Jonathan S. Mothner
Executive Vice President,
General Counsel and Secretary
| | Mr. Mothner,
| | | Name and present position with the Company | | Age, period served in present position and other business experience | Henry F. Greig Executive Vice President, Chief Credit Officer and Capital Management Leader | | Mr. Greig, 56, has been our Executive Vice President, Chief Credit Officer and Capital Management Leader since April 2017. He previously served as our Executive Vice President and CRO from February 2014 to April 2017. Mr. Greig served as CRO of GE’s North American retail finance business from October 2010 to February 2014, and the Bank from May 2011 to April 2017. Mr. Greig was also a member of the board of directors of the Bank from 2011 to January 2016. From June 2004 to October 2010, Mr. Greig served as CRO of the Retail Card platform of GE’s North American retail finance business. From December 2002 to June 2004, Mr. Greig served as Vice President of Risk for GE’s North American retail finance business. From June 2000 to December 2002, Mr. Greig served as Vice President of Information & Customer Marketing of GE’s North American retail finance business. Prior to that, Mr. Greig served in various business and risk positions with affiliates of GE. Mr. Greig received an A.B. in Mathematics from Bowdoin College and an M.S. in Applied Mathematics from Rensselaer Polytechnic Institute. | Neeraj Mehta Executive Vice President, CEO—Payment Solutions and Chief Commercial Officer | | Mr. Mehta, 48, has been Executive Vice President and CEO of our Payment Solutions platform and our Chief Commercial Officer since January 2018. He previously served as our Executive Vice President of Business Strategy and Development from January 2015 to December 2017. From January 2012 to December 2014, Mr. Mehta served as President and CEO of GE Capital, Commercial Distribution Finance. From January 2008 to December 2011, Mr. Mehta served as President and CEO of GE Capital, Bank Loan Group and Managing Director of GE Capital Europe, Bank Loans. Mr. Mehta joined GE in 1996 where he held numerous executive roles. Mr. Mehta received a B.A. in Social Ecology from the University of California, Irvine and an M.B.A. in Finance and Accounting from Syracuse University. | David P. Melito Senior Vice President, Chief Accounting Officer and Controller | | Mr. Melito, 53, has been our Executive Vice President, General Counsel and Secretary since February 2014 and has served as General Counsel for GE’s North American retail finance business since January 2009 and the Bank since September 2011. From December 2005 to July 2009, Mr. Mothner served as Chief Litigation Counsel and Chief Compliance Officer of GE’s global consumer finance business. From June 2004 to December 2005, Mr. Mothner served as Chief Litigation Counsel and head of the Litigation Center of Excellence of GE Commercial Finance. From May 2000 to June 2004, Mr. Mothner served as Litigation Counsel of GE’s global consumer finance business. Prior to joining GECC, Mr. Mothner served in various legal roles in the U.S. Department of Justice and a private law firm. Mr. Mothner received a B.A. in Economics from Hobart College and a J.D. from New York University School of Law. | | | David P. Melito
Senior Vice President,
Chief Accounting Officer
and Controller
| | Mr. Melito, 51, has been our Senior Vice President, Chief Accounting Officer and Controller since February 2014 and has served as Controller for GE’s North American retail finance business since March 2009. From January 2008 to March 2009, Mr. Melito served as Global Controller, Technical Accounting for GE Capital Aviation Services. From January 2001 to January 2008, Mr. Melito served as Global Controller, Technical Accounting for GE Capital Commercial Finance. Prior to that, Mr. Melito worked in public accounting. Mr. Melito holds a B.A. in Accounting from Queens College, City University of New York, and is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants.
|
 27
| | | | | Jonathan S. Mothner Executive Vice President, General Counsel and Secretary | | Mr. Mothner, 55, has been our Executive Vice President, General Counsel and Secretary since February 2014 and has served as General Counsel for GE’s North American retail finance business since January 2009 and the Bank since September 2011. From December 2005 to July 2009, Mr. Mothner served as Chief Litigation Counsel and Chief Compliance Officer of GE’s global consumer finance business. From June 2004 to December 2005, Mr. Mothner served as Chief Litigation Counsel and head of the Litigation Center of Excellence of GE Commercial Finance. From May 2000 to June 2004, Mr. Mothner served as Litigation Counsel of GE’s global consumer finance business. Prior to joining GECC, Mr. Mothner served in various legal roles in the U.S. Department of Justice and a private law firm. Mr. Mothner received a B.A. in Economics from Hobart College and a J.D. from New York University School of Law. | Thomas M. Quindlen Executive Vice President and CEO—Retail Card | | Mr. Quindlen, 56, has been our Executive Vice President and CEO of our Retail Card platform since February 2014 and has served as Vice President of the Retail Card platform for GE’s North American retail finance business since December 2013. From January 2009 to December 2013, Mr. Quindlen served as Vice President and CEO of GECC Corporate Finance. From November 2005 to January 2009, Mr. Quindlen served as President of GECC Corporate Lending, North America. From March 2005 to November 2005, Mr. Quindlen served as Vice President and CEO of GECC Commercial Financial Services. From May 2002 to March 2005, Mr. Quindlen served as President and CEO of GECC Franchise Finance. From September 2001 to May 2002, Mr. Quindlen served as Senior Vice President of GECC Global Six Sigma for Commercial Equipment Financing. Prior to that, Mr. Quindlen served in various sales, marketing, business development and financial positions with GE affiliates. Mr. Quindlen received a B.S. in Accounting from Villanova University. | Paul Whynott Executive Vice President, Chief Risk Officer | | Mr. Whynott, 48, has been our Executive Vice President and CRO since April 2017. From May 2014 to April 2017, Mr. Whynott served as our Executive Vice President and Chief Regulatory Officer. Prior to joining Synchrony Financial, Mr. Whynott served as Senior Supervisory Officer, Financial Institution Supervision Group at the Federal Reserve Bank of New York from April 2011 to May 2014 and he held various leadership positions of increasing responsibility from August 1992 to May 2014. Mr. Whynott received a B.A. in Economics from Connecticut College and an M.B.A. in Finance from the Columbia School of Business, Columbia University. |
COMPENSATION MATTERSSynchrony | 2019 Annual Meeting and Proxy Statement 29
Compensation Matters Compensation Discussion and Analysis Executive Summary Business and Strategic Updates | | | We generated strong operational and financial results in 2018, including the acquisition
of the U.S. PayPal Credit program, which is the largest partner win in our history. While
we did not renew the Walmart program, we successfully renewed over 50 relationships,
including five of our largest ongoing programs—PayPal, Lowe’s, JC Penney and, in
January 2019, Amazon and Sam’s Club, a Walmart subsidiary. In addition to renewing
key partnerships, we won over 35 new business deals. We continued to grow our
Payment Solutions Car Care and HOME credit card networks. In addition, we expanded
our CareCredit network into 11 new specialties. We continue to invest in our digital
capabilities and expanded our network, focusing on ease of card use across platforms,
as well as card utility, and enhancing our competitive position in the rapidly changing
marketplace. Fiscal Year 2018 Financial Performance Highlights • 44.2% Increase in Net Earnings to $2.8 billion • 54.5% Increase in Diluted Earnings Per Share to $3.74 • Returned $2.4 billion in capital to stockholders ($1.9 billion in share repurchases and $0.5 billion in dividends) • Industry leading Efficiency Ratio* of 30.8% • Better 2018 Return on Assets than two out of three direct peers** • Increased Deposits 13.3% to $64.0 billion, now 73% of total funding * For Synchrony, Efficiency Ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income. ** Direct peers include American Express Company, Capital One Financial Corporation and Discover Financial Services. Stockholder Engagement and Responsiveness to 2018 Vote Following our 2018 Annual Meeting of Stockholders, the MDCC reviewed the results of
the stockholder advisory vote on executive compensation in which approximately 66%
of votes were cast in favor of the proposal, a decline from 97% in 2017. | | Grew Net Earnings 44%
Grew Diluted EPS 55%
Returned Capital to Stockholders $2.4B | | The MDCC and management conducted extensive outreach with our stockholders leading up to and following our 2018 Annual Meeting to better understand their perspectives on our compensation program, particularly for those who voted against oursay-on-pay proposal. In total, we reached out to our top 30 stockholders representing over 60% of our outstanding shares and had conversations with all stockholders who expressed interest in meeting with us (14 stockholders representing approximately 35% of our outstanding shares). We also engaged with proxy advisory firms. Richard Hartnack, Chair of the Board and Chair of the MDCC, participated in the vast majority of the meetings with stockholders, and feedback received was regularly shared and discussed with our full Board. | | |
30 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters The MDCC considered several potential changes to the compensation program and discussed them with the full Board and with investors during our stockholder engagement. Following these helpful dialogues and the MDCC’s own discussions, a number of actions were taken, several of which are highlighted below. | | | | | | | | Areas of Focus | | Actions We Took | | | | | | AvoidOne-Time Special Equity Grants | | • The MDCC determined that it would not make specialone-time grants to NEOs other than to attract external hires | | | | | | Emphasize Alignment of Pay for Performance | | • Our CEO voluntarily agreed with the MDCC to forfeit $1 million in RSUs granted to her in 2018 • Our CEO received no increase in any component of her direct total pay for 2018 • While the Company delivered strong financial performance in 2018, given thenon-renewal of the Walmart program and the Company’s annual TSR for 2018 relative to peers, the MDCC applied a 10% decrease in the AIP award for all executives | | | | | | Further Align Incentive Metrics with Stockholders, Including by Adding Relative TSR Performance Measure | | • The MDCC added a TSR modifier to our long-term PSUs to be granted in 2019 that will be linked to stockholder returns relative to peers over the 2019–2021 performance period • We increased the weight of Net Earnings in our annual cash bonus awards under the AIP (1/3 in 2017, 45% in 2018 and 50% in 2019) | | | | | | Add Transparency to Disclosure | | • We enhanced disclosure of our pay metrics in this proxy statement, providing minimum, target and maximum funding goals for both our annual cash bonus awards under the AIP and the 2016–2019 PSUs | | |
Synchrony | 2019 Annual Meeting and Proxy Statement 31
Compensation Matters Mix of Pay A majority of our NEOs’ compensation is performance-based and therefore at risk. The only fixed compensation paid is base salary, which represents approximately 11% of the CEO’s total direct compensation and no more than 28% of the other NEOs’ total direct compensation. The mix of direct pay as of the end of 2018 for our CEO and CFO is shown below. 
32 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters Align Incentives with Stockholders The MDCC evaluates several financial and operational achievements against our peers, including return measures, growth metrics, efficiency ratio and TSR. Performance during 2018 against our peers ranked first or second out of our direct peers for Efficiency Ratio and Return on Assets. 
During the five-year period from 2014 through 2018, our annualized receivables growth rate and annualized earnings growth rate ranked first compared to our direct peers: 
Synchrony | 2019 Annual Meeting and Proxy Statement 33
Compensation Matters Best Practice Compensation Programs and Policies The MDCC has implemented the following measures as part of our executive compensation programs: | | | | | | | | | | | | | | | | | What We Do: | | | | | | | | What We Don’t Do: | | | | | | | | | | | | | | | | | | |  Substantial portion of executive pay based on performance against goals set by the MDCC
| | | | | |  No hedging or pledging of Company stock
| | | | | | | | Risk governance framework underlies compensation decisions | | | | | | No employment agreements for executive officers | | | | | | | | Updated: Enhanced stock ownership requirements for executive officers | | | | | | No taxgross-ups for executive officers | | | | | | | | Minimum vesting of 12 months for any options or stock appreciation rights | | | | | | No discretion to accelerate the vesting of awards | | | | | | | | Minimum vesting of 12 months for any restricted stock or RSUs | | | | | | No cash buyouts of stock options or stock appreciation rights with exercise prices that are notin-the-money | | | | | | | | Limited perquisites | | | | | | No payout of dividends on unvested equity prior to the vesting date | | | | | | | | Use of peer company benchmarking | | | | | | No backdating or repricing of stock option awards | | | | | | | | | | Double-trigger vesting of equity and long-term incentive plan awards upon change in control | | | | | | | | | | | | | | | | | | | | Updated: Compensation subject to claw-back in the event of misconduct and expanded to “no fault” in the case of financial restatements | | | | | | | | | | | | | | | | | | | | One-year“Say-on-Pay” frequency | | | | | | | | | | | | | | | | | | | | Updated: New independent compensation consultant advises the MDCC | | | | | | | | | | |
Compensation Philosophy Synchrony Program Principles Synchrony’s executive compensation program is intended to discourage excessive or imprudent risk-taking while at the same time promoting and supporting the key principles outlined below. The program is also designed to be consistent with our safety and soundness and to identify, measure, monitor and control incentive compensation arrangements. The key principles guiding this program and underlying the oversight of our program by Synchrony’s MDCC are: Performance—compensation programs are linked to business and individual performance against both qualitative and quantitative goals and objectives; Values—compensation programs are also linked to how employees demonstrate the behaviors and values expected of our employees; Stockholder Alignment—compensation program should be designed to align management incentives with the creation of stockholder returns over the long-term; Market Competitiveness—compensation programs should be competitive with the external labor markets; 34 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters | | | Internal Equity—compensation programs should be internally equitable, subject to the employee’s experience, performance and other relevant factors; Prudent Risk—compensation programs, particularly in the form of incentive compensation, must not encourage employees to expose the Company to inappropriate or excessive risks and should be based in part on the long-term performance outcomes of risks taken. Employees should take risks only within approved policy limits, in accordance with the MDCC charter and key practices and in consideration of Synchrony’s ability to effectively identify and manage such risks, including credit, operational and reputational risks; Fair Customer Treatment—compensation programs should encourage employees to follow established Company procedures and to treat customers fairly; and Reporting Concerns—compensation programs should be designed in such a way as to encourage employees to raise concerns without fear of retaliation. The consistent application of these design principles enables Synchrony to maintain compensation programs that are reasonable, balanced and effectively attract, retain, motivate and engage employees to achieve the mission, goals and objectives of Synchrony in a way that is compatible with effective risk management controls and long-term stockholder value. A robust performance review process is a critical element in all reward decisions. NameKey Considerations in Setting Compensation
For 2018, we used the following considerations in setting compensation for our NEOs: Consistent and present positionSustainable Performance—Our executive compensation program provides the greatest pay opportunity when executives demonstrate superior performance for sustained periods of time. It also rewards executives for executing our Company’s strategy through business cycles, so that the achievement of long-term strategic objectives is not compromised by short-term considerations. The emphasis on consistent performance affects annual salary and equity incentive compensation. With the prior year’s salary and grant serving as an initial basis for consideration, the final determinations for salary and grants is are based on an assessment of an executive’s past performance and expected future contributions. Because current-year, past and sustainable performance are incorporated into compensation decisions, any percentage increase or decrease in the amount of total annual compensation tends to be more gradual than in a framework that is focused solely or largely on current-year performance. Balanced Compensation Approach—We strive to provide an appropriate mix of compensation elements to achieve a balance between short versus long-term compensation, cash versus equity incentive compensation and other features that cause the amounts ultimately received by the NEOs to appropriately reflect risk and risk outcomes. Cash payments primarily, but not exclusively, reward more recent performance, whereas equity awards encourage our NEOs to continue to deliver results over a longer period of time, align our executives’ interests with the interests of our stockholders and serve as a retention tool. We believe that the compensation paid or awarded to our NEOs should be more heavily weighted toward rewards based on our Company’s sustained operating performance as well as our stock price performance over the long-term. Qualitative and Quantitative Factors—Quantitative formulas are not used exclusively in determining the amount of compensation. While quantitative calculations and formulas set the funding and cap award levels for our performance-based programs, the MDCC can use qualitative factors such as performance in the context of the economic environment relative to other companies, risk considerations, execution of our strategic plan and leadership competencies/values. Risk Mitigation—Our compensation program is balanced, focused on the long term and takes into consideration the full range and duration of risks associated with an NEO’s activities. Under this structure, the highest amount of compensation can be achieved through consistent superior performance but only within the limits of our stated risk appetite. In addition, significant portions of compensation are earned only over the longer term and may be adjusted during the vesting period for risk outcomes. This provides strong incentives for executives to manage our Company for the long term while avoiding excessive risk-taking in the short term. As discussed further below under “Compensation and Risk,” Synchrony’s MDCC reviews the relationship between our risk management policies and practices and the incentive compensation provided to our NEOs. Peer Company Pay—We also considered compensation levels and pay practices at our direct peers and other peer companies when setting target pay levels in 2018. The peer group was selected to reflect publicly traded financial services companies headquartered in the United States considering assets, annual revenue and market capitalization equal to approximatelyone-half totwo-times Synchrony’s size. At the time of the peer group selection, Synchrony was at the peer 29th percentile in assets, 76th percentile in revenue and 55th percentile in market capitalization, based on financial information from the most recent fiscal year prior to the meeting.
Synchrony | 2019 Annual Meeting and Proxy Statement 35
Compensation Matters The list of peer companies used to provide market reference and set target pay levels for 2018 was as follows: | | Age, period served in present position
and other business experience | | | | | Consumer Finance | | Data Processing | | Commercial Banks | | | | Ally Financial Inc. | | MasterCard Incorporated | | BB&T Corporation | American Express Company | | PayPal Holdings, Inc. | | Citizens Financial Group, Inc. | Capital One Financial Corporation | | Visa Inc. | | Comerica Incorporated | Discover Financial Services | | | | Fifth Third Bancorp | | | | | Huntington Bancshares Incorporated | | | | | KeyCorp | | | | | M&T Bank Corporation | | | | | The PNC Financial Services Group, Inc. | | | | | Regions Financial Corporation | | | | | SunTrust Banks, Inc. | | | | | Zions Bancorporation | |
For 2019, upon the recommendation of Meridian Compensation Partners, LLC (“Meridian”), the MDCC’s new independent advisor, the MDCC intends to update Synchrony’s peer group to include more data processors and consumer finance companies (Santander Consumer USA Holdings, Fidelity National Information Services, Alliance Data Systems, Fiserv, and Total System Services) and eliminate banks with limited consumer focus (i.e., The PNC Financial Services Group, Inc. and Comerica Incorporated). As a result, the list of peer companies for 2019, as set forth below, better reflects our business model. Thomas M. Quindlen
Executive Vice President
and Chief Executive Officer—
Retail Card
| | Mr. Quindlen, 54, has been our Executive Vice President and CEO of our Retail Card platform since February 2014 and has served as Vice President of the Retail Card platform for GE’s North American retail finance business since December 2013. From January 2009 to December 2013, Mr. Quindlen served as Vice President and CEO of GECC Corporate Finance. From November 2005 to January 2009, Mr. Quindlen served as President of GECC Corporate Lending, North America. From March 2005 to November 2005, Mr. Quindlen served as Vice President and CEO of GECC Commercial Financial Services. From May 2002 to March 2005, Mr. Quindlen served as President and CEO of GECC Franchise Finance. From September 2001 to May 2002, Mr. Quindlen served as Senior Vice President of GECC Global Six Sigma for Commercial Equipment Financing. Prior to that, Mr. Quindlen served in various sales, marketing, business development and financial positions with GE affiliates. Mr. Quindlen received a B.S. in Accounting from Villanova University.
| | | | | Consumer Finance | | Data Processing | | Commercial Banks | | | | Ally Financial Inc. | | MasterCard Incorporated | | BB&T Corporation | American Express Company | | PayPal Holdings, Inc. | | Citizens Financial Group, Inc. | Capital One Financial Corporation | | Visa Inc. | | Fifth Third Bancorp | Discover Financial Services | | Fidelity National Information Services | | Huntington Bancshares Incorporated | Santander Consumer USA Holdings | | Alliance Data Systems | | KeyCorp | | | Fiserv | | M&T Bank Corporation | | | Total System Services | | Regions Financial Corporation | | | | | SunTrust Banks, Inc. | |
2018 Compensation Elements The following summarizes the compensation elements used in 2018 to reward and retain our NEOs. Base Salary Base salaries for our NEOs depend on a number of factors, including the size, scope and impact of their role, market data, leadership skills, length of service and individual performance and contributions. The MDCC meets each January to review base salaries and benchmark data provided by the MDCC’s independent compensation consultant. In January 2018, the MDCC determined to keep base salaries flat for all NEOs. Similarly, at the January 2019 meeting, the MDCC also determined to not increase NEO base salaries for the second year in a row. AnnualNon-Equity Incentive Plan Award Annualnon-equity incentive plan awards to our NEOs are granted pursuant to Synchrony’s Annual Incentive Plan and, for 2018, were based on three equally weighted quantitative metrics, each as calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These metrics are designed to promote a balanced focus on profit, growth, risk and expenses: Net Earnings—align the interests of executives with the interests of stockholders; Receivables Growth—focus executives on expanding the business to drive future net earnings; and Efficiency Ratio—drive cost discipline. The MDCC established minimum, target and maximum performance levels based on Synchrony’s business plan and financial and economic outlook which are applied to an executive’s target annual incentive. The MDCC may make negative adjustments to the weighted funding based on views of Company and individual performance, risk outcomes and other considerations. The goals for target payout require continued performance above historical peer median levels (in the case of Receivables Growth and Efficiency Ratio) or achieving our operating plan (in the case of Net Earnings). Glenn P. Marino 36 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters The metrics, weights, goals, actual performance and payouts for 2018 are shown below. While all the financial metrics exceeded target, reflecting a strong year of operational success, after taking into account the Company’s TSR for 2018 relative to peers,the MDCC exercised its authority to apply negative discretion to reduce the formulaic amount by 10%. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Goals | | | Associated Payout | | Calculation | | | | | | | | | | | | Metric | | Weight | | | Min | | | Target | | | Max | | | Min | | | Target | | | Max | | Performance | | Payout | | | | | | | | | | | | Net Earnings | | | 45% | | | | $2,300 | | | | $2,600 | | | | $2,800 | | | | 50% | | | | 100% | | | 150% | | $2,790 | | | 148% | | | | | | | | | | | | Receivables Growth | | | 30% | | | | 10% | | | | 13.5% | | | | 17% | | | | 50% | | | | 100% | | | 150% | | 13.7% | | | 102% | | | | | | | | | | | | Efficiency Ratio | | | 25% | | | | 32% | | | | 31% | | | | 30% | | | | 50% | | | | 100% | | | 150% | | 30.8% | | | 109% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Weighted Average: | | | 124% | | | | | | | | | | | | | | | | | | | MDCC Negative Discretion Adjustment: | | | -10% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Final Payout: | | | 114% | |
Annual Equity Awards (RSUs and Stock Options) In 2018, the NEOs received annual grants of RSUs and stock options under the Synchrony Financial 2014 Long-Term Incentive Plan. The amount of RSUs and stock options awarded to each NEO is based on target incentive levels for each executive, based on the competitive market for their role and subject to adjustment by the MDCC. The 2018 awards were divided between RSUs (70%) and stock options (30%), with each vesting 20% per year over five years. Synchrony used grants of stock options to focus its executives on delivering long-term value to its stockholders, because options have value only to the extent that the price of Synchrony stock on the date of exercise exceeds the stock price on the grant date, as well as to retain its executives. Synchrony grants RSUs to reward and retain executives by offering them the opportunity to receive shares of Synchrony stock on the date the restrictions lapse as long as they continue to be employed by the Company. For 2019, based on industry trends and stockholder feedback, the MDCC determined to change annual grants from 70% RSUs and 30% stock options to 100% RSUs to further discourage excessive or imprudent risk taking and incentivize sustained operating and stock price performance over the long-term. Long-Term Performance Awards (PSUs) (2018–2020) Under the Synchrony Financial 2014 Long-Term Incentive Plan, we issued performance-based, long-term PSUs in 2018 that vest based on financial performance over the 2018–2020 performance period. The PSUs will be paid in shares of common stock if we achievepre-defined goals relating to our cumulative annual diluted earnings per share and average return on equity, each weighted 50%. The MDCC selected and approved the metrics and the goals for threshold, target and stretch with the ultimate award ranging from 0% (if threshold performance is not achieved) up to 150% for achieving stretch performance levels. Target payout levels set for the 2018–2020 performance period require a significant increase in EPS growth over the prior3-year PSU grant metric goals and top quartile return on equity performance relative to historical peer performance levels. Performance below threshold results in forfeiture of the shares allocated to the corresponding performance measure. Dividend equivalents are accrued but not paid until the end of the performance period based on the actual number of shares earned. These performance metrics align the interests of our executives with the interests of stockholders by encouraging growth while ensuring that growth does not come at the cost of lower returns on assets. Grants of PSUs will vest at the end of the three-year period in the event performance conditions are met. In 2019, the MDCC added a relative TSR metric to the PSUs for the 2019–2021 performance period in response to stockholder feedback. Long-Term Performance Awards (PSUs) (2016–2018) In 2016, the MDCC granted performance-based, long-term PSUs that vested based on financial performance over the 2016–2018 performance period. The metrics used during the3-year cycle were chosen to balance executives’ focus on profitability, returning capital to investors, and growing the company. Target payouts set for the 2016–2018 performance period required 4% growth of EPS over the period which was above peer growth levels at that time and 2.4% return on assets which was top quartile among peers at that time.
Synchrony | 2019 Annual Meeting and Proxy Statement 37
Compensation Matters The charts below show (i) the performance over the last three years against goals approved at the beginning of the period and (ii) adjustments to GAAP that neutralize the impact of extraordinary items (such as the favorable corporate tax rate change for 2018): | | | | | | | | | | | | | | | | | | | | | | | | 2016–2018 Performance | | | | | | | | | | | | | | | | | | | Goals | | Associated Payout | | Calculation | | | | | | | | | | | Metric | | Weight | | Min | | Target | | Max | | Min | | Target | | Max | | Performance | | Payout | | | | | | | | | | | Cumulative EPS | | 50% | | $7.95 | | $8.60 | | $9.25 | | 50% | | 100% | | 150% | | $8.57 | | 97% | | | | | | | | | | | Return on Assets | | 50% | | 2.0% | | 2.4% | | 2.8% | | 50% | | 100% | | 150% | | 2.52% | | 114% | | | | | | | | | | | | | | Weighted Average: | | 106% |
| | | | | | | Adjustments to GAAP | | | | | Metric | | GAAP | | Tax and Other* Impact | | AdjustedNon-GAAP | | | | | Cumulative EPS | | $8.87 | | ($.30) | | $8.57 | | | | | Return on Assets | | 2.53% | | (.01%) | | 2.52% |
* Other consists of the impact of new program wins not contemplated in our operating plan. Synchrony Financial Restoration Plan NEOs participate in the Synchrony Financial Restoration Plan, which provides retirement benefits that mirror the Company’s qualified 401(k) plan. The plan provides a continuation of Company contributions on salary and bonus that would have been made to our 401(k) plan but for various limitations imposed by the Internal Revenue Code of 1986 (the “Code”), along with additional Company contributions that cannot be made to the 401(k) plan. The plans include Company contributions of (i) a 3% core contribution, (ii) a 4% match, and (iii) as of December 31, 2018, up to 6% additional contribution in 2018 for former participants of GE pension plans, which declines to 4% in 2019. The Restoration Plan account is forfeited if an executive leaves voluntarily prior to age 60. For 2018, each of our NEOs received contributions to his or her Restoration Plan account, which are reported in the “All Other Compensation” column in the 2018 Summary Compensation Table. Other Compensation In 2018, Synchrony provided certain executive officers with (i) financial counseling and/or tax preparation services, (ii) supplementary life insurance, and (iii) annual physical examinations, which are reported in the “All Other Compensation” column in the 2018 Summary Compensation Table. The supplementary life insurance policies are intended to maintain benefits that existed for certain executives as GE employees prior to the completion of oursplit-off from GE and in lieu of life insurance benefits that are provided to other Synchrony employees. These policies were frozen in value and participation upon Synchrony’s IPO. While Synchrony could have “bought out” the value of these polices upon IPO, the Company chose to freeze the insurance amount and maintain the policies to help retain senior management through Synchrony’s transition away from GE. The policies require an executive to stay with Synchrony through age 60 to receive the full value of the benefit. The face value of the supplementary life insurance policies for all participants is less than the value of the standard life insurance program for Synchrony employees. Synchrony Deferred Compensation Plan Our Deferred Compensation Plan does not pay an “above-market” rate of interest and is available to a select group of management and highly compensated employees of Synchrony and any of its participating affiliates. Under the plan, eligible employees may, elect to defer up to 80% of their base salary and bonus. The plan administrator will designate two or more investment benchmarks which participants can choose between to determine the rate of return or loss applicable to their deferred compensation amounts. Participants can also make elections regarding the time and form of payment of their deferral under the plan, in accordance with Section 409A of the Code. We have established notional unfunded accounts attributable to participants’ deferrals, which will be adjusted based on participants’ investment elections. Performance Objectives and Evaluations for Our Named Executive Vice President,Officers for 2018 Chief Executive Officer—At the beginning of 2018, the Board approved, with Ms. Keane’s input, specific objectives that they believed should be achieved for our Company to be successful. These objectives included both quantitative financial measures and qualitative factors, including strategic, operational and risk management considerations that create long-term shareowner value. The MDCC evaluated Ms. Keane’s 2018 performance against these goals to determine her incentive compensation awards. The
38 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters amount of her incentive compensation was ultimately approved by the MDCC, based on their discretion and judgment. Ms. Keane did not participate in the determination of her compensation. Our other NEOs also had objectives that reflected goals specific to their roles at the Company. Each of our other NEOs’ objectives include both quantitative financial measures and qualitative strategic, operational and risk management considerations affecting our Company and the sales platforms or functions that they lead. Each of our other NEOs’ 2018 performance was evaluated and measured against their respective goals by the MDCC, as well as by Ms. Keane. The amount of their incentive compensation was ultimately approved by the MDCC, based on the Company’s performance against goals established by the MDCC at the beginning of the year and based on the MDCC’s discretion and judgment. None of our other NEOs participated in the determination of their compensation. 2018 CEO Performance Objectives and Achievements The MDCC believes that Ms. Keane’s strong leadership resulted in strong core financials, continued growth and execution of key strategic achievements. Under Ms. Keane’s leadership, Synchrony delivered the following results on the qualitative and quantitative performance goals set for Ms. Keane with respect to 2018: Grow core business across all three sales platforms (Retail Card, Payment Solutions and CareCredit)—As of December 31, 2018, across all three platforms, we grew loan receivables by 14% and purchase volume by 7%, compared to December 31, 2017. We completed the acquisition of the U.S. PayPal Credit program, which is the largest partner win in our history, and successfully renewed over 50 key relationships and won over 35 new programs across all platforms. In addition, we further expanded Synchrony Car Care via Discover white label capability to enable acceptance at 500,000 merchants. For our Synchrony HOME credit card, we executed an IT build that will enable us to execute a 5 million cardre-issue in 2019. CareCredit acceptance for pharmacy and personal care items was expanded at Walmart, Sam’s Club and Walgreens, and CareCredit expanded into 11 new specialty healthcare markets. While we did not renew the Walmart program, we successfully delivered these new program wins, renewals and strategic initiatives, as well as the renewal of Amazon and Sam’s Club announced in early 2019. Chief Commercial Officer
| Operate with a strong balance sheet and financial profile—We delivered strong operating and financial performance in 2018. We reported record net earnings of $2.8 billion, or $3.74 earnings per share on a diluted basis, and grew loan receivables by 14% at December 31, 2018 as compared to December 31, 2017. We continue to invest in our direct banking activities to grow our deposit | | base, with total deposits increasing 13% to $64 billion at December 31, 2018. In addition, we returned $2.4 billion of capital to stockholders through growth and the execution of our capital plan, including share repurchases and dividends. |
Leverage strong capital position—We had strong deposit growth in an increasingly competitive market. We launched a new securitization trust, maintained strong liquidity and executed on our capital plan, returning $2.4 billion of capital to stockholders through $1.9 billion in share repurchases and $0.5 billion in dividends. Expand robust data analytics and digital capabilities—We completed and implemented a single-customer view across all platforms and relationships, leveraging this to collect on delinquent accounts and using this for credit risk management purposes including credit line increase strategies and to even further improve the customer experience in our call centers and through our digital servicing tools. We completed multiple digital marketing technology investments which support advanced content personalization via Agile marketing strategies,in-house agency depth and increased analytic insights. Across platforms, we ran 20% more marketing activities with incrementally fewer marketing pieces delivered direct to customers. Position our business for long-term growth—We executed onmid-market acquisition and investment opportunities and expanded further into thee-tailing space. We acquired Loop Commerce as part of our diversification strategy, and invested in 5 venture investments. We were named to the list of Fortune 100 Best Companies to Work in 2018, spotlighting the Company’s strong culture. We continued our strong focus on diversity and inclusion, with external recognition by Forbes, Fortune, Great Place to Work and others of our commitment to building a supportive workplace for all employees. We also executed on our executive succession plan. 2018 Other NEO Achievements Mr. Doubles In addition to Mr. Doubles’ contributions toward our Company’s objectives described above, Mr. Doubles provided strong leadership of our finance organization, including driving excellent financial discipline across the business; playing a key role in new program wins and renewals; supporting growth and strategic investment opportunities; maintaining strong controllership and risk management; driving strong deposit growth; increasing Synchrony’s dividend and share repurchase program; maintaining strong investor relations; further expanding his relationships with our key customers; and promoting career development and diversity.
Synchrony | 2019 Annual Meeting and Proxy Statement 39
Compensation Matters Mr. Marino, 60, has beenGreig In addition to Mr. Greig’s contributions toward our Executive Vice PresidentCompany’s objectives described above, Mr. Greig provided strong leadership of the Credit and CEO ofCapital Management organization, including delivering on critical credit loss and fraud metrics while supporting strategic business initiatives to drive smart growth and enhance the consumer experience. Mr. Greig led initiatives to acquire new data and apply machine learning to solve escalating fraud incidents and improve underwriting. He continues to work closely with IT to leverage new technology to transform credit lending and improve the experience for the customer. Mr. Mehta In addition to Mr. Mehta’s contributions toward our Payment Solutions platform and our Chief Commercial Officer since February 2014 and has served as CEOCompany’s objectives described above, Mr. Mehta provided strong leadership of the Payment Solutions platform, including growing the platform within approved risk tolerances and delivering on critical growth metrics, retaining and deepening key partnerships, and adding new relationships with major retailers and merchants. Mr. Mehta is also responsible for leading innovative new products and markets like unsecured installment lending, ecommerce solutions, gifting and more. He contributes as Chief Commercial Leader of GE’s North American retail finance business since December 2011. From July 2002an external thought leader across the industry. He is a champion for diversity inclusion, talent development, and recruitment inside and outside the Company. Mr. Quindlen In addition to December 2011 Mr. Marino served as CEOQuindlen’s contributions toward our Company’s objectives described above, Mr. Quindlen provided strong leadership of the Sales FinanceRetail Card sales platform, of GE’s North American retail finance business. From March 1999 to July 2002, Mr. Marino servedincluding growing the platform within approved risk tolerances and delivering on critical growth metrics; building strong relationships with existing Retail Card partners and adding new partnerships as CEO of Monogram Credit Services, a joint venture between GEwell; leading Retail Card’s risk culture and BankOne (now JPMorgan Chase & Co.). From February 1996 to March 1999, Mr. Marino served as CROtone at the top; driving engagement with and the development of the Visa/MasterCard divisionRetail Card organization’s talent; and driving diversity through hiring and promotion practices. Other Compensation Practices Stock Ownership Guidelines Effective October 2018, we increased our stock ownership guidelines. The stock ownership guidelines require the Company’s CEO and Executive Vice Presidents to own significant amounts of GE’s North American retail finance business. Priorour common stock, helping to that, Mr. Marino served asensure alignment of executives’ interests with those of our stockholders. The enhanced stock ownership guideline for our CEO was increased from five times base salary to six times base salary and for our CFO was increased from three times base salary to five times base salary. The stock ownership guideline for Executive Vice PresidentPresidents, including the other three NEOs, is three times base salary. The guidelines are to be met within five years of Risk within Citigroup’s U.S. retail banking business. Mr. Marino received a B.S. in Biology from Syracuse Universitybeing subject to the policy and/or promotion. For the purposes of our stock ownership guidelines, all shares of common stock and an M.B.A. fromRSUs held by our executives are credited toward ownership levels. All of our NEOs’ stock ownership far exceeds the Universityownership guidelines, aligning our executive team with our stockholders. Based on our closing stock price on March 1, 2019 of Michigan.$32.46, our NEOs had the following ownership base-salary multiples: David Fasoli | | | | | | | | | | | Name of Executive | | Required
Multiple | | Ownership as of
March 1, 2019* Executive Vice President
and Chief Executive Officer—
CareCredit
| | Mr. Fasoli, 58, has been our Executive Vice President and CEO of our CareCredit platform since February 2014 and has served as President and CEO of the CareCredit platform of GE’s North American retail finance business since March 2008. From June 2003 to March 2008, he served as General Manager of the Home and Recreational Products Business of GE’s North American retail finance business. Prior to June 2003, Mr. Fasoli served as Vice President of Client Development of GE’s North American retail finance business and held several positions of increasing responsibility within GE and GE’s North American retail finance business in finance, client development, business integration and quality. Mr. Fasoli received a B.S. in Business and Economics from the State University of New York at Albany.
|
28 
COMPENSATION DISCUSSION AND ANALYSIS Margaret Keane Executive Summary
Our Named Executive Officers—The executive officers whose compensation we discuss in this Compensation Discussion and Analysis and whom we refer to as our named executive officers (“NEOs”) are Margaret M. Keane, President and CEO; Brian D. Doubles, Executive Vice President, CFO; Glenn P. Marino, Executive Vice President, CEO —Payment Solutions and Chief Commercial Officer; Jonathan S. Mothner, Executive Vice President, General Counsel and Secretary; and Thomas M. Quindlen, Executive Vice President and CEO—Retail Card.
2016 Performance—Synchrony performed very well in 2016 compared to goals established by the MDCC at the beginning of the year, as well as to our direct peers (Discover Financial Services, Capital One, American Express). We generated strong financial performance, growing our core business through all three sales platforms. We grew loan receivables by 11.8% over 2015, increased net interest income and net earnings by 11.9% and 1.7%, respectively, over 2015 and achieved our target efficiency ratio of less than 34%. We forged new relationships with Cathay Pacific, Nissan and At Home; renewed programs with TJX Companies, Stein Mart, Ashley Furniture Homestore,La-Z-Boy, Nationwide Marketing Group and Suzuki; and launched programs with partners like Citgo, Marvel, GoogleStore, Fareportal, Mattress Firm and The Container Store. We maintained a strong balance sheet with robust capital and liquidity levels and diversified funding sources, growing deposits by 20.0% at December 31, 2016 as compared to December 31, 2015.
The following charts show our performance in 2016 compared to 2015 and, in the case of Efficiency Ratio and Loan Receivables Growth, our performance versus peers. For Synchrony, Efficiency Ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income.
* Peer Avg. = 2016 average for Discover Financial, Capital One and American Express, as publicly reported by such company.
| 29 |
| | | | | 6.0X | | 15.0X | | | COMPENSATION MATTERS
| | | | | | | | | | | | |
| Brian Doubles | | 5.0X | | 8.6X | | | | Henry Greig | | 3.0X | | 7.4X | | | | Neeraj Mehta | | 3.0X | | 5.0X | | | | Tom Quindlen | | 3.0X | | 4.8X Compensation Philosophy—One of the key principles guiding Synchrony’s executive compensation program is that compensation programs should measure business and individual performance against both qualitative and quantitative goals and objectives. Synchrony’s executive compensation program is intended to discourage excessive or imprudentrisk-taking while at the same time promoting and supporting our key compensation principles—our performance, our values, market competitiveness, internal equity, fair customer treatment and employees’ ability to raise concerns. The program is also designed to be consistent with our safety and soundness and to identify, measure, monitor and control incentive compensation arrangements.
Major Compensation Programs—Since our IPO in 2014, our employees have been granted equity awards consisting of restricted stock units (RSUs) and stock options pursuant to the Synchrony Financial 2014 Long-Term Incentive Plan, in addition to salary and annual cash incentive awards. In 2014, our executives began to transition away from participation in GE compensation programs. In 2016, they were completely integrated into Synchrony compensation programs. In 2014, salary, annual incentives, and triennial grants of three-year long-term incentives for our executives were based on GE programs. In 2015, compensation programs for our executives were based on Synchrony programs except for the outstanding triennial grants of three-year long-term incentives, which were still part of a GE program. In 2016, we transitioned long-term incentives to a Synchrony program in the form of Performance Share Units (“PSUs”). The 2016 PSUs granted to our executives are linked to our financial performance over the 2016-2018 period, will not vest unless performance conditions are met, and are intended to comprise half of the value of each employee’s equity-based incentive compensation.
Our major compensation components and their objectives are:
Base Salary—Provides market-based compensation based on experience, position and performance of the executives.
Annual Cash Incentive Awards—Focuses executives on short-term goals set by the fully independent MDCC through cash awards.
| �� | | Annual Equity Awards—Aligns executives’ interests with stockholders through a combination of RSUs and stock options. |
Long-Term Incentive Awards—Through the use of three-year vesting PSUs, focuses executives on long-term goals set by the MDCC.| * | Changes to ownership levels from 2018 primarily reflect the (i) MDCC’s enhancement of stock ownership guidelines to no longer count PSUs toward ownership levels and (ii) withholding of shares of common stock for tax purposes in connection with the vesting of Founders’ Grants in July 2018. |
Hedging and Anti-Pledging Restrictions Our Code of Conduct, which applies to all of our employees and directors, includes anti-hedging provisions that prohibit all employees and directors from engaging in transactions in derivatives of or short-selling of Synchrony securities, including buying and writing options. We also maintain an anti-pledging policy that prohibits pledging activity in Synchrony securities. Clawback Policy Effective October 2018, the MDCC expanded the existing clawback policy beyond conduct detrimental to the Company, to include “no fault” financial restatements for all of our named executive officers. Under the revised policy, in the event that the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under the securities laws, the Company will take action to recover from any current or former executive officer who received any annual or long-term incentive compensation paid, awarded, or granted during the3-year period preceding the date on which the Company is required to prepare an accounting restatement, based on the erroneous data, in excess of what would have been paid to the executive officer under the accounting restatement. Additionally, under the Company’spre-existing policy, if it is determined that an employee at or above a designated executive grade under the Company’s compensation structure has engaged in conduct detrimental to the Company, the Bank or any of the Company’s other subsidiaries, the MDCC or, in the case of a Bank employee, the Bank’s Development and Compensation Committee, may take a range of actions to remedy the misconduct, prevent its recurrence, and impose such discipline as would be appropriate. Discipline may vary 30
| | | | | | | COMPENSATION MATTERS 40 Synchrony | 2019 Annual Meeting and Proxy Statement
| | | | | | | | | | | | |
Compensation Matters Target Pay—The MDCC reviews our compensation practices prior to making any decision on target pay and mix of pay, including (i) a detailed benchmarking study of peer compensation data, (ii) a pay for performance analysis comparing our compensation to our peers and to alignment with our performance, and (iii) a review of our executives’ stock ownership.
The chart below shows the target pay for our NEOs as of the end of 2016:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Position | | Base Salary | | Target
Annual Cash
Incentive Pay | | Target Annual
Equity Award | | Target Long-Term
Incentive
Awards (PSUs) | | Target
Total Pay | Margaret Keane | | President and CEO | | | $ | 1,100,000 | | | | $ | 2,200,000 | | | | $ | 2,750,000 | | | | $ | 2,750,000 | | | | $ | 8,800,000 | | Brian Doubles | | Executive Vice President, CFO | | | $ | 685,000 | | | | $ | 685,000 | | | | $ | 685,000 | | | | $ | 685,000 | | | | $ | 2,740,000 | | Glenn Marino | | Executive Vice President, CEO— | | | $ | 750,000 | | | | $ | 600,000 | | | | $ | 600,000 | | | | $ | 600,000 | | | | $ | 2,550,000 | | | | Payment Solutions and Chief | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Commercial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | Jonathan | | Executive Vice President, | | | $ | 700,000 | | | | $ | 560,000 | | | | $ | 560,000 | | | | $ | 560,000 | | | | $ | 2,380,000 | | Mothner | | General Counsel and Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas | | Executive Vice President | | | $ | 812,000 | | | | $ | 825,000 | | | | $ | 718,000 | | | | $ | 650,000 | | | | $ | 3,005,000 | | Quindlen | | and CEO—Retail Card | | | | | | | | | | | | | | | | | | | | | | | | | |
Mix of Pay—The mix of target pay as of the end of 2016 for our CEO and CFO is shown below.
depending on the facts and circumstances, and may include, without limitation, (a) termination of employment, (b) initiating an action for breach of fiduciary duty, (c) reducing, cancelling or seeking reimbursement of any paid or awarded compensation, and (d) if the conduct resulted in a material inaccuracy in the Company’s financial statements or performance metrics that affects the executive’s compensation, seeking reimbursement of any portion of incentive compensation paid or awarded to the executive that is greater than what would have been paid or awarded if calculated based on the accurate financial statements or performance metrics. If it is determined that an executive engaged in fraudulent misconduct, the MDCC or, in the case of a Bank employee, the Bank’s Development and Compensation Committee, will seek such reimbursement. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities, or as otherwise required by any agreement with a stock exchange on which the Company’s securities are listed. Compensation and Risk 2018 Risk Review Process Synchrony’s risk management culture is strongly supported by a thorough risk review process that focuses on whether the risks we take are within our risk appetite framework. In 2018, working cross-functionally, our CEO and senior executives from our risk and human resource teams identified the individuals considered to be Material Risk Takers (“MRTs”) or Material Risk Controllers (“MRCs”). These individuals were required to have annual goals and objectives specifically tied to risk and compliance standards. As part of the annual process, our Control Function Leaders, our CEO, our Audit Committee, MDCC and Risk Committee conducted assessments on MRTs and MRCs, which took into consideration MRT/MRC behavior in relation to their annual goals and objectives as well as any adverse risk outcomes during the year. These assessments are included in each MRT/MRC’s annual performance evaluation. By conducting these risk review processes as well as maintaining full transparency on all of our risk management policies and procedures, we believe that we have been able to discourage inappropriate risk-taking. Review of Incentive Compensation to NEOs Related to Risk Management In 2018, the MDCC reviewed the relationship between our risk management policies and practices and the incentive compensation provided to our NEOs to confirm that their incentive compensation appropriately balances risk and reward and determined that our compensation policies and practices are not reasonably likely to have a material adverse effect on our Company. The MDCC met with the CRO to discuss the annual risk assessment conducted with respect to incentive compensation plans in which all employees (including the NEOs) participate, including whether these arrangements had any features that might encourage excessive risk-taking that could threaten the value of the Company. The CRO also discussed the risk mitigation factors reviewed in the annual risk assessment, including the balance between financial andnon-financial measures as well as the short-term and long-term oriented measures. The MDCC also continues to monitor a separate, ongoing risk assessment by senior management of our broader employee compensation practices consistent with the federal banking regulators’ guidance on sound incentive compensation policies. Risk Review of Incentive Plans Each year, we conduct a risk analysis on each of our incentive plans using a risk analysis tool. This analysis covered 100% of our incentive eligible population and allowed us to gauge the degree to which our plans contribute to excessive risk-taking. The tool looks at six assessment categories (incentive design, strategic alignment/goal setting, pay opportunity, process, monitoring and administration) for each plan and assigns a rating score based on results. All of our incentive plans were rated such that they conform to or exceed key standards for risk management. Additionally, all incentive plans are reviewed each year and approved by our Chief Risk and Chief Human Resource Officers. We also conduct a risk analysis of third-party incentive plans at our clients and vendors related to our credit products. This assessment also covers design, strategic alignment/goal setting, pay opportunity, process, monitoring and administration. Each of the third-party incentive plans reviewed were rated such that they exceed risk management standards. Role of Independent Compensation Consultant Under its charter, the MDCC has the authority to retain such compensation consultants, outside counsel and other advisors as the MDCC may deem appropriate in its sole discretion. During 2017 and for the early part of 2018, the MDCC engaged Pay Governance to serve as its independent advisor, particularly regarding early 2018 pay decisions. In September 2018, the MDCC engaged Meridian as its independent advisor, regardingyear-end pay decisions and 2019 program design. Both firms provided advice regarding market pay levels, strong pay practices and other executive compensation matters. Pay Governance also provided advice to the Nominating and Corporate Governance Committee regarding director compensation. Neither Pay Governance nor Meridian provided any other services to the MDCC or to Synchrony. The MDCC determined that both Pay Governance and Meridian are independent and do not have any conflicts of interest.
31
| | | | | | | COMPENSATION MATTERSSynchrony | 2019 Annual Meeting and Proxy Statement 41
| | | | | | | | | | | | |
Compensation Matters Strong Governance—Our MDCC has implemented the following governance measures as part of our executive compensation programs:
Substantial portion of executive pay based on performance against goals set by the MDCC;
Risk governance framework underlies compensation decisions;
Stock ownership requirements for executive officers;
No hedging or pledging of company stock;
No employment agreements for executive officers;
No taxgross-ups for executive officers;
Limited perquisites;
Double-trigger vesting of equity and long-term incentive plan awards upon change in control;
Compensation subject to claw-back in the event of misconduct;
No backdating or repricing of stock option awards; and
Independent compensation consultant advises the MDCC.
2016Say-On-Pay Advisory Vote on Executive Compensation—At our 2016 annual stockholder meeting, our investors supported the compensation for our named executive officers with approximately 95% of the votes approving the advisorysay-on-pay item. Our MDCC considers the results of oursay-on-pay advisory vote as part of its review of our overall compensation programs and policies.
Compensation Philosophy
Synchrony Program Principles
One of the key principles guiding Synchrony’s executive compensation program is that compensation programs should measure business and individual performance against both qualitative and quantitative goals and objectives. Synchrony’s executive compensation program is intended to discourage excessive or imprudent risk-taking while at the same time promoting and supporting the key principles outlined below. The program is also designed to be consistent with our safety and soundness and to identify, measure, monitor and control incentive compensation arrangements.
The key principles guiding this program and underlying the oversight of our program by Synchrony’s MDCC are:
Performance—compensation programs should measure business and individual performance against both qualitative and quantitative goals and objectives;
Values—compensation programs should be linked to how employees go about their work or, more specifically, how they demonstrate the behaviors we expect of our employees;
MarketCompetitiveness—compensation programs should be competitive with the external labor markets;
Internal Equity—compensation programs should be internally equitable, subject to the employee’s experience, performance and other relevant factors;
Prudent Risk—compensation programs, particularly in the form of incentive compensation, must not encourage employees to expose the Company to inappropriate or excessive risks and should be based in part on the long-term performance outcomes of risks taken. Risk should always be taken within approved policy limits, in accordance with the MDCC charter and key practices, and in consideration of Synchrony’s ability to effectively identify and manage such risks, including credit, operational and reputational risks;
Fair Customer Treatment—compensation programs should encourage employees to follow established company procedures and to treat customers fairly; and
Reporting Concerns—compensation programs should be designed in such a way as to encourage employees to raise concerns without fear of retaliation.
The consistent application of these design principles enables Synchrony to maintain compensation programs that are reasonable, balanced and effectively attract, retain, motivate and engage employees who strive to achieve the mission, goals and objectives of Synchrony in a way that is compatible with effective risk management controls. A robust performance review process is a critical element in all reward decisions.
Tax Considerations Prior to December 22, 2017 when the Tax Act was signed into law, Section 162(m) of the Code provided that no U.S. income tax deduction was allowable to a publicly held corporation fornon-performance-based compensation in excess of $1 million paid to a “covered employee” (generally, the NEOs other than the CFO). The Tax Act includes numerous changes to existing law, including (1) eliminating the exclusions for commissions or performance-based compensation paid to “covered employees” under Code Section 162(m), (2) expanding the definition of “covered employee” to include anyone serving as CFO or CEO at any point during the year, as well as the three most highly compensated officers, and (3) providing that status as a covered employee continues to apply if the person was ever a covered employee for years ending after December 31, 2016. The Act is effective for tax years beginning after 2017, though it includes a transition rule for compensation paid pursuant to certain written binding contracts in place on November 2, 2017 which are not materially modified. Where we believe awards or payments are eligible for relief under this transition rule, our policy generally is to preserve that eligibility. Our policy generally had been to seek to qualify various elements of the compensation payable to executives as “performance-based compensation” to the extent possible. However, as described above, the exemptions from Section 162(m)’s deduction limit have been eliminated as a result of the Tax Act, effective for taxable years beginning after December 31, 2017, such that all compensation paid to our covered executive officers (including the CFO) in excess of $1 million will not be deductible unless it qualifies for the transition relief referenced above. Although the MDCC has historically intended to structure various elements of the compensation payable to executives in a manner intended to qualify as “performance-based compensation” for purposes of Section 162(m), because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief under the Tax Act, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) in fact will satisfy such requirements. Further, the MDCC reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with our business needs. 32
Key Considerations in Setting Compensation
For 2016, we used the following considerations in setting compensation for our NEOs:
Consistent and sustainable performance—Our executive compensation program provides the greatest pay opportunity when executives demonstrate superior performance for sustained periods of time. It also rewards executives for executing our Company’s strategy through business cycles, so that the achievement of long-term strategic objectives is not compromised by short-term considerations. The emphasis on consistent performance affects annual salary and equity incentive compensation. With the prior year’s salary and grant serving as an initial basis for consideration, such awards are determined based on an assessment of an executive’s past performance and expected future contributions. Because current-year, past and sustainable performance are incorporated into compensation decisions, any percentage increase or decrease in the amount of total annual compensation tends to be more gradual than in a framework that is focused solely or largely on current-year performance.
Future pay opportunity versus current pay—We strive to provide an appropriate mix of compensation elements to achieve a balance between current versus long-term, deferred compensation, cash versus equity incentive compensation, and other features that cause the amounts ultimately received by the NEOs to appropriately reflect risk and risk outcomes. Cash payments primarily, but not exclusively, reward more recent performance, whereas equity awards encourage our NEOs to continue to deliver results over a longer period of time, and serve as a retention tool. We believe that the compensation paid or awarded to our NEOs should be more heavily weighted toward rewards based on our Company’s sustained operating performance as well as our stock price performance over the long-term.
Qualitative and quantitative factors—Quantitative formulas are not used exclusively in determining the amount of compensation. While quantitative calculations and formulas set the funding and cap award levels for our performance-based programs, the MDCC can use qualitative factors such as performance in the context of the economic environment relative to other companies, a track record of integrity, good judgment, the vision and ability to create further growth, the ability to lead others, and other considerations that cause the amounts ultimately received by the NEOs to appropriately reflect risk and risk outcomes.
Consideration of risk—Our compensation program is balanced, focused on the long term and takes into consideration thefull range and duration of risks associated with an NEO’s activities. Under this structure, the highest amount of compensation can be achieved through consistent superior performance within the limits of our stated risk appetite. In addition, significant portions of compensation are earned only over the longer term and may be adjusted during the vesting period for risk outcomes. This provides strong incentives for executives to manage our Company for the long term while avoiding excessive risk-taking in the short term. As discussed further below, Synchrony’s MDCC reviews the relationship between our risk management policies and practices and the incentive compensation provided to our NEOs.
Peer company pay—We also considered compensation levels and pay practices at our direct peers and other peer companies when making Synchrony equity grants in 2016. In addition to total assets and the availability of information in compensation databases, the selection criteria for the peer group focused on publicly traded financial services companies headquartered in the United States with either annual revenue or market capitalization equal to approximatelyone-half totwo-times Synchrony’s annual revenue or market capitalization. When the MDCC established 2016 target compensation at its September 2015 meeting, Synchrony’s assets and annual revenue were at the 23rd and 78th percentile, respectively, of our peers, based on financial information from the most recent fiscal year prior to the meeting, and Synchrony’s market cap was at the 65th percentile of our peers as of September 1, 2015.
The list of peer companies used for understanding industry pay practices and target pay levels for 2016 includes the following financial services companies.
| | | | | Consumer Finance
| | Data Processing
| | Commercial Banks
| Alliance Data System | | MasterCard Incorporated | | BB&T Corporation | Ally Financial Inc. | | Visa Inc. | | Comerica Incorporated | American Express Company | | | | Fifth Third Bancorp | Capital One Financial Corporation | | | | Huntington Bancshares Incorporated | Discover Financial Services | | | | KeyCorp | Navient Corporation | | | | M&T Bank Corporation | | | | | The PNC Financial Services Group, Inc. | | | | | Regions Financial Corporation | | | | | SunTrust Banks, Inc. | | | | | U.S. Bancorp |
| 33 |
2016 Compensation Elements
The following summarizes the compensation elements used in 2016 to reward and retain our NEOs.
Base Salary
Base salaries for our NEOs depend on a number of factors, including the size, scope and impact of their role, the market value associated with their role, leadership skills and values, length of service, and individual performance and contributions. Decisions regarding salary increases are affected by the NEOs’ current salary and the amounts paid to their peers within and outside our Company. Salary increases in 2016 also reflect that this was the first year that Synchrony operated as a fully stand-alone public company after the completion of oursplit-off from GE in November 2015.
AnnualNon-Equity Incentive Plan Award
Annualnon-equity incentive plan awards to our NEOs are granted pursuant to Synchrony’s Annual Incentive Plan and, for 2016, were based on three equally weighted quantitative metrics, each as calculated in accordance with GAAP, consistent with our approach adopted in 2015. These metrics are designed to promote a balanced focus on profit, growth, risk and expenses:
Net Earnings—to align the interests of executives with the interest of stockholders;
Receivables Growth—to focus executives on expanding the business to drive future net earnings
Efficiency Ratio—to drive cost discipline.
Minimum, target and maximum performance levels are established for each metric by the MDCC based on Synchrony’s financial and economic outlook, and result in funding levels that are applied to an executive’s target annual incentive. The MDCC may make negative adjustments to the weighted funding based on views of company and individual performance, risk outcomes and other considerations. The goals for target payout require continued performance above historical peer median levels (in the case of Receivables Growth and Efficiency Ratio) or achieving our operating plan (in the case of Net Earnings).
Metric weighting, funding goals, actual performance and the payout funding for 2016 are shown below.
| | | | | | | | | | | | | | 100% Payout | | Actual | | Calculated | | Metric | | Weight | | Target | | Performance | | Payout* | Net Earnings | | 1/3 | | $2.250B | | $2.251B | | 101% | | | | | | Receivables Growth | | 1/3 | | 6% | | 11.8% | | 148% | | | | | | Efficiency Ratio | | 1/3 | | 33.5% | | 31.1% | | 150% |
*Payout if threshold performance achieved ranges from 50% to a cap of 150% of target.
Annual RSU and Option Awards
In 2016, our NEOs received annual grants of RSUs and stock options under the Synchrony Financial 2014 Long-Term Incentive Plan. The amount of RSUs and stock options awarded to each NEO is based on target incentive levels for each executive, subject to adjustment by the MDCC. The 2016 awards were divided between RSUs (70%) and stock options (30%), with both awards vesting 20% per year over five years. Synchrony uses grants of stock options to focus its executives on delivering long-term value to its stockholders because options have value only to the extent that the price of Synchrony stock on the date of exercise exceeds the stock price on the grant date, as well as to retain its executives. Synchrony also grants RSUs to reward and retain executives by offering them the opportunity to receive shares of Synchrony stock on the date the restrictions lapse as long as they continue to be employed by the Company.
34
Long-Term Performance Awards (PSUs)
In 2016, we adopted a performance-based, long-term incentive program under the Synchrony Financial 2014 Long-Term Incentive Plan, pursuant to which we issued PSUs that are linked to financial performance over the 2016-2018 performance period. The PSUs will be payable in shares of common stock based on our cumulative annual diluted earnings per share and average return on assets over the performance period, which were approved by the MDCC after evaluating several possible alternative performance metrics for this program. Each measure is weighted equally. These performance metrics align the interest of our executives with the interests of stockholders in an efficient and balanced manner, encouraging growth and ensuring that growth does not come at the cost of lower returns on assets. Grants of PSUs will vest at the end of 2018 in the event performance conditions are met.
Synchrony Financial Restoration Plan
The Restoration Plan mirrors the Company’s qualified 401(k) plan. The plan provides a continuation of Company contributions on salary and bonus that would have been made to our 401(k) plan but for various limitations imposed by the Internal Revenue Code of 1986 (the “Code”), along with additional Company contributions that cannot be made to the 401(k) plan. The plans are designed to include company contributions of (i) a 3% core contribution, (ii) a 4% match, and (iii) up to 10% additional contribution for former participants of GE pension plans, which will decline to 4% over the next three years. The Restoration Plan account is forfeited if an executive leaves voluntarily prior to age 60. For 2016, each of our NEOs received contributions to his or her Restoration Plan account, which are reported in the “All Other Compensation” column in the 2016 Summary Compensation Table.
Other Compensation
In 2016, Synchrony provided its executive officers with financial counseling, tax preparation services and annual physical examinations, which is reported in the “All Other Compensation” column in the 2016 Summary Compensation Table.
Synchrony Deferred Compensation Plan
Effective for 2016, we adopted our own deferred compensation plan, which does not pay an “above-market” rate of interest. The plan is available to a select group of management and highly compensated employees of Synchrony and any of its participating affiliates. Under the plan, eligible employees may, to the extent permitted by the administrator of the plan, elect to defer up to 80% (or such lower percentage, as determined by the plan administrator) of their base salary and bonus, and all or a portion of any other type of compensation, as determined by the plan administrator. The plan administrator will designate two or more investment benchmarks from which participants can select the benchmarks that will be used to determine the rate of return or loss applicable to their deferred compensation amounts. Participants will also make elections regarding the time and form of payment of their deferral under the plan, in accordance with Section 409A of the Code. We have established notional accounts attributable to participants’ deferrals, which will be adjusted based on participants’ investment elections.
Performance Objectives and Evaluations for Our Named Executive Officers for 2016
At the beginning of 2016, with the Board’s input, Ms. Keane developed the objectives that she believed should be achieved for our Company to be successful. These objectives include both quantitative financial measurements and qualitative strategic, operational and risk management considerations and are focused on the factors that Ms. Keane believes create long-term shareowner value. Ms. Keane’s 2016 performance was evaluated and measured against these goals by the MDCC to determine the appropriate incentive compensation awards for her. The amount of her incentive compensation was ultimately approved by the MDCC, based on their discretion and judgment. Ms. Keane did not participate in the determination of her compensation.
During 2016, our other NEOs reported directly to Ms. Keane, and developed their objectives based on our Company’s objectives related to their role. Each of our other NEOs’ objectives include both quantitative financial measurements and qualitative strategic, operational and risk management considerations affecting our Company and the sales platforms or functions that they lead. Each of our other NEOs’ 2016 performance was evaluated and measured against their respective goals by the MDCC, as well as by Ms. Keane. The amount of their incentive compensation was ultimately approved by the MDCC, based on the Company’s performance against goals established by the MDCC at the beginning of the year and based on the MDCC’s discretion and judgment. None of our other NEOs participated in the determination of their compensation.
35
2016 CEO Performance Objectives and Achievements
The MDCC believes that Ms. Keane performed very well in 2016 in executing on the performance framework and 2016 financial objectives outlined below. Under Ms. Keane’s leadership, management delivered the following results on the qualitative and quantitative performance goals set for Synchrony by Ms. Keane with respect to 2016:
Grow core business on all three sales platforms—We extended our Retail Card program agreements with TJX Companies and Stein Mart, launched our new programs with Citgo, Marvel, Google Store and Fareportal, and announced our new partnerships with Cathay Pacific, Nissan and At Home. Program agreements accounting for nearly 99% of Retail Card platform revenue for the year ended December 31, 2016 currently have expiration dates in 2019 and beyond. We also launched key Payment Solutions programs with Mattress Firm and The Container Store, and extended our program agreements with Ashley Furniture HomeStore,La-Z-Boy, Nationwide Marketing Group and Suzuki. In our CareCredit network, we increased the number of provider locations to approximately 200,000 locations as of December 31, 2016.
Operate with strong balance sheet and financial profile—We grew loan receivables by 11.8% at December 31, 2016 as compared to December 31, 2015. We maintained stable credit metrics and remained disciplined on underwriting. For 2016, we reported a strong net interest margin of 16.1% and achieved an efficiency ratio of 31.1%, which was below our <34% target. We also maintained a strong balance sheet with robust capital and liquidity levels and diversified funding sources, growing deposits by 20.0% to $52.1 billion at December 31, 2016, compared to December 31, 2015. On July 7, 2016, our Board of Directors approved a share repurchase program of up to $952 million of our outstanding shares of common stock for the four quarters ending June 30, 2017. We also declared a dividend of $0.13 per share in each of the third and fourth quarters of 2016.
Build and invest for the future—We delivered leading capabilities in digital and the evolving payment landscape, enhanced our Enterprise Customer Engagement analytics and loyalty capabilities, and expanded inmid-market and online-only retailers. We also enhancedco-brand opportunities and grew our banking platform into a full-scale online bank.
Invest in talent and strengthen culture—We continued to build our leadership development programs for all levels in our organization, from university recruiting to executive level leadership training experiences. For university recruiting, we received three LEAD Awards in 2017, our first year of being nominated for such awards. The LEAD Awards recognize organizations globally that have the best use of or the best internally created leadership development programs. We received the number 2 ranking in “Best Customer Service Leadership Training Program,” the number 2 ranking in “Best Use of Team Building” and the number 8 ranking in “Best Innovation of Deployment of a Leadership Program.” We also continue to invest to ensure we recruit and retain a very diverse workforce, and support our teams through seven internal diversity networks that include Women, African American, Hispanic, Asian, Veteran, LGBT, and People with Disabilities. We were ranked in Fortune’s Top 50 best places to work for diversity, coming in at number 29.
Continue to build our brand externally—We continued to build a distinctive Synchrony Financial brand. This included the launch of an enterprise-wide brand platform (“Unique Ambitions”) to differentiate Synchrony with key audiences. We introduced a new creative and messaging approach (“What are you working forward to?”) that is memorable for Synchrony and continues to be amplified through advertising, social media and internal channels. We published editorial, thought-leadership and custom content to bring Synchrony’s perspective, data insights, technology and people into new places and to new audiences. Synchrony developed its first corporate sponsorship program with KAABOO Del Mar and the Rock n’ Roll Marathon series and activated dynamic opportunities for brand exposure, client hospitality, employee engagement, partner collaboration and consumer promotion.
Increase Corporate Citizenship—Launched a philanthropic platform called Synchrony Families that Work, focused on helping working families through grants and providing basic needs. Launched the 1st Annual Pay It Forward; A Month of Caring, which is a month-long global volunteer initiative with over 25 Synchrony sites participating including India, the Philippines and Puerto Rico. Nearly 2,000 volunteers gave more than 6,600 hours to approximately 100 projects that directly impacted 47,000 people. Held United Way Campaign at 22 U.S. sites and raised nearly $1 million. Held 1st Annual Doubles Dive, a polar bear plunge which raises money for local nonprofits. Seventy-five employees, friends and family members participated in the event in Westport, Connecticut. Partnered with the USTA Foundation to host Stamford Family Fun Day. More than 100 kids from four local nonprofits participated in an afternoon of educational and tennis activities.
36
2016 Other NEO Compensation Decisions
Mr. Doubles
In addition to Mr. Doubles’ contributions toward our Company’s objectives described above, Ms. Keane specifically recognized that Mr. Doubles provided strong leadership of our finance organization, including driving excellent financial discipline across the business; maintaining strong controllership and risk management; supporting growth and strategic investment opportunities; supporting renewals of key deals; completing Synchrony’s first dividend and launching the share repurchase program; driving strong deposit growth; maintaining strong investor relations; further expanding his relationships with our key customers; and promoting career development and diversity.
Mr. Marino
In addition to his contributions toward our Company’s objectives described above, Ms. Keane specifically recognized that Mr. Marino provided strong leadership of the Payment Solutions sales platform, including growing the platform within approved risk tolerances; exceeding growth targets; successfully launching Synchrony’s Auto Network; signing new deals and extending key partnerships; and making multiple senior executive promotions within Payment Solutions to position the business for long-term growth.
Mr. Mothner
In addition to his contributions toward our Company’s objectives described above, Ms. Keane specifically recognized that Mr. Mothner provided strong leadership of our legal organization, including effectively engaging with regulators, including obtaining approval to declare Synchrony’s first dividend and begin a share repurchase program; supporting multiple business initiatives, including the successful renewal of key deals; successfully managing litigations and investigations; and continuing to drive corporate governance excellence, including the adoption of both majority voting and proxy access.
Mr. Quindlen
In addition to his contributions toward our Company’s objectives described above, Ms. Keane specifically recognized that Mr. Quindlen provided strong leadership of the Retail Card sales platform, including growing the platform within approved risk tolerances and delivering on critical growth metrics; building strong relationships with Retail Card partners; leading Retail Card’s risk culture and tone at the top; driving engagement with and the development of the Retail Card organization’s talent; and supporting diversity through hiring and promotion practices.
Other Compensation Practices
Stock Ownership Guidelines
We have established stock ownership guidelines to require the Company’s CEO and Executive Vice Presidents to own significant amounts of our common stock, thereby aligning their interests with the interest of our stockholders. The stock ownership guideline for our CEO is five times base salary, and the stock ownership guideline for Executive Vice Presidents, including the other four NEOs, is three times base salary, to be met within five years of being subject to the policy. Based on our closing stock price on December 30, 2016 ($36.27), our NEOs had the following ownership base-salary multiples:
| | | | | Name of Executive | | Required Multiple | | Actual Ownership | Margaret Keane
| | 5.0X | | 14.7X | Brian Doubles
| | 3.0X | | 9.7X | Glenn Marino
| | 3.0X | | 7.0X | Jonathan Mothner
| | 3.0X | | 6.3X | Tom Quindlen
| | 3.0X | | 8.1X |
37
Equity Grant Practices
The exercise price of each Synchrony stock option granted to our NEOs in 2016 was the closing price of Synchrony’s stock on the date of grant, which was April 1, 2016. Synchrony’s MDCC has delegated to the CEO the ability to grant equity-based awards to executives outside of the CEO’s staff to allow the Company to make timely decisions on hiring, performance and retention.
Hedging and Anti-Pledging Restrictions
Our Compensation Key Practices, which apply to all of our employees, include anti-hedging provisions that prohibit all employees from engaging in transactions in derivatives of or short-selling of Synchrony securities, including buying and writing options. We also maintain an anti-pledging policy that prohibits pledging activity in Synchrony securities.
Clawback Policy
Under the Company’s policy, if an employee has engaged in conduct detrimental to the Company or any of the Company’s subsidiaries, Synchrony’s MDCC may take a range of actions to remedy the misconduct, prevent its recurrence, and impose such discipline as would be appropriate. Discipline may vary depending on the facts and circumstances, and may include, without limitation, (a) termination of employment, (b) initiating an action for breach of fiduciary duty, (c) reducing, cancelling or seeking reimbursement of any paid or awarded compensation, and (d) if the conduct resulted in a material inaccuracy in the Company’s financial statements or performance metrics that affects the executive’s compensation, seeking reimbursement of any portion of incentive compensation paid or awarded to the executive that is greater than what would have been paid or awarded if calculated based on the accurate financial statements or performance metrics. If it is determined that an executive engaged in fraudulent misconduct, Synchrony’s MDCC will seek such reimbursement. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.
Compensation and Risk
2016 Risk Review Process
Synchrony’s risk management culture is strongly supported by a thorough risk review process that focuses on whether the risks we take are within our risk appetite framework. In 2016, working cross-functionally, our CEO and senior executives from our risk and human resource teams identified the individuals considered to be Material Risk Takers (“MRTs”) or Material Risk Controllers (“MRCs”). These individuals were required to have annual goals and objectives specifically tied to risk and compliance standards. During the fourth quarter, our Control Function Leaders, our CEO, our Audit Committee, MDCC and Risk Committee conducted assessments on MRTs and MRCs, which took into consideration MRT/MRC behavior in relation to their annual goals and objectives as well as any adverse risk outcomes during the year. These assessments were included in each MRT/MRC’s annual performance evaluation. By conducting these risk review processes as well as maintaining full transparency on all of our risk management policies and procedures, we believe that we have been able to discourage inappropriate risk-taking.
Review of Compensation to NEOs Related to Risk Management
In 2016, the MDCC reviewed the relationship between our risk management policies and practices and the incentive compensation provided to our NEOs to confirm that their incentive compensation appropriately balances risk and reward and determined that our compensation policies and practices are not reasonably likely to have a material adverse effect on our Company. The MDCC met with the CRO to discuss the annual risk assessment conducted with respect to incentive compensation plans in which all employees (including the NEOs) participate, including whether these arrangements had any features that might encourage excessive risk-taking that could threaten the value of the Company. The CRO also discussed the risk mitigation factors reviewed in the annual risk assessment, including the balance between financial andnon-financial measures as well as the short-term and long-term oriented measures. The MDCC also continues to monitor a separate, ongoing risk assessment by senior management of our broader employee compensation practices consistent with the federal banking regulators’ guidance on sound incentive compensation policies.
38
Risk Review of Incentive Plans
Each year, we conduct a risk analysis on each of our incentive plans using a risk analysis tool. This analysis covered 100% of our incentive eligible population and allowed us to gauge the degree to which our plans contribute to excessive risk-taking. The tool looks at six assessment categories (incentive design, strategic alignment/goal setting, pay opportunity, process, monitoring and administration) for each plan and assigns a rating score based on results. All of our incentive plans were rated such that they conform to or exceed key standards for risk management. Additionally, all incentive plans are reviewed each year and approved by our Chief Risk and Chief Human Resource Officers.
Role of Independent Compensation Consultant
Under its charter, the MDCC has the authority to retain such compensation consultants, outside counsel and other advisors as the MDCC may deem appropriate in its sole discretion. In 2016, the MDCC engaged Pay Governance to provide advice regarding market pay levels, strong pay practices, and other executive compensation matters. Pay Governance also provided advice to the Nominating and Governance Committee regarding director compensation. Other than these services, Pay Governance LLC does not provide any other services to the MDCC or to Synchrony. The MDCC has determined that Pay Governance LLC is independent and does not have any conflicts of interest.
Tax Considerations
Section 162(m) of the Code provides that no U.S. income tax deduction is allowable to a publicly held corporation fornon-performance-based compensation in excess of $1 million paid to a “covered employee” (generally, the NEOs (other than the CFO)). “Performance-based compensation,” which is exempt from the $1 million limitation, must be payable based upon meeting objective performance goals established by our MDCC under a plan that has been approved by stockholders and meets other tax code requirements.
Our policy generally is to seek to qualify various elements of the compensation payable to executives as “performance-based compensation,” although we may paynon-deductible compensation in order to preserve the MDCC’s ability to structure our executive compensation program to meet the objectives discussed above, including to reward individual and team performance.
COMPENSATION COMMITTEE REPORTCompensation Committee Report
The MDCC of the Board of Directors of Synchrony have reviewed and discussed the Compensation Discussion and Analysis with Synchrony’s management, and based on our review and discussions with management, we recommend to Synchrony’s Board of Directors that this Compensation Discussion and Analysis be included in this proxy statement. Respectfully submitted by the MDCC of the Board. | | | | Richard C. Hartnack, Chair | | | Richard C. Hartnack, Chair
| | | Jeffrey G. Naylor | | | Laurel J. Richie |
39
| | | | | | | COMPENSATION MATTERS 42 Synchrony | 2019 Annual Meeting and Proxy Statement
| | | | | | | | | | | | |
Compensation Matters 2018 Executive Compensation The following table contains 2018 compensation information for our NEOs. 2018 Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name & Principal Position | | Year | | Salary | | Bonus | | Stock Awards (1) | | Option
Awards (2) | | Non-Equity
Incentive
Plan Comp. | | All Other
Comp. (3) | | Total | | | | Adjusted Total (4) | | | | | | | | | | | | Margaret Keane | | 2018 | | | $ | 1,175,000 | | | | $ | 0 | | | | $ | 6,800,052 | | | | $ | 1,200,023 | | | | $ | 2,681,400 | | | | $ | 592,663 | | | | $ | 12,449,138 | | | | | | $ | 11,449,138 | | President and | | 2017 | | | $ | 1,168,654 | | | | $ | 0 | | | | $ | 7,800,060 | | | | $ | 1,199,408 | | | | $ | 2,655,500 | | | | $ | 701,881 | | | | $ | 13,525,503 | | | | | | $ | 13,525,503 | | Chief Executive Officer | | 2016 | | | $ | 1,092,923 | | | | $ | 0 | | | | $ | 4,675,026 | | | | $ | 825,428 | | | | $ | 2,923,800 | | | | $ | 743,180 | | | | $ | 10,260,358 | | | | | | $ | 10,260,358 | | | | | | | | | | | | | Brian Doubles | | 2018 | | | $ | 750,000 | | | | $ | 0 | | | | $ | 1,700,038 | | | | $ | 300,006 | | | | $ | 855,800 | | | | $ | 276,983 | | | | $ | 3,882,827 | | | | | | $ | 3,882,827 | | Executive Vice | | 2017 | | | $ | 750,000 | | | | $ | 0 | | | | $ | 2,164,536 | | | | $ | 205,402 | | | | $ | 847,500 | | | | $ | 228,046 | | | | $ | 4,195,484 | | | | | | $ | 4,195,484 | | President and Chief Financial Officer | | 2016 | | | $ | 680,077 | | | | $ | 0 | | | | $ | 1,077,760 | | | | $ | 195,853 | | | | $ | 910,400 | | | | $ | 275,294 | | | | $ | 3,139,384 | | | | | | $ | 3,139,384 | | | | | | | | | | | | | Henry Greig | | 2018 | | | $ | 625,000 | | | | $ | 0 | | | | $ | 1,062,566 | | | | $ | 187,506 | | | | $ | 713,100 | | | | $ | 173,069 | | | | $ | 2,761,241 | | | | | | $ | 2,761,241 | | Executive Vice | | 2017 | | | $ | 606,308 | | | | $ | 0 | | | | $ | 986,022 | | | | $ | 173,915 | | | | $ | 706,300 | | | | $ | 204,155 | | | | $ | 2,676,700 | | | | | | $ | 2,676,700 | | President, Chief Credit Officer and Capital Management Leader | | 2016 | | | $ | 547,000 | | | | $ | 0 | | | | $ | 911,224 | | | | $ | 160,889 | | | | $ | 770,800 | | | | $ | 234,642 | | | | $ | 2,624,555 | | | | | | $ | 2,624,555 | | | | | | | | | | | | | Neeraj Mehta | | 2018 | | | $ | 735,000 | | | | $ | 0 | | | | $ | 1,245,204 | | | | $ | 293,646 | | | | $ | 827,200 | | | | $ | 237,802 | | | | $ | 3,338,852 | | | | | | $ | 3,338,852 | | Executive Vice President, Chief Executive Officer— Payment Solutions and Chief Commercial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tom Quindlen | | 2018 | | | $ | 850,000 | | | | $ | 0 | | | | $ | 1,182,503 | | | | $ | 215,347 | | | | $ | 941,300 | | | | $ | 281,976 | | | | $ | 3,471,126 | | | | | | $ | 3,471,126 | | Executive | | 2017 | | | $ | 840,500 | | | | $ | 0 | | | | $ | 1,152,068 | | | | $ | 215,235 | | | | $ | 932,300 | | | | $ | 342,842 | | | | $ | 3,482,945 | | | | | | $ | 3,482,945 | | Vice President and Chief Executive Officer—Retail Card | | 2016 | | | $ | 812,000 | | | | $ | 0 | | | | $ | 1,152,082 | | | | $ | 215,453 | | | | $ | 1,096,400 | | | | $ | 383,443 | | | | $ | 3,659,379 | | | | | | $ | 3,659,379 | |
| | (1) | For 2018, these amounts include the grant date fair value of three-year PSUs based on the probable outcome of the performance conditions: Ms. Keane ($4,000,028); Mr. Doubles ($1,000,032); Mr. Greig ($625,033); Mr. Mehta ($560,018); and Mr. Quindlen ($680,022). The value of these awards, assuming that the highest level of performance conditions will be achieved as follows: Ms. Keane ($6,000,043); Mr. Doubles ($1,500,048); Mr. Greig ($937,549); Mr. Mehta ($840,027); and Mr. Quindlen ($1,020,033). |
2016 EXECUTIVE COMPENSATION
The following table contains 2016 compensation information for our NEOs.
2016 Summary Compensation Table| (2) | This column represents the aggregate grant date fair value of stock options. Synchrony measures the fair value of each stock option grant at the date of grant using aBlack-Scholes option pricing model. The grant-date fair value of options granted in 2018 was $7.67, based on the following assumptions: risk-free interest rate of 2.65%; dividend yield of 2.09%; expected volatility of 24.87%; and expected lives of 6.5 years. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary | | Bonus | | Stock
Awards(1) | | Option
Awards(2) | | Non-Equity
Incentive
Plan
Awards(3) | | Change
in Pension
Value andNon-
qualified
Deferred
Comp.
Earnings(4) | | All Other
Comp.(5) | | Total | Margaret Keane | | | | 2016 | | | | $ | 1,092,923 | | | | | — | | | | $ | 4,675,026 | | | | $ | 825,428 | | | | | $2,923,800 | | | | | — | | | | $ | 743,180 | | | | $ | 10,260,358 | | | President and Chief Executive Officer | | | | 2015 | | | | $ | 933,893 | | | | $ | 912,500 | | | | $ | 1,400,016 | | | | $ | 599,742 | | | | | $5,318,600 | | | | $ | 3,077,387 | | | | $ | 108,812 | | | | $ | 12,350,949 | | | | | | 2014 | | | | $ | 881,250 | | | | $ | 2,287,500 | | | | $ | 6,156,088 | | | | $ | 2,636,436 | | | | | — | | | | $ | 2,708,286 | | | | $ | 114,101 | | | | $ | 14,783,661 | | Brian Doubles | | | | 2016 | | | | $ | 680,077 | | | | | — | | | | $ | 1,077,760 | | | | $ | 195,853 | | | | | $ 910,400 | | | | | — | | | | $ | 275,294 | | | | $ | 3,139,384 | | | Executive Vice President and Chief Financial Officer | | |
| 2015
2014 |
| | | $
$ | 631,394
555,000 |
| | | $
$ | 427,500
877,500 |
| | | $
$ | 456,758
3,256,773 |
| | | $
$ | 195,672
1,394,589 |
| | |
| $1,561,500
— |
| | | $
$ | 376,728
694,487 |
| | | $
$ | 38,631
28,292 |
| | | $
$ | 3,688,184
6,806,641 |
| Glenn Marino | | | | 2016 | | | | $ | 741,877 | | | | | — | | | | $ | 975,135 | | | | $ | 172,171 | | | | | $ 797,400 | | | | | — | | | | $ | 360,194 | | | | $ | 3,046,776 | | Executive Vice President, Chief Executive Officer—
Payment Solutions and Chief Commercial Officer | | |
| 2015
2014 |
| | | $
$ | 712,077
682,500 |
| | | $
$ | 577,500
1,152,500 |
| | | $
$ | 394,813
2,451,326 |
| | | $
$ | 169,127
1,049,687 |
| | |
| $1,723,000
— |
| | | $
$ | 943,196
1,558,558 |
| | | $
$ | 113,799
98,126 |
| | | $
$ | 4,633,512
6,992,697 |
| Jonathan Mothner | | | | 2016 | | | | $ | 669,250 | | | | | — | | | | $ | 896,266 | | | | $ | 158,247 | | | | | $ 744,200 | | | | | — | | | | $ | 256,451 | | | | $ | 2,724,414 | | | Executive Vice President, Secretary and General Counsel | | |
| 2015
2014 |
| | | $
$ | 660,447
600,000 |
| | | $
$ | 425,000
825,000 |
| | | $
$ | 364,008
1,932,702 |
| | | $
$ | 155,939
827,541 |
| | |
| $1,431,900
— |
| | | $
$ | 623,537
839,288 |
| | | $
$ | 43,447
33,785 |
| | | $
$ | 3,704,279
5,058,316 |
| Tom Quindlen | | | | 2016 | | | | $ | 812,000 | | | | | — | | | | $ | 1,152,082 | | | | $ | 215,453 | | | | | $1,096,400 | | | | | — | | | | $ | 383,443 | | | | $ | 3,659,379 | | | Executive Vice President and Chief Executive Officer—Retail Card | | |
| 2015
2014 |
| | | $
$ | 782,825
750,000 |
| | | $
$ | 730,000
1,545,000 |
| | | $
$ | 502,434
3,144,956 |
| | | $
$ | 215,232
1,346,753 |
| | |
| $2,313,400
— |
| | | $
$ | 1,226,711
2,568,861 |
| | | $
$ | 108,802
73,951 |
| | | $
$ | 5,879,404
9,429,521 |
|
| See the “—2018 Grants of Synchrony Plan-Based Awards Table” for further information on stock options granted in 2018. (1) | For 2016, these amounts include the grant date fair value of three-year PSUs based on the probable outcome of the performance conditions: Ms. Keane ($2,750,010); Mr. Doubles ($621,004); Mr. Marino ($573,607); Mr. Mothner ($527,207); and Mr. Quindlen ($649,601). The value of these awards, assuming that the highest level of performance conditions will be achieved as follows: Ms. Keane ($4,125,030); Mr. Doubles ($931,521); Mr. Marino ($860,425); Mr. Mothner ($790,825); and Mr. Quindlen ($974,401). |
| (3) | See the “— 2018 All Other Compensation Table” for additional information about All Other Compensation paid in 2018. |
| (4) | Reflects Ms. Keane’s voluntary agreement with the MDCC to forfeit $1 million of RSUs granted to her in 2018. |
(2) | This column represents the aggregate grant date fair value of stock options granted in 2016 in accordance with SEC rules. Synchrony measures the fair value of each stock option grant at the date of grant using a Black-Scholes option pricing model. The grant-date fair value of options granted in 2016 was $6.99, based on the following assumptions: risk-free interest rate of 1.5%; dividend yield of 1.5%; expected volatility of 26.3%; and expected lives of 6.5 years. See the “—2016 Grants of Synchrony Plan-Based Awards Table” for further information on stock options granted in 2016. |
(3) | For 2015, this column includes amounts paid pursuant to the triennial 2013-2015 GE Long-Term Performance Awards (LTPAs), which includes the following cash amounts pursuant to the 2013-2015 GE Long-Term Performance awards: Keane—$2,415,600; Doubles—$667,500; Marino—$881,000; Mothner—$672,900; Quindlen—$1,125,400. |
Synchrony | 2019 Annual Meeting and Proxy Statement 43
(4) | This column represents the sum of the change in pension value and nonqualified deferred compensation earnings for each of the NEOs. As of the completion of oursplit-off from GE in November 2015,Compensation Matters 2018 All Other Compensation In 2018, our NEOs stopped accruingreceived additional benefits, reflected in the table below, which Synchrony believed to be reasonable, competitive and consistent with its overall executive compensation program. The costs of these benefits are shown below after giving effect to any benefits underreimbursements by the GE pension plans and GE deferred compensation plans, and amounts under the GE deferred compensation plans were paid out in 2016. For information about the 2015 and 2014 change in pension value and nonqualified deferred compensation earnings, see the 2015 Summary Compensation Table and the 2014 Summary Compensation Table. |
NEOs. (5) | See the “— 20162018 All Other Compensation Table” for additional information about All Other Compensation paid in 2016. |
40
2016 All Other Compensation
In 2016, our NEOs received additional benefits, reflected in the table below, which Synchrony believed to be reasonable, competitive and consistent with its overall executive compensation program. The costs of these benefits are shown below after giving effect to any reimbursements by the NEOs.
2016 All Other Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name of Executive | | Perquisites
& Other
Personal
Benefits(1) | | | | Value of
Supplementary
Life Insurance
Premium(2) | | | | Payments
Relating to
Employer
Savings
Plan(3) | | | | Amounts
Credited to Restoration
Plan Account(4) | | | | Total | Margaret Keane | | | $ | 6,150 | | | | | | | | | $ | 67,773 | | | | | | | | | $ | 35,000 | | | | | | | | | $ | 634,257 | | | | | | | | | $ | 743,180 | | Brian Doubles | | | $ | 8,500 | | | | | | | | | $ | 1,525 | | | | | | | | | $ | 42,563 | | | | | | | | | $ | 222,706 | | | | | | | | | $ | 275,294 | | Glenn Marino | | | $ | 13,500 | | | | | | | | | $ | 80,163 | | | | | | | | | $ | 42,321 | | | | | | | | | $ | 224,209 | | | | | | | | | $ | 360,194 | | Jonathan Mothner | | | $ | 8,500 | | | | | | | | | $ | 7,934 | | | | | | | | | $ | 42,243 | | | | | | | | | $ | 197,774 | | | | | | | | | $ | 256,451 | | Tom Quindlen | | | $ | 15,500 | | | | | | | | | $ | 30,719 | | | | | | | | | $ | 42,275 | | | | | | | | | $ | 294,950 | | | | | | | | | $ | 383,443 | |
(1) | Amounts in this column include financial counseling for all of the NEOs and annual physical examinations for Messrs. Doubles, Mothner, Marino and Quindlen. |
(2) | This column reports taxable payments made to the NEOs to cover premiums for universal life insurance policies owned by the executives. These policies include: (a) for Ms. Keane and Messrs. Marino and Quindlen, life insurance policies totaling $1 million in coverage at the time of enrollment, increased 4% annually thereafter and (b) life insurance policies for each of the NEOs with coverage amounts fixed at two times their annual pay at the time of the completion of oursplit-off from GE. These policies are intended to maintain benefits that existed for these executives as GE employees prior to the completion of oursplit-off from GE and in lieu of life insurance benefits that are provided to other Synchrony employees. The face value of the life insurance policies for Ms. Keane and Messrs. Marino and Quindlen is less than what they would have received under the standard life insurance program for Synchrony employees. |
(3) | This column reports Company core contributions, matching contributions and additional contributions to the NEOs’ 401(k) savings accounts up to the limitations imposed under IRS rules, and Synchrony 401(k) Company contributions. |
(4) | This column reports Company core contributions, matching contributions and additional contributions to the NEOs’ Restoration Plan accounts. For additional details on the Restoration Plan and the specific design elements of the plan, see “2016 Compensation Elements—Synchrony Financial Restoration Plan.” |
41
2016 Grants of Plan-Based Awards
The following table provides information about Synchrony equity awards granted to the NEOs in 2016: (i) the grant date, (ii) the number of shares or stock units underlying stock awards granted to the NEOs under the Synchrony Financial 2014 Long-Term Incentive Plan, (iii) the number of other securities underlying option awards granted to the NEOs under the Synchrony Financial 2014 Long-Term Incentive Plan, (iv) the exercise or base price of the stock option grants, which reflects the closing price of Synchrony common stock on the date of grant, and (v) the grant date fair value of each option grant computed in accordance with applicable SEC rules.
2016 Grants of Synchrony Plan-Based Awards Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other
Stock
Awards:
Number | | | All Other
Option
Awards:
Number of | | | Exercise
or Base | | | Grant Date
Fair Value | | | Name of Executive | | Grant
Date | | | Threshold
($) | | | Target ($) | | | Maximum ($) | | | | | Threshold
(# units) | | | Target
(# units) | | | Maximum
(# units) | | | of Shares
of Stock
or Units(3) | | | Securities
Underlying
Options(4) | | | Price of
Option
Awards | | | of Stock
and Option
Awards(5) | | Margaret Keane | | | 4/1/16 | | | | $1,100,000 | | | | $2,200,000 | | | | $3,300,000 | | | | | | 46,881 | | | | 93,761 | | | | 140,642 | | | | 65,633 | | | | 118,087 | | | | $29.33 | | | | $5,500,454 | | Brian Doubles | | | 4/1/16 | | | | $ 342,500 | | | | $ 685,000 | | | | $1,027,500 | | | | | | 10,587 | | | | 21,173 | | | | 31,760 | | | | 15,573 | | | | 28,019 | | | | $29.33 | | | | $1,273,613 | | Glenn Marino | | | 4/1/16 | | | | $ 300,000 | | | | $ 600,000 | | | | $ 900,000 | | | | | | 9,779 | | | | 19,557 | | | | 29,336 | | | | 13,690 | | | | 24,631 | | | | $29.33 | | | | $1,147,305 | | Jonathan Mothner | | | 4/1/16 | | | | $ 280,000 | | | | $ 560,000 | | | | $ 840,000 | | | | | | 8,988 | | | | 17,975 | | | | 26,963 | | | | 12,583 | | | | 22,639 | | | | $29.33 | | | | $1,054,513 | | Tom Quindlen | | | 4/1/16 | | | | $ 412,500 | | | | $ 825,000 | | | | $1,237,500 | | | | | | 11,074 | | | | 22,148 | | | | 33,222 | | | | 17,132 | | | | 30,823 | | | | $29.33 | | | | $1,367,535 | |
(1) | These columns show the annual incentive cash awards that are linked to Synchrony’s performance over the 2016 performance period. Cash awards are payable based on three equally-weighted quantitative metrics: net earnings, receivables growth and efficiency ratio. |
(2) | These columns show the number of PSUs granted as long-term performance awards that are linked to Synchrony’s performance over the 2016–2018 performance period. The PSUs will be payable in shares of common stock based on our cumulative annual diluted earnings per share and average return on assets over the performance period provided performance and vesting conditions are met. |
(3) | This column shows the number of RSUs granted as part of the annual equity incentive grant in April. These RSUs will vest and become exercisable ratably in five equal annual installments beginning one year from the date of grant and each year thereafter. |
(4) | This column shows the number of stock options granted as part of the annual equity incentive grant in April. These stock options will vest and become exercisable ratably in five equal annual installments beginning one year from the date of grant and each year thereafter. |
(5) | This column shows the aggregate grant date fair value of PSUs, RSUs and stock options granted to the NEOs in April. Generally, the aggregate grant date fair value is the expected accounting expense that will be recognized over the award’s vesting schedule. For stock options, fair value is calculated using the Black-Scholes value of an option on the grant date ($6.99 on April 1, 2016). For RSUs and PSUs, the value is assumed to be the stock price on date of grant. For additional information on the valuation assumptions, refer to the “— 2016 Summary Compensation Table” above. |
2016 Outstanding Synchrony Equity Awards at FiscalYear-End
The following table provides information on the current holdings of Synchrony common stock and Synchrony equity awards by the NEOs. This table includes unexercised (both vested and unvested) option grants and unvested RSUs with vesting conditions that were not satisfied as of December 31, 2016. Each equity grant is shown separately for each NEO. The vesting schedule for each outstanding award is shown following this table.
42
2016 Outstanding Synchrony Equity Awards at FiscalYear-End Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | Stock Awards | | | | | | | | | | | | | | | Name of Executive | | Option
Grant Date | | Number of
Securities
Underlying
Unexercised
Options
(Exercisable) | | Number of
Securities
Underlying
Unexercised
Options
(Unexercisable) | | Option
Exercise
Price | | Option
Expiration
Date | | | | Stock
Award
Grant
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested | | Market Value of Shares or Units of Stock That
Have Not
Vested(1) | | | Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not Vested | | Equity Incentive
Plan Awards:
Market or Payout Value of Unearned
Shares, Units or Other Rights
That Have Not Vested(2) | | Margaret Keane | | 7/31/14 | | 0 | | 323,218 | | $23.00 | | 7/31/24 | | | | 7/31/14 | | 213,044 | | $ | 7,727,106 | | | | | | | | | | 9/17/14 | | 25,926 | | 47,889 | | $24.55 | | 9/17/24 | | | | 9/17/14 | | 30,699 | | $ | 1,113,453 | | | | | | | | | | 4/1/15 | | 12,706 | | 50,826 | | $30.41 | | 4/1/25 | | | | 4/1/15 | | 36,831 | | $ | 1,335,860 | | | | | | | | | | 4/1/16 | | 0 | | 118,087 | | $29.33 | | 4/1/26 | | | | 4/1/16 | | 65,633 | | $ | 2,380,509 | | | | | | | | | | | | | | | | | | | | | | | 4/1/16 | | | | | | | | 93,761 | | $ | 3,400,711 | | Brian Doubles | | 7/31/14 | | 0 | | 184,696 | | $23.00 | | 7/31/24 | | | | 7/31/14 | | 121,740 | | $ | 4,415,510 | | | | | | | | | | 9/17/14 | | 5,609 | | 17,415 | | $24.55 | | 9/17/24 | | | | 9/17/14 | | 11,163 | | $ | 404,882 | | | | | | | | | | 4/1/15 | | 4,145 | | 16,583 | | $30.41 | | 4/1/25 | | | | 4/1/15 | | 12,016 | | $ | 435,820 | | | | | | | | | | 4/1/16 | | 0 | | 28,019 | | $29.33 | | 4/1/26 | | | | 4/1/16 | | 15,573 | | $ | 564,833 | | | | | | | | | | | | | | | | | | | | | | | 4/1/16 | | | | | | | | 21,173 | | $ | 767,945 | | Glenn Marino | | 7/31/14 | | 0 | | 139,099 | | $23.00 | | 7/31/24 | | | | 7/31/14 | | 91,685 | | $ | 3,325,415 | | | | | | | | | | 9/17/14 | | 8,707 | | 13,061 | | $24.55 | | 9/17/24 | | | | 9/17/14 | | 8,373 | | $ | 303,689 | | | | | | | | | | 4/1/15 | | 3,583 | | 14,333 | | $30.41 | | 4/1/25 | | | | 4/1/15 | | 10,387 | | $ | 376,736 | | | | | | | | | | 4/1/16 | | 0 | | 24,631 | | $29.33 | | 4/1/26 | | | | 4/1/16 | | 13,690 | | $ | 496,536 | | | | | | | | | | | | | | | | | | | | | | | 4/1/16 | | | | | | | | 19,557 | | $ | 709,332 | | Jonathan Mothner | | 7/31/14 | | 0 | | 115,435 | | $23.00 | | 7/31/24 | | | | 7/31/14 | | 76,087 | | $ | 2,759,675 | | | | | | | | | | 9/17/14 | | 1,644 | | 6,966 | | $24.55 | | 9/17/24 | | | | 9/17/14 | | 4,466 | | $ | 161,982 | | | | | | | | | | 4/1/15 | | 3,303 | | 13,216 | | $30.41 | | 4/1/25 | | | | 4/1/15 | | 9,576 | | $ | 347,322 | | | | | | | | | | 4/1/16 | | 0 | | 22,639 | | $29.33 | | 4/1/26 | | | | 4/1/16 | | 12,583 | | $ | 456,385 | | | | | | | | | | | | | | | | | | | | | | | 4/1/16 | | | | | | | | 17,975 | | $ | 651,953 | | Tom Quindlen | | 7/31/14 | | 0 | | 174,307 | | $23.00 | | 7/31/24 | | | | 7/31/14 | | 114,892 | | $ | 4,167,133 | | | | | | | | | | 9/17/14 | | 12,770 | | 19,156 | | $24.55 | | 9/17/24 | | | | 9/17/14 | | 12,280 | | $ | 445,395 | | | | | | | | | | 4/1/15 | | 4,560 | | 18,240 | | $30.41 | | 4/1/25 | | | | 4/1/15 | | 13,218 | | $ | 479,417 | | | | | | | | | | 4/1/16 | | 0 | | 30,823 | | $29.33 | | 4/1/26 | | | | 4/1/16 | | 17,132 | | $ | 621,378 | | | | | | | | | | | | | | | | | | | | | | | 4/1/16 | | | | | | | | 22,148 | | $ | 803,308 | |
(1) | The market value of the stock awards represents the product of the closing price of Synchrony common stock as of December 30, 2016, which was $36.27, and the number of shares underlying each such award. |
(2) | PSUs granted in 2016 vest, to the extent earned, on December 31, 2018. The market value of PSUs that have not vested as of December 31, 2016 was calculated using the closing price of Synchrony common stock as of December 30, 2016, which was $36.27, multiplied by the number of unvested units based on achieving target performance goals. |
2016 Outstanding Synchrony Equity Awards Vesting Schedule
| | | | | | | | | Name of Executive | | Grant
Date
| | Option Awards Vesting Schedule(1) | | Grant
Date
| | Stock Awards Vesting Schedule(2) | All NEOs
| | 7/31/14 | | 100% vests 7/31/18 | | 7/31/14 | | 100% vests 7/31/18 | | | 9/17/14 | | 20% vests 9/17/17, 9/17/18 and 9/17/19 | | 9/17/14 | | 20% vests 9/17/17, 9/17/18 and 9/17/19 | | | 4/1/15 | | 20% vests 4/1/18, 4/1/19 and 4/1/20 | | 4/1/15 | | 20% vests 4/1/18, 4/1/19 and 4/1/20 | | | 4/1/16 | | 20% vests 4/1/18, 4/1/19, 4/1/20 and 4/1/21 | | 4/1/16 | | 20% vests 4/1/18, 4/1/19, 4/1/20 and 4/1/21 | | | | | | | 4/1/16 | | 100% vests 12/31/18(3) |
(1) | This column shows the vesting schedule of unexercisable or unearned options reported in the “Number of Securities Underlying Unexercised Options (Unexercisable)” column of the “—2016 Outstanding Synchrony Equity Awards at FiscalYear-End Table.” The stock options vest on the anniversary of the grant date in the years shown in the table above. |
(2) | This column shows the vesting schedule of unvested RSUs reported in the “Number of Shares or Units of Stock That Have Not Vested” column and unvested PSUs reported in the “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” column of the “—2016 Outstanding Synchrony Equity Awards at FiscalYear-End Table.” The RSUs vest on the anniversary of the grant date in the years shown in the table above. |
(3) | The PSUs vest, to extent earned, on December 31, 2018. |
43
2016 Synchrony Nonqualified Deferred Compensation
The table below provides information on the nonqualified deferred compensation of the NEOs in 2016, including:
Synchrony Deferred Compensation
As discussed above, effective for 2016, we adopted our own deferred compensation plan, which does not pay an “above-market” rate of interest. The plan is available to a select group of management and highly compensated employees of Synchrony and any of its participating affiliates. Under the plan, eligible employees may, to the extent permitted by the administrator of the plan, elect to defer up to 80% (or such lower percentage, as determined by the plan administrator) of their base salary and bonus, and all or a portion of any other type of compensation, as determined by the plan administrator.
Synchrony Financial Restoration Plan
As discussed above, the Restoration Plan mirrors the Company’s qualified 401(k) plan. The plan provides a continuation of Company contributions on salary and bonus that would have been made to our 401(k) plan but for various limitations imposed by the Internal Revenue Code of 1986 (the “Code”), along with additional Company contributions that cannot be made to the 401(k) plan. The plans are designed to include Company contributions of (i) a 3% core contribution, (ii) a 4% match, and (iii) up to 10% additional contribution for former participants of GE pension plans, which will decline to 4% over the next three years. The Restoration Plan account is forfeited if an executive leaves voluntarily prior to age 60. For 2016, each of our NEOs received contributions to his or her Restoration Plan account, which are reported in the “All Other Compensation” column in the 2016 Summary Compensation Table.
2016 Synchrony Nonqualified Deferred Compensation
| | | | | | | | | | | | | | | | | | Name of Executive | | Type of Plan | | Executive
Contributions
in Last
Fiscal Year | | Registrant
Contributions
in Last
Fiscal Year | | | Aggregate
Earnings in Last
Fiscal Year(1) | | | Aggregate Balance
at Last Fiscal
Year-End | | Margaret Keane | | Restoration Plan | | — | | | $634,257 | | | | $ 2,169 | | | | $636,426 | | | | | Deferred Comp Plan | | — | | | — | | | | — | | | | — | | Brian Doubles | | Restoration Plan | | — | | | $222,706 | | | | $22,419 | | | | $245,125 | | | | | Deferred Comp Plan | | — | | | — | | | | — | | | | — | | Glenn Marino | | Restoration Plan | | — | | | $224,209 | | | | $34,375 | | | | $249,809(2) | | | | | Deferred Comp Plan | | — | | | — | | | | — | | | | — | | Jonathan Mothner | | Restoration Plan | | — | | | $197,774 | | | | $ 3,549 | | | | $201,322 | | | | | Deferred Comp Plan | | — | | | — | | | | — | | | | — | | Tom Quindlen | | Restoration Plan | | — | | | $294,950 | | | | $31,952 | | | | $326,902 | | | | | Deferred Comp Plan | | — | | | — | | | | — | | | | — | |
(1) | The earnings on amounts contributed to the Restoration Plan may be positive or negative, depending on the NEO’s investment choice. |
(2) | The aggregate balance atyear-end reflects a deduction of $8,775 to pay taxes pursuant to the Federal Insurance Contributions Act (FICA). This tax only applies to Mr. Marino because Mr. Marino is the only NEO who has reached the age to be eligible for retirement. |
44
2016 Potential Payments Upon Termination orChange-in-Control At FiscalYear-End
The information below describes and quantifies certain compensation that would have become payable under existing plans and arrangements if the NEO’s employment had terminated on December 31, 2016, given the NEO’s compensation and service levels as of such date and based on Synchrony’s closing stock price on December 30, 2016, as applicable. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any amounts actually paid or distributed may be different. Factors that could affect these amounts include the time during the year of any such event, Synchrony’s stock price, as applicable, and the executive’s age.
Executive Severance Plan
The purpose of the Executive Severance Plan is to secure the continued services and ensure the continued dedication of our NEOs and other executives. The Executive Severance Plan provides that if a participating executive is laid off, such executive will be entitled to the following:
CEO—18 months of the CEO’s base salary, offset by all other severance benefits that the CEO will receive from the Company in connection with being laid off; and
Other NEOs—12 months of an NEO’s base salary, offset by all other severance benefits that the NEO will receive from the Company in connection with being laid off.
CIC Severance Plan
The purpose of the CIC Severance Plan is to secure the continued services and ensure the continued dedication and objectivity of these executives in the event of any threat or occurrence of, or negotiation or other action that could lead to, or create the possibility of, a change in control of the Company. The CIC Severance Plan provides for the following severance benefits upon a qualifying termination of employment within 30 months following a change in control:
CEO—lump sum payment equal to the sum of (1) the CEO’s prorated bonus for the year of termination, (2) the product oftwo-and-one-half multiplied by the sum of the CEO’s annual base salary and target bonus, and (3) an amount equal to 30 months of the employer portion of the monthly premium or cost of coverage for the health benefits elected by the CEO, based on the rates for continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“Healthcare Premiums”). In addition, for 30 months following the CEO’s termination of employment, the CEO will be entitled to reasonable executive outplacement services.
Other NEOs—lump sum payment equal to the sum of (1) the NEO’s prorated bonus for the year of termination, (2) the product of two multiplied by the sum of the NEO’s annual base salary and target bonus, and (3) an amount equal to 24 months of Healthcare Premiums. In addition, for 24 months following the NEO’s termination of employment, the NEO will be entitled to reasonable executive outplacement services.
Synchrony Equity Awards
If one of the NEOs were to die or become disabled, anyun-exercisable stock options become exercisable and remain exercisable until their expiration date. In the event of disability, this provision applies only to options that have been held for at least one year. For these purposes, “disability” generally means disability resulting in the NEO being unable to perform his job. Remaining restrictions on RSUs that were awarded prior to death or disability lapse immediately. In addition, any unvested options or RSUs held for at least one year become fully vested upon becoming retirement-eligible (reaching age 60 with three years of service), depending on the terms of the particular award. For involuntary termination, awards are eitherpro-rated (if under age 60 and less than 20 years of service) or fully vest if over 20 years of service.
45
Payment Upon Termination as ofYear-End Tables
The following tables show the payments that each of our NEOs would have received under various termination scenarios on December 31, 2016. Termination upon a change in control reflects amounts assuming each NEO’s employment was terminated by the Company without “cause” or by the executive for “good reason” within 30 months of the specified time period prior to or following the change in control. Other than Mr. Marino, none of the NEOs were eligible to retire as of December 31, 2016; therefore, the NEOs, other than Mr. Marino, do not have any values in the retirement termination columns below. The tables below assume a stock price of $36.27, the closing price of a share of our common stock on December 30, 2016.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name of Executive | | Perquisites &
Other Personal
Benefits(1) | | Value of
Supplementary
Life Insurance
Premiums(2) | | Payments Relating
to Employee
Savings Plan(3) | | Amounts Credited
to Restoration
Plan Account(4) | | Total | | | | | | | | | | Margaret Keane | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Element of Pay | | For
Cause | | | | Voluntary
Termination | | | | Involuntary
Termination | | | | | | Pre-60
Retirement | | | | | | Death or
Disability | | | | | | Change-in-
Control | | Severance | | — | | | | — | | | | $ | 1,650,000 | | | | | | | | — | | | | | | | | — | | | | | | | $ | 8,250,000 | | RSUs | | — | | | | — | | | | $ | 7,117,773 | | | | | | | | — | | | | | | | $ | 12,556,928 | | | | | | | $ | 12,556,928 | | Stock Options | | — | | | | — | | | | $ | 3,450,432 | | | | | | | | — | | | | | | | $ | 5,967,726 | | | | | | | $ | 5,967,726 | | PSUs | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | $ | 3,400,711 | | | | | | | $ | 3,400,711 | | Annual Cash Incentive | | — | | | | — | | | | $ | 2,923,800 | | | | | | | | — | | | | | | | $ | 2,923,800 | | | | | | | $ | 2,923,800 | | Medical Benefits | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | — | | | | | | | $ | 37,511 | | Outplacement | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | — | | | | | | | $ | 14,750 | | Restoration Plan | | — | | | | — | | | | $ | 636,426 | | | | | | | | — | | | | | | | $ | 636,426 | | | | | | | $ | 636,426 | | Deferred Compensation | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | | Total | | — | | | | — | | | | $ | 15,778,431 | | | | | | | | — | | | | | | | $ | 25,485,591 | | | | | | | $ | 33,787,853 | | Brian Doubles | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Element of Pay | | For
Cause | | | | Voluntary
Termination | | | | Involuntary
Termination | | | | | | Pre-60
Retirement | | | | | | Death or
Disability | | | | | | Change-in-
Control | | Severance | | — | | | | — | | | | | $ 685,000 | | | | | | | | — | | | | | | | | — | | | | | | | $ | 2,740,000 | | RSUs | | — | | | | — | | | | | $3,088,055 | | | | | | | | — | | | | | | | $ | 5,821,045 | | | | | | | $ | 5,821,045 | | Stock Options | | — | | | | — | | | | | $1,631,402 | | | | | | | | — | | | | | | | $ | 2,946,648 | | | | | | | $ | 2,946,648 | | PSUs | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | $ | 767,945 | | | | | | | $ | 767,945 | | Annual Cash Incentive | | — | | | | — | | | | | $ 910,400 | | | | | | | | — | | | | | | | $ | 910,400 | | | | | | | $ | 910,400 | | Medical Benefits | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | — | | | | | | | $ | 30,254 | | Outplacement | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | — | | | | | | | $ | 11,800 | | Restoration Plan | | — | | | | — | | | | | $ 245,125 | | | | | | | | — | | | | | | | $ | 245,125 | | | | | | | $ | 245,125 | | Deferred Compensation | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | | Total | | — | | | | — | | | | | $6,559,982 | | | | | | | | — | | | | | | | $ | 10,691,163 | | | | | | | $ | 13,473,217 | | Glenn Marino | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Element of Pay | | For
Cause | | | | Voluntary
Termination | | | | Involuntary
Termination | | | | | | Retirement | | | | | | Death or
Disability | | | | | | Change-in-
Control | | Severance | | — | | | | — | | | | | $ 750,000 | | | | | | | | — | | | | | | | | — | | | | | | | $ | 2,700,000 | | RSUs | | — | | | | — | | | | | $2,689,530 | | | | | | | $ | 2,689,530 | | | | | | | | $4,502,376 | | | | | | | $ | 4,502,376 | | Stock Options | | — | | | | — | | | | | $1,352,264 | | | | | | | $ | 1,352,264 | | | | | | | | $2,253,849 | | | | | | | $ | 2,253,849 | | PSUs | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | $ 709,332 | | | | | | | $ | 709,332 | | Annual Cash Incentive | | — | | | | — | | | | | $ 797,400 | | | | | | | $ | 797,400 | | | | | | | | $ 797,400 | | | | | | | $ | 797,400 | | Medical Benefits | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | — | | | | | | | $ | 18,884 | | Outplacement | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | — | | | | | | | $ | 11,800 | | Restoration Plan | | — | | | | — | | | | | $ 249,809 | | | | | | | $ | 249,809 | | | | | | | | $ 249,809 | | | | | | | $ | 249,809 | | Deferred Compensation | | — | | | | — | | | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | | Total | | — | | | | — | | | | | $5,839,003 | | | | | | | $ | 5,089,003 | | | | | | | | $8,512,767 | | | | | | | $ | 11,243,451 | |
| | | $ | 12,000 | | | | $ | 78,198 | | | | $ | 35,750 | | | | $ | 466,715 | | | | $ | 592,663 | | | | | | | | | | | | | | 46 Brian Doubles
| | $ | 29,634 | | | | $ | 2,520 | | | | $ | 35,750 | | | | $ | 209,079 | | | | $ | 276,983 | | | | | | | | | | | | | | Henry Greig | | | $ | 0 | | | | $ | 0 | | | | $ | 35,750 | | | | $ | 137,319 | | | | $ | 173,069 | | | | | | | | | | | | | | Neeraj Mehta | | | $ | 14,950 | | | | $ | 12,115 | | | | $ | 35,750 | | | | $ | 174,987 | | | | $ | 237,802 | | | | | | | | | | | | | | | | COMPENSATION MATTERS
| | | | | | | | | | | | |
Jonathan Mothner
| | | | | | | | | | | | | | | | | | | | Element of Pay | | For
Cause | | Voluntary
Termination | | Involuntary
Termination | | | Pre-60
Retirement | | Death or
Disability | | | Change-in-
Control | | Severance | | — | | — | | | $ 700,000 | | | — | | | — | | | | $2,520,000 | | RSUs | | — | | — | | | $1,921,956 | | | — | | | $3,725,364 | | | | $3,725,364 | | Stock Options | | — | | — | | | $1,005,020 | | | — | | | $1,848,024 | | | | $1,848,024 | | PSUs | | — | | — | | | — | | | — | | | $ 651,953 | | | | $ 651,953 | | Annual Cash Incentive | | — | | — | | | $ 744,200 | | | — | | | $ 744,200 | | | | $ 744,200 | | Medical Benefits | | — | | — | | | — | | | — | | | — | | | | $ 30,375 | | Outplacement | | — | | — | | | — | | | — | | | — | | | | $ 11,800 | | Restoration Plan | | — | | — | | | $ 201,322 | | | — | | | $ 201,322 | | | | $ 201,322 | | Deferred Compensation | | — | | — | | | — | | | — | | | — | | | | — | | Total | | — | | — | | | $4,572,498 | | | — | | | $7,170,864 | | | | $9,733,039 | |
Tom Quindlen | | | | | | | | | | | | | | | | | | | | Element of Pay | | For
Cause | | Voluntary
Termination | | Involuntary
Termination | | | Pre-60
Retirement | | Death or
Disability | | | Change-in-
Control | | Severance | | — | | — | | | $ 812,000 | | | — | | | — | | | | $ 3,274,000 | | RSUs | | — | | — | | | $3,442,455 | | | — | | | $ 5,713,323 | | | | $ 5,713,323 | | Stock Options | | — | | — | | | $1,728,865 | | | — | | | $ 2,858,360 | | | | $ 2,858,360 | | PSUs | | — | | — | | | — | | | — | | | $ 803,308 | | | | $ 803,308 | | Annual Cash Incentive | | — | | — | | | $1,096,400 | | | — | | | $ 1,096,400 | | | | $ 1,096,400 | | Medical Benefits | | — | | — | | | — | | | — | | | — | | | | $ 30,254 | | Outplacement | | — | | — | | | — | | | — | | | — | | | | $ 11,800 | | Restoration Plan | | — | | — | | | $ 326,902 | | | — | | | $ 326,902 | | | | $ 326,902 | | Deferred Compensation | | — | | — | | | — | | | — | | | — | | | | — | | Total | | — | | — | | | $7,406,622 | | | — | | | $10,798,293 | | | | $14,114,348 | |
| | | $ | 4,650 | | | | $ | 41,127 | | | | $ | 35,750 | | | | $ | 200,449 | | | | $ | 281,976 | | | | | | |
| (1) | Amounts in this column include financial counseling, annual physical examinations and, for Mr. Doubles, personal use of corporate aircraft services due to special circumstances in the amount of $14,189, which reflects the aggregate incremental cost to Synchrony. |
| (2) | 47This column reports taxable payments made to the NEOs to cover premiums for universal life insurance policies owned by the executives. The NEOs receive these payments in lieu of the higher standard life insurance coverage available to other employees. These policies include: (a) for Ms. Keane and Messrs. Mehta and Quindlen, life insurance policies totaling $1 million in coverage at the time of enrollment, increased 4% annually thereafter and (b) life insurance policies for each of the NEOs with coverage amounts fixed at two times their annual pay at the time of the completion of oursplit-off from GE. These policies are intended to maintain benefits that existed for these executives as GE employees prior to the completion of oursplit-off from GE and in lieu of life insurance benefits that are provided to other Synchrony employees. The face value of the life insurance policies for Ms. Keane and Messrs. Mehta and Quindlen is less than what they would have received under the standard life insurance program for Synchrony employees.
|
| (3) | This column reports Company core contributions, matching contributions and additional contributions to the NEOs’ 401(k) savings accounts up to the limitations imposed under IRS rules, and the plan. |
| (4) | This column reports Company core contributions, matching contributions and additional contributions to the NEOs’ Restoration Plan accounts. For additional details on the Restoration Plan and the specific design elements of the plan, see “2018 Compensation Elements—Synchrony Financial Restoration Plan.” |
44 Synchrony | 2019 Annual Meeting and Proxy Statement
| | | | | | | Compensation Matters 2018 Grants of Plan-Based Awards The following table provides information about Synchrony plan-based awards granted to the NEOs in 2018, including the annualnon-equity incentive plan awards granted pursuant to Synchrony’s Annual Incentive Plan and the equity awards granted under the Synchrony Financial 2014 Long-Term Incentive Plan. In regard to the annualnon-equity incentive plan awards granted pursuant to Synchrony’s Annual Incentive Plan, the table below provides: (i) the grant date, and (ii) the threshold, target and maximum cash awards linked to Synchrony’s performance over the 2017 performance period. Cash awards are payable based on equally weighted quantitative metrics: net earnings, receivables growth and efficiency ratio. In regard to the equity incentive plan awards granted pursuant to the Synchrony Financial 2014 Long-Term Incentive Plan, the table below provides: (i) the grant date, (ii) the number of shares or stock units underlying stock awards, (iii) the number of other securities underlying option awards granted, (iv) the exercise or base price of the stock option grants, which reflects the closing price of Synchrony common stock on the date of grant, and (v) the grant date fair value of each option grant computed in accordance with applicable SEC rules. 2018 Grants of Synchrony Plan-Based Awards Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under
Equity Incentive Plan Awards(1) | | | All Other
Stock
Awards;
Number of
Shares of Stock or
Units(2) | | | All Other
Option
Awards;
Number of
Securities Underlying
Options(3) | | | Exercise or
Base Price of Option
Awards | | Grant Date
Fair Value of
Stock and Option
Awards(4) | Name of
Executive | | Grant
Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold
(# units) | | | Target
(# units) | | | Maximum
(# units) | | | | | | | | | | | | | | Margaret Keane | | | 4/1/18 | | | | 1,175,000 | | | | 2,350,000 | | | | 3,525,000 | | | | 59,649 | | | | 119,297 | | | | 178,946 | | | | 83,508 | | | | 156,420 | | | $33.53 | | $8,000,075 | | | | | | | | | | | | | Brian Doubles | | | 4/1/18 | | | | 375,000 | | | | 750,000 | | | | 1,125,000 | | | | 14,913 | | | | 29,825 | | | | 44,738 | | | | 20,877 | | | | 39,105 | | | $33.53 | | $2,000,044 | | | | | | | | | | | | | Henry Greig | | | 4/1/18 | | | | 312,500 | | | | 625,000 | | | | 937,500 | | | | 9,321 | | | | 18,641 | | | | 27,962 | | | | 13,049 | | | | 24,441 | | | $33.53 | | $1,250,072 | | | | | | | | | | | | | Neeraj Mehta | | | 4/1/18 | | | | 362,500 | | | | 725,000 | | | | 1,087,500 | | | | 8,351 | | | | 16,702 | | | | 25,053 | | | | 20,435 | | | | 38,276 | | | $33.53 | | $1,538,849 | | | | | | | | | | | | | Tom Quindlen | | | 4/1/18 | | | | 412,500 | | | | 825,000 | | | | 1,237,500 | | | | 10,141 | | | | 20,281 | | | | 30,422 | | | | 14,986 | | | | 28,070 | | | $33.53 | | $1,397,850 |
COMPENSATION MATTERS
| | | | | | | | | | | | |
INDEPENDENT DIRECTORS’ COMPENSATION
Our compensation program for independent directors is designed to achieve the following goals: (a) fairly pay directors for work required at a company of our size and scope of operations; (b) align directors’ interests with the long-term interests of our stockholders; and (c) have a compensation structure that is simple, transparent and easy for stockholders to understand. Our Nominating and Corporate Governance Committee reviews director compensation annually.
Each independent director currently receives annual compensation of $210,000, of which $75,000 is paid in cash and $135,000 is paid in RSUs. The RSUs are subject to a three-year vesting period and will be credited with amounts equivalent to any regular quarterly dividends paid on our common stock, which amounts will be reinvested in additional RSUs. In light of the workload and broad responsibilities of their positions, certain independent directors currently receive additional compensation as follows: the Chair of our Board receives an additional $235,000, of which $110,000 is paid in cash and $125,000 is paid in RSUs, the Chairs of the Audit Committee and Risk Committee each receive an additional $35,000 in annual cash compensation, and the Chairs of the Nominating and Corporate Governance Committee and the Company’s MDCC each receive an additional $20,000 in annual compensation. Separately, for each Board committee meeting attended, an independent director receives $2,000 in cash. If an independent director is also a director of the Bank and attends a meeting of a Bank committee that takes place on a day when the analogous Board committee is not meeting, the independent director receives $2,000 in cash for such meeting. Independent directors can defer up to 80% of their annual cash compensation and RSUs into deferred stock units, which will be paid out after they leave our Board.
The compensation amounts reported in the table below for our independent directors reflect a combination of our current compensation program described above, which was effective on October 1, 2016, and our previous compensation program for the remainder of 2016. Previously, each independent director received annual compensation of $160,000, of which $50,000 was paid in cash and $110,000 was paid in RSUs. Also, under the previous program, the Chair of our Board received an additional $90,000 in annual cash compensation. The remaining elements of our previous program are the same as described above for our current program.
We require each independent director to own at least $375,000 in our common stock, RSUs or deferred stock units while a member of our Board. Each independent director has four years to satisfy this requirement. Individual and joint holdings of our common stock with immediate family members, including unvested time-based restricted stock, RSUs and deferred stock units count toward this requirement.
2016 Independent Directors’ Compensation Table
| | | | | | | | | | | | | | | Name of Director | | Fees Earned or Paid
in Cash(1) | | | | Stock Awards(2) | | | | | Total | | Paget L. Alves | | $ 92,250 | | | | | $116,310 | | | | | $ | 208,560 | | Arthur W. Coviello, Jr. | | $ 74,250 | | | | | $116,310 | | | | | $ | 190,560 | | William W. Graylin | | $ 76,250 | | | | | $116,310 | | | | | $ | 192,560 | | Roy A. Guthrie | | $111,250 | | | | | $116,310 | | | | | $ | 227,560 | | Richard C. Hartnack | | $181,250 | | | | | $147,574 | | | | | $ | 328,824 | | Jeffrey G. Naylor | | $127,250 | | | | | $116,310 | | | | | $ | 243,560 | | Laurel J. Richie | | $ 80,250 | | | | | $116,310 | | | | | $ | 196,560 | | Olympia J. Snowe | | $108,250 | | | | | $116,310 | | | | | $ | 224,560 | |
(1) | Amount of cash compensation received in 2016 for Board and committee service and meeting attendance. |
(2) | Aggregate grant date fair value of RSUs granted in 2016. Grant date fair value is calculated by multiplying the number of RSUs granted by the closing price of Synchrony common stock on the grant date, which was $28.66 for March 31, 2016 grants, $25.28 for June 30, 2016 grants, $28.00 for September 30, 2016 grants and $36.27 for December 31, 2016 grants. |
48
ITEM 3—ADOPTION OF THE AMENDMENT TO THE SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN ANDRE-APPROVAL OF PERFORMANCE MEASURES
On February 22, 2017, the Board approved amending the Synchrony Financial 2014 Long-Term Incentive Plan subject to the approval of our stockholders. We refer to the Synchrony Financial 2014 Long-Term Incentive Plan prior to such amendment as the “Old LTIP” and to the plan subsequent to such amendment as the “Amended LTIP,” and we refer to the Old LTIP and Amended LTIP collectively as the “LTIP.” The purpose of the amendment is to increaseThese columns show the number of shares available for issuance under the LTIP by 46,000,000 shares, from 16,605,417 shares to 62,605,417 shares. The LTIP,PSUs granted as proposed to be amended and as shown in an amended and restated form, is attached to this Proxy Statement as Appendix A.
Under the LTIP, various equity or cash-basedlong-term performance awards may be granted to eligible participants, as described in further detail below. As of April 1, 2017, approximately 793,061 shares remained available for issuance under the Old LTIP. The Amended LTIP increases the aggregate number of shares reserved under the LTIP from 16,605,417 shares to 62,605,417 shares. Accordingly, if the Amended LTIP is approved, approximately 46,793,061 shares will remain available for issuance under the LTIP. Under the terms of the LTIP, this number may be increased to the extent that awards previously made under the LTIP are forfeited or otherwise terminated without delivery of shares or other consideration. We expect that there are sufficient shares currently remaining available under the Old LTIP to enable us to make equity awards under our compensation programs through the Annual Meeting. We are requesting approval of the Amended LTIP to enable us to make regular annual and other equity awards under our compensation programs after that date.
We believe it is important that the Amended LTIP be approved because we view long-term incentives as a vital component of our executive compensation program. We believe that long-term incentives help us encourage our officers, employees,non-employee directors and consultants to have a proprietary interest in the growth and performance of the Company. We believe that long-term incentives provide an increased incentive to contribute to the Company’s future success and prosperity, which enhances the value of the Company for the benefit of its stockholders and enhances the Company’s ability to attract and retain qualified individuals.
Approval of the Amended LTIP will also constitutere-approval, for purposes of Section 162(m), of the material terms of the performance measures contained in the LTIP that are linked to be used in connection with awards underSynchrony’s performance over the LTIP that are intended to qualify as “performance-based” compensation for purposes of Section 162(m). One of the conditions for compensation to be considered “performance-based” under Section 162(m) is that the material terms under which such compensation2018–2020 performance period. The PSUs will be paid (the class of eligible employees, performance criteria and theper-person maximums) be disclosed to and approved by stockholders every five years. By approving the Amended LTIP, stockholders will also be approving the material terms of the performance goals under the LTIP.
The LTIP includes a number of corporate governance provisions, including the following: (1) the LTIP is administered by the MDCC, which is composed entirely of independentnon-employee directors, (2) stock options and stock appreciation rights (SARs) cannot bere-priced without stockholder approval, (3) the LTIP limits the size of awards that may be granted during any one year to any one participant, (4) the LTIP does not permit reload options or have “evergreen” provisions that automatically add shares to the reserve, and (5) the LTIP does not include any taxgross-up provisions.
The following is a description of the material terms of the LTIP. This description is qualified in its entirety by reference to the LTIP, a copy of which, as proposed to be amended and as shown in an amended and restated form, has been included as Appendix A to this proxy statement.
49
Material Terms of the Synchrony Financial 2014 Long-Term Incentive Plan
Effective date and term. The LTIP was initially effective as of May 21, 2015, the date of its approval by the Company’s stockholders. No award may be granted under the LTIP on or after the date that is 10 years from July 10, 2014, the date the Old LTIP was approved by the Board.
Administration. The LTIP is administered by the Company’s MDCC, which has the authority to make any determination or take any action that it deems necessary or desirable for the administration of the LTIP, including, for example, to: (i) establish rules and guidelines for the administration of the LTIP, (ii) select the participants to whom awards are granted, (iii) determine the types of awards to be granted and the number of shares covered by such awards, (iv) set the terms and conditions of such awards and (v) cancel, suspend and amend awards. The MDCC has discretion to make determinations with respect to and interpret the LTIP and award agreements. The MDCC may delegate its authority under the LTIP, including to the chairman of the MDCC, a subcommittee of the MDCC, or to one or more officers or managers of the Company; provided, however, that the MDCC may not delegate to officers or managers of the Company its authority to grant awards and to cancel or suspend awards for executive officers and directors of the Company who file reports under Section 16 of the Exchange Act.
Eligibility.Officers, employees, consultants andnon-employee directors of the Company and its affiliates are eligible to participate in the LTIP. The Company does not currently have any consultants designated as eligible to participate in the LTIP.
Number of shares available for issuance.Subject to adjustment as described below and the adoption of the Amended LTIP, a total of 62,605,417 shares of our common stock (including authorized and unissued shares and treasury shares) will be available for granting awards under the LTIP. If any shares covered by an award under the LTIP are forfeited or otherwise terminated without delivery of shares or other consideration, then the shares covered by such an award shall again be available for granting awards under the LTIP. In an acquisition, any awards made and any of the shares delivered upon the assumption of or in substitution for outstanding grants made by the acquired company will not be counted against the shares available for granting awards under the LTIP. Dividend equivalents denominated in shares and awards not denominated, but potentially payable in shares shall be counted against the aggregate number of shares available for granting awards under the LTIP in such amount and at such time as the dividend equivalents and such awards are settled in shares. Shares surrendered for the payment of the exercise price or withholding taxes under stock options or SARs, and stock repurchased in the open market with the proceeds of an option exercise, may not again be made available for issuance under the LTIP. In addition, shares that were subject to an option or stock-settled SAR and were not issued upon the net settlement or net exercise of such option or SAR will also not be made available for issuance.
Adjustments. In the event of certain corporate transactions or events affecting the number or type of outstanding common shares of the Company, including, for example, a dividend or other distribution (whether in cash or stock), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,split-up,spin-off, combination, repurchase, or exchange of shares or issuance of warrants, the MDCC will make adjustments as it deems appropriate in order to prevent dilution or enlargement of LTIP benefits. These adjustments include: (i) changing the number and type of shares to be issued under the LTIP and outstanding awards, (ii) changing the per participant limitations on awards and the grant, purchase or exercise price of outstanding awards and (iii) changing the restriction on the total amount of shares subject to options or SARs, or the total amount of restricted stock, restricted stock units (RSUs), performance awards or other stock-based awards that may be granted. The MDCC may also make adjustments in the terms of awards in connection with acquisitions of another business or business entity in which the Company assumes outstanding employee awards or the right or obligation to make future awards, and make adjustments in performance award criteria or in the terms and conditions of other awards in recognition of unusual or nonrecurring events affecting the Company or its financial statements or of changes in applicable laws, regulations, or accounting principles.
Awards.Awards generally will be granted for no cash consideration. We intend that, under the LTIP, awards may provide that upon exercise the participant will receive cash, stock, other securities, other awards, other property, or any combination thereof, as the MDCC will determine. The exercise price per share of common stock purchasable under any stock option, the grant price of any SAR, and the purchase price of any security which may be purchased under any other stock-based award will be not less than 100% of the fair market value of the stock or other security on the date of the grant of such option, SAR, or right. It is intended that, under the LTIP, any exercise or purchase price may be paid in cash or, if permitted by the MDCC, by surrender of shares.
50
Award limits.The awards which may be granted under the LTIP are generally subject to the following limits. The maximum number of our shares of common stock based on our cumulative annual diluted earnings per share and average return on assets over the performance period provided performance and vesting conditions are met.
|
| (2) | This column shows the number of RSUs granted as part of the annual equity incentive grant in April. These RSUs will vest and become exercisable ratably in five equal annual installments beginning one year from the date of grant and each year thereafter. The number of RSUs for Ms. Keane, after reflecting her voluntary agreement with respectthe MDCC to whichforfeit $1 million of RSUs granted to her in 2018, is 53,684. |
| (3) | This column shows the number of stock options or SARs may be granted or measured to any participant during any fiscal year is 3,000,000 shares. The maximum number of our shares of common stock with respect to which restricted stock, RSUs, performance awards and other stock-based awards may be granted to any participant during any fiscal year is 1,000,000 shares. With respect to awards denominated in cash, the maximum amount that may be earned during any fiscal year by an individual participantas part of the LTIP is $20,000,000.annual equity incentive grant in April. These provisions are designed so that compensation resultingstock options will vest and become exercisable ratably in five equal annual installments beginning one year from awards can qualify astax-deductible performance-based compensation under Section 162(m)the date of grant and each year thereafter. |
| (4) | This column shows the Code, assuming other applicable regulatory requirements are satisfied. The aggregate grant date fair value of awards that may bePSUs, RSUs and stock options granted to anynon-employee directorthe NEOs in any fiscal yearApril. Generally, the aggregate grant date fair value is $500,000. Stock options and SARs.The MDCC may awardthe expected accounting expense that will be recognized over the award’s vesting schedule. For stock options, infair value is calculated using the formBlack-Scholes value of nonqualified stock options or incentive stock options, or SARs, each with a maximum term of 10 years. The MDCC will establishan option on the vesting schedule for stock options and SARs and, with respect to stock options, the method of payment for the exercise price, which may include cash, shares or other awards.
Restricted stock and RSUs.The MDCC may award restricted stock andgrant date ($7.67 on April 1, 2018). For RSUs and establishPSUs, the applicable restrictions, including any limitation on voting rights of restricted stock or the receipt of dividends. The MDCC will establish the manner and timing under which restrictions may lapse. If employmentvalue is terminated during the applicable restriction period, shares of restricted stock and RSUs still subject to restriction will be forfeited, except as determined otherwise by the MDCC.
Performance awards and other stock-based awards. The MDCC may grant performance awards, which may be denominated in cash, shares, other securities or other awards and payable to, or exercisable by, the participant upon the achievement of performance goals during performance periods, as established by the MDCC. Performance criteria mean any measures, as determined by the MDCC, which may be used to measure the level of performance of the Company or participant during a performance period. The MDCC may grant other stock-based awards that are denominated or payable in shares, under the terms and conditions as the MDCC will determine.
Dividends and dividend equivalents.The MDCC may decide to include dividends or dividend equivalents as part of an award (other than stock options and SARs), and the payment of any such dividends may be deferred, with or without interest, until the award is paid.
Deferrals. The MDCC also will be able to require or permit award paymentsassumed to be deferred and may authorize creditingthe stock price on date of dividends or interest or their equivalents in connection with any such deferral.
Transferability. Awards are not transferable otherwise than by will orgrant. For additional information on the laws of descent and distribution unless determined otherwise by the MDCC. Awards may not be pledged or otherwise encumbered and are exercisable during the participant’s lifetime only by the participant.
Conditions and restrictions on stock issuable under an award.The MDCC may provide that shares of our common stock issuable under an award will be subject to such further restrictions or conditions as the MDCC may determine, including, but not limited to, conditions on vesting or transferability, forfeiture or repurchase provisions, tax withholding conditions and restrictions regarding the timing and manner ofre-sales or other subsequent transfers by the participant of shares issuable under an award.
Amendments and termination.Our Board may amend, suspend or terminate the LTIP, provided, however, that our Board will seek stockholder approval of material amendmentsvaluation assumptions, refer to the LTIP as required by law, regulation or stock exchange and any amendment that would increase the total number of shares available for awards under the LTIP (except pursuant to the corporate transaction adjustment provisions discussed above) or permit stock options, SARs or other rights to purchase our common stock to bere-priced, replaced orre-granted through cancellation or by lowering the exercise or purchase price. The MDCC generally may waive conditions or amend the term of awards, or otherwise amend, suspend or terminate awards already granted, provided that such action does not, without the participant’s consent, impair the rights of the award holder.“— 2018 Summary Compensation Table” above.
51
|
Synchrony | 2019 Annual Meeting and Proxy Statement 45
| | | | | | |
Compensation Matters 2018 Outstanding Synchrony Equity Awards at FiscalYear-End The following table provides information on the current holdings of Synchrony common stock and Synchrony equity awards by the NEOs. This table includes unexercised (both vested and unvested) option grants and unvested RSUs with vesting conditions that were not satisfied as of December 31, 2018. Each equity grant is shown separately for each NEO. The vesting schedule for each outstanding award is shown following this table. 2018 Outstanding Synchrony Equity Awards at FiscalYear-End Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | | | | | | | | | Stock Awards | | | | | Name of
Executive | | Option Grant
Date | | Number of
Securities
Underlying
Unexercised
Options
(Exercisable) | | | Number of
Securities
Underlying
Unexercised
Options
(Unexercisable) | | | Option Exercise
Price | | Option
Expiration Date | | Stock Award
Grant Date | | Number of
Shares or Units
of Stock That
Have Not
Vested | | | Market (YE 2018)
Value of Shares of
Stock that Have
Not Yet Vested | | | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
not Vested | | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units
or Other Rights
That Have Not
Vested(2) | | | | | | | | | | | | | Margaret | | 7/31/2014 | | | 323,218 | | | | 0 | | | $23.00 | | 7/31/2024 | | 7/31/2014 | | | 0 | | | $ | 0.00 | | | | | | | | | | Keane | | 9/17/2014 | | | 37,242 | | | | 15,963 | | | $24.55 | | 9/17/2024 | | 9/17/2014 | | | 10,753 | | | $ | 252,264 | | | | | | | | | | | | 4/1/2015 | | | 38,119 | | | | 25,413 | | | $30.41 | | 4/1/2025 | | 4/1/2015 | | | 19,353 | | | $ | 454,027 | | | | | | | | | | | | 4/1/2016 | | | 47,234 | | | | 70,853 | | | $29.33 | | 4/1/2026 | | 4/1/2016 | | | 41,385 | | | $ | 970,893 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2016 | | | | | | | | | | | 0 | | | $ | 0.00 | | | | 4/1/2017 | | | 33,224 | | | | 132,899 | | | $34.30 | | 4/1/2027 | | 4/1/2017 | | | 67,799 | | | $ | 1,590,553 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2017 | | | | | | | | | | | 121,071 | | | $ | 2,840,323 | | | | | | | | | | | | | | | | | | 4/1/2017 | | | 30,268 | | | $ | 710,086 | | | | | | | | | | | | 4/1/2018 | | | 0 | | | | 156,420 | | | $33.53 | | 4/1/2028 | | 4/1/2018 | | | 54,717 | | | $ | 1,283,652 | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2018 | | | | | | | | | | | 121,592 | | | $ | 2,852,542 | | | | | | | | | | | | | Brian | | 7/31/2014 | | | 184,696 | | | | 0 | | | $23.00 | | 7/31/2024 | | 7/31/2014 | | | 0 | | | $ | 0.00 | | | | | | | | | | Doubles | | 9/17/2014 | | | 5,805 | | | | 5,805 | | | $24.55 | | 9/17/2024 | | 9/17/2014 | | | 3,910 | | | $ | 91,724 | | | | | | | | | | | | 4/1/2015 | | | 12,436 | | | | 8,292 | | | $30.41 | | 4/1/2025 | | 4/1/2015 | | | 6,313 | | | $ | 148,106 | | | | | | | | | | | | 4/1/2016 | | | 11,207 | | | | 16,812 | | | $29.33 | | 4/1/2026 | | 4/1/2016 | | | 9,819 | | | $ | 230,361 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2016 | | | | | | | | | | | 0 | | | $ | 0.00 | | | | 4/1/2017 | | | 5,689 | | | | 22,760 | | | $34.30 | | 4/1/2027 | | 4/1/2017 | | | 11,610 | | | $ | 272,373 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2017 | | | | | | | | | | | 20,733 | | | $ | 486,400 | | | | | | | | | | | | | | | | | | 4/1/2017 | | | 30,268 | | | $ | 710,086 | | | | | | | | | | | | 4/1/2018 | | | 0 | | | | 39,105 | | | $33.53 | | 4/1/2028 | | 4/1/2018 | | | 21,279 | | | $ | 499,196 | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2018 | | | | | | | | | | | 30,399 | | | $ | 713,154 | | | | | | | | | | | | | Henry | | 7/31/2014 | | | 161,609 | | | | 0 | | | $23.00 | | 7/31/2024 | | 7/31/2014 | | | 0 | | | $ | 0.00 | | | | | | | | | | Greig | | 9/17/2014 | | | 11,609 | | | | 2,903 | | | $24.55 | | 9/17/2024 | | 9/17/2014 | | | 1,955 | | | $ | 45,862 | | | | | | | | | | | | 4/1/2015 | | | 10,006 | | | | 6,672 | | | $30.41 | | 4/1/2025 | | 4/1/2015 | | | 5,079 | | | $ | 119,150 | | | | | | | | | | | | 4/1/2016 | | | 9,206 | | | | 13,811 | | | $29.33 | | 4/1/2026 | | 4/1/2016 | | | 8,065 | | | $ | 189,210 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2016 | | | | | | | | | | | 0 | | | $ | 0.00 | | | | 4/1/2017 | | | 4,817 | | | | 19,271 | | | $34.30 | | 4/1/2027 | | 4/1/2017 | | | 9,831 | | | $ | 230,624 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2017 | | | | | | | | | | | 17,555 | | | $ | 411,848 | | | | 4/1/2018 | | | 0 | | | | 24,441 | | | $33.53 | | 4/1/2028 | | 4/1/2018 | | | 13,300 | | | $ | 312,018 | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2018 | | | | | | | | | | | 19,000 | | | $ | 445,730 | | | | | | | | | | | | | Neeraj | | 7/31/2014 | | | 0 | | | | 0 | | | $23.00 | | 7/31/2024 | | 7/31/2014 | | | 0 | | | $ | 0.00 | | | | | | | | | | Mehta | | 9/17/2014 | | | 0 | | | | 0 | | | $24.55 | | 9/17/2024 | | 9/17/2014 | | | 0 | | | $ | 0.00 | | | | | | | | | | | | 4/1/2015 | | | 18,654 | | | | 12,437 | | | $30.41 | | 4/1/2025 | | 4/1/2015 | | | 9,470 | | | $ | 222,160 | | | | | | | | | | | | 4/1/2016 | | | 16,812 | | | | 25,219 | | | $29.33 | | 4/1/2026 | | 4/1/2016 | | | 14,730 | | | $ | 345,566 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2016 | | | | | | | | | | | 0 | | | $ | 0.00 | | | | 4/1/2017 | | | 8,130 | | | | 32,521 | | | $34.30 | | 4/1/2027 | | 4/1/2017 | | | 16,590 | | | $ | 389,204 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2017 | | | | | | | | | | | 16,030 | | | $ | 376,068 | | | | 4/1/2018 | | | 0 | | | | 38,276 | | | $33.53 | | 4/1/2028 | | 4/1/2018 | | | 20,828 | | | $ | 488,627 | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2018 | | | | | | | | | | | 17,023 | | | $ | 399,366 | | | | | | | | | | | | | Tom | | 7/31/2014 | | | 174,307 | | | | 0 | | | $23.00 | | 7/31/2024 | | 7/31/2014 | | | 0 | | | $ | 0.00 | | | | | | | | | | Quindlen | | 9/17/2014 | | | 6,385 | | | | 6,386 | | | $24.55 | | 9/17/2024 | | 9/17/2014 | | | 4,302 | | | $ | 100,929 | | | | | | | | | | | | 4/1/2015 | | | 9,120 | | | | 9,120 | | | $30.41 | | 4/1/2025 | | 4/1/2015 | | | 6,944 | | | $ | 162,907 | | | | | | | | | | | | 4/1/2016 | | | 6,165 | | | | 18,494 | | | $29.33 | | 4/1/2026 | | 4/1/2016 | | | 10,802 | | | $ | 253,412 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2016 | | | | | | | | | | | 0 | | | $ | 0.00 | | | | 4/1/2017 | | | 5,962 | | | | 23,849 | | | $34.30 | | 4/1/2027 | | 4/1/2017 | | | 12,167 | | | $ | 285,429 | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2017 | | | | | | | | | | | 19,662 | | | $ | 461,265 | | | | 4/1/2018 | | | 0 | | | | 28,070 | | | $33.53 | | 4/1/2028 | | 4/1/2018 | | | 15,274 | | | $ | 358,334 | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/1/2018 | | | | | | | | | | | 20,671 | | | $ | 484,944 | |
COMPENSATION MATTERS
| | | | | | | | | | | | |
Federal Income Tax Consequences
The following is a brief summary of certain United States federal income tax consequences generally arising with respect to awards under the LTIP. This discussion does not address all aspects of the United States federal income tax consequences of participating in the LTIP that may be relevant to participants in light of their personal investment or tax circumstances and does not discuss any state, local ornon-United States tax consequences of participating in the LTIP. Each participant is advised to consult his or her personal tax advisor concerning the application of the United States federal income tax laws to such participant’s particular situation, as well as the applicability and effect of any state, local ornon-United States tax laws before taking any actions with respect to any awards. Section 162(m)—As noted above, Section 162(m) generally limits to $1 million the amount that a publicly held corporation is allowed each year to deduct for the compensation paid to the corporation’s covered employees under Section 162(m). However, “qualified performance-based compensation” is not subject to the $1 million deduction limit. To qualify as performance based-compensation, the following requirements must be satisfied: (1) the performance goals are determined by a committee consisting solely of two or more “outside directors”; (2) the material terms under which the compensation is to be paid, including the performance goals, are approved by the corporation’s stockholders; and (3) the committee certifies that the applicable performance goals were satisfied before payment of any performance-based compensation is made. Compensation payable with respect to stock options and SARs will be considered payable solely on account of the attainment ofpre-established objective performance measures (i) if such award has a purchase or base price at least equal to the fair market value of the underlying stock onawards represents the date of grant, (ii) if such award is granted by a committee, or a subcommittee thereof, consisting solely of two or more “outside directors,” and (iii) if the plan under which the stock option or SAR is granted states the maximum number of shares with respect to which stock options or SARs may be granted during a specified period to any employee.
Stock Options—A participant will not recognize taxable income at the time an option is granted and the Company will not be entitled to a tax deduction at that time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) upon exercise of anon-qualified stock option equal to the excessproduct of the fair market valueclosing price of the shares purchased over their exercise price, and the Company will be entitled to a corresponding deduction. A participant will not recognize income (except for purposes of the alternative minimum tax) upon exercise of an incentive stock option. If the shares acquired by exercise of an incentive stock option are held for the longer of two years from the date the option was granted and one year from the date it was exercised, any gain or loss arising from a subsequent disposition of those shares will be taxed as long-term capital gain or loss, and the Company will not be entitled to any deduction. If, however, those shares are disposed of within the above-described period, then in the year of that disposition the participant will recognize compensation taxable as ordinary income equal to the excess of the lesser of (1) the amount realized upon that disposition, and (2) the excess of the fair market value of those shares on the date of exercise over the exercise price, and the Company will be entitled to a corresponding deduction.
SARs—A participant will not recognize taxable income at the time SARs are granted and the Company will not be entitled to a tax deduction at that time. Upon exercise, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) in an amount equal to the fair market value of any shares delivered and the amount of any cash paid by the Company, and the Company will be entitled to a corresponding deduction.
Stock Awards—A participant will not recognize taxable income at the time restricted stock is granted and the Company will not be entitled to a tax deduction at that time, unless the participant makes an election to be taxed at that time. If such election is made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of the grant in an amount equal to the excess of the fair market value for the shares at such time over the amount, if any, paid for those shares. If such election is not made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time the restrictions constituting a substantial risk of forfeiture lapse in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for those shares. The amount of ordinary income recognized by making the above-described election or upon the lapse of restrictions constituting a substantial risk of forfeiture is deductible by the Company as compensation expense, except to the extent the deduction limits of Section 162(m) apply. In addition, a participant receiving dividends with respect to restricted stock for which the above-described election has not been made and prior to the time the restrictions constituting a substantial risk of forfeiture lapse will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee), rather than dividend income, in an amount equal to the dividends paid and the Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
52
A participant who receives shares ofSynchrony common stock that are not subject to any restrictions under the LTIP will recognize compensation taxable as ordinary income on the date of grant in an amount equal to the fair market value of such shares on that date over the amount, if any, paid for those shares, and the Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
Restricted Stock Units—A participant will not recognize taxable income at the time a restricted stock unit is granted and the Company will not be entitled to a tax deduction at that time. Upon settlement of restricted stock units, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) in an amount equal to the fair market value of any shares delivered and the amount of any cash paid by the Company, and the Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
Performance Awards—A participant will not recognize taxable income at the time performance awards are granted and the Company will not be entitled to a tax deduction at that time. Upon settlement of performance awards, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) in an amount equal to the fair market value of any shares delivered and the amount of any cash paid by the Company, and the Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
Awards Granted to Date Under the Old LTIP
The following table sets forth the number of stock options, RSUs and PSUs granted over the lifetime of the Old LTIP to the individuals and groups indicated as of April 1, 2017.
| | | | | | | | | | | | | | | | Name | | Number of Shares
Subject to Stock Option Awards | | | RSUs (#) | | | PSUs (#) | | | | Margaret Keane | | | 750,775 | | | | 490,965 | | | | 211,531 | | | | Brian Doubles | | | 290,916 | | | | 216,058 | | | | 41,403 | | | | Glenn Marino | | | 228,333 | | | | 146,092 | | | | 37,290 | | | | Jonathan Mothner | | | 189,461 | | | | 120,777 | | | | 34,522 | | | | Tom Quindlen | | | 289,667 | | | | 185,613 | | | | 41,358 | | | | Paget L. Alves | | | — | | | | 5,428 | | | | — | | | | Arthur W. Coviello, Jr. | | | — | | | | 5,428 | | | | — | | | | William W. Graylin | | | — | | | | 5,428 | | | | — | | | | Roy A. Guthrie | | | — | | | | 10,617 | | | | — | | | | Richard C. Hartnack | | | — | | | | 12,394 | | | | — | | | | Jeffrey G. Naylor | | | — | | | | 10,617 | | | | — | | | | Laurel J. Richie | | | — | | | | 5,428 | | | | — | | | | Olympia J. Snowe | | | — | | | | 5,428 | | | | — | | | | Executive Group (8 persons) | | | 2,199,923 | | | | 1,447,500 | | | | 444,205 | | | | Non-Executive Director Group (8 persons) | | | — | | | | 60,768 | | | | — | | | | Non-Executive Officer Employee Group (995 persons) | | | 7,027,055 | | | | 5,184,561 | | | | 566,925 | | | |
53
Equity Compensation Plan Information
The following table provides information as of December 31, 2016 regarding2018, which was $23.46, and the number of shares underlying each such award.
|
|
| (2) | PSUs granted in 2018 and 2017 vest, to the extent earned, on December 31, 2020 and December 31, 2019, respectively. The market value of ourPSUs that have not vested as of December 31, 2018 was calculated using the closing price of Synchrony common stock as of December 31, 2018, which was $23.46, multiplied by the number of unvested units based on achieving target performance goals. |
46 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters 2018 Outstanding Synchrony Equity Awards Vesting Schedule | | | | | | | | | Name of Executive | | Grant Date | | Option Awards Vesting Schedule(1) | | Grant Date | | Stock Awards Vesting
Schedule(2) | | | | | | | All Executives | | 9/17/14 | | 20% vests 2019 | | 9/17/14 | | 20% vests 2019 | | | | | | | | 4/1/15 | | 20% vests 2019 and 2020 | | 4/1/15 | | 20% vests 2019 and 2020 | | | | | | | | 4/1/16 | | 20% vests 2019, 2020 and 2021 | | 4/1/16 | | 20% vests 2019, 2020 and 2021 | | | | | | | | 4/1/17 | | 20% vests 2019, 2020, 2021 and 2022 | | 4/1/17 | | 20% vests 2019, 2020, 2021 and 2022 | | | | | | | | | | | | 4/1/17 | | 100% vests 2019(3) | | | | | | | | 4/1/17 | | | | 4/1/17 | | 100% vests 2020(4) | | | | | | | | 4/1/18 | | 20% vests 2019, 2020, 2021, 2022, and 2023 | | 4/1/18 | | 20% vests 2019, 2020, 2021, 2022, and 2023 | | | | | | | | | | | | 4/1/18 | | 100% vests 2020(5) |
| (1) | This column shows the vesting schedule of unexercisable or unearned options reported in the “Number of Securities Underlying Unexercised Options (Unexercisable)” column of the “—2018 Outstanding Synchrony Equity Awards at FiscalYear-End Table.” The stock options vest on the anniversary of the grant date in the years shown in the table above. |
| (2) | This column shows the vesting schedule of unvested RSUs reported in the “Number of Shares or Units of Stock That Have Not Vested” column and unvested PSUs reported in the “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” column of the “—2018 Outstanding Synchrony Equity Awards at FiscalYear-End Table.” The RSUs vest on the anniversary of the grant date in the years shown in the table above. |
| (3) | PSUs granted in 2017 vest, to the extent earned, on December 31, 2019. |
| (4) | This grant applies to Ms. Keane and Mr. Doubles only. |
| (5) | PSUs granted in 2018 vest, to the extent earned, on December 31, 2020. |
2018 Synchrony Nonqualified Deferred Compensation The table below provides information on the nonqualified deferred compensation of the NEOs in 2018, including: Synchrony Deferred Compensation As discussed above, our Deferred Compensation Plan does not pay an “above-market” rate of interest and is available to a select group of management and highly compensated employees of Synchrony and any of its participating affiliates. Under the plan, eligible employees may, to the extent permitted by the administrator of the plan, elect to defer up to 80% (or such lower percentage, as determined by the plan administrator) of their base salary and bonus, and all or a portion of any other type of compensation, as determined by the plan administrator. Synchrony Financial Restoration Plan As discussed above, the Restoration Plan mirrors the Company’s qualified 401(k) plan. The plan provides a continuation of Company contributions on salary and bonus that would have been made to our 401(k) plan but for various limitations imposed by the Code, along with additional Company contributions that cannot be made to the 401(k) plan. The plans include Company contributions of (i) a 3% core contribution, (ii) a 4% match, and, as of December 31, 2018, (iii) up to 6% additional contribution in 2018 for former participants of GE pension plans, which declines to 4% in 2019. The Restoration Plan account is forfeited if an executive leaves voluntarily prior to age 60. For 2018, each of our NEOs received contributions to his or her Restoration Plan account, which are reported in the “All Other Compensation” column in the 2018 Summary Compensation Table.
Synchrony | 2019 Annual Meeting and Proxy Statement 47
Compensation Matters 2018 Synchrony Nonqualified Deferred Compensation | | | | | | | | | | | | | | | | | | | | | | | Name of Executive | | Type of Plan | | Executive
Contributions in Last
Fiscal Year | | Registrant
Contributions in Last
Fiscal Year | | Aggregate Earnings
(Losses) in Last
Fiscal Year(1) | | Aggregate Balance at
Last FiscalYear-End | | | | | | | | Margaret Keane | | Restoration Plan | | $0 | | $466,715 | | $ (68,552) | | $1,749,299 | | | | Deferred Comp Plan | | $0 | | $ 0 | | $ 0 | | $ 0 | | | | | | | | Brian Doubles | | Restoration Plan | | $0 | | $209,079 | | $ (56,724) | | $ 652,894 | | | | Deferred Comp Plan | | $0 | | $ 0 | | $ 0 | | $ 0 | | | | | | | | Henry Greig | | Restoration Plan | | $0 | | $137,319 | | $ 9,072 | | $ 502,223 | | | | Deferred Comp Plan | | $0 | | $ 0 | | $ 0 | | $ 0 | | | | | | | | Neeraj Mehta | | Restoration Plan | | $0 | | $174,987 | | $ (26,869) | | $ 453,775 | | | | Deferred Comp Plan | | $0 | | $245,790 | | $(208,094) | | $ 381,659 | | | | | | | | Tom Quindlen | | Restoration Plan | | $0 | | $200,449 | | $ (61,531) | | $ 836,589 | | | | Deferred Comp Plan | | $0 | | $ 0 | | $ 0 | | $ 0 |
| (1) | The earnings on amounts contributed to the Restoration Plan may be issued under our equity compensation plans.positive or negative, depending on the NEO’s investment choice. | | | | | | | | | | | | | | A | | | | B | | | | C | | Plan Category | | Number of securities to be
issued upon exercise
of outstanding options,
warrants and rights(1) | | | | Weighted-average
exercise price of outstanding options, warrants and rights | | | | Number of securities
remaining available for future issuance under equity compensation plans
(excluding securities
reflected in column A) | Equity compensation plans approved by security holders | | 13,006,204 | | | | $25.13 | | | | 3,340,083 | Equity compensation plans not approved by security holders | | — | | | | — | | | | — | Total | | 13,006,204 | | | | $25.13 | | | | 3,340,083 |
(1) | This column includes 7,499,585 shares underlying stock options, 4,982,973 shares underlying RSUs and 523,646 shares underlying PSUs, in each case, awarded under the Old LTIP. |
2018 Potential Payments Upon Termination orChange-in-Control at FiscalYear-End The information below describes and quantifies certain compensation that would have become payable under existing plans and arrangements if the NEO’s employment had terminated on December 31, 2018, given the NEO’s compensation and service levels as of such date and based on Synchrony’s closing stock price on December 31, 2018, as applicable. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any amounts actually paid or distributed may be different. Factors that could affect these amounts include the time during the year of any such event, Synchrony’s stock price, as applicable, and the executive’s age. Executive Severance Plan The purpose of the Executive Severance Plan is to secure the continued services and ensure the continued dedication of our NEOs and other executives. The Executive Severance Plan provides that if a participating executive is laid off, part of a redundancy or reorganization, or terminated for “for the good of the Company,” such executive will be entitled to the following: CEO—18 months of the CEO’s base salary, offset by all other severance benefits that the CEO will receive from the Company in connection with being laid off; and Other NEOs—12 months of an NEO’s base salary, offset by all other severance benefits that the NEO will receive from the Company in connection with being laid off. CIC Severance Plan The purpose of the CIC Severance Plan is to secure the continued services and ensure the continued dedication and objectivity of these executives in the event of any threat or occurrence of, or negotiation or other action that could lead to, or create the possibility of, a change in control of the Company. The CIC Severance Plan provides for the following severance benefits upon a “double-trigger” qualifying termination of employment within 30 months following a change in control: CEO—lump sum payment equal to the sum of (1) the CEO’s prorated bonus for the year of termination, (2) the product oftwo-and-one-half multiplied by the sum of the CEO’s annual base salary and target bonus, and (3) an amount equal to 30 months of the employer portion of the monthly premium or cost of coverage for the health benefits elected by the CEO, based on the rates for continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“Healthcare Premiums”). In addition, for 30 months following the CEO’s termination of employment, the CEO will be entitled to reasonable executive outplacement services. Other NEOs—lump sum payment equal to the sum of (1) the NEO’s prorated bonus for the year of termination, (2) the product of two multiplied by the sum of the NEO’s annual base salary and target bonus, and (3) an amount equal to 24 months of Healthcare Premiums. In addition, for 24 months following the NEO’s termination of employment, the NEO will be entitled to reasonable executive outplacement services. 48 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters Synchrony Equity Awards If one of the NEOs were to die or become disabled, anyun-exercisable stock options become exercisable and remain exercisable until their expiration date. In the event of disability, this provision applies only to options that have been held for at least one year. For these purposes, “disability” generally means disability resulting in the NEO being unable to perform his or her job. Remaining restrictions on RSUs that were awarded prior to death or disability lapse immediately. In addition, any unvested options or RSUs held for at least one year become fully vested upon becoming retirement-eligible (reaching age 60 with three years of service), depending on the terms of the particular award. For involuntary termination, awards are eitherpro-rated (if under age 60 and less than 20 years of service) or fully vest if over 20 years of service. Payment Upon Termination as ofYear-End Tables The following tables show the payments that each of our NEOs would have received under various termination scenarios on December 31, 2018. Termination upon a change in control reflects amounts assuming each NEO’s employment was terminated by the Company without “cause” or by the executive for “good reason” within 30 months of the specified time period prior to or following the change in control. None of the NEOs were eligible to retire as of December 31, 2018; therefore, the NEOs, do not have any values in the retirement termination columns below. The tables below assume a stock price of $23.46, the closing price of a share of our common stock on December 31, 2018. Margaret Keane | | | | | | | | | | | | | | | | | | | Element of Pay | | For Cause | | Voluntary
Termination | |
| Involuntary
Termination |
| | Retirement | |
| Death or
Disability |
| |
| Change-in-
Control |
| | | | | | | | Severance | | $0 | | $0 | | $ | 1,762,500 | | | $0 | | $ | 0 | | | $ | 8,812,500 | | Restricted Stock Units | | $0 | | $0 | | $ | 3,977,824 | | | $0 | | $ | 5,261,476 | | | $ | 5,261,476 | | Stock Options | | $0 | | $0 | | $ | 0 | | | $0 | | $ | 0 | | | $ | 0 | | Long-Term Performance Plan | | $0 | | $0 | | $ | 2,840,323 | | | $0 | | $ | 5,692,865 | | | $ | 5,692,865 | | Annual Cash Incentive | | $0 | | $0 | | $ | 2,681,400 | | | $0 | | $ | 2,681,400 | | | $ | 2,681,400 | | Medical Benefits | | $0 | | $0 | | $ | 0 | | | $0 | | $ | 0 | | | $ | 27,628 | | Outplacement | | $0 | | $0 | | $ | 0 | | | $0 | | $ | 0 | | | $ | 14,750 | | Restoration Plan | | $0 | | $0 | | $ | 1,749,299 | | | $0 | | $ | 1,749,299 | | | $ | 1,749,299 | | Deferred Compensation | | $0 | | $0 | | $ | 0 | | | $0 | | $ | 0 | | | $ | 0 | | | | | | | | | | Total Value to Executive | | $0 | | $0 | | $ | 13,011,346 | | | $0 | | $ | 15,385,041 | | | $ | 24,239,919 | | | | | | | | | Brian Doubles | | | | | | | | | | | | | | | | | | | Element of Pay | | For Cause | | Voluntary
Termination | |
| Involuntary
Termination |
| | Retirement | |
| Death or
Disability |
| |
| Change-in-
Control |
| | | | | | | | Severance | | $0 | | $0 | | $ | 750,000 | | | $0 | | $ | 0 | | | $ | 3,000,000 | | Restricted Stock Units | | $0 | | $0 | | $ | 1,452,651 | | | $0 | | $ | 1,951,846 | | | $ | 1,951,846 | | Stock Options | | $0 | | $0 | | $ | 0 | | | $0 | | $ | 0 | | | $ | 0 | | Long-Term Performance Plan | | $0 | | $0 | | $ | 486,400 | | | $0 | | $ | 1,199,553 | | | $ | 1,199,553 | | Annual Cash Incentive | | $0 | | $0 | | $ | 855,800 | | | $0 | | $ | 855,800 | | | $ | 855,800 | | Medical Benefits | | $0 | | $0 | | $ | 0 | | | $0 | | $ | 0 | | | $ | 34,714 | | Outplacement | | $0 | | $0 | | $ | 0 | | | $0 | | $ | 0 | | | $ | 11,800 | | Restoration Plan | | $0 | | $0 | | $ | 652,894 | | | $0 | | $ | 652,894 | | | $ | 652,894 | | Deferred Compensation | | $0 | | $0 | | $ | 0 | | | $0 | | $ | 0 | | | $ | 0 | | | | | | | | | | Total Value to Executive | | $0 | | $0 | | $ | 4,197,744 | | | $0 | | $ | 4,660,093 | | | $ | 7,706,607 | |
Synchrony | 2019 Annual Meeting and Proxy Statement 49
Compensation Matters Henry Greig | | | | | | | | | | | | | | | | | | | | | | | | | Element of Pay | | | For Cause | | |
| Voluntary
Termination |
| |
| Involuntary
Termination |
| | | Retirement | | |
| Death or
Disability |
| |
| Change-in-
Control |
| | | | | | | | Severance | | | $0 | | | | $0 | | | $ | 625,000 | | | | $0 | | | $ | 0 | | | $ | 2,500,000 | | Restricted Stock Units | | | $0 | | | | $0 | | | $ | 584,846 | | | | $0 | | | $ | 896,864 | | | $ | 896,864 | | Stock Options | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 0 | | Long-Term Performance Plan | | | $0 | | | | $0 | | | $ | 411,848 | | | | $0 | | | $ | 857,578 | | | $ | 857,578 | | Annual Cash Incentive | | | $0 | | | | $0 | | | $ | 713,100 | | | | $0 | | | $ | 713,100 | | | $ | 713,100 | | Medical Benefits | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 36,719 | | Outplacement | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 11,800 | | Restoration Plan | | | $0 | | | | $0 | | | $ | 502,223 | | | | $0 | | | $ | 502,223 | | | $ | 502,223 | | Deferred Compensation | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 0 | | | | | | | | | | Total Value to Executive | | | $0 | | | | $0 | | | $ | 2,837,017 | | | | $0 | | | $ | 2,969,766 | | | $ | 5,518,284 | | Neeraj Mehta | | | | | | | | | | | | | | | | | | | | | | | | | Element of Pay | | | For Cause | | |
| Voluntary
Termination |
| |
| Involuntary
Termination |
| | | Retirement | | |
| Death or
Disability |
| |
| Change-in-
Control |
| | | | | | | | Severance | | | $0 | | | | $0 | | | $ | 735,000 | | | | $0 | | | $ | 0 | | | $ | 2,920,000 | | Restricted Stock Units | | | $0 | | | | $0 | | | $ | 956,929 | | | | $0 | | | $ | 1,445,556 | | | $ | 1,445,556 | | Stock Options | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 0 | | Long-Term Performance Plan | | | $0 | | | | $0 | | | $ | 376,068 | | | | $0 | | | $ | 775,434 | | | $ | 775,434 | | Annual Cash Incentive | | | $0 | | | | $0 | | | $ | 827,200 | | | | $0 | | | $ | 827,200 | | | $ | 827,200 | | Medical Benefits | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 36,674 | | Outplacement | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 11,800 | | Restoration Plan | | | $0 | | | | $0 | | | $ | 453,775 | | | | $0 | | | $ | 453,775 | | | $ | 453,775 | | Deferred Compensation | | | $0 | | | | $0 | | | $ | 381,659 | | | | $0 | | | $ | 0 | | | $ | 0 | | | | | | | | | | Total Value to Executive | | | $0 | | | | $0 | | | $ | 3,730,631 | | | | $0 | | | $ | 3,501,964 | | | $ | 6,470,438 | | Tom Quindlen | | | | | | | | | | | | | | | | | | | | | | | | | Element of Pay | | | For Cause | | |
| Voluntary
Termination |
| |
| Involuntary
Termination |
| | | Retirement | | |
| Death or
Disability |
| |
| Change-in-
Control |
| | | | | | | | Severance | | | $0 | | | | $0 | | | $ | 850,000 | | | | $0 | | | $ | 0 | | | $ | 3,350,000 | | Restricted Stock Units | | | $0 | | | | $0 | | | $ | 802,677 | | | | $0 | | | $ | 1,161,012 | | | $ | 1,161,012 | | Stock Options | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 0 | | Long-Term Performance Plan | | | $0 | | | | $0 | | | $ | 461,265 | | | | $0 | | | $ | 946,209 | | | $ | 946,209 | | Annual Cash Incentive | | | $0 | | | | $0 | | | $ | 941,300 | | | | $0 | | | $ | 941,300 | | | $ | 941,300 | | Medical Benefits | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 34,714 | | Outplacement | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 11,800 | | Restoration Plan | | | $0 | | | | $0 | | | $ | 836,589 | | | | $0 | | | $ | 836,589 | | | $ | 836,589 | | Deferred Compensation | | | $0 | | | | $0 | | | $ | 0 | | | | $0 | | | $ | 0 | | | $ | 0 | | | | | | | | | | Total Value to Executive | | | $0 | | | | $0 | | | $ | 3,891,832 | | | | $0 | | | $ | 3,885,110 | | | `$ | 7,281,624 | |
50 Synchrony | 2019 Annual Meeting and Proxy Statement
Compensation Matters Independent Directors’ Compensation Our compensation program for independent directors is designed to achieve the following goals: (a) fairly pay directors for work required at a company of our size and scope of operations; (b) align directors’ interests with the long-term interests of our stockholders; and (c) have a compensation structure that is simple, transparent and easy for stockholders to understand. Our Nominating and Corporate Governance Committee reviews director compensation annually. Each independent director currently receives annual compensation of $210,000, of which $75,000 is paid in cash and $135,000 is paid in RSUs. The RSUs are subject to aone-year vesting period and will be credited with amounts equivalent to any regular quarterly dividends paid on our common stock, which amounts will be reinvested in additional RSUs. In light of the workload and broad responsibilities of their positions, certain independent directors currently receive additional compensation as follows: the Chair of our Board receives an additional $235,000, of which $110,000 is paid in cash and $125,000 is paid in RSUs, the Chairs of the Audit Committee and Risk Committee each receive an additional $35,000 in annual cash compensation and the Chairs of the Nominating and Corporate Governance Committee and the Company’s MDCC each receive an additional $20,000 in annual compensation. Separately, for each Board committee meeting attended, an independent director receives $2,000 in cash. If an independent director is also a director of the Bank and attends a meeting of a Bank committee that takes place on a day when the analogous Board committee is not meeting, the independent director receives $2,000 in cash for such meeting. Independent directors can defer up to 80% of their annual cash compensation and RSUs into deferred stock units, which will be paid out after they leave our Board. We require each independent director to own at least $375,000 in our common stock, RSUs or deferred stock units while a member of our Board. Each independent director has four years to satisfy this requirement. Individual and joint holdings of our common stock with immediate family members, including unvested time-based restricted stock, RSUs and deferred stock units count toward this requirement. 2018 Independent Directors’ Compensation Table | | | | | | | Name of Director | | Fees Earned or Paid in Cash (1) | | Stock Awards (2) | | Total | | | | | Paget L. Alves | | $111,000 | | $135,057 | | $246,057 | | | | | Art W. Coviello, Jr. | | $ 91,000 | | $135,057 | | $226,057 | | | | | William W. Graylin | | $ 91,000 | | $135,057 | | $226,057 | | | | | Roy A. Guthrie | | $126,000 | | $135,057 | | $261,057 | | | | | Richard C. Hartnack | | $219,000 | | $260,156 | | $479,156 | | | | | Jeffrey G. Naylor | | $144,000 | | $135,057 | | $279,057 | | | | | Laurel J. Richie | | $105,000 | | $135,057 | | $240,057 | | | | | Olympia J. Snowe | | $129,000 | | $135,057 | | $264,057 |
| (1) | Amount of cash compensation received in 2018 for Board and committee service and meeting attendance. |
| (2) | Aggregate grant date fair value of RSUs granted in 2018. Grant date fair value is calculated by multiplying the number of RSUs granted by the closing price of Synchrony common stock on the grant date, which was $33.53 for March 31, 2018 grants, $33.38 for June 30, 2018 grants, $31.08 for September 30, 2018 grants and $23.46 for December 31, 2018 grants. |
| (3) | As of December 31, 2016, the weighted-average term of outstanding stock options was 7.9 years. The table below provides details regarding2018, the number of shares availableunvested equity awards (in the form of RSUs) that were outstanding for future awards under our equity compensation planseachnon-employee director was as of the end of each fiscal year since our IPO through December 31, 2016.follows: Mr. Alves 11,501; Mr. Coviello 11,501; Mr. Graylin 11,501; Mr. Guthrie 12,263; Mr. Hartnack 19,970; Mr. Naylor 11,501; Ms. Richie 11,501; and Senator Snowe 11,501.
| | | | | | | | | | | | | | | | | | | | | For the Years Ended December 31, | | | | 2016 | | 2015 | | 2014 | Beginning of the period available shares | | | | 5,699,056 | | | | | 7,414,644 | | | | | 16,605,417 | | Granted: Stock Based (RSUs/PSUs) and
Non-Qualified Stock Options (“NQSOs”) | | | | | | | | | | | | | | | | – RSUs | | | | 1,000,900 | | | | | 793,585 | | | | | 3,704,535 | | – PSUs | | | | 523,646 | | | | | — | | | | | — | | – NQSOs | | | | 1,272,897 | | | | | 984,086 | | | | | 5,553,815 | | Total | | | | 2,797,443 | | | | | 1,777,671 | | | | | 9,258,350 | | | | | | Cancelled: Stock Based (RSUs/PSUs) and NQSOs | | | | | | | | | | | | | | | | – RSUs | | | | 226,407 | | | | | 45,484 | | | | | 26,806 | | – PSUs | | | | — | | | | | — | | | | | — | | – NQSOs | | | | 212,063 | | | | | 16,599 | | | | | 40,771 | | Total | | | | 438,470 | | | | | 62,083 | | | | | 67,577 | | | | | | End of the period available shares | | | | 3,340,083 | | | | | 5,699,056 | | | | | 7,414,644 | |
|
Ms. Ellen Zane, who was elected to the Board effective February 1, 2019, was anon-voting observer to the Board from October 2018 to February 2019 to enable her to attend Board meetings in preparation for her proposed director role. In connection with her role as a Board observer, Ms. Zane received cash compensation of $50,000. | Synchrony | 2019 Annual Meeting and Proxy Statement 51
Compensation Matters Equity Compensation Plan Information The following table provides information as of December 31, 2018 regarding the number of shares of our common stock that may be issued under our equity compensation plans. | | | | | | | | | | A | | B | | C | Plan Category | | Number of securities to be issued
upon exercise of outstanding
options, warrants and rights(1) | | Weighted-average exercise
price of outstanding options,
warrants and rights | | Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in column A) | Equity compensation plans approved by security holders | | 13,766,133 | | $27.84 | | 45,115,124 | Equity compensation plans not approved by security holders | | — | | | | — | Total | | 13,766,133 | | $27.84 | | 45,115,124 |
 The Board recommends a voteFOR the adoption of the amendment to the
| (1) | This column includes 9,574,416 shares underlying stock options, 2,620,737 shares underlying RSUs and 1,570,980 shares underlying PSUs, in each case, awarded under the LTIP. |
As of December 31, 2018, the weighted-average term of outstanding stock options was 6.9 years. The table below provides details regarding the number of shares available for future awards under our equity compensation plans as of the end of each fiscal year since our IPO through December 31, 2018. | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Years Ended December 31, | | | | | | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018(1) | | Beginning of the period available shares | | | 16,605,417 | | | | 7,414,644 | | | | 5,699,056 | | | | 3,340,083 | | | | 46,839,931 | | | | | | | | 2017 Amended Plan Additional Shares | | | 0 | | | | 0 | | | | 0 | | | | 46,000,000 | | | | 0 | | | | | | | | New Shares Available | | | 16,605,417 | | | | 7,414,644 | | | | 5,699,056 | | | | 49,340,083 | | | | 46,839,931 | | | | | | | | Granted: Stock Based (RSUs/PSUs) and NQSOs | | | | | | | | | | | | | | | | | | | | | | | | | | | – RSUs | | | 3,704,535 | | | | 793,585 | | | | 1,000,900 | | | | 1,034,299 | | | | 1,069,882 | | | | | | | | – PSUs | | | | | | | | | | | 523,646 | | | | 502,022 | | | | 616,673 | | | | | | | | – NQSOs | | | 5,553,815 | | | | 984,086 | | | | 1,272,897 | | | | 1,369,269 | | | | 1,782,601 | | | | | | | | Total | | | 9,258,350 | | | | 1,777,671 | | | | 2,797,443 | | | | 2,905,590 | | | | 3,469,156 | | | | | | | | Cancelled: Stock Based (RSUs/PSUs) and NQSOs | | | | | | | | | | | | | | | | | | | | | | | | | | | – RSUs(2) | | | 26,806 | | | | 45,484 | | | | 226,407 | | | | 271,981 | | | | 1,499,331 | | | | | | | | – PSUs | | | 0 | | | | 0 | | | | 0 | | | | 11,001 | | | | 62,704 | | | | | | | | – NQSOs | | | 40,771 | | | | 16,599 | | | | 212,063 | | | | 122,456 | | | | 182,313 | | | | | | | | Total | | | 67,577 | | | | 62,083 | | | | 438,470 | | | | 405,438 | | | | 1,744,349 | | | | | | | | End of the period available shares | | | 7,414,644 | | | | 5,699,056 | | | | 3,340,083 | | | | 46,839,931 | | | | 45,115,124 | |
| (1) | Includes shares and dividend equivalent units granted during 2018. |
| (2) | Includes lapsed or unissued units. |
52 Synchrony Financial 2014 Long-Term Incentive Plan andre-approval of performance measures, as disclosed in this proxy statement.| 2019 Annual Meeting and Proxy Statement
Compensation Matters Pay Ratio As required by the SEC and in accordance with its regulations and guidance, we determined the ratio of the annual total compensation of our CEO and the annual total compensation of our median employee using the following methodology. We note that the pay ratio and annual total compensation amounts we disclose are reasonable estimates that have been calculated using methodologies and assumptions permitted by the SEC, which may differ from those used by other companies. We identified our median employee by using the target total compensation including retirement for all employees globally. Based on our CEO’s annual total compensation compared to the annual total compensation for our median employee, our estimated pay ratio for 2018 was 297:1. We calculated the median employee’s annual total compensation in accordance with the SEC rules used to calculate the amount set forth in the “total” column of the Summary Compensation Table and added the value of benefits. Accordingly, our median employee’s total annual compensation was calculated as $41,933, including benefits. With respect to the annual total compensation of our CEO, we used the amount reported in the “total” column of our Summary Compensation Table for 2018 and added the value of benefits. Accordingly, our CEO’s annual total compensation for purposes of the pay ratio determination was $12,464,802, including benefits.
Synchrony | 2019 Annual Meeting and Proxy Statement 53
Audit Matters Independent Auditor The Audit Committee retained KPMG LLP (“KPMG”) to audit our consolidated financial statements for 2018. In addition, the Audit Committee retained KPMG to provide other auditing and advisory services in 2018. In selecting KPMG as the independent auditor for 2019, the Audit Committee considered, among other factors, KPMG’s performance during 2018, including that of the lead audit partner, its independence and its attention to quality control matters. We understand the need for KPMG to maintain objectivity and independence in its audit of our financial statements. To minimize relationships that could appear to impair the objectivity of KPMG, our Audit Committee has restricted thenon-audit services that KPMG may provide to us primarily to tax services and merger and acquisition due diligence and integration services. The Audit Committee also requires key KPMG partners assigned to our audit to be rotated at least every five years. Pre-Approval Processes The Audit Committee approves all audit engagement fees and terms. It is the Audit Committee’s policy to review andpre-approve all audit andnon-audit services provided to the Company by KPMG on anengagement-by-engagement basis. To minimize relationships that could appear to impair KPMG’s objectivity, it is the Audit Committee’s practice to restrict thenon-audit services that may be provided to the Company by KPMG primarily to tax services and merger and acquisition due diligence and integration services. The Chair of the Audit Committee is authorized topre-approve any audit ornon-audit service on behalf of the Audit Committee, provided such decisions are presented to the full committee at its next regularly scheduled meeting. Accounting Fees and Services The following table presents fees paid for the audit of our annual consolidated financial statements and all other professional services rendered by KPMG for the years ended December 31, 2018 and 2017. | | | | | | | | | | | | For the Years Ended December 31, | | | | | 2018 | | | 2017 | | Audit fees | | | $4,726,603 | | | | $4,728,178 | | | | | Audit-related fees | | | 597,956 | | | | 490,215 | | | | | Tax fees | | | — | | | | — | | | | | All other fees | | | — | | | | — | | | | | Total fees | | | $5,324,559 | | | | $5,218,393 | |
In the above table, in accordance with SEC rules, “Audit” fees are fees that we paid to KPMG for (i) the audit of the Company’s annual financial statements included in the Annual Report on Form10-K for fiscal year ended December 31, 2018, and review of financial statements included in the Quarterly Reports on Form10-Q for the first, second and third quarters of 2018, and (ii) services that are normally provided by KPMG in connection with statutory and regulatory filings or engagements, including comfort letter procedures and consent-related procedures. “Audit-related” fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements, including agreed-upon procedures. “Tax” fees are fees for tax compliance, tax advice and tax planning, and “All other” fees are fees for any services not included in the first three categories. Hiring Restrictions The Audit Committee has adopted restrictions on our hiring of any KPMG partner, director, manager, staff, advising member of the department of professional practice, reviewing actuary, reviewing tax professional and any other persons having responsibility for providing audit assurance on any aspect of KPMG’s certification of the Company’s financial statements. These restrictions are contained in our Audit Committee Key Practices, which are published on the Company’s website at http://investors.synchrony.com under “Corporate Governance.” 54 Synchrony | 2019 Annual Meeting and Proxy Statement
Audit Matters Item 3—Ratification of Selection of KPMG LLP as Independent Registered Public Accounting Firm of the Company for 2019 |
54
INDEPENDENT AUDITOR
The Audit Committee retained KPMG LLP (“KPMG”) to audit our consolidated and combined financial statements for 2016. In addition, the Audit Committee retained KPMG to provide other auditing and advisory services in 2016. We understand the need for KPMG to maintain objectivity and independence in its audit of our financial statements. To minimize relationships that could appear to impair the objectivity of KPMG, our Audit Committee has restricted thenon-audit services that KPMG may provide to us primarily to tax services and merger and acquisition due diligence and integration services. The Audit Committee also requires key KPMG partners assigned to our audit to be rotated at least every five years.
Pre-Approval Processes
It is the Audit Committee’s policy to review andpre-approve all audit andnon-audit services provided to the Company by KPMG on anengagement-by-engagement basis. To minimize relationships that could appear to impair KPMG’s objectivity, it is the Audit Committee’s practice to restrict thenon-audit services that may be provided to the Company by KPMG primarily to tax services and merger and acquisition due diligence and integration services. The Chair of the Audit Committee is authorized topre-approve any audit ornon-audit service on behalf of the Audit Committee, provided such decisions are presented to the full committee at its next regularly scheduled meeting.
Accounting Fees and Services
The following table presents fees paid for the audit of our annual consolidated and combined financial statements and all other professional services rendered by KPMG for the years ended December 31, 2016 and 2015.
| | | | | | | | | | | | | | For the Years Ended December 31, | | | | 2016 | | 2015 | Audit fees | | | | $5,080,164 | | | | | $4,290,536 | | Audit-related fees | | | | 495,471 | | | | | 435,928 | | Tax fees | | | | — | | | | | — | | All other fees | | | | — | | | | | 2,830 | | Total fees | | | | $5,575,635 | | | | | $4,729,294 | |
In the above table, in accordance with SEC rules, “Audit” fees are fees that we paid to KPMG for (i) the audit of the Company’s annual financial statements included in the Annual Report on Form10-K for fiscal year ended December 31, 2016, and review of financial statements included in the Quarterly Reports on Form10-Q for the first, second and third quarters of 2016, and (ii) services that are normally provided by KPMG in connection with statutory and regulatory filings or engagements, including comfort letter procedures and consent-related procedures. “Audit-related” fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements, including agreed-upon procedures. “Tax” fees are fees for tax compliance, tax advice and tax planning, and “All other” fees are fees for any services not included in the first three categories.
Hiring Restrictions
The Audit Committee has adopted restrictions on our hiring of any KPMG partner, director, manager, staff, advising member of the department of professional practice, reviewing actuary, reviewing tax professional and any other persons having responsibility for providing audit assurance on any aspect of KPMG’s certification of the Company’s financial statements. These restrictions are contained in our Audit Committee Key Practices, which are published on the Company’s website at http://investors.synchronyfinancial.com under “Corporate Governance.”
55
ITEM 4—RATIFICATION OF SELECTION OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE COMPANY FOR 2017
We are asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm for 2017.2019. The Audit Committee has approved the selection of KPMG as our independent registered public accounting firm for 2017.2019. KPMG is currently our independent registered public accounting firm. | |  | Although the Company is not required to seek stockholder approval of this appointment, the Board believes that doing so is consistent with good corporate governance practices. If the selection is not ratified, the Audit Committee will explore the reasons for stockholder rejection and whether it is appropriate to select another independent auditor. | We have been advised that representatives of KPMG will attend the Annual Meeting. They will have an opportunity to make a statement if they wish to do so and will be available to respond to appropriate questions. |
Audit Committee Report The Audit Committee reviews and oversees the Company’s financial reporting process on behalf of the Board, including the selection, evaluation, compensation and oversight of our independent auditor. Management has the primary responsibility for the Company’s financial statements and overall financial reporting process, including the Company’s internal control over financial reporting. KPMG, our independent auditor for 2018, has the responsibility to conduct an independent audit in accordance with generally accepted auditing standards and to issue an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles. In this context, the Audit Committee: |  The Audit Committee and the Board recommend a voteFOR ratification of the selection of KPMG
as our independent registered public accounting firm for 2017.
|
Audit Committee Report
The Audit Committee reviews and oversees the Company’s financial reporting process on behalf of the Board, including the selection, evaluation, compensation and oversight of our independent auditor. Management has the primary responsibility for the Company’s financial statements and overall financial reporting process, including the Company’s internal control over financial reporting. KPMG, our independent auditor for 2016, has the responsibility to conduct an independent audit in accordance with generally accepted auditing standards and to issue an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles.
In this context, the Audit Committee:
has reviewed and discussed with management the Company’s audited consolidated and combined financial statements for the year ended December 31, 2016;has reviewed and discussed with management the Company’s audited consolidated financial statements for the year ended December 31, 2018; | • | | has discussed with KPMG the matters required to be discussed byAuditing Standard No. 1301: Communications with Audit Committees; |
has discussed with KPMG its assessment of the effectiveness of the Company’s internal control over financial reporting;
has received from KPMG the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s communications with the Audit Committee concerning independence; and
has discussed with KPMG its independence, taking into consideration the amount and nature of the fees paid to the firm for audit andnon-audit services.
Based on the review and discussions described above, the Audit Committee has recommended to the Board that the audited consolidated and combined financial statements for the year ended December 31, 2016 be included in the Company’s Annual Report on Form10-K for the year ended December 31, 2016has discussed with KPMG the matters required to be discussed by Auditing Standard No. 1301: Communications with Audit Committees; has discussed with KPMG its assessment of the effectiveness of the Company’s internal control over financial reporting; has received from KPMG the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s communications with the Audit Committee concerning independence; and has discussed with KPMG its independence, taking into consideration the amount and nature of the fees paid to the firm for audit andnon-audit services. Based on the review and discussions described above, the Audit Committee has recommended to the Board that the audited consolidated financial statements for the year ended December 31, 2018 be included in the Company’s Annual Report on Form10-K for the year ended December 31, 2018 for filing with the SEC. Respectfully submitted by the Audit Committee of the Board. | | | | | | | Jeffrey G. Naylor, Chair | | | | | Paget L. Alves | | | | | Olympia J. Snowe | | | | | Ellen M. Zane | | | Jeffrey G. Naylor, Chair | Paget L. Alves | Olympia J. Snowe |
Synchrony | 2019 Annual Meeting and Proxy Statement 55
Beneficial Ownership At March 18, 2019, we had 691,654,495 shares of common stock outstanding. The following table shows information regarding the beneficial ownership of our common stock by: all persons known by us to own beneficially more than 5% of our common stock; our CEO and each of our named executive officers; each of our directors; and all directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Synchrony common stock subject to options or RSUs held by that person that are currently exercisable or exercisable (or in the case of RSUs, vested or vest) within 60 days of the date of this proxy statement are deemed to be issued and outstanding. These shares, however, are not deemed outstanding for purposes of computing percentage ownership of each other stockholder. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them. Except as noted by footnote, all stockholdings are as of March 18, 2019, and the percentage of beneficial ownership is based on 691,654,495 shares of common stock outstanding as of March 18, 2019. | | | | | | | | | | | Name of Beneficial Owner | | Number of Shares | | Percent of Total | | | | GIC Private Limited—168, Robinson Road#37-01, Capital Tower Singapore 068912(1) | | | | 55,468,263 | | | | | 7.72% | | The Vanguard Group—100 Vanguard Blvd., Malvern, PA 19355(2) | | | | 48,828,260 | | | | | 6.79% | | BlackRock, Inc.—55 East 52nd Street, New York, NY 10055(3) | | | | 46,496,604 | | | | | 6.5% | | FMR LLC—245 Summer Street, Boston, MA 02210(4) | | | | 33,064,317 | | | | | 4.6% | | Margaret M. Keane(5) | | | | 832,621 | | | | | * | | Brian D. Doubles(6) | | | | 343,497 | | | | | * | | Henry F. Greig(7) | | | | 261,149 | | | | | * | | Neeraj Mehta(8) | | | | 103,505 | | | | | * | | Tom M. Quindlen(9) | | | | 242,678 | | | | | * | | Paget L. Alves(10) | | | | 4,518 | | | | | * | | Arthur W. Coviello, Jr.(11) | | | | 8,700 | | | | | * | | William W. Graylin(12) | | | | 62,514 | | | | | * | | Roy A. Guthrie(13) | | | | 14,877 | | | | | * | | Richard C. Hartnack(14) | | | | 6,158 | | | | | * | | Jeffrey G. Naylor(15) | | | | 39,812 | | | | | * | | Laurel J. Richie(16) | | | | 4,014 | | | | | * | | Olympia J. Snowe(17) | | | | 5,514 | | | | | * | | Ellen M. Zane(18) | | | | 0 | | | | | | | All directors and executive officers as a group (18 persons) | | | | 2,194,298 | | | | | * | |
* Denotes less than 1.0% | (1) | Based on a Schedule 13G/A filed on January 28, 2019 by GIC Private Limited regarding its holdings of our common stock as of December 31, 2018. The Schedule 13G/A discloses that the reporting entity had sole voting power as to 35,986,950 of the shares, shared voting power as to 19,481,313 of the shares, sole dispositive power as to 35,986,950 of the shares and shared dispositive power as to 19,481,313 of the shares. |
| (2) | Based on a Schedule 13G/A filed on February 13, 2019 by The Vanguard Group regarding its holdings, together with its subsidiaries, of our common stock as of December 31, 2018. The Schedule 13G/A discloses that the reporting entity had sole voting power as to 811,493 of the shares, shared voting power as to 172,484 of the shares, sole dispositive power as to 47,857,471 of the shares and shared dispositive power as to 970,789 of the shares. |
| (3) | Based on a Schedule 13G/A filed on February 6, 2019 by BlackRock, Inc. regarding its holdings, together with its subsidiaries, of our common stock as of December 31, 2018. The Schedule 13G/A discloses that the reporting entity had sole voting power as to 40,265,260 of the shares, shared voting power as to none of the shares, sole dispositive power as to 46,496,604 of the shares and shared dispositive power as to none of the shares. |
| (4) | Based on a Schedule 13G/A filed on February 13, 2019 by FMR LLC regarding its holdings, together with certain of its subsidiaries and affiliates, of our common stock as of December 31, 2018. The Schedule 13G/A discloses that the reporting entity had sole voting power as to 3,800,550 of the shares, shared voting power as to none of the shares, sole dispositive power as to 33,064,317 of the shares and shared dispositive power as to none of the shares. |
| (5) | Includes 51,714 restricted stock units and 100,833 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2019. Each restricted stock unit represents a contingent right to receive one share of our common stock. |
| (6) | Includes 13,680 restricted stock units and 23,261 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2019. |
| (7) | Includes 10,415 restricted stock units and 17,646 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2019. |
| (8) | Includes 18,080 restricted stock units and 30,409 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2019. |
| (9) | Includes 13,259 restricted stock units and 22,300 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2019. |
| (10) | Includes 2,049 restricted stock units that vested on March 31, 2019. |
| (11) | Includes 2,049 restricted stock units that vested on March 31, 2019. |
| (12) | Includes 2,049 restricted stock units that vested on March 31, 2019. |
| (13) | Includes 2,049 restricted stock units that vested on March 31, 2019. |
| Mr. Guthrie is the Investment Manager of Guthrie 2012 Investments LP, which owns the reported securities. Mr. Guthrie disclaims beneficial ownership of the shares of common stock held by Guthrie 2012 Investments LP, except to the extent of his direct pecuniary interest therein. |
| (14) | Includes 3,006 restricted stock units that vested on March 31, 2019. |
| (15) | Includes 2,049 restricted stock units that vested on March 31, 2019. |
| (16) | Includes 2,049 restricted stock units that vested on March 31, 2019. |
| (17) | Includes 2,049 restricted stock units that vested on March 31, 2019. |
| (18) | Includes 2,049 restricted stock units that vested on March 31, 2019. |
56 Synchrony | 2019 Annual Meeting and Proxy Statement
Beneficial Ownership Related Person Transactions There were no transactions or proposed transactions between the Company and any officer, director or nominee for director, any stockholder beneficially owning more than 5% of any class of our voting stock or any immediate family member of any of them, since January 1, 2018, of the type or amount required to be disclosed under the applicable SEC rules. Related Person Transactions Policy Our Board has adopted a written policy for the review, approval or ratification of transactions (known as “related person transactions”) between us or any of our subsidiaries and any related person, in which the amount involved since the beginning of our last completed fiscal year will or may be expected to exceed $120,000 and in which one of our executive officers, directors or nominees for director, or stockholders beneficially owning more than 5% of any class of our voting stock (or an immediate family member of any of the foregoing has a direct or indirect material interest). Since January 1, 2018, no transaction has been identified as a related person transaction. The policy calls for related person transactions to be reported to, reviewed and, if deemed appropriate, approved or ratified by, the Nominating and Corporate Governance Committee. In determining whether or not to approve or ratify a related person transaction, the Nominating and Corporate Governance Committee will take into account, among other factors it deems important, whether the related person transaction is in our best interests and whether the transaction is on terms no less favorable than terms generally available to us from an unaffiliated third party under the same or similar circumstances. In the event a member of the Nominating and Corporate Governance Committee is not disinterested with respect to the related person transaction under review, that member may not participate in the review, approval or ratification of that related person transaction. Certain decisions and transactions are not subject to the related person transaction approval policy, including: (i) decisions on compensation or benefits relating to our directors or executive officers or the hiring or retention of our executive officers, (ii) decisions relating to pro rata distributions to all our stockholders, (iii) indebtedness transactions with the Bank made in the ordinary course of business, on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable loans with persons not related to the lender and not presenting more than the normal risk of collectability or other unfavorable features, and (iv) deposit transactions with the Bank made in the ordinary course of business and not paying a greater rate of interest on the deposits of a related person than the rate paid to other depositors on similar deposits with the Bank. Certain of our directors and executive officers and certain members of their immediate families have received extensions of credit from us in connection with credit card transactions. The extensions of credit were made in the ordinary course of business on substantially the same terms, including interest rates, as those prevailing at the time for comparable transactions with other persons not related to us and did not involve more than the normal risk of collectability or present other unfavorable terms. Future extensions of credit of this nature are not subject to the related person transaction approval policy.
Synchrony | 2019 Annual Meeting and Proxy Statement 57
Frequently Asked Questions About the Annual Meeting (“FAQs”) Voting Information Who is entitled to vote at the Annual Meeting? Holders of our common stock as of the close of business on the record date, which is March 28, 2019, are entitled to notice of, and to vote at, the Annual Meeting. As of the record date, there were 691,654,495 shares of our common stock outstanding and entitled to vote at the Annual Meeting, with each share entitled to one vote. How do I vote at the Annual Meeting? Stockholders of record can vote in one of four ways: | | | | | | | | | | | 
56 BY MAIL
You may date, sign and promptly return your proxy card by mail in a postage prepaid envelope (such proxıy card must be received by May 22, 2019). | | | | | | | 
BY TELEPHONE You may use the toll-free telephone number shown on your Notice of Internet Availability of Proxy Materials (the “Notice”) or proxy card up until 11:59 p.m., Eastern Time, on May 22, 2019. BENEFICIAL OWNERSHIP
|
| | | | | | | 
| | BY THE INTERNET In Advance You may vote online by visiting the internet website address indicated on your Notice or proxy card or scan the QR code indicated on your Notice or proxy card with your mobile device, and follow theon-screen instructions until 11:59 p.m., Eastern Time, on May 22, 2019. | | | | | | | | | | | At the Annual Meeting You may attend the virtual Annual Meeting by visiting this internet website address: www.virtualshareholdermeeting.com/SYF2019. |
Voting instructions (including instructions for both telephonic and internet voting) are provided on the Notice and the proxy card. The telephone and internet voting procedures are designed to authenticate stockholder identities, to allow stockholders to give voting instructions and to confirm that stockholders’ instructions have been recorded properly. A control number, located on the Notice and the proxy card, will identify stockholders and allow them to submit their proxies and confirm that their voting instructions have been properly recorded. If your shares are held through a bank, broker, fiduciary or custodian (which we refer to in this proxy statement as a “broker”), please follow the voting instructions on the form you receive from such institution. What if my shares of the Company’s common stock are held for me by a broker? If you are the beneficial owner of shares held for you by a broker, your broker must vote those shares in accordance with your instructions. If you do not provide your broker with instructions as to how to vote such shares, your broker will only be able to vote your shares at its discretion on certain “routine” matters as permitted by NYSE rules. The proposal to ratify the appointment of KPMG is the only proposal considered a routine matter to be presented at the Annual Meeting. Brokers will not be permitted to vote your shares on any of the other matters presented at the Annual Meeting. If you do not provide voting instructions on these matters, including the election of the director nominees named herein, the shares will be considered “brokernon-votes” with respect to such matters. What if I do not vote or do not indicate how my shares should be voted on my proxy card? If a stockholder does not return a signed proxy card or submit a proxy by telephone or the internet, and does not attend the meeting and vote, his or her shares will not be voted or counted as present for purposes of establishing a quorum at the Annual Meeting. Shares of our common stock represented by properly executed proxies received by us and not subsequently revoked will be voted at the Annual Meeting in accordance with the instructions contained therein. If you submit a properly completed proxy but do not indicate how your shares should be voted on a proposal, the shares represented by your proxy will be voted as the Board recommends on such proposal. In addition, if any other matter is properly presented at the Annual Meeting, the persons named in the accompanying proxy card will have discretion to vote your shares in their best judgment on such matter. 58 Synchrony | 2019 Annual Meeting and Proxy Statement
FAQs At March 23, 2017, we had 810,804,845 shares of common stock issued and outstanding.
The following table shows information regarding the beneficial ownership of our common stock by:
How can I change my votes or revoke my proxy after I have voted? Any proxy signed and returned by a stockholder or submitted by telephone or via the internet may be revoked or changed at any time before it is exercised by mailing a written notice of revocation or change to our Corporate Secretary at Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902 or by executing and delivering a later-dated proxy (either in writing, by telephone or via the internet). Will my votes be publicly disclosed? No. Stockholder proxies, ballots and tabulations that identify individual stockholders are not publicly disclosed and are available only to the inspector of election and certain employees, who are obligated to keep such information confidential. What if other matters come up during the Annual Meeting? If any other matters properly come before the meeting, including a question of adjourning or postponing the meeting, the persons named in the proxies or their substitutes acting thereunder will have discretion to vote your shares on such matters in accordance with their best judgment. What constitutes a quorum at the Annual Meeting? The presence at the Annual Meeting, in person or represented by proxy, of the holders of a majority in voting power of the outstanding capital stock issued and entitled to vote at the Annual Meeting is required to constitute a quorum to transact business at the Annual Meeting. Abstentions are counted for purposes of determining whether a quorum is present. As explained above under “What if my shares of the Company’s common stock are held for me by a broker?,” if brokers exercise their discretionary voting authority on the ratification of the appointment of KPMG, such shares will be considered present at the Annual Meeting for quorum purposes and brokernon-votes will occur as to each of the other proposals presented at the Annual Meeting. How many votes are required to approve each matter to be considered at the Annual Meeting? all persons known by us to own beneficially more than 5% | | | | | | | | | | Voting Item | | Voting Standard | | Treatment of our common stock;our CEO Abstentionsand eachBrokerNon-Votes | | Board
Recommendation | | | | | | | | Election of directors named in this proxy statement | | Majority of votes cast | | Not counted as votes cast and therefore will have no effect | | FOR | | | | | | | | Advisory approval of our named executive officers; eachexecutives’ compensation
| | Majority of our directors;votes cast | | Not counted as votes cast and all directors therefore will have no effect
| | FOR | | | | | | | | Auditor ratification | | Majority of votes cast | | Abstentions not counted as votes cast and executive officers as a group.therefore will have no effect. No brokernon-votes (routine matter). | | FOR | | |
| | | Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Synchrony common stock subject to options or RSUs held by that person that are currently exercisable or exercisable (or in the case of RSUs, vested or vest) within 60 days of the date of this proxy statement are deemed to be issued and outstanding. These shares, however, are not deemed outstanding for purposes of computing percentage ownership of each other stockholder. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them.
Synchrony | 2019 Annual Meeting and Proxy Statement 59
FAQs Who will count the vote? Votes will be tabulated by Broadridge. The Board has appointed a representative of Broadridge to serve as the Inspector of Elections. Will a list of stockholders be made available? We will make a list of stockholders available for 10 days prior to the Annual Meeting at our offices located at 777 Long Ridge Road, Stamford, Connecticut 06902. Please contact Synchrony’s Corporate Secretary by telephone at (203)585-2400 if you wish to inspect the list of stockholders prior to the Annual Meeting. This list will also be available during the Annual Meeting at www.virtualshareholdermeeting.com/SYF2019. Proxy Solicitation and Document Request Information Why did I receive a Notice of Internet Availability of Proxy Materials instead of printed proxy materials? The SEC permits companies to furnish proxy materials to stockholders by providing access to these documents over the internet instead of mailing printed copies, which can reduce costs of printing and impact on the environment. Accordingly, we have mailed a Notice to some of our stockholders. All stockholders can access our proxy materials on the internet website referred to in the Notice. If you received a Notice and would like to receive a printed copy of our proxy materials, you should follow the instructions for obtaining such materials included in the Notice. Multiple individuals residing at my address are beneficial owners of the Company’s common stock, so why did we receive only one mailing? The SEC permits companies to deliver a single Notice or set of Annual Meeting materials to an address shared by two or more stockholders. This delivery method is referred to as “householding.” We have delivered only one such Notice or set of Annual Meeting materials to some stockholders who share an address, unless we received contrary instructions from the affected stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of such Notice or Annual Meeting materials to any stockholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of such Notice or Annual Meeting materials, please contact our Corporate Secretary by telephone at (203)585-2400 or in writing at Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902. If you are currently a stockholder sharing an address with another stockholder receiving multiple copies of Notices or Annual Meeting materials and wish to receive only one copy for your household, please contact the Company at the above phone number or address. Who is soliciting my proxy and who pays to prepare, mail and solicit the proxies? The Board is soliciting proxies from the Company’s stockholders for the Annual Meeting. We will bear the costs of solicitation of proxies for the Annual Meeting, including preparation, assembly, printing and mailing of the Notice, this proxy statement, the annual report, the proxy card and any additional information furnished to stockholders. We may reimburse persons representing beneficial owners of common stock for their costs of forwarding any solicitation materials to such beneficial owners. However, we do not reimburse or pay additional compensation to our own directors, officers or other employees for soliciting proxies. In addition, we have retained Innisfree M&A Incorporated to assist us in the solicitation of proxies for an aggregate fee of $20,000, plus reasonableout-of-pocket expenses. Information About Attending the 2019 Annual Meeting How can I attend the Annual Meeting? Stockholders as of the record date and/or their authorized representatives are permitted to attend our Annual Meeting. The Annual Meeting will be conducted entirely over an internet website, at the following address: www.virtualshareholdermeeting.com/SYF2019. Hosting a virtual meeting enables increased stockholder attendance and participation because stockholders can participate from any location. You may attend the Annual Meeting, vote and submit a question during the Annual Meeting by visiting www.virtualshareholdermeeting.com/SYF2019 and using your16-digit control number, located on the Notice and the proxy card, to enter the meeting. 60 Synchrony | 2019 Annual Meeting and Proxy Statement
Additional Information Other Business The Board has no knowledge of any other matter to be submitted at the Annual Meeting. If any other matter shall properly come before the Annual Meeting, including a question of adjourning or postponing the meeting, the persons named in this proxy statement will have discretionary authority to vote the shares thereby represented in accordance with their best judgment. Annual Report and Company Information A copy of our 2018 Annual Report is being furnished to stockholders concurrently herewith. Our Annual Report and other reports we file with the SEC are available free of charge on our website as soon as reasonably practicable after they are electronically filed or furnished to the SEC at http://investors.synchrony.com under “SEC Filings.” Stockholder Proposals for the 2020 Annual Meeting Proposals that stockholders wish to submit for inclusion in our proxy statement for our 2020 Annual Meeting of Stockholders pursuant to Rule14a-8 under the Exchange Act must be received by our Corporate Secretary at Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902 no later than December 7, 2019. Any stockholder proposal submitted for inclusion must be eligible for inclusion in our proxy statement in accordance with the rules and regulations promulgated by the SEC. With respect to proposals submitted by a stockholder for consideration at our 2020 annual meeting but not for inclusion in our proxy statement for such annual meeting, timely notice of any stockholder proposal must be received by us in accordance with our Bylaws no earlier than January 24, 2020, nor later than February 23, 2020. Such notice must contain the information required by our Bylaws. Stockholders who intend to submit director nominees for inclusion in our proxy statement for the 2020 annual meeting must comply with the requirements of proxy access as set forth in our Bylaws. The stockholder or group of stockholders who wish to submit director nominees pursuant to proxy access must deliver the required materials to the Company not earlier than November 7, 2019, nor later than December 7, 2019. Stockholders who wish to propose director nominees at the 2020 annual meeting but not include such nominees in our proxy statement must deliver notice to the Company at its principal executive offices no earlier than January 24, 2020, nor later than February 23, 2020, and such notice must otherwise comply with our Bylaws. Important Notice Regarding Internet Availability of Proxy Materials for the 2019 Annual Meeting to be Held on May 23, 2019 Our proxy materials relating to our Annual Meeting (Notice, proxy statement and annual report) are available at www.proxyvote.com.
Synchrony | 2019 Annual Meeting and Proxy Statement 61
| | | SYNCHRONY FINANCIAL | | 
|
777 LONG RIDGE ROAD | | VOTE BY INTERNET | STAMFORD, CT 06902 | | Before The Meeting- Go towww.proxyvote.com or scan the QR Barcode above | | | 57Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
| | | During The Meeting- Go towww.virtualshareholdermeeting.com/SYF2019You may attend the Meeting via the internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. | | | VOTE BY PHONE -1-800-690-6903 | | | Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. | | | VOTE BY MAIL | | | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | | | If you vote your proxy by internet or telephone, you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. | |
Except as noted by footnote, all stockholdings are as of March 23, 2017, and the percentage of beneficial ownership is based on 810,804,845 shares of common stock outstanding as of March 23, 2017.
| | | | | | | | | Name of Beneficial Owner | | Number of Shares | | Percent of Total | BlackRock, Inc. | | | | | | | | 55 East 52nd Street | | | | | | | | New York, NY 10055(1) | | | | 52,387,744 | | | 6.3% | | | | GIC Private Limited | | | | | | | | 168, Robinson Road | | | | | | | | #37-01, Capital Tower | | | | | | | | Singapore 068912(2) | | | | 45,980,617 | | | 5.6% | | | | The Vanguard Group | | | | | | | | 100 Vanguard Blvd. | | | | | | | | Malvern, PA 19355(3) | | | | 49,977,595 | | | 6.1% | | | | Margaret M. Keane(4) | | | | 71,238 | | | * | | | | Brian D. Doubles(5) | | | | 17,257 | | | * | | | | Glenn P. Marino(6) | | | | 19,394 | | | * | | | | Jonathan S. Mothner(7) | | | | 14,278 | | | * | | | | Thomas M. Quindlen(8) | | | | 25,437 | | | * | | | | Paget L. Alves | | | | 0 | | | 0% | | | | Arthur W. Coviello, Jr. | | | | 6,186 | | | * | | | | William W. Graylin | | | | 32,000 | | | * | | | | Roy A. Guthrie(9) | | | | 10,000 | | | * | | | | Richard C. Hartnack | | | | 2,000 | | | * | | | | Jeffrey G. Naylor | | | | 20,000 | | | * | | | | Laurel J. Richie | | | | 0 | | | 0% | | | | Olympia J. Snowe | | | | 0 | | | 0% | | | | All directors and executive officers as a group (16 persons) | | | | 257,308 | | | * |
* Denotes less than 1.0%
(1) | Based on a Schedule 13G/A filed on January 27, 2017 by BlackRock, Inc. regarding its holdings, together with its subsidiaries, of our common stock as of December 31, 2016. The Schedule 13G/A discloses that the reporting entity had sole voting power as to 44,883,079 of the shares, shared voting power as to 18,469 of the shares, sole dispositive power as to 52,369,275 of the shares and shared dispositive power as to 18,469 of the shares. |
(2) | Based on a Schedule 13G filed on January 25, 2017 by GIC Private Limited regarding its holdings of our common stock as of December 31, 2016. The Schedule 13G discloses that the reporting entity had sole voting power as to 28,725,657 of the shares, shared voting power as to 17,254,960 of the shares, sole dispositive power as to 28,725,657 of the shares and shared dispositive power as to 17,254,960 of the shares. |
(3) | Based on a Schedule 13G/A filed on February 10, 2017 by The Vanguard Group regarding its holdings, together with its subsidiaries, of our common stock as of December 31, 2016. The Schedule 13G/A discloses that the reporting entity had sole voting power as to 1,268,399 of the shares, shared voting power as to 149,348 of the shares, sole dispositive power as to 48,599,490 of the shares and shared dispositive power as to 1,378,105 of the shares. |
(4) | Includes 22,334 restricted stock units and 36,323 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2017. Each restricted stock unit represents a contingent right to receive one share of our common stock. |
(5) | Includes 6,118 restricted stock units and 9,749 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2017. Each restricted stock unit represents a contingent right to receive one share of our common stock. |
(6) | Includes 5,335 restricted stock units and 8,509 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2017. Each restricted stock unit represents a contingent right to receive one share of our common stock. |
(7) | Includes 4,910 restricted stock units and 7,831 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2017. Each restricted stock unit represents a contingent right to receive one share of our common stock. |
(8) | Includes 6,730 restricted stock units and 10,724 options (before netting out shares of our common stock withheld to pay the tax liability of the reporting person) that vested on April 1, 2017. Each restricted stock unit represents a contingent right to receive one share of our common stock. |
(9) | Mr. Guthrie is the Investment Manager of Guthrie 2012 Investments LP, which owns the reported securities. Mr. Guthrie disclaims beneficial ownership of the shares of common stock held by Guthrie 2012 Investments LP, except to the extent of his direct pecuniary interest therein. |
58
| | | RELATED PERSON TRANSACTIONS
|
There were no transactions or proposed transactions between the Company and any officer, director or nominee for director, any stockholder beneficially owning more than 5% of any class of our voting stock or any immediate family member of any of them, since January 1, 2016, of the type or amount required to be disclosed under the applicable SEC rules.
Related Person Transactions Policy
Our Board has adopted a written policy for the review, approval or ratification of transactions (known as “related person transactions”) between us or any of our subsidiaries and any related person, in which the amount involved since the beginning of our last completed fiscal year will or may be expected to exceed $120,000 and in which one of our executive officers, directors or nominees for director, or stockholders beneficially owning more than 5% of any class of our voting stock (or an immediate family member of any of the foregoing has a direct or indirect material interest). Since January 1, 2016, no transaction has been identified as a related person transaction.
The policy calls for related person transactions to be reported to, reviewed and, if deemed appropriate, approved or ratified by, the Nominating and Corporate Governance Committee. In determining whether or not to approve or ratify a related person transaction, the Nominating and Corporate Governance Committee will take into account, among other factors it deems important, whether the related person transaction is in our best interests and whether the transaction is on terms no less favorable than terms generally available to us from an unaffiliated third party under the same or similar circumstances. In the event a member of the Nominating and Corporate Governance Committee is not disinterested with respect to the related person transaction under review, that member may not participate in the review, approval or ratification of that related person transaction.
Certain decisions and transactions are not subject to the related person transaction approval policy, including: (i) decisions on compensation or benefits relating to our directors or executive officers or the hiring or retention of our executive officers, (ii) decisions relating to pro rata distributions to all our stockholders, (iii) indebtedness transactions with the Bank made in the ordinary course of business, on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable loans with persons not related to the lender and not presenting more than the normal risk of collectability or other unfavorable features and (iv) deposit transactions with the Bank made in the ordinary course of business and not paying a greater rate of interest on the deposits of a related person than the rate paid to other depositors on similar deposits with the Bank.
Certain of our directors and executive officers and certain members of their immediate families have received extensions of credit from us in connection with credit card transactions. The extensions of credit were made in the ordinary course of business on substantially the same terms, including interest rates, as those prevailing at the time for comparable transactions with other persons not related to us and did not involve more than the normal risk of collectability or present other unfavorable terms. Future extensions of credit of this nature are not subject to the related person transaction approval policy.
59
| | | | | | | | | FREQUENTLY ASKED QUESTIONS
ABOUT THE ANNUAL MEETING (“FAQs”)
|
VOTING INFORMATION
Who is entitled to vote at the Annual Meeting?
Holders of our common stock as of the close of business on the record date, which is March 23, 2017, are entitled to notice of, and to vote at, the Annual Meeting. As of the record date, there were 810,804,845 shares of our common stock outstanding and entitled to vote at the Annual Meeting, with each share entitled to one vote.
How do I vote at the Annual Meeting?
Stockholders of record can vote in one of four ways:
| | | 
| | BY MAIL | | You may date, sign and promptly return your proxy card by mail in a postage prepaid envelope (such proxy card must be received by May 17, 2017).
| 
| | BY TELEPHONE
You may use the toll-free telephone number shown on your Notice or proxy card up until 11:59 p.m., Eastern Time, on May 17, 2017.
| | 
| | BY THE INTERNET
| | In Advance
| | You may visit the internet website indicated on your Notice or proxy card or scan the QR code indicated on your Notice or proxy card with your mobile device, and follow theon-screen instructions until 11:59 p.m., Eastern Time, on May 17, 2017. | | | | | At the Annual Meeting | | | You may visit the internet website at the following address: www.virtualshareholdermeeting.com/SYF2017. |
Voting instructions (including instructions for both telephonic and internet voting) are provided on the Notice and the proxy card. The telephone and internet voting procedures are designed to authenticate stockholder identities, to allow stockholders to give voting instructions and to confirm that stockholders’ instructions have been recorded properly. A control number, located on the Notice and the proxy card, will identify stockholders and allow them to submit their proxies and confirm that their voting instructions have been properly recorded.
If your shares are held through a bank, broker, fiduciary or custodian (which we refer to in this proxy statement as a “broker”), please follow the voting instructions on the form you receive from such institution.
What if my shares of the Company’s common stock are held for me by a broker?
If you are the beneficial owner of shares held for you by a broker, your broker must vote those shares in accordance with your instructions. If you do not provide your broker with instructions as to how to vote such shares, your broker will only be able to vote your shares at its discretion on certain “routine” matters as permitted by NYSE rules. The proposal to ratify the appointment of KPMG is the only proposal considered a routine matter to be presented at the Annual Meeting. Brokers will not be permitted to vote your shares on any of the other matters presented at the Annual Meeting. If you do not provide voting instructions on these matters, including the election of the director nominees named herein, the shares will be considered “brokernon-votes” with respect to such matters.
What if I do not vote or do not indicate how my shares should be voted on my proxy card?
If a stockholder does not return a signed proxy card or submit a proxy by telephone or the internet, and does not attend the meeting and vote, his or her shares will not be voted or counted as present for purposes of establishing a quorum at the Annual Meeting. Shares of our common stock represented by properly executed proxies received by us and not subsequently revoked will be voted at the Annual Meeting in accordance with the instructions contained therein.
60
If you submit a properly completed proxy but do not indicate how your shares should be voted on a proposal, the shares represented by your proxy will be voted as the Board recommends on such proposal.In addition, if any other matter is properly presented at the Annual Meeting, the persons named in the accompanying proxy card will have discretion to vote in their best judgment on such matter.
How can I change my votes or revoke my proxy after I have voted?
Any proxy signed and returned by a stockholder or submitted by telephone or via the internet may be revoked or changed at any time before it is exercised by mailing a written notice of revocation or change to our Corporate Secretary at Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902 or by executing and delivering a later-dated proxy (either in writing, by telephone or via the internet).
Will my votes be publicly disclosed?
No. Stockholder proxies, ballots and tabulations that identify individual stockholders are not publicly disclosed and are available only to the inspector of election and certain employees, who are obligated to keep such information confidential.
What if other matters come up during the Annual Meeting?
If any other matters properly come before the meeting, including a question of adjourning or postponing the meeting, the persons named in the proxies or their substitutes acting thereunder will have discretion to vote on such matters in accordance with their best judgment.
What constitutes a quorum at the Annual Meeting?
The presence at the Annual Meeting, in person or represented by proxy, of the holders of a majority in voting power of the outstanding capital stock issued and entitled to vote at the Annual Meeting is required to constitute a quorum to transact business at the Annual Meeting. Abstentions are counted for purposes of determining whether a quorum is present. As explained above under “What if my shares of the Company’s common stock are held for me by a broker?,” if brokers exercise their discretionary voting authority on the ratification of the appointment of KPMG, such shares will be considered present at the Annual Meeting for quorum purposes and brokernon-votes will occur as to each of the other proposals presented at the Annual Meeting.
How many votes are required to approve each matter to be considered at the Annual Meeting?
| | | | | | | Voting Item
| | Voting Standard
| | Treatment of Abstentions
and BrokerNon-Votes
| | Board
Recommendation
| Election of directors named in this proxy statement
| | Majority of votes cast
| | Not counted as votes cast and therefore will have no effect
| | FOR
| | | | | Advisory approval of our named executives’ compensation
| | Majority of votes cast | | Not counted as votes cast and therefore will have no effect | | FOR | | | | | Approve the adoption of the amendment to the Synchrony Financial 2014 Long-Term Incentive Plan andre-approval of performance measures
| | Majority of votes cast | | Abstentions are counted as votes cast pursuant to NYSE stockholder approval rules applicable to this proposal and will have the same effect as a vote cast against the proposal; brokernon-votes are not counted as votes cast and therefore will have no effect | | FOR | | | | | Auditor ratification
| | Majority of votes cast | | Not counted as votes cast and therefore will have no effect | | FOR |
61
Who will count the vote?
Votes will be tabulated by Broadridge. The Board has appointed a representative of Broadridge to serve as the Inspector of Elections.
Will a list of stockholders be made available?
We will make a list of stockholders available for 10 days prior to the Annual Meeting at our offices located at 777 Long Ridge Road, Stamford, Connecticut 06902. Please contact Synchrony’s Corporate Secretary by telephone at (203)585-2400 if you wish to inspect the list of stockholders prior to the Annual Meeting. This list will also be available during the Annual Meeting at www.virtualshareholdermeeting.com/SYF2017.
PROXY SOLICITATION AND DOCUMENT REQUEST INFORMATION
Why did I receive a Notice of Internet Availability of Proxy Materials instead of printed proxy materials?
The SEC permits companies to furnish proxy materials to stockholders by providing access to these documents over the internet instead of mailing printed copies, which can reduce costs of printing and impact on the environment. Accordingly, we have mailed a Notice to some of our stockholders. All stockholders can access our proxy materials on the internet website referred to in the Notice. If you received a Notice and would like to receive a printed copy of our proxy materials, you should follow the instructions for obtaining such materials included in the Notice.
Multiple individuals residing at my address are beneficial owners of the Company’s common stock, so why did we receive only one mailing?
The SEC permits companies to deliver a single Notice or set of Annual Meeting materials to an address shared by two or more stockholders. This delivery method is referred to as “householding.” We have delivered only one such Notice or set of Annual Meeting materials to some stockholders who share an address, unless we received contrary instructions from the affected stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of such Notice or Annual Meeting materials to any stockholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of such Notice or Annual Meeting materials, please contact our Corporate Secretary by telephone at (203)585-2400 or in writing at Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902.
If you are currently a stockholder sharing an address with another stockholder receiving multiple copies of Notices or Annual Meeting materials and wish to receive only one copy for your household, please contact the Company at the above phone number or address.
62
Who is soliciting my proxy and who pays to prepare, mail and solicit the proxies?
The Board is soliciting proxies from the Company’s stockholders for the Annual Meeting. We will bear the costs of solicitation of proxies for the Annual Meeting, including preparation, assembly, printing and mailing of the Notice, this proxy statement, the annual report, the proxy card and any additional information furnished to stockholders. We may reimburse persons representing beneficial owners of common stock for their costs of forwarding any solicitation materials to such beneficial owners. However, we do not reimburse or pay additional compensation to our own directors, officers or other employees for soliciting proxies. In addition, we have retained Georgeson, LLC to assist us in the solicitation of proxies for an aggregate fee of $15,000, plus reasonableout-of-pocket expenses.
INFORMATION ABOUT ATTENDING THE 2017 ANNUAL MEETING
How can I attend the Annual Meeting?
Stockholders as of the record date and/or their authorized representatives are permitted to attend our Annual Meeting. The Annual Meeting will be conducted entirely over an internet website, at the following address: www.virtualshareholdermeeting.com/SYF2017. Hosting a virtual meeting enables increased stockholder attendance and participation because stockholders can participate from any location. You may attend the Annual Meeting, vote and submit a question during the Annual Meeting by visiting www.virtualshareholdermeeting.com/SYF2017 and using your16-digit control number, located on the Notice and the proxy card, to enter the meeting.
63
OTHER BUSINESS
The Board has no knowledge of any other matter to be submitted at the Annual Meeting. If any other matter shall properly come before the Annual Meeting, including a question of adjourning or postponing the meeting, the persons named in this proxy statement will have discretionary authority to vote the shares thereby represented in accordance with their best judgment.
ANNUAL REPORT AND COMPANY INFORMATION
A copy of our 2016 Annual Report is being furnished to stockholders concurrently herewith. Our Annual Report and other reports we file with the SEC are available free of charge on our website as soon as reasonably practicable after they are electronically filed or furnished to the SEC at http://investors.synchronyfinancial.com under “SEC Filings.”
STOCKHOLDER PROPOSALS FOR THE 2018 ANNUAL MEETING
Proposals that stockholders wish to submit for inclusion in our proxy statement for our 2018 annual meeting of stockholders pursuant to Rule14a-8 under the Exchange Act must be received by our Corporate Secretary at Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902 no later than December 5, 2017. Any stockholder proposal submitted for inclusion must be eligible for inclusion in our proxy statement in accordance with the rules and regulations promulgated by the SEC.
With respect to proposals submitted by a stockholder for consideration at our 2018 annual meeting but not for inclusion in our proxy statement for such annual meeting, timely notice of any stockholder proposal must be received by us in accordance with our Bylaws no earlier than January 18, 2018, nor later than February 17, 2018. Such notice must contain the information required by our Bylaws.
Stockholders who intend to submit director nominees for inclusion in our proxy statement for the 2018 annual meeting must comply with the requirements of proxy access as set forth in our Bylaws. The stockholder or group of stockholders who wish to submit director nominees pursuant to proxy access must deliver the required materials to the Company not earlier than November 5, 2017, nor later than December 5, 2017. Stockholders who wish to propose director nominees at the 2018 annual meeting but not include such nominees in our proxy statement must deliver notice to the Company at its principal executive offices no earlier than January 18, 2018, nor later than February 17, 2018, and such notice must otherwise comply with our Bylaws.
IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE 2017 ANNUAL MEETING TO BE HELD ON MAY 18, 2017
Our proxy materials relating to our Annual Meeting (notice, proxy statement and annual report) are available at www.proxyvote.com.
64
| | | APPENDIX A: SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
|
SYNCHRONY FINANCIAL AMENDED AND RESTATED
2014 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE
The purposes of this Amended and Restated Synchrony Financial 2014 Long-Term Incentive Plan (the “Plan”) are to encourage selected officers, employees,non-employee directors and consultants of Synchrony Financial (together with any successor thereto, the “Company”) and its Affiliates (as defined below) to acquire a proprietary interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of the Company for the benefit of its shareowners, and to enhance the ability of the Company and its Affiliates to attract and retain exceptionally qualified individuals upon whom, in large measure, the sustained progress, growth and profitability of the Company depend.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth below:
| (a) | “Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, as determined by the Committee. |
| (b) | “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, or Other Stock-Based Award granted under the Plan. |
| (c) | “Award Agreement” shall mean any written agreement, contract, or other instrument or document, including an electronic communication, as may from time to time be designated by the Company as evidencing any Award granted under the Plan. |
| (d) | “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. |
| (e) | “Committee” shall mean a committee of the Board of Directors of the Company, acting in accordance with the provisions of Section 3, designated by the Board to administer the Plan and composed of not less than twonon-employee directors. |
| (f) | “Dividend Equivalent” shall mean any right granted under Section 6(e) of the Plan. |
| (g) | “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. |
| (h) | “Fair Market Value” shall mean, with respect to any Shares or other securities, the closing price of a Share on the date as of which the determination is being made as reported on the principal national stock exchange on which the Shares are then traded or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if the Shares are not listed on a national stock exchange or if the closing price of a Share for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate and, to the extent applicable, in compliance with Section 409A of the Code; provided, further, in the case of grants made in connection with the Initial Public Offering, Fair Market Value shall mean the price per Share at which the Shares are initially offered for sale to the public by the Company’s underwriters in the Initial Public Offering. |
| (i) | “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Sections 422 of the Code, or any successor provision thereto. |
| (j) | “Initial Public Offering” shall mean the initial public offering of the Company registered on FormS-1 (or any successor form under the Securities Act of 1933, as amended). |
| (k) | “Non-Employee Director” shall mean any director of the Company who is not an officer or employee of the Company or any Affiliate. |
| (l) | “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. |
65
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
| (m) | “Option” shall mean an Incentive Stock Option or aNon-Qualified Stock Option. |
| (n) | “Other Stock-Based Award” shall mean any right granted under Section 6(f) of the Plan. |
| (o) | “Participant” shall mean an officer, employee or consultant of the Company or any of its Affiliates or aNon-Employee Director, in each case, as designated to be granted an Award under the Plan. |
| (p) | “Performance Award” shall mean any right granted under Section 6(d) of the Plan. |
| (q) | “Performance Criteria” shall mean any quantitative and/or qualitative measures, as determined by the Committee, which may be used to measure the level of performance of the Company or any individual Participant during a Performance Period, including any Qualifying Performance Criteria. |
| (r) | “Performance Period” shall mean any period as determined by the Committee in its sole discretion. |
| (s) | “Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof. |
| (t) | “Qualifying Performance Criteria” shall mean, to the extent necessary to qualify an Award as “performance-based compensation” under Section 162(m) of the Code, one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the company as a whole or to a business unit or related company, and measured on an absolute basis or relative to apre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee in the Award: purchase volume; loan receivables; Tier 1 common ratio; liquidity as a percentage of total assets; liquidity coverage ratio; tangible common equity to tangible assets ratio; platform revenue; net earnings; earnings per share; diluted earnings per share; return on average assets; return on capital or invested capital; return on equity; cash flow; gross or operating profit and margin rate; net interest margin; other expense efficiency; active accounts; new accounts; the attainment by a Share of a specified Fair Market Value for a specified period of time; increase in stockholder value; return on investments; total stockholder return; earnings or income of the Company before or after taxes and/or interest; earnings before interest, taxes, depreciation and amortization (“EBITDA”); EBITDA margin; operating income; operating expenses, attainment of expense levels or cost reduction goals; net charge-offs and netcharge-off percent; delinquency rates; won, lost and extended deals; market share; interest expense; economic value created; net cash provided by operations;price-to-earnings growth; and strategic business criteria, consisting of one or more objectives based on meeting specified goals relating to compliance, market penetration, customer acquisition, business expansion, cost targets, customer satisfaction, reductions in errors and omissions, reductions in lost business, management of employment practices and employee benefits, supervision of litigation and information technology, quality and quality audit scores, efficiency, and acquisitions or divestitures, or any combination of the foregoing. The applicable performance measures may be applied on apre- orpost-tax basis and may be adjusted in accordance with Section 162(m) of the Code to include or exclude objectively determinable components of any performance measure, including, without limitation, charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence, related to the disposal of a segment or a business, or related to a change in accounting principle or otherwise. With respect to Participants who are not “covered employees” within the meaning of Section 162(m) of the Code and who, in the Committee’s judgment, are not likely to be covered employees at any time during the applicable Performance Period or during any period in which an award may be paid following a Performance Period, the Performance Criteria may consist of any objective or subjective corporate-wide or subsidiary, division, operating unit or individual measures, whether or not listed herein. If the Committee determines that it is advisable to grant Awards that are not intended to qualify as performance-based compensation under Section 162(m) of the Code, the Committee may grant such award without satisfying the requirements of Section 162(m) of the Code and that use Performance Criteria other than those specified herein. |
| (u) | “Restricted Securities” shall mean Awards of Restricted Stock or other Awards under which issued and outstanding Shares are held subject to certain restrictions. |
| (v) | “Restricted Stock” shall mean any award of Shares granted under Section 6(c) of the Plan. |
| (w) | “Restricted Stock Unit” shall mean any right granted under Section 6(c) of the Plan that is denominated in Shares. |
| (x) | “Shares” shall mean the common shares of the Company, $0.01 par value, and such other securities as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 4(b) of the Plan. |
| (y) | “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan. |
66
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
SECTION 3. ADMINISTRATION
Except as otherwise provided herein, the Plan shall be administered by the Committee, which shall have the power to interpret the Plan and to adopt such rules and guidelines for implementing the terms of the Plan as it may deem appropriate. The Committee shall have the ability to modify the Plan provisions, to the extent necessary, or delegate such authority, to accommodate any changes in law and regulations in jurisdictions in which Participants will receive Awards.
| (a) | Subject to the terms of the Plan and applicable law, the Committee shall have full power and authority to: |
| (i) | designate Participants; |
| (ii) | determine the type or types of Awards to be granted to each Participant under the Plan; |
| (iii) | determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards; |
| (iv) | determine the terms and conditions of any Award, including any restrictive covenants, clawback or recoupment provisions or requirements that a Participant execute a waiver and release; |
| (v) | determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, or other Awards, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; |
| (vi) | determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; |
| (vii) | interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; |
| (viii) | establish, amend, suspend, or waive such rules and guidelines; |
| (ix) | appoint such agents as it shall deem appropriate for the proper administration of the Plan; |
| (x) | make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and |
| (xi) | correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry the Plan into effect. |
| (b) | Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, any shareowner, and any employee of the Company or of any Affiliate. To the extent permitted by Section 162(m) of the Code and Section 16 of the Exchange Act, actions of the Committee may be taken by: |
| (i) | the Chairman of the Committee; |
| (ii) | a subcommittee, designated by the Committee; |
| (iii) | the Committee but with one or more members abstaining or recusing himself or herself from acting on the matter, so long as two or more members remain to act on the matter. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such members, shall be the action of the Committee for purposes of the Plan; or |
| (iv) | one or more officers or managers of the Company or any Affiliate, or a committee of such officers or managers whose authority is subject to such terms and limitations set forth by the Committee, and only with respect to employees who are not officers orNon-Employee Directors of the Company for purposes of Section 16 of the Exchange Act. This delegation shall include modifications necessary to accommodate changes in the laws or regulations of jurisdictions outside the U.S. |
67
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
SECTION 4. SHARES AVAILABLE FOR AWARDS
| (a) | SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b): |
| (i) | The total number of Shares reserved and available for delivery pursuant to Awards granted under the Plan shall be 62,605,417. If any Shares covered by an Award granted under the Plan, or to which such an Award relates, are forfeited, or if an Award otherwise terminates without the delivery of Shares or of other consideration, or if an Award is settled in cash, then the Shares covered by such Award, or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture, termination or cash settlement, shall again be available for granting Awards under the Plan. The full number of Shares available for delivery under the Plan may be delivered pursuant to Incentive Stock Options, except that in calculating the number of Shares that remain available for Awards of Incentive Stock Options, the rules set forth in this Section shall not apply to the extent not permitted by Section 422 of the Code. |
| (ii) | ACCOUNTING FOR AWARDS. For purposes of this Section 4, |
| (A) | If an Award (other than a Dividend Equivalent) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan; provided, however that if an Award is settled or paid by the Company in whole or in part through the delivery of consideration other than Shares, or by delivery of fewer than the full number of Shares that was counted against the Shares available for delivery as provided above, there shall be added back to the number of Shares available for delivery pursuant to Awards the excess of the number of Shares that had been so counted over the number of Shares (if any) actually delivered upon payment or settlement of the Award (including with respect to Awards that are outstanding as of the effective date of the amendment and restatement of the Plan). |
| (B) | If an Award is not denominated in Shares, the number of Shares available for delivery shall be reduced by the number of Shares actually delivered upon payment or settlement of the Award. |
| (C) | Dividend Equivalents denominated in Shares and Awards not denominated, but potentially payable, in Shares shall be counted against the aggregate number of Shares available for granting Awards under the Plan in such amount and at such time as the Dividend Equivalents and such Awards are settled in Shares; provided, however, that Awards that operate in tandem with (whether granted simultaneously with or at a different time from), or that are substituted for, other Awards may only be counted once against the aggregate number of Shares available, and the Committee shall adopt procedures, as it deems appropriate, in order to avoid double counting. Any Shares that are delivered by the Company, and any Awards that are granted by, or become obligations of, the Company through the assumption by the Company or an Affiliate of, or in substitution for, outstanding awards previously granted by an acquired company, shall not be counted against the Shares available for granting Awards under this Plan. |
| (D) | Notwithstanding anything herein to the contrary, any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are: (x) Shares that were subject to an Option or a stock-settled Stock Appreciation Right and were not issued upon the net settlement or net exercise of such Option or Stock Appreciation Right, (y) Shares delivered to or withheld by the Company to pay the exercise price or the withholding taxes under Options or Stock Appreciation Rights, or (z) Shares repurchased on the open market with the proceeds of an Option exercise. Shares delivered to or withheld by the Company to pay the withholding taxes for Awards other than Options and Stock Appreciation Rights shall again be available for issuance under this Plan. |
| (iii) | SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares. |
68
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
| (i) | In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, or other securities), 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, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event constitutes an equity restructuring transaction, as that term is defined in the Accounting Standards Codification 718 (or any successor accounting standard) or otherwise affects the Shares, then the Committee shall adjust the following in a manner that is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan: |
| (A) | the number and type of Shares or other securities which thereafter may be made the subject of Awards; |
| (B) | the number and type of Shares or other securities subject to outstanding Awards; |
| (C) | the number and type of Shares or other securities specified as the annualper-participant limitation under Section 6(g)(v) and (vi); |
| (D) | the grant, purchase, or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; and |
| (E) | other value determinations applicable to outstanding awards. |
Provided, however, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Sections 422(b)(1) of the Code or any successor provision thereto and, with respect to Awards of Stock Appreciation Rights and Options, such adjustment shall be in accordance with Section 409A of the Code; and provided further, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.
| (ii) | ADJUSTMENTS OF AWARDS UPON CERTAIN ACQUISITIONS. In the event the Company or any Affiliate shall assume outstanding employee awards or the right or obligation to make future such awards in connection with the acquisition of another business or another corporation or business entity, the Committee may make such adjustments, not inconsistent with the terms of the Plan, in the terms of Awards as it shall deem appropriate in order to achieve reasonable comparability or other equitable relationship between the assumed awards and the Awards granted under the Plan as so adjusted. |
| (iii) | ADJUSTMENTS OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING EVENTS. The Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits to be made available under the Plan. |
SECTION 5. ELIGIBILITY
Any officer, employee or consultant of the Company or of any Affiliate and anyNon-Employee Director shall be eligible to be designated a Participant.
69
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
SECTION 6. AWARDS
| (a) | OPTIONS. The Committee is hereby authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine: |
| (i) | EXERCISE PRICE. The purchase price per Share purchasable under an Option shall be determined by the Committee; provided, however, and except as provided in Section 4(b), that such purchase price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option. |
| (ii) | OPTION TERM. The term of each Option shall not exceed ten (10) years from the date of grant. |
| (iii) | TIME AND METHOD OF EXERCISE. The Committee shall establish in the applicable Award Agreement the time or times at which an Option may be exercised in whole or in part, and the method or methods by which, and the form or forms, including, without limitation, cash, Shares, or other Awards, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which, payment of the exercise price with respect thereto may be made or deemed to have been made. |
| (iv) | INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Option granted under the Plan shall be designed to comply in all respects with the provisions of Sections 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder. Notwithstanding anything in this Section 6(a) to the contrary, Options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to beNon-Qualified Stock Options) to the extent that either (1) the aggregate Fair Market Value of Shares (determined as of the time of grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (2) such Options otherwise remain exercisable but are not exercised within three (3) months of termination of employment (or such other period of time provided in Section 422 of the Code). |
| (b) | STOCK APPRECIATION RIGHTS. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants. Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the right as specified by the Committee. |
| (i) | GRANT PRICE. Shall be determined by the Committee, provided, however, and except as provided in Section 4(b), that such price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right, except that if a Stock Appreciation Right is at any time granted in tandem to an Option, the grant price of the Stock Appreciation Right shall not be less than the exercise price of such Option. |
| (ii) | TERM. The term of each Stock Appreciation Right shall not exceed ten (10) years from the date of grant. |
| (iii) | TIME AND METHOD OF EXERCISE. The Committee shall establish in the applicable Award Agreement the time or times at which a Stock Appreciation Right may be exercised in whole or in part. |
| (c) | RESTRICTED STOCK AND RESTRICTED STOCK UNITS. |
| (i) | ISSUANCE. The Committee is hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units to Participants. Subject to the terms of the Plan or the applicable Award Agreement, a Restricted Stock Unit may be payable in Shares or cash. |
| (ii) | RESTRICTIONS. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may establish in the applicable Award Agreement (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be delivered to the holder of Restricted Stock promptly after such restrictions have lapsed. |
70
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
| (iii) | REGISTRATION. Any Restricted Stock or Restricted Stock Units granted under the Plan may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. |
| (iv) | FORFEITURE. Upon termination of employment during the applicable restriction period, except as determined otherwise by the Committee, all Shares of Restricted Stock and all Restricted Stock Units still, in either case, subject to restriction shall be forfeited and reacquired by the Company. |
| (d) | PERFORMANCE AWARDS. The Committee is hereby authorized to grant Performance Awards to Participants. Performance Awards include arrangements under which the grant, issuance, retention, vesting and/or transferability of any Award is subject to such Performance Criteria and such additional conditions or terms as the Committee may designate. Subject to the terms of the Plan and any applicable Award Agreement, a Performance Award granted under the Plan: |
| (i) | may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, or other Awards; and |
| (ii) | shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such Performance Criteria during such Performance Periods as the Committee shall establish. |
| (e) | DIVIDEND EQUIVALENTS. The Committee is hereby authorized to grant to Participants Awards under which the holders thereof shall be entitled to receive payments equivalent to dividends or interest with respect to a number of Shares determined by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Subject to the terms of the Plan and any applicable Award Agreement, such Awards may have such terms and conditions as the Committee shall determine; provided, however, any Dividend Equivalents with respect to Awards subject to performance-based vesting conditions shall be subject to the same restrictions as the underlying Awards. |
| (f) | OTHER STOCK-BASED AWARDS. The Committee is hereby authorized to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purposes of the Plan, provided, however, that such grants must comply with applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase right granted under this Section 6(f) shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, other securities, or other Awards, or any combination thereof, as the Committee shall determine, the value of which consideration, as established by the Committee, and except as provided in Section 4(b), shall not be less than the Fair Market Value of such Shares or other securities as of the date such purchase right is granted. |
| (i) | NO CASH CONSIDERATION FOR AWARDS. Awards shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law. |
| (ii) | AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards. |
71
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
| (iii) | FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, rights in or to Shares issuable under the Award or other Awards, other securities, or other Awards, or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments. |
| (iv) | LIMITS ON TRANSFER OF AWARDS. Except as provided by the Committee, no Award and no right under any such Award, shall be assignable, alienable, saleable, or transferable by a Participant otherwise than by will or by the laws of descent and distribution; provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant with respect to any Award upon the death of the Participant. Each Award, and each right under any Award, shall be exercisable, during the Participant’s lifetime, only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative. No Award and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. |
| (v) | PER-PERSON LIMITATION ON OPTIONS AND SARs. The number of Shares with respect to which Options and Stock Appreciation Rights may be granted under the Plan during any fiscal year to an individual Participant shall not exceed 3,000,000 Shares, subject to adjustment as provided in Section 4(b). |
| (vi) | PER-PERSON LIMITATION ON CERTAIN AWARDS. Other than Options and Stock Appreciation Rights, (A) the aggregate number of Shares with respect to which Restricted Stock, Restricted Stock Units, Performance Awards and Other Stock-Based Awards may be granted under the Plan during any fiscal year to an individual Participant shall not exceed 1,000,000 Shares, subject to adjustment as provided in Section 4(b) and (B) with respect to Awards denominated in cash, the maximum amount that may be earned during any fiscal year by an individual Participant shall not exceed $20,000,000. The aggregate grant date fair value of the Awards that may be granted to anyNon-Employee Director in any fiscal year shall not exceed $500,000. |
| (vii) | CONDITIONS AND RESTRICTIONS UPON SECURITIES SUBJECT TO AWARDS. The Committee may provide that the Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability and forfeiture or repurchase provisions or provisions on payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of anyre-sales by the Participant or other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation: (A) restrictions under an insider trading policy or pursuant to applicable law, (B) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and holders of other Company equity compensation arrangements, (C) restrictions as to the use of a specified brokerage firm for suchre-sales or other transfers and (D) provisions requiring Shares to be sold on the open market or to the Company in order to satisfy tax withholding or other obligations. |
| (viii) | SHARE CERTIFICATES. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal, state, or local securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. |
72
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
SECTION 7. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Plan:
| (a) | AMENDMENTS TO THE PLAN. The Board of Directors of the Company may amend, alter, suspend, discontinue, or terminate the Plan, in whole or in part; provided, however, that without the prior approval of the Company’s shareowners, no material amendment shall be made if shareowner approval is required by law, regulation, or stock exchange, and; provided, further, that, notwithstanding any other provision of the Plan or any Award Agreement, no such amendment, alteration, suspension, discontinuation, or termination shall be made without the approval of the shareowners of the Company that would: |
| (i) | increase the total number of Shares available for Awards under the Plan, except as provided in Section 4 hereof; or |
| (ii) | except as provided in Section 4(b), permit Options, Stock Appreciation Rights, or other Stock-Based Awards encompassing rights to purchase Shares to bere-priced, replaced, orre-granted through cancellation, or by lowering the Option Price of a previously granted Option or the grant price of a previously granted Stock Appreciation Right, or the purchase price of a previously granted Other Stock-Based Award. |
| (b) | AMENDMENTS TO AWARDS. The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue, or terminate, any Awards theretofore granted, prospectively or retroactively. No such amendment or alteration shall be made which would impair the rights of any Participant, without such Participant’s consent, under any Award theretofore granted, provided that no such consent shall be required with respect to any amendment or alteration if the Committee determines in its sole discretion that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy or conform to any law or regulation or to meet the requirements of any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award. |
SECTION 8. GENERAL PROVISIONS
| (a) | NO RIGHTS TO AWARDS. No Participant or other Person shall have any claim to be granted any Award under the Plan, or, having been selected to receive an Award under this Plan, to be selected to receive a future Award, and further there is no obligation for uniformity of treatment of employees or consultants of the Company or any Affiliates,Non-Employee Directors, Participants, or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient. |
| (b) | WITHHOLDING. The Company or any Affiliate shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Plan the amount (in cash, Shares, other securities, or other Awards) of withholding taxes due in respect of an Award, its exercise, or any payment or transfer under such Award or under the Plan and to take such other action as may be necessary in the opinion of the Company or Affiliate to satisfy statutory withholding obligations for the payment of such taxes. |
| (c) | NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. |
| (d) | NO RIGHT TO EMPLOYMENT. The grant of an Award shall not constitute an employment contract nor be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement. |
| (e) | GOVERNING LAW. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable Federal law without regard to conflict of law. |
73
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
| (f) | SEVERABILITY. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan and any such Award shall remain in full force and effect. |
| (g) | NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. |
| (h) | NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated. |
| (i) | HEADINGS. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. |
| (j) | INDEMNIFICATION. Subject to requirements of Delaware State law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with Section 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability, or expense is a result of his/her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. |
| (k) | COMPLIANCE WITH SECTION 409A OF THE CODE. Except to the extent specifically provided otherwise by the Committee, Awards under the Plan are intended to satisfy the requirements of Section 409A of the Code (and the Treasury Department guidance and regulations issued thereunder) so as to avoid the imposition of any additional taxes or penalties under Section 409A of the Code. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Section 409A of the Code, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Section 409A of the Code to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant. |
| (l) | NO REPRESENTATIONS OR COVENANTS WITH RESPECT TO TAX QUALIFICATION. Although the Company may endeavor to (i) qualify an Award for favorable U.S. or foreign tax treatment (e.g., incentive stock options under Section 422 of the Code) or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on holders of Awards under the Plan. |
74
| | | | | | | SYNCHRONY FINANCIAL 2014 LONG-TERM INCENTIVE PLAN, AS AMENDED
| | | | | | | | | | |
| (m) | AWARDS TONON-U.S. EMPLOYEES. The Committee shall have the power and authority to determine which Affiliates shall be covered by this Plan and which employees outside the U.S. shall be eligible to participate in the Plan. The Committee may adopt, amend or rescind rules, procedures orsub-plans relating to the operation and administration of the Plan to accommodate the specific requirements of local laws, procedures, and practices. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules, procedures andsub-plans with provisions that limit or modify rights on death, disability or retirement or on termination of employment; available methods of exercise or settlement of an award; payment of income, social insurance contributions and payroll taxes; the withholding procedures and handling of any stock certificates or other indicia of ownership which vary with local requirements. The Committee may also adopt rules, procedures orsub-plans applicable to particular Affiliates or locations. |
| (n) | COMPLIANCE WITH LAWS. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges on which the Company is listed as may be required. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to: |
| (i) | obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and |
| (ii) | completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable or at a time when any such registration or qualification is not current, has been suspended or otherwise has ceased to be effective. |
The inability or impracticability of the Company to obtain or maintain 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 shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
| (o) | AWARDS SUBJECT TO CLAWBACK. The Awards granted under this Plan and any cash payment or Shares delivered pursuant to an Award are subject to forfeiture, recovery by the Company or other action pursuant to the applicable Award Agreement or any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law. |
SECTION 9. EFFECTIVE DATE; STOCKHOLDER APPROVAL
The Plan, as amended and restated, shall be submitted to the stockholders of the Company for approval at the Company’s 2017 annual meeting of stockholders and, if so approved, the Plan, as amended and restated, shall become effective as of the date of such approval. In the event that this Plan is not approved by the stockholders of the Company, this Plan, as amended and restated, shall be void and of no force or effect.
SECTION 10. TERM OF THE PLAN
No Award shall be granted under the Plan on or after the date that is ten years from the date of the adoption of the Plan. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date, and the authority of the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award, or to waive any conditions or rights under any such Award, and the authority of the Board of Directors of the Company to amend the Plan, shall extend beyond such date.
75
[THIS PAGE INTENTIONALLY LEFT BLANK]
76
| | | | | SYNCHRONY FINANCIAL
777 LONG RIDGE ROAD
STAMFORD, CT 06902
| | 
| | | | VOTE BY INTERNET
Before The Meeting - Go towww.proxyvote.comor scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
| | | | During The Meeting - Go towww.virtualshareholdermeeting.com/SYF2017
You may attend the Meeting via the internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
| | | | VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
| | | | VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
If you vote your proxy by internet or telephone, you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
| | |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E23463-P90076
| | | E69569-P21652 | | KEEP THIS PORTION FOR YOUR RECORDS — — — — — — —��— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | | | | | | | | | | | | | | | | | | | | | | | | | | SYNCHRONY FINANCIAL
| | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends a vote FOR all nominees and FOR Items 2, 3 and 4.
| | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors
| | | | | | | | | | | | | | | | | | | | | | | | | | Nominees:
| | | | For
| | Against
| | Abstain
| | | | | | | | | | | | | | | | | | | 1a. Margaret M. Keane
1b. Paget L. Alves
1c. Arthur W. Coviello, Jr.
1d. William W. Graylin
1e. Roy A. Guthrie
1f. Richard C. Hartnack
1g. Jeffrey G. Naylor
1h. Laurel J. Richie
1i. Olympia J. Snowe
| | ☐
☐
☐
☐
☐
☐
☐
☐
☐
| | ☐
☐
☐
☐
☐
☐
☐
☐
☐
| | ☐
☐
☐
☐
☐
☐
☐
☐
☐
| | | | 2. Advisory Vote to Approve Named Executive Officer Compensation
3. Approve the Adoption of the Amendment to the Synchrony Financial 2014 Long-Term Incentive Plan and Re-Approval of Performance Measures
4. Ratification of Selection of KPMG LLP as Independent Registered Public Accounting Firm of the Company for 2017
NOTE: Any other matters that may properly come before the meeting or any adjournments or postponements of the meeting.
| | For
☐
☐
☐
| | Against
☐
☐
☐
| | Abstain
☐
☐
☐
| | | | | For address changes and/or comments, please check this box and write them on the back where indicated.
| | ☐
| | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
| | | | All shares will be voted as instructed above. In the absence of instructions, all shares will be voted with respect to registered stockholders that return a signed proxy card, FOR all nominees listed in Item 1, FOR Item 2, FOR Item 3, and FOR Item 4.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX]
| | Date
| | | | | | | | Signature (Joint Owners)
| | Date
| | | | | | |
V.1.1
SYNCHRONY FINANCIAL
2017 ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 2017
11:00 A.M., EASTERN TIME
www.virtualshareholdermeeting.com/SYF2017
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING.
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 P.M. Eastern Time on May 17, 2017.
Your internet or telephone vote authorizes the named proxies to vote the shares in the same
manner as if you marked, signed and returned your proxy card.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | E23464-P90076 THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | DETACH AND RETURN THIS PORTION ONLY |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SYNCHRONY FINANCIAL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends a vote FOR all nominees and FOR Items 2 and 3. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nominees: | | | | For | | Against | | Abstain | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1a. | | Margaret M. Keane | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1b. | | Paget L. Alves | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | For | | Against | | Abstain | | | | | | | | | | | | | | | | | | | | | | | | | | | 1c. | | Arthur W. Coviello, Jr. | | | | ☐ | | ☐ | | ☐ | | | | | | 1i. Olympia J. Snowe | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1d. | | William W. Graylin | | | | ☐ | | ☐ | | ☐ | | | | | | 1j. Ellen M. Zane | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1e. | | Roy A. Guthrie | | | | ☐ | | ☐ | | ☐ | | | | 2. | | Advisory Vote to Approve Named Executive Officer Compensation | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1f. | | Richard C. Hartnack | | | | ☐ | | ☐ | | ☐ | | | | 3. | | Ratification of Selection of KPMG LLP as Independent Registered Public Accounting Firm of the Company for 2019 | | ☐ | | ☐ | | ☐ | | | | | | | | | | | 1g. | | Jeffrey G. Naylor | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1h. | | Laurel J. Richie | | | | ☐ | | ☐ | | ☐ | | | | NOTE:Any other matters that may properly come before the meeting or any adjournments or postponements of the meeting. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For address changes and/or comments, please check this box and write them on the back where indicated. | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | All shares will be voted as instructed above. In the absence of instructions, all shares will be voted with respect to registered stockholders that return a signed proxy card, FOR all nominees listed in Item 1, FOR Item 2 and FOR Item 3. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PROXY
FOR ANNUAL MEETING OF STOCKHOLDERS
SYNCHRONY FINANCIAL
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Margaret M. Keane, Brian D. Doubles and Jonathan S. Mothner, and each of them, as proxies, each with full power of substitution, and authorizes them to represent and to vote, as designated on the reverse side of this form, all shares of common stock of Synchrony Financial held of record by the undersigned as of March 23, 2017, at the 2017 Annual Meeting of Stockholders to be held on May 18, 2017, beginning at 11:00 a.m., Eastern Time, at www.virtualshareholdermeeting.com/SYF2017, and in their discretion, upon any matter that may properly come before the meeting or any adjournment of the meeting, in accordance with their best judgment.
If no other indication is made on the reverse side of this form, the proxies shall vote FOR all nominees listed in Item 1, FOR Item 2, FOR Item 3, and FOR Item 4.
This proxy may be revoked at any time prior to the time voting is declared closed by giving the Corporate Secretary of Synchrony Financial written notice of revocation or a subsequently dated proxy, or by casting a ballot at the meeting.
| | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] Date | | | | | | | | Signature (Joint Owners) | | Date | | | | | | | | | | | | | Address Changes/Comments:
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) | | | | | | | | | | | | | Continued and to be signed on reverse side
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SYNCHRONY FINANCIAL 2019 ANNUAL MEETING OF STOCKHOLDERS MAY 23, 2019 11:00 A.M., EASTERN TIME www.virtualshareholdermeeting.com/SYF2019 WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING. BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. Internet and telephone voting is available through 11:59 P.M. Eastern Time on May 22, 2019. Your internet or telephone vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. | | — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | | E69570-P21652 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PROXY | | | | | V.1.1
| | | | FOR ANNUAL MEETING OF STOCKHOLDERS | | | | | | | | | SYNCHRONY FINANCIAL | | | | | | | | | SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS | | | | | | | | | | The undersigned appoints Margaret M. Keane, Brian D. Doubles and Jonathan S. Mothner, and each of them, as proxies, each with full power of substitution, and authorizes them to represent and to vote, as designated on the reverse side of this form, all shares of common stock of Synchrony Financial held of record by the undersigned as of March 28, 2019, at the 2019 Annual Meeting of Stockholders to be held on May 23, 2019, beginning at 11:00 a.m., Eastern Time, at www.virtualshareholdermeeting.com/SYF2019, and in their discretion, upon any matter that may properly come before the meeting or any adjournment of the meeting, in accordance with their best judgment. | | | | | | | | If no other indication is made on the reverse side of this form, the proxies shall vote FOR all nominees listed in Item 1, FOR Item 2 and FOR Item 3. | | | | | | | | This proxy may be revoked at any time prior to the time voting is declared closed by giving the Corporate Secretary of Synchrony Financial written notice of revocation or a subsequently dated proxy, or by casting a ballot at the meeting. | | | | | | | | | | | | | | | | | Address Changes/Comments: | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) | | | | | | | | | | | | | | | | | | Continued and to be signed on reverse side | | | | | | | | | | | | | |
|
The Board recommends a vote FOR approval of the compensation paid to the Company’s
