterest income items. We use, and believe our investors benefit from referring to, ournon-GAAP core fee income in assessing our overall operating results, forecasting and analyzing future periods.
Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP.
A-1
Attest: | ||
By: |
| |
Name: Michael Zuckert
|
A-3 | 2019 PROXY STATEMENT |
svbSVB FINANCIAL GROUP
2006 EQUITY INCENTIVE PLAN
1. | Purposes of the Plan. The purposes of this Plan are: |
to attract and retain the best available personnel for positions of substantial responsibility,
to provide incentives to individuals who perform services to the Company,
to align with stockholder interests, and
to promote the success of the Company’s business.
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine.
2. | Definitions. As used herein, the following definitions will apply: |
(a) | “Administrator” means the Board or any of its Committees, including its Compensation Committee, as will be administering the Plan, in accordance with Section 4 of the Plan. |
(b) | “Affiliate” means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company. |
(c) | “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan. |
(d) | “Award” means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine. |
(e) | “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. |
(f) | “Board” means the Board of Directors of the Company. |
(g) | “Cause” means: |
(i) | An act of embezzlement, fraud, dishonesty, or breach of fiduciary duty to the Company; or |
(ii) | A deliberate disregard of the rules of the Company which results in loss, damage or injury to the Company; or |
(iii) | Any unauthorized disclosure of any of the secrets or confidential information of the Company; or |
(iv) | Inducing any client or customer of the Company to break any contract with the Company or inducing any principal for whom the Company acts as agent to terminate such agency relations; or |
(v) | Engaging in any conduct which constitutes unfair competition with the Company; or |
(vi) | Any act which results in the Participant being removed from any office of the Company by any bank regulatory agency. |
B-1 | 2019 PROXY STATEMENT |
(h) | “Change in Control” means the consummation of any of the following transactions: |
(i) | A merger or consolidation of Silicon Valley Bank (the “Bank”) or the Company with any other corporation, other than a merger or consolidation which would result in beneficial owners of the total voting power in the election of directors represented by the voting securities (“Voting Securities”) of the Bank or the Company (as the case may be) outstanding immediately prior thereto continuing to beneficially own securities representing (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total Voting Securities of the Bank or the Company, or of such surviving entity, outstanding immediately after such merger or consolidation; |
(ii) | The filing of a plan of liquidation or dissolution of the Bank or the closing of the sale, lease, exchange or other transfer or disposition by the Bank or the Company of all or substantially all of the Bank’s assets; |
(iii) | Any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, other than (A) a trustee or other fiduciary holding securities under an employee benefit plan of the Bank or the Company, (B) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their beneficial ownership of stock in the Company, or (C) the Company (with respect to the Company’s ownership of the stock of the Bank), is or becomes the beneficial owner (within the meaning of Rule13d-3 under the Exchange Act), directly or indirectly, of the securities of the Bank or the Company representing fifty percent (50%) or more of the Voting Securities; or |
(iv) | Any person (as such term is used in Sections 13(d) or 14(d) of the Exchange Act), other than (A) a trustee or other fiduciary holding securities under an employee benefit plan of the Bank or the Company, (B) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock in the Bank, or (C) the Company (with respect to the Company’s ownership of the stock of the Bank) is or becomes the beneficial owner (within the meaning or Rule13d-3 under the Exchange Act), directly or indirectly, of the securities of the Bank or the Company representing twenty-five percent (25%) or more of the Voting Securities of such corporation, andwithin twelve (12) months of the occurrence of such event, a change in the composition of the Board occurs as a result of which sixty percent (60%) or fewer of the Directors are Incumbent Directors. For purposes of this definition, Incumbent Directors will mean Directors who either (A) are Directors as of the date hereof, (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Directors who are Incumbent Directors described in (A) above at the time of such election or nomination, or (C) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Directors who are Incumbent Directors described in (A) or (B) above at the time of such election or nomination. Notwithstanding the foregoing, “Incumbent Directors” will not include an individual whose election or nomination to the Board occurs in order to provide representation for a person or group of related persons who have initiated or encouraged an actual or threatened proxy contest relating to the election of Directors. |
(i) | “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code. |
(j) | “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof. |
(k) | “Common Stock” means the common stock of the Company. |
(l) | “Company” means SVB Financial Group, a Delaware corporation, or any successor thereto. |
(m) | “Consultant” means any natural person, including an advisor, engaged by the Company or its Affiliates to render bona fide services to such entity, provided the services: (i) are not in connection with the offer or sale of securities in a capital-raising transaction, and (ii) do not directly promote or maintain a market for the Company’s securities, in each case, within the meaning of FormS-8 promulgated under the Securities Act, and provided, further, that a Consultant will include only those persons to whom the issuance of Shares may be registered under FormS-8 promulgated under the Securities Act. |
(n) | “Director” means a member of the Board. |
B-2 | 2019 PROXY STATEMENT |
(o) | “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform andnon-discriminatory standards adopted by the Administrator from time to time. |
(p) | “Employee” means any person, including Officers and Directors, employed by the Company or its Affiliates. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. |
(q) | “Exchange Act” means the Securities Exchange Act of 1934, as amended. |
(r) | “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is increased or reduced. The Administrator may not implement an Exchange Program. |
(s) | “Fair Market Value” means, as of any date, the value of Common Stock as the Administrator may determine in good faith by reference to the price of such stock on any established stock exchange or a national market system on the day of determination if the Common Stock is so listed on any established stock exchange or a national market system. If the Common Stock is not listed on any established stock exchange or a national market system, the value of the Common Stock will be determined by the Administrator in good faith. |
(t) | “Fiscal Year” means the fiscal year of the Company. |
(u) | “Full Value Award” means an Award granted with an exercise price, if any, less than the Fair Market Value on the date of grant of such Award and generally will be in the form of Awards of Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units. |
(v) | “Incentive Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. |
(w) | “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option. |
(x) | “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. |
(y) | “Option” means a stock option granted pursuant to the Plan. |
(z) | “Outside Director” means a Director who is not an Employee. |
(aa) | “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. |
(bb) | “Participant” means the holder of an outstanding Award. |
(cc) | “Performance Period” means any Fiscal Year of the Company or such other period as determined by the Administrator in its sole discretion. |
(dd) | “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance objectives or other vesting criteria as the Administrator may determine pursuant to Section 11. |
(ee) | “Performance Unit” means an Award which may be earned in whole or in part upon attainment of performance objectives or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 11. |
B-3 | 2019 PROXY STATEMENT |
(ff) | “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator. |
(gg) | “Plan” means this 2006 Equity Incentive Plan. |
(hh) | “Restricted Stock” means Shares issued pursuant to an Award of Restricted Stock under Section 9 of the Plan, or issued pursuant to the early exercise of an Option. |
(ii) | “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 10. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company. |
(jj) | “Rule16b-3” means Rule16b-3 of the Exchange Act or any successor to Rule16b-3, as in effect when discretion is being exercised with respect to the Plan. |
(kk) | “Section 16(b)” means Section 16(b) of the Exchange Act. |
(ll) | “Securities Act” means the Securities Act of 1933, as amended. |
(mm) | “Service Provider” means an Employee, Director or Consultant. |
(nn) | “Share” means a share of the Common Stock, as adjusted in accordance with Section 16 of the Plan. |
(oo) | “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 8 is designated as a Stock Appreciation Right. |
(pp) | “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. |
(qq) | “Successor Corporation” has the meaning given to such term in Section 16(c) of the Plan. |
3. | Stock Subject to the Plan. |
(a) | Stock Subject to the Plan. Subject to the provisions of Section 16 of the Plan, the maximum aggregate number of Shares that may be awarded and sold under the Plan is 12,028,505 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. |
(b) | Full Value Awards. Any Shares subject to Full Value Awards will be counted against the numerical limits of this Section 3 as two Shares for every one Share subject thereto. Further, if Shares acquired pursuant to any such Award are forfeited or repurchased by the Company and would otherwise return to the Plan pursuant to Section 3(c), two times the number of Shares so forfeited or repurchased will return to the Plan and will again become available for issuance. |
(c) | Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, is forfeited to or repurchased by the Company, the unpurchased Shares (or for Awards other than Options and Stock Appreciation Rights, the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, all of the Shares covered by the Award (that is, Shares actually issued pursuant to a Stock Appreciation Right, as well as the Shares that represent payment of the exercise price) will cease to be available under the Plan. However, Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if unvested Shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price of an Award will not become available for future grant or sale under the Plan. Shares used to |
B-4 | 2019 PROXY STATEMENT |
satisfy the tax withholding obligations related to an Award (other than an Option or Stock Appreciation Right) will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment provided in Section 16, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code, any Shares that become available for issuance under the Plan under this Section 3(c). |
4. | Administration of the Plan. |
(a) | Procedure. |
(i) | Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan. |
(ii) | Rule16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule16b-3. |
(iii) | Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws. |
(b) | Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion: |
(i) | to determine the Fair Market Value; |
(ii) | to select the Service Providers to whom Awards may be granted hereunder; |
(iii) | to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine; |
(iv) | to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; |
(v) | to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating tosub-plans established for the purpose of satisfying applicable foreign laws; |
(vi) | to modify or amend each Award (subject to Section 6(c) and 21(c) of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards; |
(vii) | to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; |
(viii) | to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award pursuant to such procedures as the Administrator may determine; and |
(ix) | to make all other determinations deemed necessary or advisable for administering the Plan. |
(c) | Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards. |
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5. | Eligibility. Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares and such other cash or stock awards as the Administrator determines may be granted to Service Providers. Incentive Stock Options may be granted only to employees of the Company or any Parent or Subsidiary of the Company. |
6. | Limitations. |
(a) | Incentive Stock Options. |
(i) | $100,000 Limitation. Notwithstanding any designation of an Option as an Incentive Stock Option, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a)(i), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. |
(ii) | Maximum Option Term. In the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement. |
(iii) | Option Exercise Price. In the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. |
(b) | Share Limitations. Subject to Section 16, the following limitations shall apply to Awards under the Plan: during any Fiscal Year, no Employee will be granted: (i) Options to purchase more than 250,000 Shares; (ii) Stock Appreciation Rights covering more than 250,000 Shares; (iii) more than an aggregate of 125,000 Shares of Restricted Stock; (iv) more than an aggregate of 125,000 Restricted Stock Units; and (v) Performance Units having an initial value greater than $4,000,000, and more than 125,000 Performance Shares. |
(c) | Exchange Program. The Administrator may not institute an Exchange Program. |
(d) | Outside Director Award Limitations. No Outside Director may be granted, in any Fiscal Year, Awards covering Shares having an initial value greater than $500,000. Awards granted to an individual while he or she was an Employee or Consultant, but not an Outside Director, shall not count for purposes of these limitations. The foregoing limitations will be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 16. |
(e) | Limitations on Vesting and Acceleration. |
(i) | Vesting of Awards. With respect to Awards granted to Employees or Consultants, and except as otherwise provided in Section 16(c), no Award granted hereunder shall vest and become exercisable prior to the one (1) year anniversary of the date of grant (or, if applicable, the date an Employee or Consultant begins his or her employment or service with the Company or any Parent or Subsidiary of the Company). Notwithstanding the foregoing sentence and subject to Section 6(e)(iii), the Administrator, in its sole discretion, may provide at the time of or following the date of grant for accelerated vesting of an Award. |
(ii) | Vesting of Awards Granted to Directors. Awards that are granted on an annual basis to Directors following the Company’s Annual Meeting of Stockholders, shall become fully vested no earlier than the last day of the Director’s then current annual term of service as a member of the Board. Notwithstanding the foregoing, Awards granted pursuant to the 5% Limit or Awards that accelerate in connection with a Change in Control or upon or in connection with a Director’s termination of service due to death, Disability or retirement are not subject to the vesting provisions contained in this Section 6(e)(ii). |
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(iii) | Generally. Awards that result in issuing up to 5% of the maximum aggregate number of Shares authorized for issuance under the Plan (the “5% Limit”) may be granted to any one or more Service Providers without respect to any minimum vesting provisions included in the Plan. Further, all Awards that have their vesting discretionarily accelerated by the Administrator are subject to the 5% Limit, other than upon or in connection with a Change in Control or upon or in connection with a Participant’s termination of service due to death, Disability or retirement. Notwithstanding the foregoing, the Administrator may, in its discretion, accelerate the vesting of Awards such that the Plan minimum vesting requirements still must be met, without such vesting acceleration counting toward the 5% Limit. The 5% Limit shall be considered as one aggregate limit applying to the granting of Awards to Service Providers without respect to Plan minimum vesting requirements and to the discretionary vesting acceleration of Awards. |
(iv) | Dividend Payments. Dividends and other distributions payable with respect to Awards will not vest or be paid before the Award or Shares underlying the Award vest. |
7. | Stock Options. |
(a) | Grant of Options. Subject to the terms and conditions of the Plan, Options may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. |
(b) | Number of Shares. Subject to the limitations contained in Section 6, the Administrator will have complete discretion to determine the number of Shares subject to Options granted to any Participant. |
(c) | Term of Option. The Administrator will determine the term of each Option in its sole discretion. Any Option granted under the Plan will not be exercisable after the expiration of seven (7) years from the date of grant or such shorter term as may be provided in the Award Agreement. |
(d) | Option Exercise Price and Consideration. |
(i) | Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, but will be no less than 100% of the Fair Market Value per Share on the date of grant, subject to the provisions of Section 6. Notwithstanding the foregoing provisions of this Section 7(d), Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. |
(ii) | Waiting Period and Exercise Dates. Subject to the terms and conditions of the Plan, at the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised. |
(iii) | Form of Consideration. The Administrator will determine the acceptable form(s) of consideration for exercising an Option, including the method of payment, to the extent permitted by Applicable Laws. |
(e) | Exercise of Option. |
(i) | Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. |
An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Administrator specifies from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with an applicable withholding taxes). No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 16 of the Plan. |
(ii) | Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination for Cause or as the result of the Participant’s death or Disability, |
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the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan. |
(iii) | Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. |
(iv) | Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. |
(v) | Termination for Cause. If a Participant’s status as a Service Provider is terminated for Cause, then the Option will immediately terminate, and the Shares covered by such Option will revert to and again become available for issuance under the Plan. |
(vi) | Other Termination. A Participant’s Award Agreement may also provide that if the exercise of the Option following the termination of Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would result in liability under Section 16(b), then the Option will terminate on the earlier of (A) the expiration of the term of the Option set forth in the Award Agreement, or (B) the 10th day after the last date on which such exercise would result in such liability under Section 16(b). Finally, a Participant’s Award Agreement may also provide that if the exercise of the Option following the termination of the Participant’s status as a Service Provider (other than upon the Participant’s death or disability) would be prohibited at any time solely because the issuance of Shares would violate the registration requirements under the Securities Act, then the Option will terminate on the earlier of (A) the expiration of the term of the Option, or (B) the expiration of a period of three (3) months after the termination of the Participant’s status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements. |
8. | Stock Appreciation Rights. |
(a) | Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. |
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(b) | Number of Shares. Subject to the limitations contained in Section 6, the Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Participant. |
(c) | Exercise Price and Other Terms. The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan, provided, however, that the exercise price will be not less than 100% of the Fair Market Value of a Share on the date of grant. |
(d) | Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine. |
(e) | Expiration of Stock Appreciation Rights. The Administrator will determine the term of each Stock Appreciation Right in its sole discretion. Any Stock Appreciation Right granted under the Plan will not be exercisable after the expiration of seven (7) years from the date of grant or such shorter term as may be provided in the Award Agreement. Notwithstanding the foregoing, the rules of Section 7(e) also will apply to Stock Appreciation Rights. |
(f) | Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying: |
(i) | The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times |
(ii) | The number of Shares with respect to which the Stock Appreciation Right is exercised. |
At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof. |
9. | Restricted Stock. |
(a) | Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine. |
(b) | Restricted Stock Agreement. Subject to the limitations contained in Section 6, each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held by the Company as escrow agent until the restrictions on such Shares have lapsed. |
(c) | Transferability. Except as provided in this Section 9, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. |
(d) | Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate. |
(e) | Removal of Restrictions. Except as otherwise provided in this Section 9, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction. Subject to the terms and conditions of the Plan, the restrictions will lapse at a rate determined by the Administrator and subject to the vesting limitations contained in Section 6, the Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed. |
(f) | Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. |
(g) | Dividends and Other Distributions. During the Period of Restriction, and subject to the limitations contained in Section 6, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other |
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distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. |
(h) | Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan. |
10. | Restricted Stock Units. |
(a) | Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. Such to the limitations contained in Section 6, each Restricted Stock Unit grant will be evidenced by an Award Agreement that will specify such other terms and conditions as the Administrator, in its sole discretion, will determine, including all terms, conditions, and restrictions related to the grant, the number of Restricted Stock Units and the form of payout, which, subject to Section 10(d), may be left to the discretion of the Administrator. |
(b) | Vesting Criteria and Other Terms. Subject to the terms and conditions of the Plan, the Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will specify the vesting criteria, and such other terms and conditions as the Administrator, in its sole discretion, will determine. |
(c) | Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as specified in the Award Agreement. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion. Subject to the vesting limitations contained in Section 6, after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout. |
(d) | Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) set forth in the Award Agreement. The Administrator, in its sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof. Shares represented by Restricted Stock Units that are fully paid in cash again will be available for grant under the Plan. |
(e) | Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company. |
11. | Performance Units and Performance Shares. |
(a) | Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. Subject to the limitations contained in Section 6, the Administrator will have complete discretion in determining the number of Performance Units/Shares granted to each Participant. |
(b) | Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. |
(c) | Performance Objectives and Other Terms. Subject to the terms and conditions of the Plan, the Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Participant. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion. Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. |
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(d) | Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. Subject to the vesting limitations contained in Section 6, after the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share. |
(e) | Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof. |
(f) | Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan. |
12. | [RESERVED] |
13. | Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the Code such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A of the Code, except as otherwise determined in the sole discretion of the Administrator. Each payment or benefit under this Plan and under each Award Agreement is intended to constitute a separate payment for purposes ofSection 1.409A-2(b)(2) of the Treasury Regulations. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Section 409A of the Code and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A of the Code the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A of the Code. |
14. | Leaves of Absence. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant who is an Employee will not cease to be an Employee in the case of (i) any leave of absence approved by the Company of the Affiliate employing the Participant or (ii) transfers between locations of the Company or between the Company and its Affiliates. |
For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months and one day following the commencement of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. |
15. | Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate. |
16. | Adjustments; Dissolution or Liquidation; Merger or Change in Control. |
(a) | Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,split-up,spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits set forth in Sections 3 and 6. |
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(b) | Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action. |
(c) | Change in Control. |
(i) | In the event of a merger of the Company with or into another company or Change in Control (subject to Section 16(c)(ii) and any vesting acceleration provisions in an Award or other agreement), outstanding Awards will be treated in the manner provided in the agreement relating to the Change in Control (including as the same may be amended), including, without limitation: |
(1) | the continuation of the outstanding Award by the Company, if the Company is a surviving corporation; |
(2) | the assumption of the outstanding Awards, or substitution of equivalent Awards, by the acquiring or succeeding corporation (or an affiliate thereof) (the “Successor Corporation”) with appropriate adjustments as to the number and kind of shares and prices; |
(3) | that outstanding Awards will vest and become exercisable (and for the avoidance of doubt, notwithstanding the vesting limitations in Section 6), realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon consummation of such Change in Control, and, to the extent the Administrator determines, terminate upon or immediately prior to the effectiveness of such merger or Change in Control; |
(4) | (A) the termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment), or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion; or |
(5) | any combination of the foregoing. |
Such agreement shall not be required to treat all Awards or individual types of Awards similarly in the Change in Control.
(ii) | In the event that the Successor Corporation refuses to assume, continue or substitute for the Award (and for the avoidance of doubt, notwithstanding the vesting limitations in Section 6), the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock will lapse, and, with respect to Restricted Stock Units, Performance Shares and Performance Units, all performance goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right becomes fully vested and exercisable in lieu of assumption, continuation, or substitution in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period. |
For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines to pay cash or a Restricted Stock Unit, Performance Share or Performance Unit which the |
B-12 | 2019 PROXY STATEMENT |
Administrator can determine to pay in cash, the fair market value of the consideration received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Share or Performance Unit, for each Share subject to such Award (or in the case of Performance Units, the number of implied shares determined by dividing the value of the Performance Units by the per share consideration received by holders of Common Stock in the Change in Control), to be solely common stock of the Successor Corporation equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control. |
Notwithstanding anything in this Section 16(c) to the contrary, an Award that vests, is earned orpaid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the Successor Corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption. |
Notwithstanding anything in this Section 16(c) to the contrary, if a payment under an Award Agreement is subject to Section 409A of the Code and if the change in control definition contained in the Award Agreement does not comply with the definition of “change of control” for purposes of a distribution under Section 409A of the Code, then any payment of an amount that is otherwise accelerated under this Section 16 will be delayed until the earliest time that such payment would be permissible under Section 409A of the Code without triggering any penalties applicable under Section 409A of the Code. |
17. | Tax Withholding |
(a) | Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof). |
(b) | Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (a) paying cash (or cash equivalent), (b) electing to have the Company withhold otherwise deliverable cash or Shares having a fair market value equal to the amount required to be withheld or such other amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion, (c) delivering to the Company already-owned Shares having a fair market value equal to the amount required to be withheld or such other amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion, or (d) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld. The fair market value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld. |
18. | No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws. |
19. | Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant. |
20. | Term of Plan. Subject to Section 24of the Plan, the Plan will become effective upon its adoption by the Administrator. It will continue in effect until April 24, 2029, unless terminated earlier under Section 21of the Plan. |
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21. | Amendment and Termination of the Plan. |
(a) | Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan. |
(b) | Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. |
(c) | Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. |
22. | Conditions Upon Issuance of Shares. |
(a) | Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance. |
(b) | Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. |
23. | Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained. |
24. | Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws. |
25. | Clawback Policy. Notwithstanding anything contained herein to the contrary, all Awards granted under the Plan will be subject to the terms and conditions of any clawback policy adopted by the Company and as may be in effect from time to time, which will survive the Participant’s termination as a Service Provider. |
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SVB FINANCIAL GROUP 3003 TASMAN DRIVE SANTA CLARA, CA 95054
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up untilinformation. Vote by 11:59 P.M. Eastern Time the day before thecut-off date or meeting date.on April 24, 2019 for shares held directly and by 11:59 P.M. Eastern Time on April 22, 2019 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up untilinstructions. Vote by 11:59 P.M. Eastern Time the day before thecut-off date or meeting date.on April 24, 2019 for shares held directly and by 11:59 P.M. Eastern Time on April 22, 2019 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E17091-P85507
E57312-P17293 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
SVB FINANCIAL GROUP For All Withhold AllAgainst For All Except
To withhold authority to vote foragainst any individual nominee(s), mark All All Except “For All Except” and write the number(s) of the The Board of Directors recommends you vote FOR nominee(s) on the line below.
the following: 1. Election of Directors ! ! ! Nominees: 01) Greg W. Becker 07) Jeffrey N. Maggioncalda 02) Eric A. Benhamou 08) Mary J. Miller 03) John S. Clendening 09) Kate D. Mitchell 04) Roger F. Dunbar 10) John F. Robinson 05) Joel P. Friedman 11) Garen K. Staglin 06) Kimberly A. Jabal The Board of Directors recommends you vote FOR the following:
1. Election of Directors
Nominees:
01) Greg W. Becker 07) Jeffrey N. Maggioncalda
02) Eric A. Benhamou 08) Mary J. Miller
03) David M. Clapper 09) Kate D. Mitchell
04) Roger F. Dunbar 10) John F. Robinson
05) Joel P. Friedman 11) Garen K. Staglin
06) Lata Krishnan
The Board of Directors recommends you vote FOR Proposals 2 and 3:following proposals: For Against Abstain
For Against Abstain 2. To approve our Amended and Restated Certificate of 5. To ratify the appointment of KPMG LLP as the Company’s Incorporation to eliminate cumulative voting in director independent registered public accounting firm for its fiscal elections. year ending December 31, 2017.
2019. 3. To approve, on an advisory basis, our executive compensation (“Say on Pay”).
The Board of Directors recommends you vote 1 YEAR on Proposal 4: 1 Year 2 Years 3 Years Abstain
4. To approve onour 2006 Equity Incentive Plan, as amended and restated, to reserve an advisory basis,additional 2,500,000 shares of common stock for issuance thereunder and extend the frequencyexpiration date of future Say on Pay votes.
the Plan to April 24, 2029. To cumulate votes as to a particular nominee as explained in the Proxy Statement, check box to the right then indicate the name(s) and the number of votes to be given to such nominee(s) on the reverse side of this card. Please do not check box unless you want to exercise cumulative voting.
Please indicate if you plan to attend this meeting.
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in fullinfull corporate or partnership name by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and 20162018 Form10-K Annual Report are available at www.proxyvote.com.
E17092-P85507
E57313-P17293 SVB FINANCIAL GROUP
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING ON APRIL 27, 2017
25, 2019
The undersigned appoints GREG W. BECKER and MICHAEL S. ZUCKERT, or either of them, with full power of substitution for himself, as the proxy holder of the undersigned to vote and otherwise represent all of the shares registered in the name of the undersigned at the Annual Meeting of Stockholders of SVB Financial Group to be held on Thursday, April 27, 2017,25, 2019, at 4:30 p.m. local time,Local Time, at the Company’s offices located at 3005 Tasman Drive, Santa Clara, California 95054 and any postponements or adjournments thereof, with the same effect as if the undersigned were present and voting such shares, on the matters and manner listed on the reverse side. If the undersigned holds shares in its name, and signs and returns this proxy card without giving specific voting instructions, the undersigned’s shares will be voted as recommended by the Company’s Board on each of the matters listed on the reverse side and as the proxy holders may determine in their discretion with respect to any other matters that properly come before the meeting.
Cumulative voting (Complete only if applicable)
NAME OF CANDIDATE # OF VOTES CAST 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11
NAME OF CANDIDATE
# OF VOTES CAST
(If you exercised cumulative voting, please mark corresponding box on the reverse side.
) Continued and to be signed on reverse side
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