UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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SLM Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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300 Continental Drive
Newark, Delaware 19713
May 5, 20174, 2018
Dear Fellow Stockholders:
Please join us for the SLM Corporation (“Sallie Mae”) 20172018 Annual Meeting of Stockholders (the “Annual Meeting”) on Thursday, June 22, 2017,21, 2018, at 11:00 a.m. Eastern Daylight Time in our corporate headquarters located at 300 Continental Drive, Newark, Delaware 19713.
In 2016, weWe are pleased 2017 was another solid year as evidenced by customer experience innovations, continued to execute onimprovements in our mission as we helped 348,000 families make college happen,net interest margin, sound credit trends, increased originations of our high-quality student loans, and improved our operating efficiency, ratio as we saw a healthy return on customer experience investments. Duringand an expanding market share, which all contributed to our strong earnings growth. In addition, last year’s tax legislation will increase our earnings, resulting in both higher profits and the past three years, we have made a meaningful shift toward becoming a consumer bank. I am gratified byopportunity to invest in service upgrades, technological efficiencies, and diversified product offerings, all of which will strengthen our franchise for the ongoing results of that effort: disciplined compliance management has cultivated strong working relationships with our regulators, and high credit quality in originations has translated into customer success in repayment.future. I applaud our 1,347more than 1,500 employees and their continued commitment to providing our customers with the best possible experience from application through repayment. Through their exemplary efforts, we have put past regulatory orders behind us and made our customers the center of our efforts. These positive indicators illustrate how Sallie Mae is positioned for continued growth in 2017.making college happen.
Details of the business to be conducted at the Annual Meeting are provided in the attached Notice of Annual Meeting and proxy statement. You are being asked to vote on a number of important matters. Your vote is important, regardless of the number of shares you own, and all holders of our Common Stock are cordially invited to attend the Annual Meeting in person. Whether or not you plan to attend the Annual Meeting, please vote at your earliest convenience by following the instructions in the Notice of Availability of Proxy Materials or the proxy card you received in the mail.
Thank you for your continued support of Sallie Mae.
Sincerely, |
/s/ Raymond J. Quinlan |
Raymond J. Quinlan |
Chairman of the Board of Directors and Chief Executive Officer |
300 Continental Drive
Newark, Delaware 19713
May 5, 20174, 2018
NOTICE OF 20172018 ANNUAL MEETING OF STOCKHOLDERS
To our Stockholders:
SLM Corporation (“Sallie Mae” or the “Company”) will hold its 20172018 Annual Meeting of Stockholders (the “Annual Meeting”) as follows:
Date and Time: | Thursday, June | |
Place: | Sallie Mae’s Corporate Headquarters 300 Continental Drive Newark, Delaware 19713 | |
Items of Business: | (1) Elect 12 directors nominated by the Sallie Mae Board of Directors (“Board of Directors”), each for aone-year term, to serve until their successors have been duly elected and qualified; | |
(2) Approve, on an advisory basis, Sallie Mae’s executive compensation; | ||
(3) Ratify the appointment of KPMG LLP as Sallie Mae’s independent registered public accounting firm for the year ending December 31, | ||
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Record Date: | Stockholders of record of the Company’s Common Stock, par value $.20 per share (“Common Stock”), as of the close of business on April 25, |
Your participation in the Annual Meeting is important. Sallie Mae urges you to take the time to read carefully the proposals described in the proxy statement and vote your proxy at your earliest convenience. You may vote by telephone, Internet or, if you request that proxy materials be mailed to you, by completing and signing the proxy card enclosed with those materials and returning it in the envelope provided. If you wish to attend the meeting in person, you must bring evidence of your ownership as of April 25, 2017,2018, or a valid proxy showing that you are representing a stockholder.
/s/ |
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PROPOSAL 3—RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 10 | |||
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OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS | ||||
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Other Arrangements, Policies and Practices Related to Executive Compensation Programs | ||||
Nominations, Governance and Compensation Committee—Delegation of Authority | ||||
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR | ||||
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300 Continental Drive
Newark, Delaware 19713
The Board of Directors of SLM Corporation (“Sallie Mae,” the “Company,” “we,” “our” or “us”) is furnishing this proxy statement to solicit proxies for use at Sallie Mae’s 20172018 Annual Meeting of Stockholders (the “Annual Meeting”). A copy of the Notice of the Annual Meeting accompanies this proxy statement. This proxy statement is being sent or made available, as applicable, to our stockholders beginning on or about May 5, 2017.4, 2018. For more information regarding the Annual Meeting process, please review the section entitled “Questions and Answers About the Annual Meeting and Voting” contained at the end of this proxy statement.
The proxy statement and Sallie Mae’s Annual Report on Form10-K for the year ended December 31, 20162017 (the “2016“2017 Form10-K”) are available athttp:https://www.salliemae.com/Investors/AnnualReportsinvestors/shareholder-information andhttp:https://materials.proxyvote.com. You may also obtain these materials at the Securities and Exchange Commission (“SEC”) website atwww.sec.gov or by contacting the Office of the Corporate Secretary at the Company’s principal executive offices, located at 300 Continental Drive, Newark, Delaware 19713. Sallie Mae will provide a copy of the 20162017 Form10-K without charge to any stockholder upon written request.
This proxy statement contains fivethree proposals requiring stockholder action, each of which is discussed in more detail below. Proposal 1 seeks the election of 12 directors nominated by the Board of Directors. Proposal 2 seeks approval, on an advisory basis, of Sallie Mae’s executive compensation. Proposal 3 seeks ratification of the appointment of KPMG LLP as Sallie Mae’s independent registered public accounting firm for the fiscal year ending December 31, 2017. Proposal 4 seeks the approval of an amendment to the SLM Corporation 2012 Omnibus Incentive Plan and the material terms of the performance goals under the Plan for purposes of Section 162(m) of the Internal Revenue Code. Proposal 5 seeks approval, on an advisory basis, of the frequency of future advisory votes on executive compensation.2018. Each share of Common Stock is entitled to one vote on each proposal or, in the case of the election of directors, on each nominee.
PROPOSAL 1—ELECTION OF DIRECTORS
The Sallie Mae Board of Directors has nominated and recommends 12 individuals for election to our Board of Directors at the Annual Meeting. These individuals are as follows:
Paul G. Child | Frank C. Puleo | |
Carter Warren Franke | Raymond J. Quinlan | |
Earl A. Goode | Vivian C. Schneck-Last | |
Marianne M. Keler | William N. Shiebler | |
Jim Matheson | Robert S. Strong | |
Jed H. Pitcher | Kirsten O. Wolberg |
The Sallie Mae Board of Directors also nominated Ronald F. Hunt for election to the Board of Directors. As previously reported on March 28, 2017, Mr. Hunt subsequently declined to stand for re-election at the upcoming Annual Meeting. Under our Certificate of Incorporation, the size of our Board of Directors may not be less than 11 nor more than 16 members. Under theBy-Laws, the Board of Directors has the authority to determine the size of the Board of Directors within that range and to fill any vacancies that may arise prior to the next annual meeting of stockholders. The Board of Directors has set the number of members at 12, effective as of the Annual Meeting.12.
Biographical information, qualifications, and experience with respect to each nominee appearsappear below. In addition to fulfilling the general criteria for director nominees described in the section titled “Nominations Process,” each nominee possesses experience, skills, attributes, and other qualifications the Board of Directors has determined support its oversight
and management of Sallie Mae’s business, operations, and structure. These qualifications are discussed below, along with biographical information regarding each member of the Board of Directors, including each individual’s age, principal occupation, and business experience during the past five years. Information concerning each director is based in part on information received from the respective directors and in part from Sallie Mae’s records.
All nominees appearing below have consented to being named in this proxy statement and to serve if elected. Should any nominee subsequently decline or be unable to accept such nomination to serve as a director, the Board of Directors may designate a substitute nominee or the persons voting the shares represented by proxies solicited hereby may vote such shares for a reduced number of nominees. If the Board of Directors designates a substitute nominee, persons named as proxies will vote“FOR” that substitute nominee.
OurBy-Laws provide the election of a director in an uncontested election will be by a majority of the votes cast with respect to a nominee at a meeting for the election of directors at which a quorum is present. Each share of Common Stock is entitled to one vote for each nominee. A director nominee will be elected to the Board of Directors if the number of shares voted“FOR” the nominee exceeds the number of votes cast“AGAINST” the nominee’s election. Abstentions and shares not voted on the proposal, including brokernon-votes, are of no effect.
If any director nominee fails to receive a majority of the votes cast“FOR” his or her election, such nominee will automatically tender his or her resignation upon certification of the election results. The Nominations, Governance and Compensation Committee (the “NGC Committee”) of the Board of Directors will make a recommendation to the Board of Directors on whether to accept or reject such nominee’s resignation. The Sallie Mae Board of Directors will act on the NGC Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of certification of the election results.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Name and Age Service as a Director | Position, Principal Occupation, Business Experience and Directorships | |
Paul G. Child | Former Office Managing Partner, Salt Lake City, Deloitte LLP | |
Director since April | Professional Highlights:
• Office Managing Partner, Salt Lake City, Deloitte LLP—1995 to 2008; Professional Practice Director, Salt Lake City—1989 to 1995; Audit Partner—1983 to 2008; various positions—1971 to 1983
Other Professional and Leadership Experience:
• Director, Sallie Mae Bank—2009 to present • Member, Board of Governors, Salt Lake Chamber of Commerce—2002 to 2008 • Director, Mountainwest Capital Network—2002 to 2008 • Director, United Way of Greater Salt Lake—2001 to 2008
Mr. Child’s leadership roles and experience in the accounting field enable him to bring to the Board of Directors experience in the areas of finance, accounting, financial services, and capital markets. | |
Carter Warren Franke | Former Managing Director, Head of Corporate Marketing, JPMorgan Chase & Co. | |
Director since April | Professional Highlights:
• Managing Director, Head of Corporate Marketing, JPMorgan Chase & Co.—2007 to 2013 • Executive Vice President and Chief Marketing Officer, Chase Card Services—1995 to 2007
Other Professional and Leadership Experience:
• Director, Sallie Mae Bank—2014 to present • Director, The Warfield Fund—2007 to present • Director, Saint Mary’s School—2014 to present • Director, Hobe Sound Community Chest—2017 to present • Director, Paul’s Place—2014 to
Ms. Franke’s leadership roles and experience in marketing and the banking industry enable her to contribute to the Board of Directors experience in the areas of marketing, business development, and financial services. |
Name and Age Service as a Director | Position, Principal Occupation, Business Experience and Directorships | |
Earl A. Goode | Chief of Staff to the Governor of Indiana | |
Director since July | Professional Highlights:
• Chief of Staff to the Governor of Indiana—2006 to 2013; • President, Indianapolis Capital Improvement Board of Managers—2015 to 2016 • Deputy Chief of Staff to the Governor of Indiana—2006 • Commissioner, Department of Administration, State of Indiana—2005 to 2006 • Chairman, Indiana Sports Corporation—2001 to 2006 • President, GTE Information Services and GTE Directories Company—1994 to
Other Professional and Leadership Experience:
• Director, Sallie Mae Bank—2013 to present • Member and Former Chairman, Georgetown College Board of Trustees—2006 to present • Director, Mitch Daniels Leadership Foundation—2012 to present • Vice Chairman, Indiana Motorsports Commission—2015 to 2017 • Member, Executive Committee and Host Committee, 2012 Super Bowl—2009 to 2014
Mr. Goode has held several leadership positions in business services and operations. This experience, combined with his involvement in the state political process, enables him to contribute to the Board of Directors in the areas of marketing and product development, business operations, and political and government affairs. | |
Marianne M. Keler | Attorney, Keler & Kershow, PLLC | |
Director since April | Professional Highlights:
• Attorney, Keler & Kershow, PLLC—2006 to present • Executive Vice President, Consumer Finance, Corporate Strategy & Administration, Sallie Mae—2004 to 2006 • Senior Vice President & General Counsel, Sallie Mae; President, Student Loan Marketing Association—1997 to 2004 • Vice President & Associate General
Other Professional and Leadership Experience:
• Director, Sallie Mae Bank—2010 to present • Board Chair, Building Hope (charter school lender) • Deputy Board Chair, Institute for American Universities—2016 to present • Finance Committee Chair, Institute for American Universities—2008 to 2016 • Board Chair, American University in Bulgaria—2008 to 2014 • Member, Georgetown University Board of Regents—2009 to 2015 • Founding Director, National Student Clearinghouse—1993 to 2009
Directorship of other public companies:
• CubeSmart (NYSE: CUBE)—2007 to present
Ms. Keler’s legal background and experience in the student loan industry and with Sallie Mae bring valuable perspective to the Board of Directors in the areas of student and consumer lending, legal and corporate governance, and higher education. |
Name and Age Service as a Director | Position, Principal Occupation, Business Experience and Directorships | |
Jim Matheson | Chief Executive Officer, NRECA | |
Director since March | Professional Highlights:
• Chief Executive Officer, National Rural Electric Cooperative • Principal in the Public Policy Practice, Squire Patton Boggs—2015 to 2016 • Member of the United States House of Representatives—2001 to 2015 • Founder of The Matheson Group—1999 to 2000 • Consultant, Energy Strategies, Inc.—1991 to 1998
Other Professional and Leadership Experience:
• Service on the United States House of Representatives Energy and Commerce Committee—2007 to 2015; Science Committee—2001 to 2011; Financial Services Committee—2003 to 2007; and Transportation and Infrastructure Committee—2001 to 2007 • Chief Deputy Whip for the Democratic Caucus of the United States House of Representatives—2011 to 2015 • Board Member, United States Association of Former Members of Congress—2015 to present
Mr. Matheson’s extensive experience in public policy and financial services enables him to bring to the Board of Directors a valuable perspective in development of business strategies and on public policy and regulatory matters. | |
Jed H. Pitcher | Former President and Chief Operating Officer, | |
Director since April | Professional Highlights:
• President and Chief Operating Officer of Regence Group, a healthcare insurance provider—2000 to 2004 • Chairman, President and Chief Executive Officer of Regence Blue Cross Blue Shield of
Other Professional and Leadership Experience:
• Director, Sallie Mae Bank—2005 to present • • Commissioner and Vice Chair, Bountiful City (Utah) Power Commission—2005 to present • Director and Vice Chair, Rural Health Group of Utah—2005 to present • • Trustee and Chair, Utah State Higher Education Authority—2002 to 2005 • Trustee and Chair, Utah State University Board of Trustees—1991 to 1999 • Director and Chair, Workers Compensation Fund of Utah—1988 to 1997 • Member and Vice Chair, Salt Lake Area Chamber of Commerce Board of Governors—1992 to 1995 • Director, Westminster College—1987 to 1991
Mr. Pitcher’s extensive leadership experience in the insurance industry and higher education governance and policy-making enables him to bring valuable insight to the Board of Directors in the areas of finance, business operations, and corporate governance. |
Name and Age Service as a Director | Position, Principal Occupation, Business Experience and Directorships | |
Frank C. Puleo | Attorney | |
Director since March | Professional Highlights:
• Attorney—2006 to • Co-Chair, Global Finance Group, Milbank, Tweed, Hadley & McCloy LLP, a law firm—1995 to 2006; Partner—1978 to 2006
Other Professional and Leadership Experience:
• Director, Sallie Mae Bank—2013 to present • Director, South Street Securities Holdings Inc. • Director, Syncora Guaranty, Inc.—2018 to present • Director, Syncora Capital Assurance, Inc.—2009 to • Director, CIFC
Directorships of other public companies:
• Apollo Investment Corporation—2007 to present
Mr. Puleo’s background as a corporate and finance | |
Raymond J. Quinlan | Chairman and Chief Executive Officer, Sallie Mae | |
Director since January | Professional Highlights:
• Chairman and Chief Executive Officer, Sallie Mae—April • Vice Chairman, Sallie Mae—January 2014 to April • Executive Vice President—Banking, CIT Group—2010 to 2013 • Executive Chairman, Coastal South Bancshares, Inc.—2010 • Business Manager, • Chief Executive Officer, Retail Division North America,
Other Professional and Leadership Experience:
• Director, Sallie Mae Bank—2014 to present
Directorships of other
• • • Member, Board of Visitors, Fordham College, Fordham University—2015 to present • Member, Foundation Board, The Graduate Center of the City University of New York—2011 to present
Mr. Quinlan’s extensive background and significant leadership experience in the banking industry allow him to provide business and leadership insight to the Board of Directors in the areas of banking, financial services, business operations, and capital markets. |
Name and Age Service as a Director | Position, Principal Occupation, Business Experience and Directorships | |
Vivian C. Schneck-Last | Former Managing Director, Global Head of Technology Governance, Goldman Sachs & Company | |
Director since March | Professional Highlights:
• Managing Director, Global Head of Technology Governance, Goldman Sachs & Company—2009 to 2014 • Managing Director, Global Head of Technology Business Development, Goldman Sachs & Company—2000 to 2014 • Managing Director, Global Head of Technology Vendor Management, Goldman Sachs & Company—2003 to 2014
Other Professional and Leadership Experience:
• Advisor/Board of Directors, Portrait Capital Systems, LLC—2016 to present • Advisor/Board of Directors, Coronet (f/k/a Cybercanary)—2015 to present • Director, Bikur Cholim of Manhattan—2014 to present • Committee Member, Jewish Theological Seminary—2012 to 2013
Ms. Schneck-Last’s strategic technology experience and background in technology governance in the financial services field bring valuable perspective to the Board of Directors in risk management and on a broad range of enterprise technology matters. | |
William N. Shiebler | Private Investor | |
Director since April | Professional Highlights:
• Private Investor—2007 to present • Chief Executive Officer of the Americas, Deutsche Asset Management (Deutsche Bank)—2002 to 2007 • President and Chief Executive Officer, Putnam Mutual
Other Professional and Leadership Experience:
• Director, Sallie Mae Bank—2010 to present • Trustee, United States Ski and Snowboard Team—2002 to present
Directorships of other public companies:
• Calamos Asset Management, Inc.—2012 to • OXiGENE, Inc.—2002 to 2012 • MasTec Inc.—2001 to 2004
Mr. Shiebler’s extensive experience in the financial services industry and with other public companies allows him to provide valuable insight to the Board of Directors in the areas of finance, portfolio management, and business operations. |
Name and Age Service as a Director | Position, Principal Occupation, Business Experience and Directorships | |
Robert S. Strong | Former Managing Director, Chairman, Capital Commitments Committee, Bank of America Securities | |
Director since April | Professional Highlights:
• Managing Director, Chairman, Capital Commitments Committee, Bank of America Securities—2006 to 2007 • Managing Director, Portfolio Management, Bank of America Securities—2001 to 2006 • Executive Vice President, Chief Credit Officer, JP Morgan Chase
Other Professional and Leadership Experience:
• Director, Sallie Mae Bank—2014 to present • Director, Syncora Guaranty, Inc.—2018 to present • Director, Syncora Capital Assurance, Inc.—2009 to • Member, Financial Policy Review Board for the State of New Jersey—2013 to 2016 • Director, CamberLink Inc.—2013 to 2016
Mr. Strong’s extensive experience in the banking and financial services industries allows him to provide valuable insight to the Board of Directors in the areas of finance, risk management, portfolio management, and business operations. | |
Kirsten O. Wolberg | ||
Director since November | Professional Highlights:
• Chief Technology and Operations Officer, DocuSign—2017 to present • Vice President, PayPal Separation Executive, PayPal, Inc.—2014 to 2017 • Vice President, Technology, PayPal, Inc.—2012 to 2014 • Chief Information Officer, Salesforce.com—2008 to 2011
Other Professional and Leadership Experience:
• Vice President, Corporate Technology, Charles Schwab & Co.—2001 to 2008
Directorships of other public companies:
• Silicon Graphics International Corp.—2016 Directorships ofnot-for-profit companies: • YearUp—2008 to present • Jewish Vocational Services—2014 to present
Ms. Wolberg’s extensive experience in information technology for the financial services industry allows her to provide valuable insight to the Board of Directors in the areas of finance, information technology risks, and business operations. |
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE TWELVE NOMINEES NAMED ABOVE.
PROPOSAL 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION
Sallie Mae is asking stockholders to approve an advisory resolution (commonly referred to as a “say-on-pay”“say-on-pay” resolution) on its executive compensation as reported in this proxy statement. Sallie Mae urges stockholders to read the “Compensation Discussion and Analysis” section (“CD&A”) of this proxy statement, which describes how itsour executive compensation policies and procedures operate and are designed to achieve itsour compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, which provide detailed information on the compensation of Sallie Mae’s named executive officers.
The Board of Directors has adopted a policy providing for annual “say-on-pay”“say-on-pay” advisory votes. In accordance with this policy and Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as a matter of good corporate governance, Sallie Mae is asking stockholders to approve the following advisory resolution at the Annual Meeting:
“Resolved, that Sallie Mae’s stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis and the related compensation tables and narrative disclosure in this proxy statement.”
This proposal to approve the resolution regarding the compensation of Sallie Mae’s named executive officers requires the affirmative vote of the holders of a majority of the Common Stock present, represented and entitled to vote at the Annual Meeting. Abstentions have the same effect as votes“AGAINST” “AGAINST” the matter. Shares not voted on the matter, including brokernon-votes, have no direct effect on the matter. This proposal is advisory in nature and, therefore, is not binding upon the NGC Committee or the Board of Directors. However, the NGC Committee will, as it has done in the past, carefully evaluate the outcome of the vote when considering future executive compensation decisions.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS AND THE RELATED COMPENSATION TABLES AND NARRATIVE DISCLOSURE IN THIS PROXY STATEMENT.
PROPOSAL 3—RATIFICATION OF THE APPOINTMENT OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Sallie Mae’s independent registered public accounting firm, KPMG LLP (“KPMG”), is selected by the Audit Committee of Sallie Mae’s Board of Directors (the “Audit Committee”). The Audit Committee has engaged KPMG as Sallie Mae’s independent registered public accounting firm for the fiscal year ending December 31, 2017.2018. Representatives of KPMG are expected to be present at the Annual Meeting and they will have the opportunity to respond to appropriate questions from stockholders and to make a statement if they desire to do so.
This proposal is put before the stockholders because the Board of Directors believes it is a good corporate governance practice to provide stockholders a vote on ratification of the selection of the independent registered public accounting firm.
For ratification, this proposal will require the affirmative vote of the holders of a majority of the shares of Common Stock present, represented and entitled to vote at the Annual Meeting. Abstentions have the same effect as votes“AGAINST” “AGAINST” the matter. Shares not voted on the matter, including brokernon-votes, have no direct effect on the matter. If the appointment of KPMG is not ratified, the Audit Committee will evaluate the basis for the stockholders’ vote when determining whether to continue the firm’s engagement. Even if the selection of Sallie Mae’s independent registered public accounting firm is ratified, the Audit Committee may direct the appointment of a different independent registered public accounting firm at any time during 20172018 if, in its discretion, it determines such a change would be in the Company’s best interests.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF KPMG AS SALLIE MAE’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017.2018.
PROPOSAL 4 - APPROVAL OF AN AMENDMENT TO THE 2012 OMNIBUS INCENTIVE PLAN AND THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE PLAN FOR PURPOSES OF SECTION 162(m) OF THE INTERNAL REVENUE CODE
At the Annual Meeting, stockholders are being asked to approve an amendment to the SLM Corporation 2012 Omnibus Incentive Plan (the “Incentive Plan”) to limit the aggregate number of equity awards settled in Common Stock and cash that may be granted to a single employee per year and to re-approve the material terms of the Incentive Plan for purposes of Section 162(m) of the Internal Revenue Code (the “Code”).We are not requesting that stockholders authorize any additional shares of Common Stock for issuance under the Incentive Plan.
In connection with the approval of the amendment to the Incentive Plan, the NGC Committee and the Board of Directors carefully considered our anticipated future equity needs, our historical equity incentive compensation practices, and the advice of the NGC Committee’s independent compensation consultant. The Board of Directors believes that the grant of common stock and other equity-based incentives for members of the Company’s Board of Directors, senior management, other members of management, employees and directors of Company subsidiaries is an essential component of the mix of compensation awarded to these individuals. Equity-based incentives encourage a sense of proprietorship and commitment to the Company’s business goals and objectives, thereby aligning these individuals’ interests with those of the Company’s stockholders, and enable the Company to continue to attract and retain highly qualified employees and directors. Stockholders are encouraged to read more about the Company’s philosophy regarding the importance of equity-based incentives for senior management in the “Compensation Discussion and Analysis” section of this proxy statement.
Stockholders originally approved the Incentive Plan at our May 24, 2012 annual meeting of stockholders. On February 22, 2017, the NGC Committee recommended to the Board of Directors, and the Board of Directors approved, subject to stockholder approval at the Annual Meeting, an amendment to the Incentive Plan. The Incentive Plan, as proposed to be amended, will impose the following limitations on awards granted to any employee under the Incentive Plan: during any calendar year, no employee may be granted (1) Option or SAR awards covering more than 1,000,000 shares of Common Stock, (2) restricted stock, restricted stock units, performance awards or other awards that are settled in Common Stock covering more than 1,000,000 shares of Common Stock, and (3) cash awards, performance awards, restricted stock unit awards or performance unit awards settled in cash that have a grant date value in excess of $5,000,000. In addition, the amendment to the Incentive Plan revises the performance goals to include earnings per share and operating revenue and to delete core cash earnings per share. In recommending this amendment to the Board of Directors, the NGC Committee considered the reasonableness of the limits in the context of market practice and the importance of retaining flexibility to structure the mix of awards in a tax-efficient manner over the life of the Incentive Plan. In addition, the limit imposed is not a guarantee that the maximum amounts will in fact be granted, and the NGC Committee consistently applies a prudent approach to the grant of equity-based incentives.
The Board of Directors is requesting this vote in order to obtain stockholder re-approval of the material terms of the Incentive Plan for purposes of Section 162(m) of the Code. The Incentive Plan is intended to comply with Section 162(m) of the Code. Section 162(m) places a limit of $1,000,000 on the amount that the Company may deduct in any one taxable year for compensation paid to each of its “covered employees.” The Company’s covered employees include its Chief Executive Officer and each of its other three most highly-paid executive officers, other than the Chief Financial Officer. There is, however, an exception to this limit for compensation earned pursuant to certain performance-based awards. A performance-based award made under the Incentive Plan is eligible for this exception provided certain Section 162(m) requirements are met. One of these requirements relates to stockholder approval (and, in certain cases, re-approval) of the material terms of the performance goals underlying the performance-based award. The performance goals in the Incentive Plan were approved by stockholders in 2012 with 95 percent of the vote. Section 162(m) requires re-approval of those performance goals and material terms of the plan after five years if the NGC Committee has retained discretion to vary the targets under the performance goals from year to year. The NGC Committee has retained discretion to vary the targets under the performance goals from year to year. Accordingly, the Company is seeking re-approval of the performance goals included in the Incentive Plan in order to preserve the Company’s ability to deduct compensation earned by certain executives pursuant to any performance-based award that may be made in the future under the Incentive Plan. For purposes of Section 162(m), the material terms include (a) the employees eligible to receive compensation under the Incentive Plan, (b) a description of the
business criteria on which performance goals may be based, and (c) the maximum amount of compensation that can be paid to an employee under the Incentive Plan. Each of these aspects of the Incentive Plan, as proposed to be amended, is discussed below, and stockholder approval of this Proposal 4 will be deemed to constitute re-approval of the material terms of the Incentive Plan, as amended, for purposes of the stockholder approval requirements of Section 162(m).
Approval of the amendment to the Incentive Plan and re-approval of the performance goals will allow the Company to continue to grant tax-deductible awards over the next several years. Upon stockholder approval of the amendment to the Incentive Plan, it will become effective. If stockholders do not approve the amendment to the Incentive Plan, the existing Incentive Plan will continue in effect in the form in which it currently exists. In that event, the NGC Committee would consider the resulting limitation on the tax deductibility of awards to covered employees in structuring future awards to those employees, but may approve cash and equity-based incentives for which some of the potential deduction is lost if the NGC Committee considers such action to be in the best interest of the Company and stockholders.
Key Aspects of the Incentive Plan
The Incentive Plan incorporates the best governance practices to further align our equity compensation program with the interests of our stockholders. The following is a list of some of the key factors to be considered by stockholders in connection with approving the amended Incentive Plan:
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Key Data
The following table includes information regarding outstanding equity awards and shares available for future awards under the Incentive Plan as of December 31, 2016:
Incentive Plan | ||||
Total shares underlying outstanding options | 668,121 | |||
Weighted average exercise price of outstanding options | $ | 6.45 | ||
Weighted average remaining contractual life of outstanding options | 1.1 years | |||
Total shares subject to outstanding, unvested full-value awards(1) | 7,607,489 | |||
Total shares currently available for grant | 25,019,928 |
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Description of our Incentive Plan
The following discussion summarizes the material terms of the performance goals under the Incentive Plan, including a description of (i) the individuals eligible for performance awards under the Incentive Plan, (ii) the business criteria on which the underlying performance goals are based, and (iii) the applicable award limits. The full text of the Incentive Plan is attached to this Proxy Statement asAppendix A.
Eligibility. Employees of the Company and its subsidiaries and directors of the Company are eligible to receive awards under the Incentive Plan. There are approximately 1,347 employees and 12 non-employee directors currently eligible to receive awards under the Incentive Plan. Awards under the Incentive Plan may include grants of options, stock appreciation rights, restricted stock, restricted stock units, performance units, and Common Stock. Eligibility for any particular award is determined by the NGC Committee (or the Board of Directors, in the case of director awards) and, in the case of certain awards such as incentive stock options, may be limited by the Internal Revenue Code.
Business Criteria Underlying Performance Goals. In order to be considered performance-based compensation, an award must be subject to the accomplishment of one or more performance goals. These performance goals may be based on one or more of the following business criteria established by the NGC Committee: (a) cash flow (including operating cash flow, free cash flow, cash flow return on capital and cash flow per share), (b) earnings per share (including earnings before interest, taxes, depreciation and/or amortization), (c) return measures (including return on assets, capital, equity, sales and operating revenue), (d) total stockholder return, (e) productivity ratios, (f) expense targets or ratios, (g) revenue, (h) income (including net income, operating income and net operating income), (i) operating profit (including net operating profit), (j) margins (including gross or operating margin), (k) market share, (l) loan volume, (m) overhead or other expense reduction, (n) charge-off levels, (o) deposit growth, (p) operating efficiency, (q) economic value added, (r) customer or employee satisfaction, (s) debt reduction, (t) capital targets, (u) consummation of acquisitions, dispositions, projects or other specific events or transactions, (v) liquidity, (w) capital adequacy, (x) ratio of nonperforming to performing assets, (y) ratio of common equity to total assets, or (z) regulatory compliance metrics. One or more of such performance goals may apply to the employee, one or more business units, divisions or sectors of the Company, or the Company as a whole, and if so desired by the NGC Committee, by comparison with a peer group of companies. This comprehensive list of business criteria is identical to criteria set forth in the Incentive Plan approved in 2012, other than the addition of “earnings per share” and “operating revenue” and the deletion of “core cash earnings per share.”
Plan Limits. The Company at the time of the adoption of the Incentive Plan reserved 20,000,000 shares of Common Stock for issuance under the Incentive Plan. Subsequently, at the time of the spin-off of Navient Corporation in April 2014 (the “Spin-Off”), 11,332,119 shares remained available for grant. In connection with the Spin-Off, the number of remaining shares was adjusted to 31,599,837, of which 25,019,928 remain available for grant as of December 31, 2016.
Award Limits. All shares of Common Stock available under the Incentive Plan are available for grants of incentive stock options.
Individual Limits. During any calendar year, no employee may be granted:
options and stock appreciation rights covering more than 1,000,000 shares of Common Stock;
qualified performance awards under Section 162(m) of restricted stock, restricted stock units, performance awards, or other stock-based awards that may be settled solely in shares of common stock and are intended to cover more than 1,000,000 shares of Common Stock (assuming a maximum payout of performance-based awards); and
cash awards and restricted stock unit awards, performance awards and performance unit awards that may be settled solely in cash, having a value determined on the grant date in excess of $5,000,000 (assuming a maximum payout of performance-based awards).
Prior to the amendment, the Incentive Plan provided that during a calendar year no employee could be granted aggregate awards exercisable for, relating to or covering more than 1,000,000 shares of Common Stock and aggregate cash-settled awards in excess of $5,000,000, but did not specify individual sub-limits for stock-settled full-value and appreciation awards.
Adjustments. Each of the above limits is subject to adjustment for certain changes in the Company’s capitalization such as declaration of dividends, stock splits, combinations, corporate mergers, consolidations, acquisitions of property or stock, separations, reorganizations or liquidations, or similar events. If an award expires, terminates, is forfeited or is settled in cash rather than in Common Stock, the Common Stock not issued under that award will again become available for grant under the Incentive Plan. If shares of Common Stock are surrendered to the Company or withheld to pay any exercise price or satisfy tax withholding requirements, such shares of Common Stock withheld or surrendered will be counted against the number of shares of Common Stock available under the Incentive Plan.
Exercise Price. The exercise price for an Option or Stock Appreciation Right may not be less than the fair market value of the Common Stock on the grant date.
Expiration Date.The NGC Committee will determine the expiration date of each Option and Stock Appreciation Right, but no Option or Stock Appreciation Right will be exercisable more than 10 years after the grant date.
Plan Benefits Under the Incentive Plan. The number of awards (if any) that an eligible participant may receive under the Incentive Plan is in the discretion of the NGC Committee or the Board of Directors and, therefore, cannot be determined in advance and it is not possible to determine the actual amount of compensation that will be earned under the Incentive Plan in Fiscal Year 2016 or in future years because the awards earned will depend on future performance as measured against the applicable performance goals established by the NGC Committee. The Company expects that future awards under the Incentive Plan will be granted in a manner substantially consistent with the historical grant of awards under the Incentive Plan. For information regarding past grants and outstanding equity awards, see the disclosure in this Proxy Statement in “Grants of Plan-Based Awards” and “Outstanding Equity Awards at 2016 Fiscal Year-End.”
U.S. Federal Income Tax Consequences. As required by SEC disclosure rules, the following is a general summary under current law of certain United States federal income tax consequences to the Company and participants who are citizens or individual residents of the United States relating to stock options granted under the Incentive Plan. This summary deals with the general tax principles that apply to such awards and is provided only for general information. Certain kinds of taxes, such as foreign taxes, state and local income taxes, payroll taxes and the alternative minimum tax, are not discussed. This summary is not tax advice and it does not discuss all aspects of federal taxation that may be relevant to the Company and
participants. Accordingly, the Company urges each participant to consult his or her own tax advisor as to the specific tax consequences of participation in the Incentive Plan under federal, state, local and other applicable laws.
Non-Qualified Stock Options. A non-qualified stock option is an option that does not meet the requirements of Section 422 of the Code. A participant generally will not recognize taxable income when granted a non-qualified stock option. When the participant exercises the stock option, he or she generally will recognize taxable ordinary income equal to the excess of the fair market value of the shares received on the exercise date over the aggregate exercise price of the shares. The participant’s tax basis in the shares acquired on exercise of the option will be increased by the amount of such taxable income. We generally will be entitled to a federal income tax deduction in an amount equal to the ordinary income that the participant recognizes. When the participant sells the shares acquired on exercise, the participant generally will realize long-term or short-term capital gain or loss, depending on whether the participant holds the shares for more than one year before selling them. Special rules apply if all or a portion of the exercise price is paid in the form of shares.
Incentive Stock Options. An incentive stock option is an option that meets the requirements of Section 422 of the Code. A participant generally will not have taxable income when granted an incentive stock option or when exercising the option. If the participant exercises the option and does not dispose of the shares until the later of two years after the grant date and one year after the exercise date, the entire gain, if any, realized when the participant sells the shares generally will be taxable as long-term capital gain. We generally will not be entitled to any corresponding tax deduction. If a participant disposes of the shares received upon exercise of an incentive stock option within the one-year or two-year periods described above, it will be considered a “disqualifying disposition,” and the option will be treated as a non-qualified stock option for federal income tax purposes. If a participant exercises an incentive stock option more than three months after the participant’s employment or service with us terminates, the option will be treated as a non-qualified stock option for federal income tax purposes. If the participant is disabled and terminates employment or service because of his or her disability, the three-month period is extended to one year. The three-month period does not apply in the case of the participant’s death.
This proposal for the approval of an amendment to the Incentive Plan and the material terms of the performance goals included in the Incentive Plan requires the affirmative vote of the holders of a majority of Common Stock present, represented, and entitled to vote at the Annual Meeting. Abstentions have the same effect as votes “AGAINST” the matter. Shares not voted on the matter, including broker non-votes, have no direct effect on the matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF AN AMENDMENT TO THE 2012 OMNIBUS INCENTIVE PLAN AND THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE PLAN FOR PURPOSES OF SECTION 162(m) OF THE INTERNAL REVENUE CODE.
PROPOSAL 5–ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
Section 14A of the Exchange Act also requires the Company to hold, at least once every six years, shareholder advisory votes on the frequency of future advisory votes on executive compensation. This proposal allows the Company’s stockholders to express their views on whether future advisory votes on executive compensation of the nature reflected in Proposal 2 should occur every one, two, or three years. Stockholders may specify “1 year”, as recommended by the Board of Directors, or “2 years” or “3 years” on the proxy card or voting instruction form or may abstain from voting on this proposal.
Historically, the Board of Directors has recommended stockholders hold an advisory vote on executive compensation each year. An annual vote provides stockholders with an opportunity to provide input on compensation decisions and allows the Board of Directors to promptly reevaluate compensation policies and practices and reflect on stockholder feedback. This is also the preferred approach by many investors and institutional shareholder advisory service firms. For these reasons, the Board of Directors recommends that stockholders vote to hold an advisory vote on executive compensation every one year.
The vote is advisory and not binding upon the Company and its Board of Directors. However, the Board of Directors values your opinion and will consider your vote when making future decisions on the frequency of the advisory vote. Notwithstanding the Board of Directors’ recommendation and the outcome of the stockholder vote, the Board of Directors may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.
Board Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE OPTION OF “1 YEAR” AS THE PREFERRED FREQUENCY FOR ADVISORY VOTES ON EXECUTIVE COMPENSATION.
Roles and Responsibilities of the Board of Directors
The Board of Directors believes strong corporate governance is critical to achieving Sallie Mae’s performance goals and to maintaining the trust and confidence of investors, employees, regulatory agencies, and other stakeholders.
The primary responsibilities of the Board of Directors are to:
Review Sallie Mae’s long-term strategies and set long-term performance metrics;
Review risks affecting Sallie Mae and its processes for managing those risks, and oversee assignment of various aspects of risk management, compliance, and governance;
Select, evaluate, and compensate the Chief Executive Officer and our named executive officers;Named Executive Officers (hereinafter “Named Executive Officers” or “NEOs”);
Plan for succession of the Chief Executive Officer and members of the executive management team;
Review and approve Sallie Mae’s annual business plan and multi-year strategic plan, and periodically review performance against such plans;
Review and approve major transactions and business initiatives;
Through its Audit Committee, select and oversee Sallie Mae’s independent registered public accounting firm;
Recommend director candidates for election by stockholders; and
Evaluate its own effectiveness.
The Board of Directors’ Governance Guidelines (the “Guidelines”) are reviewed each year by the NGC Committee, which from time to time will recommend
changes to the Board of Directors. The Guidelines are
published atwww.salliemae.com under “For Investors” and a written copy may be obtained by contacting the Corporate Secretary atcorporatesecretary@salliemae.com. The Guidelines, along with Sallie Mae’sBy-Laws, embody the following governance practices, among others:
A majority of the members of the Board of Directors must be independent directors and all members of the Audit and NGC Committees must be independent.
All directors stand forre-election each year. Directors are elected under a majority vote standard in uncontested elections.
We combine the roles of Chairman of the Board of Directors and Chief Executive Officer. We also have a Lead Independent Director elected by the Board of Directors.
Each regularly scheduled Board of Directors meeting concludes with an executive session in which only members of the Board of Directors participate. Each regularly scheduled committee meeting also generally concludes with an executive session presided over by the committee chair.Chair.
We maintain stock ownership and retention guidelines for directors and executive officers.
The Board of Directors and its committees conduct performance reviews annually.
The Board of Directors and its committees may engage their own advisors.
Raymond J. Quinlan serves as our Chairman of the Board of Directors and Chief Executive officer.Officer. The Board of Directors believes Mr. Quinlan is best situated to serve as Chairman of the Board of Directors based upon his significant consumer banking experience. In addition, the Board of Directors believes Mr. Quinlan’s combined roles as Chairman of the Board of Directors and Chief Executive Officer position him to identify effectively Sallie Mae’s strategic priorities and lead discussions on the execution of Company strategy. Mr. Quinlan’s industry-specific
experience and expertise allow him to direct discussions effectively discussions and focus decision-making on those items most important to Sallie Mae’s overall success.
To assist in discharging its oversight responsibilities, the Board of Directors appoints a Lead Independent Director. Mr. Child currently serves as the Lead Independent Director. The Lead Independent Director and the Chair of the NGC Committee are responsible for leading the annual performance review of the Chief Executive Officer. In addition, the Lead Independent Director will continue to act as an active liaison between management and Sallie Mae’s independent directors, maintaining frequent contact with both Mr. Quinlan to advise him on the progress of the Board of Directors’ committee meetings, and with individual independent directors concerning developments affecting the Company. Through the role of an active, engaged Lead Independent Director, the Board of Directors believes its leadership structure is appropriately balanced between promoting Sallie Mae’s strategic development withand the Board of Directors’ management oversight function. The Board of Directors also believes its leadership structure has created an environment of open and efficient communication between the Board of Directors and management, enabling the Board of Directors to maintain an active, informed role in risk management by being able to monitor and manage those matters that may present significant risks to Sallie Mae.
For a director to be considered independent, the Board of Directors must determine the director does not have any direct or indirect material relationship with Sallie Mae. The Board of Directors has adopted the Guidelines, which embody the corporate governance principles and practices of the Company. The Guidelines include the standards for determining director independence, which conform to the independence requirements of the NASDAQ listing standards.
The Board of Directors has determined that all of the individuals who served as a director during 20162017 and all nominees standing for election at the Annual Meeting, other than Mr. Quinlan, our Chief Executive Officer, are independent of Sallie Mae.
Each member of the Board of Directors’ Audit and NGC Committees is independent within the meaning of the NASDAQ listing standards, SEC Exchange Act Rule10A-3 and Sallie Mae’s own director independence standards set forth in the Guidelines.
Board, Committee, and Annual Meeting Attendance
Our Board of Directors met sevennine times in 2016.2017. Each of the then-serving directors attended at least 75 percent of the total number of meetings of the Board of Directors and committees on which he or she served. Directors are expected to attend the Annual Meeting, and alla majority of the then-serving members of the Board of Directors attended the Annual Meeting in June 2016.2017.
Roles of the Board and Its Committees
The Company’s Board of Directors has established the following standing committees to assist in its oversight responsibilities: Audit; NGC; Risk; Executive and Strategic Planning; and Preferred Stock. Separately, the Sallie Mae Bank Board of Directors has also established a Compliance Committee. Each committee is governed by a Board-approved written charter, which is evaluated annually and which sets forth the respective committee’s functions, responsibilities, and delegated authority. Membership of each of the committees is established on an annual basis.
All of our committee charters, including the charter for our NGC Committee, charters are available atwww.salliemae.com under “For Investors.Investors, Corporate governance.” Stockholders may obtain a written copy of a committee charter by contacting the Corporate Secretary atcorporatesecretary@salliemae.com or SLM Corporation, 300 Continental Drive, Newark, Delaware 19713.
The following table sets forth the membership and number of meetings held for each committee of the Board of Directors during 2016.2017.
Audit Committee(1) | Nominations, Governance and Compensation Committee | Risk Committee(2) | Strategic Planning Committee | Preferred Stock Committee | ||||||||||||||||
Audit Committee(1) | Nominations, Governance and Compensation Committee | Risk Committee(2) | Executive and Strategic Planning Committee | Preferred Stock Committee | ||||||||||||||||
Paul G. Child(1) (2) | * | * | *
| *
| ||||||||||||||||
Carter Warren Franke+(2) | * | * | *
| *
| ||||||||||||||||
Earl A. Goode(1) | * | * | Co-Chair | *
| *
| Co-Chair
| ||||||||||||||
Ronald F. Hunt+(4) | * | |||||||||||||||||||
Marianne M. Keler++ | * | *
| ||||||||||||||||||
Jim Matheson | * | * | *
| *
| ||||||||||||||||
Jed H. Pitcher(1) (2) | Chair | * | * | Chair
| *
| *
| ||||||||||||||
Frank C. Puleo+(2) | Chair | * | Chair
| *
| ||||||||||||||||
Raymond J. Quinlan+ | Co-Chair | Co-Chair
| ||||||||||||||||||
Vivian Schneck-Last(2) | * | * | * | *
| *
| *
| ||||||||||||||
William N. Shiebler+(1) | Chair | * | * | Chair
| *
| *
| ||||||||||||||
Robert S. Strong(1) (2) | * | * | Chair | *
| *
| Chair
| ||||||||||||||
Kirsten O. Wolberg(3) | ||||||||||||||||||||
Number of Meetings in 2016 | 10 | 12 | 7 | 2 | 1 | |||||||||||||||
Kirsten O. Wolberg
| *
| *
| ||||||||||||||||||
Number of Meetings in 2017
| 12
| 9
| 10
| 1
| 1
|
* | Committee Member |
+ | Also serves as a member of the Sallie Mae Bank Compliance Committee. |
++ | Also serves as Chair of the Sallie Mae Bank Compliance Committee. |
(1) | The Board of Directors determined Mr. Child, Mr. Goode, Mr. Pitcher, Mr. Shiebler, and Mr. Strong each qualified as an “Audit Committee Financial Expert” as set forth in Item 407 of RegulationS-K. During |
(2) | The Board of Directors determined Mr. Child, Ms. Warren Franke, Mr. Pitcher, Mr. Puleo, Ms. Schneck-Last, and Mr. Strong each qualified as a “Risk Management Expert” as such term is defined by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and the rules and regulations promulgated thereunder. |
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The Board of Directors and its committees oversee Sallie Mae’s overall strategic direction, including setting risk management philosophy, tolerance and parameters, and establishing procedures for assessing the risks of each business line as well as the risk management practices the management team develops and utilizes. Management escalates to the Board of Directors and its committees any significant departures from established tolerances and parameters and reviews new and emerging risks. Throughout the year, the Board of Directors and its committees dedicate a portion of their meetings to reviewing and discussing specific risk topics in greater detail with senior management, including risks related to cybersecurity. The primary risk oversight responsibilities of each of the standing committees of ourthe Board of Directors are as follows:
Board Committee | Primary Oversight Responsibilities | |
Audit Committee | • development of financial statements and periodic public reports; • sufficiency of internal controls over financial reporting and disclosure controls; • engagement of, and communications with, our independent registered accounting firm; and • operation of internal audit function, staffing, and work plan. | |
Nominations, Governance and Compensation Committee | • • • management’s administration of employee benefit plans; • management succession planning; • confirm our incentive compensation practices properly balance risk and reward and do not promote excessive risk-taking; • implement good governance policies and measures for Sallie Mae and our Board of Directors; • recommend nominees for election to the Board of Directors; • conduct assessments of the performance of our Board of Directors and its committees; and • review related party transactions. | |
Risk Committee | • monitor our major risk categories, including credit, funding and liquidity, market, compliance, legal, operational, and • review, approve, and authorize the terms and conditions of any loan securitization transaction, loan sale, or debt transaction of our Company or our affiliates; • review our risk management framework and supporting governance structure, roles, and responsibilities established by management; • facilitate the distribution of risk-related information provided to the Risk Committee across and among the Board of Directors and its other committees, including cybersecurity and other information security issues, risks and threats; and • | |
• engage the Chief Executive Officer and senior management in the strategic planning process and recommend proposals regarding the Company’s long-term strategic initiatives. | ||
Preferred Stock Committee | • monitor and evaluate our business activities in light of the rights of holders of the Company’s preferred stock. |
Board Committee | Primary Oversight Responsibilities | |
Sallie Mae Bank Committees | • all members of the Board of Directors also serve as members of the board of directors of our wholly-owned subsidiary, Sallie Mae Bank (the “Bank”) and its committees. Our Audit, NGC, and Risk committees perform similar oversight roles for the Bank. Separately, a Compliance Committee of the Bank Board of Directors has oversight over the establishment of standards related to our monitoring and control of legal and regulatory compliance risks and the qualification of employees overseeing these functions. The |
The NGC Committee considers for nomination to the Board of Directors candidates recommended by stockholders and members of the Board of Directors. The candidates are evaluated based on the needs of the Board of Directors and Sallie Mae at that time. The Board of Directors seeks representation that reflects gender, ethnic, and geographic diversity. The minimum qualifications and attributes the NGC Committee believes a director nominee must possess include:
Knowledge of the business of Sallie Mae;
Proven record of accomplishment;
Willingness to commit the time necessary for Board of Directors service;
Integrity and sound judgment in areas relevant to the business;
Impartiality in representing stockholders;
Ability to challenge and stimulate management; and
Independence.
To recommend a candidate, stockholders should send, in writing, the candidate’s name, credentials, contact information, and his or her consent to be considered as a candidate to the Chair of the NGC Committee atcorporatesecretary@salliemae.com or c/o Corporate Secretary, SLM Corporation, 300 Continental Drive, Newark, Delaware 19713. The stockholder should also include his or her contact information and a statement of his or her share ownership. The nomination deadline for the 20172018 Annual Meeting has now closed. A stockholder wishing to nominate a candidate must comply with the notice and other requirements described under “Stockholder Proposals for the 20182019 Annual Meeting” in this proxy statement.
Sallie Mae has a written policy regarding review and approval of related party transactions. Transactions covered by the policy are transactions involving Sallie Mae in excess of $120,000 in any year in which any director, nominee, executive officer, or greater-than-five percent beneficial owner of the Company, or any of their respective immediate family members, has or had a direct or indirect interest, other than as a director orless-than-ten percent owner of an entity involved in the transaction (“Related Party Transactions”). Loans made in the ordinary course of
Sallie Mae’s business to executive officers, directors, and their family members are considered Related Party Transactions and arepre-approved. Moreover, the Bank has also adopted written policies to implement the requirements of Regulation O of the Board of Governors of the Federal Reserve System, which restricts the extension of credit to directors and executive officers and their family members and other related interests. Under these policies, extensions of credit that exceed regulatory thresholds must be, and are, approved by the Board of Directors of the Bank. Since January 1, 2017, we have not had any other transactions with related persons required to be disclosed under Item 404(a) of RegulationS-K, and no such transactions are currently proposed.
Under the Related Party Transactions policy, the Corporate Secretary will notify the Chair of the NGC Committee of any proposed Related Party Transaction, and the Chair of the NGC Committee will determine if approval under the policy is required. If required, the NGC Committee will then review the proposed Related Party Transaction and make a recommendation to the Board of Directors regarding whether to approve the transaction. In considering a transaction, the NGC Committee takes into account whether a transaction would be on terms no less favorable to an unaffiliated third-party under the same or similar circumstances.
The Company’sOur current policy on political activities is publicly available on our website atwww.salliemae.com under “For Investors” and sets forth the principles regarding the Company’sour stance on political activities. We comply with federal, state, and local lobbying registration and disclosure requirements, and we do not engage in grassroots lobbying. We work closely with the NGC Committee to review and reconsider our existing policies, procedures, and decision-making approaches to government relations and political activities.
At this time, we have one long-term, experienced employee engaged in lobbying activities exclusively related to matters that directly or indirectly affect the Private Education Loan industry and the Company’sour mission. The compensation of the employee, and other executives, for time attributed to lobbying activity is reported as lobbying expenditure. That employee manages one external, bipartisan lobbying/consulting firm that assists with the same objectives, and we report the expenditures made to this firm in our lobbying disclosures. Our involvement with industry associations is limited to those associations comprised of similar financial institutions. In 2016, we did not pay more than $100,000 to any industry association or other group of which we are a member. We report the
estimated portions of these expenses attributable to political expenditures by these entities in our lobbying disclosure reports.
Quarterly disclosures detailing Companyour lobbying activities and expenditures, as required by the Lobbying Disclosure Act of 1995, are posted online by the Clerk of the U.S. House of Representatives and the Secretary of the U.S. Senate. Disclosures relating to contributions by our Political Action Committee are posted online by the Federal Election Commission (“FEC”). We will continue to comply with all applicable laws and regulations on disclosure of those activities.
At this time, we do not believe the preparation and dissemination of any additional reports on these matters would provide any meaningful information to our stockholders. We will continue to consider the value to stockholders of additional reporting of our political activities as our activities evolve, and review this matter periodically with the NGC Committee.
Formation of theThe Sallie Mae Political Action Committee (“PAC”)
In June 2015, we formed the Sallie Mae PAC. ItsAll of the assets and activities of its predecessor prior to theSpin-Off (the “Spin-Off”“Spin-Off”) of Navient Corporation (“Navient”) in April 2014 all of its assets, and all of its activities were assumed and taken over by Navient in connection with theSpin-Off.
Our PAC is governed by an Advisory Board comprised of six employees, who represent different divisions within the Sallie Mae organization. The PAC’s Advisory Board reviews and approves all PAC and
corporate political contributions on a quarterly basis.contributions. The PAC’s Advisory Board evaluates candidates on the basis of their views on issues that impact Sallie Mae and itsus or our employees. It also takes note of whether Sallie Maeour facilities or employees reside in a candidate’s district or state.
Our PAC contributions are published on the FEC website.
Stockholder Communications with the Board
Stockholders and other interested parties may submit communications to the Board of Directors, thenon-management directors as a group, the Lead Independent Director, or any other individual member of the Board of Directors by contacting the Lead Independent Director in writing atcorporatesecretary@salliemae.com or c/o Corporate Secretary, SLM Corporation, 300 Continental Drive, Newark, Delaware 19713.
The Company hasWe have a Code of Business Conduct that applies to Board of Directors members and all employees. The Code of Business Conduct is available on the Company’sour website (www.salliemae.com under “For Investors”) and a written copy is available from the Corporate Secretary. The Company intendsWe intend to post amendments to or waivers of the Code of Business Conduct, if any (to the extent applicable to the Company’s chief executive officer, principal financial officer or principal accounting officer or any director), at this location on its website.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee hereby reports as follows:
1. | Management has the primary responsibility for the financial statements and the reporting process, including the system of internal accounting controls. The Audit Committee, in its oversight role, has reviewed and discussed the audited financial statements with the Company’s management. |
2. | The Audit Committee has discussed with the Company’s internal auditors and the Company’s independent registered public accounting firm the overall scope of, and plans for, their respective audits. The Audit Committee has met with the internal auditors and independent registered public accounting firm, separately and together, with and without management present, to discuss the Company’s financial reporting process and internal accounting controls in addition to any other matters required to be discussed by the statement on Auditing Standards No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”), as may be modified or supplemented. |
3. | The Audit Committee has received the written disclosures and the letter from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLP’s communications with the Audit Committee concerning independence, and has discussed with KPMG LLP its independence. |
4. | The Audit Committee has an established charter outlining the practices it follows. The charter is available on the Company’s website atwww.salliemae.com under “For Investors.” |
5. | The Audit Committee’s charter requires thepre-approval by the Audit Committee of all fees paid to, and all services performed by, the Company’s independent registered public accounting firm. At the beginning of each year, the Audit Committee approves the proposed services, including the nature, type and scope of service contemplated and the related fees, to be rendered by the firm during the year. In addition, engagements may arise during the course of the year that are outside the scope of the initial services and fees approved by the Audit Committee. Any such additional engagements are approved by the Audit Committee or by the Audit Committee Chair pursuant to authority delegated by the Audit Committee. For each category of proposed service, the independent registered public accounting firm is required to confirm that the provision of such services does not impair its independence. Pursuant to the Sarbanes-Oxley Act of 2002, the fees and services provided as noted in the table on the following page were authorized and approved by the Audit Committee in compliance with thepre-approval requirements described herein. |
6. | Based on the review and discussions referred to in paragraphs (1) through (5) above, the Audit Committee recommended to the Board of Directors of the Company, and the Board of Directors has approved, that the audited financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, |
Audit Committee*Committee
Jed H. Pitcher, Chair
Paul G. Child
Ronald F. Hunt
Marianne M. Keler
Jim Matheson
Vivian C. Schneck-Last
Robert S. Strong
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Independent Registered Public Accounting Firm Fees for 20162017 and 20152016
Aggregate fees billed for services performed for Sallie Mae by its independent accountant, KPMG LLP, for fiscal years ended December 31, 20162017 and 2015,2016, are set forth below.
2016 | 2015 | 2017 | 2016 | |||||||||||||
Audit Fees | $ | 1,811,074 | $ | 1,660,775 | $ | 1,728,352 | $ | 1,811,074 | ||||||||
Audit-Related Fees | $ | 691,000 | $ | 390,000 | $ | 806,000 | $ | 691,000 | ||||||||
Tax Fees | $ | 40,549 | $ | 530,246 | $ | 50,000 | $ | 40,549 | ||||||||
All Other Fees | — | — | — | — | ||||||||||||
Total | $ | 2,542,623 | $ | 2,581,021 | $ | 2,584,352 | $ | 2,542,623 |
Audit Fees.Audit fees include fees for professional services rendered for the audits of the consolidated financial statements of Sallie Mae and statutory and subsidiary audits, issuance of comfort letters, consents, income tax provision procedures, and assistance with review of documents filed with the SEC.
Audit-Related Fees.Audit-related fees include fees for assurance and other services related to service provider compliance reports, trust servicing and administration reports, internal control reviews, and attest services that are not required by statute or regulation.
Tax Fees.Tax fees include fees for federal and state tax compliance, and tax consultation services. For 2015, the tax fees billed by KPMG LLP and reported above include fees of $342,796 for federal and state tax compliance, and tax consultation services allocable to
Navient in connection with the joint 2014 tax return filed following the Spin-Off and for which Navient made payment.
All Other Fees.All other fees for the fiscal year ended December 31, 20152017 were $0. All other fees for the fiscal year ended December 31, 2016 were $0.
Pre-Approval Requirements
The Audit Committee’s charter addresses the approval of audit andnon-audit services to be provided by the independent registered public accounting firm to the Company. The Audit Committee’s charter requires all services to be provided by the Company’sour independent registered public accounting firm bepre-approved by the Audit Committee or its Chair. Each approval of the Audit Committee or the Chair of the Audit Committee must describe the services provided and set a dollar limit for the services. The Audit Committee, or its Chair,pre-approved all audit andnon-audit services provided by KPMG LLP during 2016.2017. Reporting is provided to the Audit Committee regarding services the Chair of the Audit Committeepre-approved between committee meetings. The Audit Committee receives regular reports from management regarding the actual provision of all services by KPMG LLP. No services provided by our independent registered public accounting firm were approved by the Audit Committee pursuant to the “de minimis” exception to thepre-approval requirement set forth in paragraph (c)(7)(i)(C) of Rule2-01 of RegulationS-X.
The following table provides information about each stockholder known to Sallie Mae to beneficially own more than five percent or more of the outstanding shares of our Common Stock, based solely on the information filed by each such stockholder in 20172018 for the year ended December 31, 2016,2017, on Schedule 13G, as amended, as applicable, under the Exchange Act. As of February 28, 2017,2018, the Company had 431,035,632435,044,428 outstanding shares of Common Stock.
Name and Address of Beneficial Owner | Shares(1) | Percent(1) | ||||||
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10022 | 49,604,224 | 11.6 | % | |||||
The Bank of New York Mellon Corporation(3) 225 Liberty Street New York, New York 10286 | 38,631,096 | 9.02 | % | |||||
Barrow, Hanley, Mewhinney & Strauss, LLC(4) 2200 Ross Avenue 31st Floor Dallas, TX 75201-2761 | 32,976,736 | 7.7 | % | |||||
FMR LLC(5) 245 Summer Street, Boston, Massachusetts 02210 | 35,766,405 | 8.35 | % | |||||
Prudential Financial, Inc.(6) 751 Broad Street Newark, New Jersey 07102-3777 | 26,064,547 | 6.1 | % | |||||
Jennison Associates LLC(7) 466 Lexington Avenue New York, NY 10017 | 24,502,282 | 5.7 | % | |||||
Boston Partners(8) One Beacon Street 30th Floor Boston, MA 02108 | 24,736,373 | 5.78 | % | |||||
The Vanguard Group Inc. (9) 100 Vanguard Blvd. Malvern, PA 19355 | 23,154,782 | 5.4 | % |
Name and Address of Beneficial Owner | Shares(1) | Percent(1) | ||||||
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10022 | 43,457,663 | 10.1 | % | |||||
T. Rowe Price Associates, Inc.(3) 100 E. Pratt Street Baltimore, MD 21202 | 37,572,459 | 8.6 | % | |||||
Barrow, Hanley, Mewhinney & Strauss, LLC(4) 2200 Ross Avenue 31st Floor Dallas, TX 75201-2761 | 34,886,671 | 8.08 | % | |||||
Boston Partners(5) One Beacon Street 30th Floor Boston, MA 02108 | 28,682,706 | 6.64 | % | |||||
The Bank of New York Mellon Corporation(6) 225 Liberty Street New York, NY 10286 | 26,530,156 | 6.14 | % | |||||
The Vanguard Group Inc.(7) 100 Vanguard Blvd. Malvern, PA 19355 | 23,675,981 | 5.48 | % | |||||
Prudential Financial, Inc.(8) 751 Broad Street Newark, NJ 07102-3777 | 21,761,392 | 5.0 | % | |||||
Jennison Associates LLC(9) 466 Lexington Avenue New York, NY 10017 | 21,488,767 | 5.0 | % |
(1) | Based on information in the most recent Schedule 13G or Schedule 13G amendment, as the case may be, filed with the SEC pursuant to the Exchange Act with respect to holdings of the Company’s Common Stock as of December 31, |
(2) | Information is as of December 31, |
(3) | Information is as of December 31, |
(4) | Information is as of December 31, 2017 and is based upon a Schedule 13G, filed with the SEC on February 12, 2018, by Barrow, Hanley, Mewhinney & Strauss, LLC, a Delaware limited liability company. The reporting entity reported sole power to vote or direct the vote for 14,726,904 shares of Common Stock, shared power to vote or to direct the vote for 20,159,767 shares of Common Stock and sole power to dispose or to direct the disposition of 34,886,671 shares of Common Stock. |
(5) | Information is as of December 31, 2017 and is based upon a Schedule 13G, filed with the SEC on February 12, 2018, by Boston Partners, a Delaware entity. The reporting entity reported the sole power to vote or direct the voting for 24,158,098 shares of Common Stock, shared power to vote or direct the voting for 125,676 shares of Common Stock, and the sole power to dispose of or direct the disposition of 28,682,706 shares of Common Stock. |
(6) | Information is as of December 31, 2017 and is based upon a Schedule 13G/A, filed with the SEC on February 7, 2018, by The Bank of New York Mellon Corporation, a New York corporation, and its direct or indirect subsidiaries. The reporting entity reported the sole power to vote or direct the voting for |
22,814,255 shares of Common Stock, the sole power to dispose of or direct the disposition of |
Information is as of December 31, |
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Information is as of December 31, |
Information is as of December 31, |
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OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning the beneficial ownership of Sallie Mae’s Common Stock by: (i) our current directors and nominees; (ii) the NEOs (as hereinafter defined)Named Executive Officers listed in the Summary Compensation Table;Table(1); and (iii) all of the Company’s current directors and executive officers as a group. Under SEC rules, beneficial ownership for purposes of this table takes into account shares as to which the individual has or shares voting and/or investment power as well as shares that may be acquired within 60 days (such as by exercising vested stock options). Information is provided as of March 31, 2017,2018, unless noted otherwise.otherwise(2). The beneficial owners listed have sole voting and investment power with respect to shares beneficially owned, except as to the interests of spouses or as otherwise indicated.
Shares(1) | Vested Options(2) | Total Beneficial Ownership | Percent of Class | |||||||||||
Director Nominees | ||||||||||||||
Paul G. Child | 26,529 | 214 | 26,743 | * | ||||||||||
Carter Warren Franke | 24,876 | — | 24,876 | * | ||||||||||
Earl A. Goode | 79,493 | 50,287 | 129,780 | * | ||||||||||
Ronald F. Hunt(3) | 263,288 | 50,287 | 313,575 | * | ||||||||||
Marianne M. Keler | 59,901 | 1,644 | 61,545 | * | ||||||||||
Jim Matheson | 18,823 | — | 18,823 | * | ||||||||||
Jed H. Pitcher(4) | 31,424 | 1,834 | 33,258 | * | ||||||||||
Frank C. Puleo | 74,112 | 50,287 | 124,399 | * | ||||||||||
Raymond J. Quinlan | 529,178 | — | 529,178 | * | ||||||||||
Vivian C. Schneck-Last | 18,823 | — | 18,823 | * | ||||||||||
William N. Shiebler(5) | 37,864 | 1,607 | 39,471 | * | ||||||||||
Robert S. Strong | 41,876 | — | 41,876 | * | ||||||||||
Kirsten O. Wolberg | — | — | — | * | ||||||||||
Named Executive Officers | ||||||||||||||
Steven J. McGarry(6) | 162,878 | 37,998 | 200,876 | * | ||||||||||
Charles P. Rocha | 102,688 | 74,180 | 176,868 | * | ||||||||||
Paul F. Thome(7) | 128,050 | 35,437 | 163,487 | * | ||||||||||
Jeffrey F. Dale | 57,566 | — | 57,566 | * | ||||||||||
Current Directors and Executive Officers as a Group (19 Persons) | 2,006,713 | 518,839 | 2,525,552 | 0.59% |
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Our executive officers are appointed annually by the Board of Directors. The following sets forth biographical information concerning Sallie Mae’s executive officers who are not directors. Biographical information for Mr. Quinlan is included in Proposal 1—Election of Directors.
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NOMINATIONS, GOVERNANCE AND COMPENSATION COMMITTEE REPORT
The year ended December 31, 2016 marked another successful year for Sallie Mae. We remain the leader in the Private Education Loan marketplace. Our Earnings Per Share were $0.53 a share, up a solid 36 percent compared to 2015’s adjusted number of $0.39 (adjusted number excludes $0.20 attributable to gains on sales of loans in 2015). In addition, in 2016, our originations were up 8 percent. The total portfolio of private student loans grew a solid 34 percent, and our net interest income grew 27 percent. We had total net charge-offs (as a percentage of average loans in repayment) of under 1 percent; 96 basis points compared to 82 basis points in 2015.
Our capital position improved enough that we were able to retain all of our loan production and accelerate its growth rate. This past year, we also launched a parent loan product that we think is extremely well positioned to benefit from favorable market conditions, if there are expansions in the private loan market over the course of the coming years. We continued to invest in improving our customer experience. We on-shored our call centers from the Philippines to the United States and took additional steps of bringing our servicing call center in-house, so we could manage the customer experience more effectively. In addition, we continued to improve our online servicing platform. Collectively, these steps led to an improved customer satisfaction rating in 2016.
We have worked carefully and deliberately with our management and independent compensation consultant to recognize our employees for their 2016 performance in a manner that reflects the strength of our results. In 2016, we introduced performance stock units as a component of our long-term incentive compensation program for Named Executive Officers. The program provides a critical tool to align executive compensation with the long-term performance of the Company and our shareholder interests. In addition, we continued to require the deferral into RSUs of a portion of our Executive Officers’ annual bonuses, as well as awarding equity to our management employees across the Company.
These components of our compensation program have been added by our Committee to promote prudent management decision-making and to profitably drive the evolution of our consumer banking business, all while ensuring we motivate, reward, and retain employees.
In conclusion, we have reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussion, we have recommended to the Board of Directors its inclusion herein and its incorporation by reference in the Company’s Annual Report on Form 10-K for the year ending December 31, 2016.
Nominations, Governance and Compensation Committee*
William N. Shiebler, Chair
Shares(2) | Vested Options | Total Beneficial Ownership | Percent of Class | |||||||||||||||
Director Nominees
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Paul G. Child
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Carter Warren Franke | 32,249 | — | 32,249 | * | ||||||||||||||
Earl A. Goode | 86,866 | 40,160 | 127,026 | * | ||||||||||||||
Marianne M. Keler | 67,274 | 1,576 | 68,850 | * | ||||||||||||||
Jim Matheson | 26,196 | — | 26,196 | * | ||||||||||||||
Jed H. Pitcher(3)
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Frank C. Puleo | 90,349 | 40,160 | 130,509 | * | ||||||||||||||
Raymond J. Quinlan | 535,234 | — | 535,234 | * | ||||||||||||||
Vivian C. Schneck-Last
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William N. Shiebler(4) | 45,237 | 1,536 | 46,773 | * | ||||||||||||||
Robert S. Strong | 49,249 | — | 49,249 | * | ||||||||||||||
Kirsten O. Wolberg | 7,373 | — | 7,373 | * | ||||||||||||||
Named Executive Officers
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Steven J. McGarry(5) | 208,185 | 15,968 | 224,153 | * | ||||||||||||||
Paul F. Thome(6) | 166,337 | 15,968 | 182,305 | * | ||||||||||||||
Laurent C. Lutz(7) | 377,948 | — | 377,948 | * | ||||||||||||||
Current Directors and Executive Officers as a Group (17 Persons) | 1,457,855 | 117,960 | 1,575,815 | 0.36 |
(1) | Mr. Rocha died on January 17, 2018 and is not included in this table. |
(2) | Shares that may be acquired within 60 days of March 31, 2018, through exercise of vested stock options. Net settled options are shown on a “spread basis” and if notin-the-money shown as 0. Traditional stock options are included in this column on aone-to-one basis. The number of traditional stock options for each individual are as follows: Mr. Goode—6,600; and Mr. Puleo—6,600. |
(3) | Includes 2,633 shares held in trust. |
(4) | Includes 1,027 shares held in trust and 10,000 shares held in a partnership. |
(5) | Includes 110 shares credited as phantom stock units due to a deferred compensation plan account, and 2,141 unitized stock held in a 401(k) account. |
(6) | Includes 40,846 unitized stock held in a 401(k) account and 23,847 unitized stock held in a supplemental 401(k) account. |
(7) | Mr. Lutz retired as of March 1, 2018, and is thus not included among our current Executive Officers. |
Our executive officers are appointed annually by the Board of Directors. The following sets forth biographical information concerning Sallie Mae’s executive officers who are not directors. Biographical information for Mr. Quinlan is included in Proposal 1—Election of Directors.
Name and Age | Position and Business Experience | |
Steven J. McGarry 60 | • Executive Vice President and Chief Financial Officer, SLM Corporation—May 2014 to present; Senior Vice President—Corporate Finance and Investor Relations, SLM Corporation—June 2013 to April 2014; Senior Vice President—Investor Relations, SLM Corporation—June 2008 to June 2013 | |
Paul F. Thome 67 | • Executive Vice President and Chief Administrative Officer, SLM Corporation and President of Sallie Mae Bank—February 2016 to present; Senior Vice President, SLM Corporation and President of Sallie Mae Bank—January 2011 to February 2016; Senior Vice President—Business Finance—March 2009 to January 2011 • Chief Financial Officer andCo-Founder, Credit One Financial Services LLC, October 2006 to March 2009 • Executive Vice President, MBNA Corporation—1996 to 2006 | |
Jonathan R. Boyles 51 | • Senior Vice President, Controller, SLM Corporation—May 2014 to present; Vice President, Corporate Financial Reporting and Accounting Policy, SLM Corporation—May 2010 to April 2014 | |
Jeffrey F. Dale 56 | • Senior Vice President and Chief Risk Officer, SLM Corporation—July 2014 to present • North American Group Risk Director, Citigroup—February 2009 to July 2014 • Divisional Risk Officer, Lloyds TSB—July 2006 to February 2009 | |
Nicolas Jafarieh 43 | • Senior Vice President and General Counsel, SLM Corporation—March 2018 to present • Senior Vice President, Deputy General Counsel, and Assistant Corporate Secretary, SLM Corporation—February 2017 to March 2018 • Vice President, Associate General Counsel, and Assistant Corporate Secretary, SLM Corporation—December 2013 to February 2017 • Managing Director and Associate General Counsel, Sallie Mae, Inc.—February 2010 to December 2013 • Associate General Counsel, Sallie Mae, Inc.—June 2008 to February 2010 |
NOMINATIONS, GOVERNANCE AND COMPENSATION COMMITTEE REPORT
The year ended December 31, 2017 marked another strong year of earnings and quality asset growth for Sallie Mae. We have worked carefully and deliberately with our management and independent compensation consultant to appropriately recognize the 2017 performance of our management and employees in light of our results. In establishing the compensation described in the following Compensation Discussion and Analysis (“CD&A”), the Committee considered, among other factors, the levels of achievement of the Company’s 2017 Management Objectives as set forth in our 2017 Form10-K and reflected in our 2017 Management Incentive Plan targets. Highlights included:
Private Education Loan originations in 2017 were 3 percent higher than in 2016, and the Company expanded its leading position in the Private Education Loan industry.
Regulatory capital ratios remain significantly in excess of the capital levels required to be considered “well capitalized” by our regulators.
• | Ournon-GAAP operating efficiency ratio was 39.6 percent for the |
Enhanced customer communications and experience through improved delivery of services and products were demonstrated through a newly adopted customer satisfaction metric.
We sustained consumer protection improvements sufficient to lift the FDIC Consent Order.
Successful promotion of a culture centered on the Company’s core values, through ongoing employee engagement, recognition, and development.
The Committee also considered the effects of the adoption of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) on our 2017 financial results. The Tax Act lowered federal corporate tax rates from 35 percent to 21 percent, beginning in 2018. The timing of the adoption of the Tax Act required the Company to reflect in its 2017 financial statements the future effects of the lower tax rate in its deferred tax assets, liabilities, and indemnification receivables. While the passage of the Tax Act is in the long-term best interests of our shareholders, the content, passage, and timing of the adoption of the Tax Act were unknown at the time the 2017 Management Incentive Plan targets were established. Consequently, the Committee took these factors into account when exercising its discretion in determining final 2017 MIP scores.
The components of our compensation program are in place to promote prudent management decision-making and to profitably drive the evolution of our consumer banking business, all while ensuring we motivate, reward, and retain employees. In conclusion, we have reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussion, we have recommended to the Board of Directors its inclusion herein and its incorporation by reference in the Company’s Annual Report on Form10-K for the year ending December 31, 2017.
Nominations, Governance and Compensation Committee
William N. Shiebler, Chair
Carter Warren Franke
Earl A. Goode
Jim Matheson
Jed H. Pitcher
Kirsten O. Wolberg
(1) | For a description of how we calculate “operating efficiency” and for a reconciliation of “operating efficiency” to the nearest comparable GAAP measure, see footnote (6) to Item 6 “Selected Financial Data” on page 42 of the Company’s 2017 Form10-K. |
COMPENSATION DISCUSSION AND ANALYSIS
In this Compensation Discussion and Analysis (“CD&A”), we describe our compensation practices and programs in the context of our five most highly compensated executive officers. It is worth noting our compensation practices and programs applicable to our NEOs in many cases also apply to senior executive employees beyond our NEOs.
Our primary business is to originate and service high-quality Private Education Loans we make to students and their families. “Private Education Loans” are education loans for students or their families that are not made, insured or guaranteed by any state or federal government. Private Education Loans do not include loans insured or guaranteed under the previously existing Federal Family Education Loan program (“FFELP Loans”). We also offer a range of deposit products insured by the Federal Deposit Insurance Corporation (the “FDIC”) and operate a consumer savings network that provides financial rewards on everyday purchases to help families save for college.
For the fiscal year ended December 31, 2017, our Named Executive Officers were:
Raymond J. Quinlan, Chairman of the Board of Directors and Chief Executive Officer;
Steven J. McGarry, Executive Vice President and Chief Financial Officer;
• | Laurent C. Lutz(1), Executive Vice President, General Counsel and Corporate Secretary; |
• | Charles P. Rocha(2) , Executive Vice President and Chief Marketing Officer; and |
Paul F. Thome, Executive Vice President and Chief Administrative Officer.
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(2) | Mr. Rocha died on January 17, 2018. |
Achievement of 2017 Management Objectives
For 2017, we set out the following major goals for ourselves: (1) prudently grow our Private Education Loan assets and revenues while continuing to diversify the mix of our funding sources; (2) maintain our strong capital position; (3) manage operating expenses while improving efficiency; (4) enhance our customers’ experience by further improving the delivery of our products and services; (5) sustain the consumer protection improvements we have made since theSpin-Off and maintain our strong governance, risk oversight and compliance infrastructure; (6) continue our disciplined expansion of new products to increase the level of engagement we have with our existing customers and attract new customers; and (7) continue to promote a culture centered on our core values (collaboration, mutual respect, honesty, integrity, performance, and accountability), sustained through ongoing employee engagement, recognition and development, and aligned with our mission and business plan for growth. The following describes our performance relative to each of these goals.
Actual | Well Requirements | |||||||||||
2016 Ratio | 2017 Ratio | 2017 Minimum | ||||||||||
Common Equity Tier 1 Capital (to | 12.6 | % | 11.9 | % ³ | 6.5% | |||||||
Tier 1 Capital (to Risk-Weighted Assets) | 12.6 | % | 11.9 | % ³ | 8.0% | |||||||
Total Capital (to Risk-Weighted Assets) | 13.8 | % | 13.1 | % ³ | 10.0% | |||||||
Tier 1 Capital (to Average Assets) | 11.1 | % | 11.0 | % ³ | 5.0% | |||||||
• On April 5, 2017, we issued $200 million of 5.125 percent Senior Notes due April 5, 2022 at par. We used the net proceeds from this debt offering to redeem all of our 6.97 percent Series A preferred stock and for general corporate purposes. |
Management Objective | Highlights | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Manage Operating Expenses While Improving Efficiency | • We measure our effectiveness in managing operating expenses by monitoring ournon-GAAP operating efficiency | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Enhance Customers’ Experience by Further Improving Delivery of Products and Services | • In 2017, we enhanced customer communications that include an annual summary duringin-school periods, enhanced entering into repayment communication designed to help borrowers transition into their repayment period successfully, and simplified billing statements. We also launched new auto debit functionality online to allow customers to enroll with a designated amount greater than their minimum due so they can pay down loans faster. Additionally, we provided targeted customer service training to further improve our interactions with our customers. We focused on • Created an integrated online origination and servicing experience with a single point of entry and improved customer messaging;
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Sustain Consumer Protection Improvements Made Since theSpin-Off and Maintain Our Strong Governance, Risk Oversight and Compliance Infrastructure |
• In the first quarter of 2017, we also began conducting our own internal audits of consumer protection processes and procedures, including our compliance management system, using internal audit staff supplemented with staff from the same third-party firm that had conducted the compliance audits since 2014. • We have continued to advance our overall governance processes, including robust oversight, education, policies and procedures, all supported by strong enterprise risk management, compliance and internal audit functions. |
(1) | For a description of how we |
Management Objective | Highlights | |
Continued Disciplined Expansion of New Products to Increase Level of Engagement With Our Existing Customers and Attract New Customers | • In 2017, we began to implement a strategy that will expand and enhance our suite of graduate student loan products. These loans were designed with discipline-specific features created exclusively for graduate students and will feature competitive interest rates and greater repayment flexibility. • We also developed our infrastructure in 2017 so that in early 2018 we could have the capability to originate and service unsecured personal loans to be used fornon-educational purposes. | |
Continue to Promote a Culture Centered on Our Core Values (Collaboration, Mutual Respect, Honesty, Integrity, Performance, and Accountability), Sustained Through Ongoing Employee Engagement, Recognition, and Development and Aligned with our Mission and Business Plan for Growth | • Over the course of 2017, to ensure commitment to our culture and core values, we cascaded level-appropriate goals to our employees. • As part of our investment in employee development, we engaged leadership to define our long-term talent development strategy and established a roadmap to deliver on key talent priorities. • We implemented several learning programs that focus on the development of employees and managers, as well as a business knowledge series to provide all employees with opportunities to learn about our business and our future. • We enhanced our talent assessment process to further evaluate performance and potential and effectively align development plans that support succession management. Through our targeted focus on career and skill development, we significantly increased our internal hire rate. • We continued to recognize employees with superior performance and commitment to our values through our quarterly Awards of Excellence Program, and launched apeer-to-peer recognition program to provide employees with a tool to recognize each other. • We expanded our management incentive program to provide managers with additional tools to recognize and reward all employees for their contributions to our mutual success. • We engaged employees to promote wellness across the Company and also launched a financial wellness platform. We also conducted an Employee Engagement Survey to gather employee input on what it is like to work at Sallie Mae and to assess where we are relative to their needs and expectations. |
For additional information with regard to each of these objectives and their achievement, see Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the Company’s 2017 Form10-K.
Compensation Practices Summary
What We Do
✓ | Tie significant portions of compensation to Company performance |
✓ | Mitigate risk-taking by utilizing equity awards vesting over a three-year period, while placing caps on potential payments and maintaining equity clawback provisions |
✓ | Require significant share ownership by the Chairman and CEO, Executive Vice Presidents, and Senior Vice Presidents |
✓ | NGC Committee, comprised only of independent directors, determines achievement of both corporate and individual performance of NEOs, as well as all aspects of their compensation and incentives |
✓ | Annual risk assessment of significant employee incentive compensation plans |
✓ | Retain an Independent Compensation Consultant to advise on market practices and specific compensation programs |
What We Don’t Do
× | Since 2014, no individual employment agreements have been entered into(1) |
× | No individualchange-in-control agreements |
× | No |
× | No excise taxgross-ups |
× | No hedging of Common Stock |
× | No single-trigger accelerated settlement of equity awards |
× | No above-market returns on deferred compensation plans |
× | No pension benefits provided |
(1) | Mr. Lutz’s 2014 Employment Agreement expired pursuant to its terms on December 1, 2017. |
Chief Executive Officer Compensation Summary for 20162017
For the fiscal year ended December 31, 2017, the compensation of our Chief Executive Officer consisted of the following:
An annual base salary of $750,000.$850,000.
An annual bonus of $1,462,725$1,462,808 paid 75 percent in cash, and 25 percent in Restricted Stock Units (“RSUs”) that carry transfer restrictions that lapselapsing inone-third increments over a three-year period.
A long-term equity-based incentive opportunity of $3,374,995;$3,374,981 consisting ofof: 80 percent in three-year, time-vesting RSUs, and 20 percent in Performance Stock Units (“PSUs”) vesting in 2020 based upon cumulative charge-offs of our fourth-quarter 20152016 full principal and interest repayment cohort over a three-year performance period.
Other considerationperquisites and benefits valued at $98,250.benefits.
The NEOs’ totalcharts below illustrate, for the CEO and separately for the other NEOs (excluding Mr. Quinlan) in aggregate, the percentage of 2017 compensation for 2016that consisted of base salaries, annual bonuses (determined and paid in cash and RSUs in early 2017)2018), and LTIPlong-term incentive plan (“LTIP”) awards of RSUs and PSUs granted in early 2016. Set forth below are the 2016 pay mix for these elements for Mr. Quinlan, and for Messrs. McGarry, Rocha, Thome, and Dale as a group.2017.(1)
(1) Pursuant to the terms of his employment agreement, Mr. Thome’s appointment asLutz was ineligible to receive an Executive Officer occurred after the 2016 grant resulting in his LTIP award consisting of 100 percent RSUs.in 2017.
Compensation Philosophy and Elements of Compensation
Thepay-for-performance philosophy underlying our executive compensation program provides a competitive total compensation program tied to both Company and individual performance and aligned with the interests of our stockholders. We use the following principles to implement our compensation philosophy and achieve our executive compensation program objectives:
A significant portion of the total compensation of our executives is earned based on achievement of enterprise-wide goals that impactdrive shareholder value.
Base salaries and benefits that are competitive and permit us to attract, motivate, and retain those executives who drive our success.
Compensation of our executives is heavily weighted toward long-term equity-based incentives to reward long-term growth and focus management on sustained success and shareholder value creation.
Granting PSUs to further align executive compensation with the performance of the Company.
The interests of our executives should be linked with those of our common stockholders.
Base salaries that are competitive and permit us to attract, motivate, and retain those executives who drive our success.
We provide competitive employee benefits and limited perquisites.
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CEO Compensation 12% Fixed - 15% 15% 19% 6% 48% Variable - 85% Average NEO Compensation 5% 29% Fixed - 29% 37% 8% 21% Variable - 71% Base Salary Annual Bonus - cash Annual Bonus - Bonus deferral RSUs Long Term Incentive - Time Vested RSUs Long Term Incentive - PSUs
The compensation program in 20162017 for our NEOs consisted of seven elements. These elements, as well as the reasons why each was chosen and the ways in which each achieves our compensation objectives, are described below:
Compensation Element | Objective | Type of Compensation | ||
Base salary | To provide a base level of cash compensation for senior executives based on level and responsibility. | Fixed cash compensation. Reviewed annually and adjusted as appropriate. | ||
Annual incentive bonus | To encourage and reward senior executives for achieving annual corporate performance and individual goals. | Variable compensation. Annual bonus amounts for | ||
Long-term equity-based incentives | To motivate and retain senior executives by aligning their interests with that of stockholders through sustained performance and growth. | Multi-year variable compensation. Generally granted annually. In For LTIP awards granted in 2018, the | ||
Health, welfare, and retirement benefits | To promote employee health and protect financial security. | Fixed compensation. Company subsidies and matching contributions, respectively. | ||
Deferred Compensation Plan and Supplemental 401(k) Savings Plan | To provide retirement planning opportunities. |
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Severance benefits | To maintain continuity of management in light of major restructurings or after a change of control and provide temporary income following involuntary terminations of employment other than for cause. | Fixed cash compensation-based severance payments. Equity awards generally continue to vest on their terms after changes of control or involuntary terminations other than for cause. For more information, see “Arrangements with Named Executive Officers” below. | ||
Perquisites | To provide business-related benefits to assist in attracting and retaining key executives. | Fixed compensation. Consists primarily of |
How Our Compensation Decisions Are Made
Participant | Roles | |
Board of Directors | • Independent members establish Chief Executive Officer’s compensation based on findings and recommendations of NGC Committee and Lead Independent Director. • Receives report from NGC Committee with respect to annual Management Incentive Plan (“MIP”) target achievement, bonus pool funding, and PSU progress. | |
NGC Committee | • Sets annual MIP and PSU targets and approves NEO individual performance goals at the beginning of each year. • Establishes annual long-term equity-based incentive plan awards for senior executives, including NEOs, and establishes related performance-based metrics. • Retains independent compensation consultant on annual basis. • Establishes peer group for comparative compensation data purposes. • Participates with Lead Independent Director in the annual performance and compensation review of Chief Executive Officer and recommendation to the Board of Directors. • Reviews and approves all aspects of NEO compensation. • Certifies annual achievement of MIP targets, PSU targets, aggregate MIP bonus pool, and NEO individual performance goals. | |
Lead Independent Director | • Participates in development and delivery of Chief Executive Officer’s performance and compensation review. | |
NGC Committee Chair | • Participates in development and delivery of Chief Executive Officer’s performance and compensation review. • Participates with Chief Executive Officer in final review and approval of all individual MIP and long-term incentive awards to all eligible senior executives other than NEOs. | |
Chief Executive Officer | • Reviews performance of all other NEOs with NGC Committee and makes recommendations with regard to their salaries, bonuses, and long-term incentive awards. • Participates with NGC Committee Chair in final review and approval of all individual MIP and long-term incentive awards to all eligible senior executives other than NEOs. | |
Compensation Consultant | • Assists the NGC Committee in the review and oversight of all aspects of our executive compensation programs, particularly as | |
Chief Risk Officer | • The adoption of any proposed employee incentive compensation plan requires the Chief Risk Officer (“CRO”) to first conduct a risk assessment of the proposed incentive compensation plan to ascertain any potential material risks that may be created by the proposed plan. |
In establishing compensation levels, policies, and performance for 2016,2017, the NGC Committee also considered the results of the annual “say-on-pay”“say-on-pay” advisory vote of stockholders, which received the approval of approximately 8790 percent of the shares present in person or represented by proxy and entitled to vote on the matter at our 20162017 annual meeting of stockholders.
Risk Assessment of Compensation Plans
The CRO coordinates the risk assessment and oversight of Sallie Mae’s incentive compensation plans with a cross-functional team of Sallie Mae’s senior officers from the human resources, audit, compliance, and legal departments. The CRO’s responsibilities includeinclude: oversight of the annual risk review and assessment of Sallie Mae’sour incentive compensation plans to ensure the Company’sour employees are not incented to take inappropriate risks whichthat could impact Sallie Mae’sour financial position and controls, reputation, and operations; and to develop policies and procedures to ensure the Company’sour incentive compensation plans are designed to achieve their business goals within acceptable risk parameters. The CRO periodically reports to the NGC Committee on the controls and reviews of Sallie Mae’sour incentive compensation plans.
The CRO presented his conclusions to the NGC Committee, and the NGC Committee agreed, that with respect to our 20162017 management incentive and long-term incentive plans, to, and the NGC Committee agreed, the risks embedded in those plans were within Sallie Mae’sour ability to effectively monitor and manage, and properly balancedbalance risk and reward, and were not likely to promote excessive risk- taking.risk-taking.
The NGC Committee retains aan independent compensation consultant to advise on relevant market practices and specific compensation programs. A representative of the compensation consultant attended meetings of the NGC Committee, as requested, and communicated with the chairChair of the NGC Committee. Frederic W. Cook & Co., Inc. has served as our compensation consultant (the “Compensation Consultant”) since May 22, 2015. Since its appointment, some of the services the Compensation Consultant has provided have included:
AssistedAssisting in developing a peer group of companies for benchmarking executivedirector and directorexecutive compensation;
ProvidedProviding market-relevant information as to the composition of director and executive compensation;
ProvidedProviding views on the reasonableness of amounts and forms of director and executive compensation;
AssistedAssisting the NGC Committee with incentive plan design decisions;
Providing guidance on regulatory changes; and
ReviewedReviewing drafts and commentedcommenting on the Compensation Discussion and Analysis and related compensation tables for the proxy statement.
From time to time, the NGC Committee considers the independence of the Compensation Consultant in light of SEC rules and NASDAQ listing standards. At this time, the NGC Committee has concluded there is no conflict of interest with regard to the Compensation Consultant.
Committee Interlocks and Insider Participation
All members of the NGC Committee are independent directors and no current member is or has been an employee of Sallie Mae. During 2016,2017, none of our executive officers served on a compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on the NGC Committee.
The NGC Committee works with the Compensation Consultant to select a financial services peer group for purposes of identifying and considering comparative compensation data in determining the compensation of our Chief Executive Officer and other NEOs. No changes were made to the peer group in 2016.2017. The peer group utilized for purposes of setting NEO compensation components is as follows:
Peer Group | ||
Bank of the Ozarks Commerce Bancshares, Inc. Everbank Financial Corp. First Republic Bank/CA F.N.B. Corporation Hancock Holding Company IberiaBank Corporation MB Financial, Inc. | PacWest Bancorp Private Bancorp, Inc. Prosperity Bancshares, Inc. Signature Bank SVB Financial Group Texas Capital Bancshares, Inc. Webster Financial Corp. Western Alliance Bancorporation |
The NGC Committee believes it is appropriate to continuously monitor relative compensation amounts with respect to the same peer group used by management and the Board of Directors for financial performance comparisons.
Changes to NEO Compensation in 2016
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We believe that emphasis on maintaining the credit quality of our Private Education Loans over the next three years is the most important and consistent metric of our business model over this timeframe. We have selected cumulative charge-offs against our fourth-quarter 2015 full principal and interest repayment cohort as the relevant PSU credit quality metric, as loans in this cohort going into full principal and interest repayment during the fourth quarter 2015 are the first to do so since our complete operational separation from Navient in the Spin-Off.
20162017 Management Incentive Plan for Named Executive Officers (“20162017 MIP”)
The 20162017 MIP used Core Net Operating Income as the performance metric for establishing its funding pool. A combination of corporate metrics and individual performance goals were then used to guide the NGC Committee in its exercise of downward discretion for determining the final awards to the NEOs. For the NEOs, the corporate and individual performance components of their bonus targets were 80 percent and 20 percent, respectively.
For the corporate performance portion of the 20162017 MIP, six corporate performance metrics were utilized. These metrics were derived from management’s 20162017 objectives identified in Sallie Mae’sour annual business plan. These metrics were:
“Core Earnings Per Share”;Share;
Private Credit Loan Originations;
Operating Expenses;
Gross Private Education Loan Defaults as a Percentage of Average Loan Balances in Full Principal and Interest Repayment;
Year-end Overall Satisfaction;Customer Experience; and
Weighted Average Origination FICO Scores.FICO.
Year-end Overall SatisfactionTo better align with the industry and ensure that we measure the ease with which customers engage with and receive service from us, “Customer Ease” was a newadopted as the measure of the Customer Experience metric introduced in 2016 for the MIP. We felt, as a customer focused organization, it was important to directly tie our NEOs’ compensation to the overall satisfaction of our customers. This metric2017. Customer Ease is calculated based onas the levelinverse of Overall Satisfaction for the fourth quarter of 2016 as derived from the Customerfollowing: Calls into Service Call Center Monthly Satisfaction Survey.and Sales Agents divided by (Calls + Online Servicing Logins + Mobile Logins + Online Application Visits).
Minimum, target, and maximum achievement levels were set for each performance metric and a weight assigned to each performance metric based on its relative importance to the Company’sour overall operating plan. Unless otherwise limited by an employment agreement, our NEOs are each eligible to receive bonuses up to a stated maximum percentage of their base salary, which cannot exceed $5 million, assuming funding threshold is achieved.
Core Net Operating Income is defined as the sum of (a) Core Earnings attributable to the Company’s common stock, and (b) preferred stock dividends. For a description of how we calculate “Core Earnings” and for a reconciliation of “Core Earnings” to the nearest comparable Generally Accepted Accounting Principles (“GAAP”) measure, see Part II, Item 7,7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial Measures—Core Earnings” in the Company’s 2016our 2017 Form10-K. Operating Expenses are a GAAP measure.
In February 2017, the NGC Committee approved the bonus pool funding and the corporate performance goals for the 2017 MIP. In January 2017,2018, the NGC Committee and the Lead Independent Director reviewed our relative achievement of the previously identified bonus pool funding and approved corporate performance metrics,goals and, after discussions with our Chief Executive Officer, determined that for the year ended December 31, 20162017: (i) the bonus pool funding should be established at the maximum level based on the achievement of Core Net Operating Income of $252$294 million; and (ii) the weighted achievement of the 20162017 MIP corporate performance metricsgoals was attained at a level of 118.2104.3 percent of the targets set under the 20162017 MIP. In January 2018, the NGC Committee certified the achievement of the 2017 MIP performance goals.
To determine final awards, the NGC Committee exercised downward discretion fromconsidered several factors, including the bonus pool funding level to reduce the NEOs’ bonus payouts under the 2016 MIP funding pool to more precisely correlate the achievementimpact of the relative percentagesTax Cuts and Jobs of both2017 (the “Tax Act”). The Tax Act was signed into law on December 22, 2017, and lowered federal corporate tax rates from 35 percent to 21 percent beginning in fiscal year 2018. Because the Tax Act was enacted during the fourth quarter of 2017, we were required to reflect the application of the lower tax rate in future years to our deferred tax assets, liabilities, and individual performance componentsindemnification receivables, which negatively impacted GAAP Earnings Per Share and Core Earnings Per Share in 2017. The content, passage, and timing of the adoption of the Tax Act were unknown at the time the 2017 MIP targets were established. The NGC Committee recognized the passage of the Tax Act and its provisions as matters not within management’s control. The NGC Committee also recognized the reduced tax rates dictated by the Tax Act are in our long-term best interests as well
as those of our shareholders, but that the required accounting treatment applicable to each NEO. The following chart provides more informationfiscal year 2017 by the passage of the Tax Act impacted the 2017 MIP score in unforeseen ways. Consequently, the Committee took these factors into account when exercising its negative discretion in determining final 2017 MIP scores.
Application of the 2017 MIP score, based on the computation of the corporate performance score.goals as originally approved in February 2017 resulted in the following outcomes:
Corporate Performance Goal | Min | Target | Max | Actual Performance | Award Factor | Weighting | Corporate Performance Score | Min | Target | Max | Actual Performance | Award Factor | Weighting | Corporate Performance Score | ||||||||||||||||||||||||||||||||||||||||||
Core Earnings Per Share | $ | 0.45 | $ | 0.50 | $ | 0.55 | $ | 0.534 | 134 | % | 35 | % | 46.8 | % | $ | 0.626 | $ | 0.684 | $ | 0.742 | $ | 0.635 | 58 | % | 35 | % | 20.3 | % | ||||||||||||||||||||||||||||
Private Education Loan Originations | $ | 4,350 | $ | 4,600 | $ | 4,850 | $ | 4,666.3 | 113 | % | 25 | % | 28.3 | % | $ | 4,650 | $ | 4,900 | $ | 5,150 | $ | 4,800 | 80 | % | 25 | % | 20.0 | % | ||||||||||||||||||||||||||||
Operating Expenses | $ | 420 | $ | 395 | $ | 370 | $ | 386.3 | 117 | % | 20 | % | 23.5 | % | $ | 473 | $ | 442.5 | $ | 413 | $ | 449.1 | 89 | % | 20 | % | 17.8 | % | ||||||||||||||||||||||||||||
Gross Private Education Loan Defaults (as % of Average Loan Balances in Full Repayment) | 1.60 | % | 1.10 | % | 0.60 | % | 1.09 | % | 101 | % | 10 | % | 10.1 | % | 1.65 | % | 1.15 | % | 0.65 | % | 1.20 | % | 95 | % | 10 | % | 9.5 | % | ||||||||||||||||||||||||||||
Year-end Overall Satisfaction(1) | 63 | % | 73 | % | 83 | % | 71.2 | % | 91 | % | 5 | % | 4.5 | % | ||||||||||||||||||||||||||||||||||||||||||
Weighted Average 2016 Originations FICO Scores | 739 | 745 | 751 | 748 | 100 | % | 5 | % | 5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Customer Experience(1) | 80 | % | 90 | % | 100 | % | 91.8 | % | 109 | % | 5 | % | 5.5 | % | ||||||||||||||||||||||||||||||||||||||||||
Weighted Average 2017 Originations FICO Scores | 735 | 745 | 755 | 747 | 102 | % | 5 | % | 5.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
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Total | 118.2 | % | 78.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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(1) | Based on Customer Ease as defined in the |
The required accounting treatment in 2017 reflecting the passage of the Tax Act resulted in a Core Earnings Per Share of $0.635, resulting in a final 2017 MIP score level of 78.1 percent. Absent the impact of the Tax Act, Core Earnings Per Share for 2017 would have been $0.722. Core Earnings Per Share was the only metric impacted. The following table reflects the 2017 MIP score adjusted by excluding the impact of the Tax Act.
Corporate Performance Goal | Min | Target | Max | Actual Performance | Award Factor | Weighting | Corporate Performance Score | |||||||||||||||||||||
Core Earnings Per Share | $ | 0.626 | $ | 0.684 | $ | 0.742 | $ | 0.722 | 133 | % | 35 | % | 46.8 | % | ||||||||||||||
Private Education Loan Originations | $ | 4,650 | $ | 4,900 | $ | 5,150 | $ | 4,800 | 80 | % | 25 | % | 20.0 | % | ||||||||||||||
Operating Expenses | $ | 473 | $ | 442.5 | $ | 413 | $ | 449.1 | 89 | % | 20 | % | 17.8 | % | ||||||||||||||
Gross Private Education Loan Defaults (as % of Average Loan Balances in Full Repayment) | 1.65 | % | 1.15 | % | 0.65 | % | 1.20 | % | 95 | % | 10 | % | 9.5 | % | ||||||||||||||
Customer Experience(1) | 80 | % | 90 | % | 100 | % | 91.8 | % | 109 | % | 5 | % | 5.5 | % | ||||||||||||||
Weighted Average 2017 Originations FICO Scores | 735 | 745 | 755 | 747 | 102 | % | 5 | % | 5.1 | % | ||||||||||||||||||
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Total | 104.3 | % | ||||||||||||||||||||||||||
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(1) | Based on Customer Ease as defined in the |
Applying the corporate performanceadjusted 2017 MIP score of 118.2104.3 percent and the NGC Committee’s assessment of NEO individual achievement,achievements, the bonus payment to each NEO under the 20162017 MIP and its components are set forth below.
Named Executive Officer | Target Bonus as a % of Base Salary | 2016 Target Bonus $ Amount | 2016 Corporate Performance Bonus Component(1) | 2016 Individual Performance Bonus Component(1) | 2016 Total Bonus | Target Bonus as a % of Base Salary | 2017 Target Bonus $ Amount(1) | 2017 Corporate Performance Bonus Component(1) | 2017 Individual Performance Bonus Component(1) | 2017 Total Actual Bonus | ||||||||||||||||||||||||||||||
Raymond J. Quinlan | 150 | % | $ | 1,125,000 | $ | 1,063,800 | $ | 398,925 | $ | 1,462,725 | 150 | % | $ | 1,275,000 | $ | 1,063,860 | $ | 398,948 | $ | 1,462,808 | ||||||||||||||||||||
Steven J. McGarry | 150 | % | $ | 600,000 | $ | 567,360 | $ | 171,390 | $ | 738,750 | 150 | % | 690,000 | 575,736 | 179,918 | 755,654 | ||||||||||||||||||||||||
Charles P. Rocha | 150 | % | $ | 600,000 | $ | 567,360 | $ | 171,390 | $ | 738,750 | 150 | % | 690,000 | 575,736 | 179,918 | 755,654 | ||||||||||||||||||||||||
Paul F. Thome | 125 | % | $ | 500,000 | $ | 472,800 | $ | 118,200 | $ | 591,000 | 125 | % | 500,000 | 417,200 | 140,805 | 558,005 | ||||||||||||||||||||||||
Jeffrey F. Dale | 100 | % | $ | 400,000 | $ | 378,240 | $ | 100,470 | $ | 478,710 | ||||||||||||||||||||||||||||||
Laurent C. Lutz | 150 | % | 787,500 | 657,090 | 164,273 | 821,363 |
(1) | For the NEOs, the corporate and individual performance components of their bonus targets were 80 percent and 20 percent, respectively. |
The NGC Committee’s assessment of NEO individual achievement considered the following:
Raymond J. Quinlan:In 2016, Mr. Quinlan led us through a major breakthroughthe growth of our Company in 2017 as it was agreed that Sallie Mae Bank would no longer be required to sell assets over its previous growth cap of 20 percent per annum. As a direct result, the business has over $1.5 billion more in loans than wereevidenced by customer experience innovations, continued improvements in our original plan for 2016. In addition to this change, we also originated $4.67 billion of new loans in 2016, exceeding our plan levels and, again, gained market share year-over-year. At the same time, we improved ournet interest margin, sound credit trends, increased operating efficiency, ratio, maintained credit quality, and realizedan expanding market share. Under Mr. Quinlan ‘s leadership in 2017, our core earnings per diluted share grew by 35 percent, driven by a return on equity22-percent increase in our private education loan portfolio, compared to theyear-ago period, after adjusting for the effects of 14.1 percent.the Tax Act. Through his strategic vision, Mr. Quinlan also led our investment in service upgrades, technological efficiencies, and diversification of our product offerings, all of which will strengthen our franchise for the future.
Steven J. McGarry: Mr. McGarry and his team have focused on maintaining the appropriate levels of capitalcoordinated our successful plans in 2017 to grow core deposits by 20 percent and liquidity, diversifying Sallie Mae Bank’s funding base, and managing Sallie Mae Bank’s interest rate risk profile resulting in a solid and sustainable net interest margin. In 2016, our deposit base expanded by nearly $2 billion as we tapped health savings accounts forbalances by 25 percent. He executed the first time. In addition, Mr. McGarryredemption of $165 million of high-cost preferred stock adding 1.5 cents to EPS in 2017, and each year thereafter. He also made significant improvements and led the team through its first Dodd Frank Act Stress Test submission which demonstrated the strength of Sallie Mae Bank’s balance sheet.discussions with our regulators to more accurately define our Troubled Debt Restructurings and Adversely Classified Items.
Charles P. Rocha: For the thirdfourth year in a row, the hard work of Mr. Rocha and his team has led tomarketing efforts that resulted in increased private student loan originations and improved market share. Mr. Rocha led the team through the development and launch of a new online digital strategy to further enhance the experienceoversaw his team’s support of our customers,deposit franchise, which finished the development and launchyear $650 million greater than it started, a key component of keeping our new Parent Loan product, and the launch of thefunding base strength. The Company also conducted another successfulBridging the Dream Scholarship program, with employees participating in activities to raise nearly $60,000 for scholarships as part of our mission to help families save, plan, and pay for college.
Paul F. Thome: Mr. Thome provided leadershipled our physical facility expansion in 2017, achieved on schedule and within budget. This was a major accomplishment for our institution, which is now over 100 percent larger than it was three years ago. Serving as a lead executive for our consumer deposit funding franchise, he further led the enhancement of that function in 2017 by the acquisition of SmartyPig deposit accounts. In 2017, as the President of our Sallie Mae Bank-wide Operational Risk Committee, which evaluatesBank subsidiary, Mr. Thome also served in a key capacity as (i) the risk ofFederal Deposit Insurance Corporation lifted its Consent Order, (ii) we completed our second successful Dodd-Frank Act Stress Test, (iii) Sallie Mae Bank exceeded all major activities across the firm,regulatory standards for well-capitalized banks, (iv) Sallie Mae Bank and its prudential regulators agreed upon lower regulatory-based capital requirements, and (v) Sallie Mae Bank achieved an outstanding Community Reinvestment Act rating.
Laurent C. Lutz: In 2017, Mr. Lutz provided management leadership and made significant contributions with regard to winding down remaining post-separation activities from our 2014 separation from Navient, the 20 percent growthcompletion and diversificationcontinued testing of our deposit base,cyber-incident response program, and successfully led his team throughsuccessful completion of the expansionextensive, ongoing succession planning and build-outmentoring of our Indiana operations centerLegal and Government Relations team begun in 2016.
Jeffrey F. Dale: Mr. Dale continuedconnection with the 2014 separation so as to maintainfully develop necessary expertise and coordinate operation of our momentumpost-separation legal, corporate secretarial and made significant stridesgovernment relations functions and provide strong future leadership in further improving our risk management capabilities, making important progress in our Sallie Mae Bank-wide manager risk self-assessment program, model risk management, and DFAST submission.those areas.
20162017 NEO Long-Term Incentive Program
For 2016,2017, the NGC Committee utilized a combination of (i) 80 percent RSUs vesting inone-third increments over each anniversary of the grant date, and (ii) 20 percent PSUs vesting in 20192020 upon certification by the NGC Committee as to satisfaction of the performance factor.
Performance Stock Units (“PSUs”) for NEO Long-Term Incentive Awards | • For Messrs. Quinlan, McGarry, Rocha, and Thome, we granted PSUs that: • vest between 0 percent to 150 percent based on the level of cumulative charge-offs from 2017-2019 on the fourth-quarter 2016 cohort of Private Education Loans entering full principal interest repayment during the fourth quarter of 2016; and • require the NGC Committee to approve the determination of actual performance relative topre-established targets. • Mr. Lutz was not eligible to receive an LTIP award in 2017 pursuant to the terms of his employment agreement. |
We believe that emphasis on maintaining the credit quality of our Private Education Loans over the next three years is of critical importance to the Company. To measure our success, we have selected cumulative charge-offs against our fourth-quarter 2016 full principal and interest repayment cohort as the relevant PSU credit quality metrics.
The Tabletable below sets forth the value of LTIP awards granted in 2016:2017:
Named Executive Officer | 2016 LTIP RSUs ($) | 2016 LTIP PSUs(1) ($) | 2016 LTIP Total ($) | 2017 LTIP RSUs ($) | 2017 LTIP PSUs(1) ($) | 2017 LTIP Total ($) | ||||||||||||||||||
Raymond J. Quinlan | 2,700,000 | 675,000 | 3,375,000 | 2,700,000 | 675,000 | 3,375,000 | ||||||||||||||||||
Steven J. McGarry | 400,000 | 100,000 | 500,000 | 480,000 | 120,000 | 600,000 | ||||||||||||||||||
Charles P. Rocha | 380,000 | 95,000 | 475,000 | 480,000 | 120,000 | 600,000 | ||||||||||||||||||
Paul F. Thome | 375,000 | — | 375,000 | 360,000 | 90,000 | 450,000 | ||||||||||||||||||
Jeffrey F. Dale | 300,000 | 75,000 | 375,000 | |||||||||||||||||||||
Laurent C. Lutz(2) | — | — | — |
(1) | PSUs granted in |
(2) | Pursuant to the terms of his employment agreement, Mr. |
Changes to the NEO Long-Term Incentive Program for 2018
Other Arrangements, Policies and Practices Related to Executive Compensation Programs
Share Ownership Guidelines
As of December 31, 2016,2017, the guidelines for beneficial ownership of our Common Stock, which are expected to be achieved over a five-year period from date of hire or appointment, were as follows:
Chief Executive Officer—lesser of 1 million shares or $5 million in value;
Bank President and Chief Administration Officer—lesser of 500,000 shares or $2.5 million in value;
Executive Vice President—lesser of 200,000 shares or $1 million in value; and
Senior Vice President—lesser of 70,000 shares or $350,000 in value.
The guidelines encourage continued beneficial ownership of a significant amount of our Common Stock acquired through equity awards and help align the interests of senior executives with the interests of our stockholders. Executives generally must hold all Common Stock acquired through equity grants until the applicable thresholds are met, and an executive will not be eligible to receive further equity grants for the year if he or she sells the stock and such sale would result in a decrease below the established thresholds.
All current NEOs were in compliance with the share ownership guidelines as of December 31, 20162017 or are expected to achieve compliance within the applicable five-year period.
Hedging Prohibition
We prohibit directors and senior management from selling Common Stock short, buying or selling call or put options or other derivatives, or entering into other transactions that have the effect of hedging the economic value of any of their beneficial ownership of our shares.
Clawback
Equity awards made to executives, including our NEOs, under the Incentive2012 Plan (as defined below) currently contain clawback provisions in the event of a material misstatement of our financial results and certain other events.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Exchange Act requires Sallie Mae’s executive officers and directors, as well as persons who
beneficially own more than 10 percent of the Common Stock, to file reports on their holdings of and transactions in Sallie Maeour Common Stock. Based solely on a review of the copies of such forms in our possession and on written representations from reporting persons, we believe that during the fiscal year 20162017 all required reports were filed in a timely manner, except for the following transactions which were not timely filed: an exercise of stock options and sale of Common Stock by Jonathan R. Boyles; and a purchase of 6.97% Cumulative Preferred Stock, Series A, by Ronald F. Hunt.manner.
Tax Information: Section 162(m) of the Internal Revenue Code: Tax Deductibility of Compensation over $1 million
Section 162(m) of the Internal Revenue Code (“Section 162(m)”) can potentially disallow a federal income tax deduction for compensation over $1 million paid to the Chief Executive Officer and the three other highest paid
NEOs (excluding the Chief Financial Officer) who were serving as of the last day of our fiscal year. One exception to Section 162(m)’s disallowance of a U.S. federal income tax deduction for compensation over $1 million applies to “performance-based compensation” paid pursuant to stockholder-approved plans. Although much of the compensation opportunity in our executive compensation program historically has been performance-based and generally deductible for U.S. federal income tax purposes, the NGC Committee retains the flexibility to award compensation to the NEOs that is not deductible for U.S. federal income tax purposes.
All outstanding long-term incentive awards granted The exemption from Section 162(m)’s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to the NEOsour covered executive officers in 2014 and prior years were adjustedexcess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in connection with the Spin-Off. See Attachment B to the Company’s 2015 proxy statement for additional information.place as of November 2, 2017.
Nominations, Governance and Compensation Committee—Delegation of Authority
Pursuant to the 2012 Omnibus Incentive Plan (the “2012 Plan”), the NGC Committee has delegated limited authority to a subcommittee consisting of our Chairman and Chief Executive Officer and the Chair of the NGC Committee to approve bonuses, including RSUs, paid under the 20162017 MIP tonon-NEO employees. The NGC Committee has also delegated limited authority to our Chairman and Chief Executive Officer to make grants to new hires who are not subject to Section 16(b) of the Exchange Act. Neither subcommittee is permitted to grant awards to our NEOs or persons subject to Section 16(b) of the Exchange Act.
The table below summarizes compensation paid or awarded to or earned by each of the NEOs for the fiscal years ended December 31, 2016,2017, December 31, 20152016 and December 31, 2014.2015.
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(6) | Total ($) | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Raymond J. Quinlan | 2016 | 750,000 | — | 3,740,673 | — | 1,097,044 | — | 148,250 | 5,735,967 | 2017 | 834,615 | — | 3,740,675 | — | 1,097,106 | — | 82,131 | 5,754,527 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chairman and Chief Executive Officer | 2015 | 750,000 | — | 3,677,494 | — | 677,500 | — | 48,250 | 5,153,244 | 2016 | 750,000 | — | 3,740,673 | — | 1,097,044 | — | 148,250 | 5,735,967 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 600,000 | 60,000 | 4,244,971 | — | 675,000 | — | 1,238 | 5,581,208 |
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|
| |||||||||||||||||||||||||||||||||||||
Steven J. McGarry | 2016 | 400,000 | — | 684,669 | — | 554,063 | — | 41,075 | 1,679,807 | 2017 | 450,771 | — | 788,899 | — | 566,740 | — | 40,558 | 1,846,968 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President and Chief Financial Officer | 2015 | 400,000 | — | 812,492 | — | 332,500 | — | 30,894 | 1,575,886 | 2016 | 400,000 | — | 684,669 | — | 554,063 | — | 41,075 | 1,679,807 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 375,000 | 27,500 | 732,484 | — | 282,500 | — | 47,877 | 1,465,361 |
| 2015
|
|
| 400,000
|
|
| —
|
|
| 812,492
|
|
| —
|
|
| 332,500
|
|
| —
|
|
| 30,894
|
|
| 1,575,886
|
| |||||||||||||||||||||||||||||||||||||
Charles P. Rocha | 2016 | 400,000 | — | 659,673 | — | 554,063 | — | 36,625 | 1,650,361 | 2017 | 450,771 | — | 599,993 | — | 566,740 | — | 36,108 | 1,653,612 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President and Chief Marketing Officer | | 2015 2014 |
| | 400,000 375,000 |
| | — 32,500 |
| | 707,493 599,009 |
| | — — |
| | 332,500 385,983 |
| | — — |
| | 38,250 32,437 |
| | 1,478,243 1,424,928 |
|
| 2016 2015
|
|
| 400,000 400,000
|
|
| — —
|
|
| 659,673 707,493
|
|
| — —
|
|
| 554,063 332,500
|
|
| — —
|
|
| 36,625 38,250
|
|
| 1,650,361 1,478,243
|
| ||||||||||||||||||
Paul F. Thome(5) | 2016 | 392,308 | — | 522,739 | — | 443,250 | — | 88,539 | 1,446,836 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul F. Thome(4) | 2017 | 400,000 | — | 589,487 | — | 418,504 | — | 37,304 | 1,445,295 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President and Chief Administration Officer |
| 2016
|
|
| 392,308
|
|
| —
|
|
| 522,739
|
|
| —
|
|
| 443,250
|
|
| —
|
|
| 88,539
|
|
| 1,446,836
|
| |||||||||||||||||||||||||||||||||||||||||||||
Jeffrey F. Dale | 2016 | 400,000 | — | 494,667 | — | 359,033 | — | 33,350 | 1,287,050 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Vice President and Chief Risk Officer | | 2015 2014 |
| | 400,000 400,000 |
| | — 410,000 |
| | 477,994 339.988 |
| | — — |
| | 267,000 — |
| | — — |
| | 12,635 74,765 |
| | 1,157,629 1,224,753 |
| |||||||||||||||||||||||||||||||||||||||||||||
Laurent C. Lutz | 2017 | 525,000 | — | 205,337 | — | 616,022 | — | 15,426 | 1,361,785 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President and
|
| 2016 2015
|
|
| 525,000 525,000
|
|
| — —
|
|
| — —
|
|
| — —
|
|
| — —
|
|
| — —
|
|
| 15,110 23,192
|
|
| 540,110 548,192
|
|
(1) |
|
Consists of (i) the portions of the MIP awards that were deferred in the form of vested RSUs with respect to performance for 2017, 2016 |
Represents the cash portions of the MIP awards paid to the NEOs with respect to performance in 2017, 2016 |
The Company terminated itstax-qualified pension plan andnon-qualified supplemental pension plan in 2011. The Company does not pay any above-market earnings onnon-qualified deferred compensation plans. |
Mr. Thome was |
For |
Name | Employer Contributions to Defined Contribution Plans ($)(a) | Severance ($) | Relocation Allowance ($) | Perquisites ($) | Executive Physical ($) | Total ($) | ||||||||||||||||||
Raymond J. Quinlan(b) (c) | 38,250 | — | — | 110,000 | — | 148,250 | ||||||||||||||||||
Steve J. McGarry | 36,625 | — | — | — | 4,450 | 41,075 | ||||||||||||||||||
Charles P. Rocha | 36,625 | — | — | — | — | 36,625 | ||||||||||||||||||
Paul F. Thome(c) (d) | 32,065 | — | 44,245 | 10,000 | 2,229 | 88,539 | ||||||||||||||||||
Jeffrey F. Dale | 33,350 | — | — | — | — | 33,350 |
Name | Employer Contributions to Defined Contribution Plans ($)(a) | Severance ($) | Relocation Allowance ($) | Perquisites ($) | Executive Physical ($) | Total ($) | ||||||||||||||||||
Raymond J. Quinlan(b)
|
| 32,131
|
|
| —
|
|
| —
|
|
| 50,000
|
|
| —
|
|
| 82,131
|
| ||||||
Steve J. McGarry
|
| 36,108
|
|
| —
|
|
| —
|
|
| —
|
|
| 4,450
|
|
| 40,558
|
| ||||||
Charles P. Rocha
|
| 36,108
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 36,108
|
| ||||||
Paul F. Thome
|
| 37,304
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 37,304
|
| ||||||
Laurent C. Lutz
|
| 13,200
|
|
| —
|
|
| —
|
|
| —
|
|
| 2,226
|
|
| 15,426
|
|
(a) | Amounts credited to the Company’stax-qualified andnon-qualified defined contribution plans. The combination of both plans provides participants with an employer contribution of up to five percent of the sum of base salary plus annual performance bonus up to |
(b) |
|
The Sallie Mae Fund, an affiliate of the Company, made a charitable donation at the request of Mr. Quinlan in the amount of |
|
20162017 GRANTS OF PLAN-BASED AWARDS TABLE
The following table provides information regarding all plan-based awards attributable to 20162017 performance, including all annual performance bonuses under the 20162017 MIP (which were determined and paid in early 2017)2018), and three-year, time-vesting RSU awards and PSUs vesting based upon cumulative charge-offs of our fourth-quarter 20152016 full principal and interest repayment cohort over a three-year performance period, granted February 26, 201627, 2017 with respect to the 20162017 LTIP awards. The awards listed in this table were granted under the Incentive2012 Plan and are described in more detail under “Compensation Discussion and Analysis.”
Name | Grant Date |
Estimated Future Payouts Under | Estimated Future Payouts under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/ Share) | Grant Date Fair Value of Stock and Option Awards ($)(2) | Grant Date |
Estimated Future Payouts Under | Estimated Future Payouts under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/ Share) | Grant Date Fair Value of Stock and Option Awards ($)(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Raymond J. Quinlan | 2016 LTIP RSU 2016 LTIP PSU | | — — |
| | — — |
| | — — |
| | — 0 |
| | — 113,445 |
| | — 170,167 |
| | 453,781 — |
| | — — |
| | — — |
| | 2,699,997 674,998 |
| 2017 LTIP 2017 PSU | — — | | — — |
| | — — |
| — 0 | | — 57,251 |
| | — 85,877 |
| | 229,007 — |
| — — | — — | | 2,699,993 674,989 |
| ||||||||||||||||||||||
2016 MIP(1) | 0 | 843,750 | 1,097,044 | — | — | — | 31,016 | — | — | 365,679 | 2017 MIP(1)
| 0
|
| 997,369
|
|
| 1,097,106
|
| —
|
| —
|
|
| —
|
|
| 31,471
|
| —
| —
|
| 365,693
|
| |||||||||||||||||||||||||||||||||||||||||||
Steven J. McGarry | 2016 LTIP RSU 2016 LTIP PSU | | — — |
| | — — |
| | — — |
| | — 0 |
| | — 16,806 |
| | — 25,209 |
| | — 67,226 |
| | — | | | — | | | 399,995 99,996 |
| 2017 LTIP 2017 PSU | — — | | — — |
| | — — |
| — 0 | | — 10,178 |
| | — 15,267 |
| | 40,712 — |
| — — | — — | | 479,994 119,999 |
| ||||||||||||||||||||||
2017 MIP(1)
| 0
|
| 539,753
|
|
| 566,740
|
| —
|
| —
|
|
| —
|
|
| 16,257
|
| —
| —
|
| 188,906
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 MIP(1) | 0 | 450,000 | 554,063 | — | — | — | 15,664 | — | — | 184,679 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Charles P. Rocha | 2016 LTIP RSU | — | — | — | — | — | — | 63,865 | — | — | 379,997 | 2017 LTIP | — | — | — | — | — | — | 40,712 | — | — | 479,994 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 LTIP PSU | — | — | — | 0 | 15,966 | 23,949 | — | — | — | 94,998 | 2017 PSU | — | — | — | 0 | 10,178 | 15,267 | — | — | — | 119,999 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 MIP(1) | — | 450,000 | 554,063 | — | — | — | 15,664 | — | — | 184,679 | 2017 MIP(1)
| —
|
| 539,753
|
|
| 566,740
|
| —
|
| —
|
|
| —
|
|
| —
|
| —
| —
|
| —
|
| |||||||||||||||||||||||||||||||||||||||||||
Paul F. Thome | 2016 LTIP RSU | — | — | — | — | — | — | 63,025 | — | — | 374,999 | 2017 LTIP | — | — | — | — | — | — | 30,534 | — | — | 359,996 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 MIP(1) | 0 | 375,000 | 443,250 | — | — | — | 12,531 | — | — | 147,740 | 2017 PSU | — | — | — | 0 | 7,633 | 11,450 | — | — | — | 89,993 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey F. Dale | 2016 LTIP RSU 2016 LTIP PSU | | — — |
| | — — |
| | — — |
| | — 0 |
| | — 12,605 |
| | — 18,907 |
| | 50,420 — |
| | — — |
| | — — |
| | 299,999 75,000 |
| |||||||||||||||||||||||||||||||||||||||||||||
2016 MIP(1) | 0 | 300,000 | 359,033 | — | — | — | 10,150 | — | — | 119,669 | 2017 MIP(1)
| 0
|
| 391,125
|
|
| 418,504
|
| —
|
| —
|
|
| —
|
|
| 12,005
|
| —
| —
|
| 139,498
|
| |||||||||||||||||||||||||||||||||||||||||||
Laurent C. Lutz | 2017 LTIP 2017 PSU | — — | | — — |
| | — — |
| — — | | — — |
| | — — |
| | — — |
| — — | — — | | — — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 MIP(1)
| 0
|
| 616,022
|
|
| 616,022
|
| —
|
| —
|
|
| —
|
|
| 17,671
|
| —
| —
|
| 205,337
|
|
(1) |
|
All determinations under the |
(2) | The grant date fair value of the RSU |
OUTSTANDING EQUITY AWARDS AT 20162017 FISCALYEAR-END TABLE
The table below sets forth information regarding Company options and stock awards of the NEOs that were outstanding as of December 31, 2016.2017.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of (#)(1) | Number of (#) | Option Exercise ($) | Option Expiration Date | Number of (#)(2)(3)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | Grant Date | Number of (#) | Number of (#)(1) | Option Exercise ($) | Option Expiration Date | Number of (#)(2)(3) | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | ||||||||||||||||||||||||||||||||||||||
Raymond J. Quinlan | — | — | — | — | 871,405 | 9,602,883 | — | — | — | — | 808,044 | 9,130,897 | ||||||||||||||||||||||||||||||||||||||||
Steven J. McGarry | 01/27/2011 | 30,000 | — | 5.2430 | 1/27/2021 | |||||||||||||||||||||||||||||||||||||||||||||||
02/03/2012 | 30,272 | — | 5.7343 | 2/3/2017 | 01/27/2011 | 30,000 | — | 5.2430 | 1/27/2021 | |||||||||||||||||||||||||||||||||||||||||||
02/07/2013 | 44,755 | — | 6.4228 | 2/7/2018 | 02/07/2013 | 44,755 | — | 6.4228 | 2/7/2018 | |||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 136,239 | 1,501,354 | — | — | — | — | 129,445 | 1,462,729 | |||||||||||||||||||||||||||||||||||||||||
Charles P. Rocha | 09/28/2009 | 46,500 | — | 3.1558 | 9/28/2019 | 09/28/2009 | 46,500 | — | 3.1558 | 9/28/2019 | ||||||||||||||||||||||||||||||||||||||||||
01/27/2011 | 35,000 | — | 5.2430 | 1/27/2021 | 01/27/2011 | 35,000 | — | 5.2430 | 1/27/2021 | |||||||||||||||||||||||||||||||||||||||||||
02/07/2013 | 42,572 | — | 6.4228 | 2/7/2018 | 02/07/2013 | 42,572 | — | 6.4228 | 2/7/2018 | |||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 122,594 | 1,350,986 | — | — | — | — | 122,660 | 1,386,058 | |||||||||||||||||||||||||||||||||||||||||
Paul F. Thome | 01/27/2011 | 30,000 | — | 5.2430 | 1/27/2021 | 01/27/2011 | 30,000 | — | 5.2430 | 1/27/2021 | ||||||||||||||||||||||||||||||||||||||||||
02/03/2012 | 25,363 | — | 5.7343 | 2/3/2017 | 02/07/2013 | 39,297 | — | 6.4228 | 2/7/2018 | |||||||||||||||||||||||||||||||||||||||||||
02/07/2013 | 39,297 | — | 6.4228 | 2/7/2018 | — | — | — | — | 92,882 | 1,049,567 | ||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 103,294 | 1,138,300 | |||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey F. Dale | — | — | — | — | 92,125 | 1,015,218 | ||||||||||||||||||||||||||||||||||||||||||||||
Laurent C. Lutz | 01/05/2011 | 200,000 | — | 4.5939 | 1/5/2021 | — | — |
(1) | Options granted in 2009 to Mr. Rocha were fully vested as of September 28, 2012. Options granted in 2011 to Messrs. McGarry, Rocha, and Thome were fully vested as of January 27, 2014. Options granted in |
(2) | The vesting dates of the NEOs’ unvested RSU awards that were outstanding as of December 31, |
Name | Grant Date |
| # of RSUs
| # of RSUs Vesting - Vesting Date 2018 | # of RSUs Vesting - Vesting | # of RSUs Vesting - Vesting Date 2020 | ||||||||||||||||||||||||||
Raymond J. Quinlan | 02/ | |||||||||||||||||||||||||||||||
105,820 - 2/ | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
| — | — | ||||||||||||||||||||||||||||||
02/ | — | |||||||||||||||||||||||||||||||
01/27/2017 | 76,335 - 1/27 | 76,336 - 1/27 | 76,336 - 1/27 | |||||||||||||||||||||||||||||
Steven J. McGarry | 02/10/2015 | 16,931 | 16,931 - 2/10 | — | — | |||||||||||||||||||||||||||
02/26/2016 | 44,818 | 22,409 - 2/26 | ||||||||||||||||||||||||||||||
01/27/2017 | 40,712 | 13,570 - 1/27 | 13,571 - 1/27 | 13,571 - 1/27 | ||||||||||||||||||||||||||||
Charles P. Rocha | 02/10/2015 | 13,227 | 13,227 - 2/10 | — | — | |||||||||||||||||||||||||||
02/26/2016 | 42,577 | 21,289 - 2/26 | 21,288 - 2/26 | — | ||||||||||||||||||||||||||||
01/27/2017 | 40,712 | 13,570 - 1/27 | 13,571 - 1/27 | 13,571 - 1/27 | ||||||||||||||||||||||||||||
Paul F. Thome | 02/10/2015 | 12,698 | 12,698 - 2/10 | — | — | |||||||||||||||||||||||||||
02/26/2016 | 42,017 | 21,009 - 2/26 | 21,008 - 2/26 | — | ||||||||||||||||||||||||||||
01/27/2017 | 30,534 | 10,178 - 1/27 | 10,178 - 1/27 | 10,178 - 1/27 | ||||||||||||||||||||||||||||
Laurent C. Lutz | — | — | — | — | — |
(3) | The vesting dates of the NEOs’ unvested PSU awards that were outstanding as of December 31, |
Name | Grant Date | # of Underlying | # of PSUs Vesting - Vesting Date 2019 | # of PSUs Vesting - Vesting Date 2020 | ||||||||||
Raymond J. Quinlan | 02/26/2016 | 113,445 | 113,445 - 2/26 | — | ||||||||||
01/27/2017 | 57,251 | — | 57,251 - 1/27 | |||||||||||
Steven J. McGarry | 02/26/2016 | 16,806 | 16,806 - 2/26 | — | ||||||||||
01/27/2017 | 10,178 | — | 10,178 - 1/27 | |||||||||||
Charles P. Rocha | 02/26/2016 | 15,966 | 15,966 - 2/26 | — | ||||||||||
01/27/2017 | 10,178 | — | 10,178 - 1/27 | |||||||||||
Paul F. Thome | 01/27/2017 | 7,633 | — | 7,633 - 1/27 | ||||||||||
Laurent C. Lutz | — | — | — | — | ||||||||||
|
(4) |
|
Market value of shares or units is calculated based on the closing price of the Company’s Common Stock on December |
Mr. Thome’s appointment as an Executive Officer occurred after the 2016 |
OPTION EXERCISES AND STOCK VESTED IN 20162017
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||
Name | Number of (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | Number of (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | ||||||||||||||||||||||||||||
Raymond J. Quinlan | — | — | 279,516 | 2,101,724 | — | — | 381,090 | 4,624,128 | ||||||||||||||||||||||||||||
Steven J. McGarry | — | — | 56,191 | 428,467 | 30,272 | 172,118 | 73,941 | 892,168 | ||||||||||||||||||||||||||||
Charles P. Rocha | 32,727 | 117,676 | 50,192 | 392,998 | — | — | 50,824 | 618,875 | ||||||||||||||||||||||||||||
Paul F. Thome | — | — | 43,089 | 331,518 | 25,363 | 157,395 | 58,960 | 710,950 | ||||||||||||||||||||||||||||
Jeffrey F. Dale | — | — | 28,669 | 232,767 | ||||||||||||||||||||||||||||||||
Laurent C. Lutz | 181,459 | 959,410 | 710,316 | 8,269,276 |
(1) | Includes vested RSUs received as a portion of the |
(2) | The value realized on vesting is the number of shares vested multiplied by the closing market price of the Company’s Common Stock on the vesting date. |
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information as of December 31, 2016,2017, relating to equity compensation plans or arrangements of the Company pursuant to which options, restricted stock, RSUs, PSUs, stock units, or other rights to acquire shares may be granted from time to time.
Name | Number of securities to be issued upon exercise of outstanding options and rights(1) | Weighted average exercise price of outstanding options and rights | Average remaining life (years) of options outstanding | Number of securities remaining available for future issuance under equity compensation plans | Types of awards issuable(2) | Number of securities to be issued upon exercise of outstanding options and rights(1) | Weighted average exercise price of outstanding options and rights | Average remaining life (years) of options outstanding | Number of securities remaining available for future issuance under equity compensation plans | Types of awards issuable(2) | ||||||||||||||||||||||||||||||
Equity compensation plans approved by security holders: | NQ, ISO, PSU, SAR, RES, RSU, ST | |||||||||||||||||||||||||||||||||||||||
SLM Corporation 2012 Omnibus Incentive Plan | NQ, ISO, PSU, SAR, RES, RSU, ST | |||||||||||||||||||||||||||||||||||||||
Traditional options | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Net-settled options | 688,121 | $ | 6.45 | 1.1 | 386,314 | $6.48 | 0.1 | |||||||||||||||||||||||||||||||||
RSUs/RES | 7,607,489 | — | — | |||||||||||||||||||||||||||||||||||||
RSUs/RES/PSUs | 6,026,393 | — | — | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total | 8,275,610 | 6.45 | 1.1 | 25,019,928 | 6,412,707 | $6.48 | 0.1 | 22,716,088 | ||||||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||||||
Employee Stock Purchase Plan(3) | — | — | — | 15,163,078 | NQ, RES | — | — | — | 14,879,126 | NQ, RES | ||||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||||||
Expired Plans | NQ, ISO, RES, RSU, SU | NQ, ISO, RES, RSU, SU | ||||||||||||||||||||||||||||||||||||||
Traditional options | 59,400 | 13.40 | 0.5 | 52,800 | 7.99 | 0.4 | ||||||||||||||||||||||||||||||||||
Net-settled options | 2,463,744 | 5.72 | 2.2 | 1,943,832 | 5.03 | 1.4 | ||||||||||||||||||||||||||||||||||
RSUs/PSUs | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total | 2,523,144 | 5.98 | 2.1 | — | 1,996,632 | 5.07 | 1.4 | — | ||||||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||||||
Total approved by security holders | 10,798,754 | 6.09 | 1.9 | 40,183,006 | 8,409,339 | 5.36 | 1.2 | 37,595,214 | ||||||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||||||
Equity compensation plans not approved by security holders: | ||||||||||||||||||||||||||||||||||||||||
Compensation arrangements | 437,014 | 6.20 | 1.0 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total not approved by security holders | 437,014 | 6.20 | 1.0 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||||||
Total | 11,235,768 | $ | 10.43 | 1.8 | 40,183,006 | 8,409,339 | $11.34 | 1.2 | 37,595,214 | |||||||||||||||||||||||||||||||
|
|
|
(1) | Upon exercise of anet-settled option, optionees are entitled to receive the spread shares only. The spread shares equal the gross number of options granted less shares |
(2) | NQ |
(3) | Number of shares available for issuance under the Employee Stock Purchase Plan (ESPP) as of December |
|
|
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 20162017
Deferred Compensation Plan for Key Employees
The table below provides information about thenon-qualified deferred compensation of the NEOs in 2016.2017. Under the Sallie Mae Deferred Compensation Plan for Key Employees (“DC Plan”), eligible employees may elect to defer up to 100 percent of their annual cash performance bonus and up to 85 percent of their base salary. Amounts deferred by plan participants are credited to record-keeping accounts, and participants are general creditors of the Company with regard to their accounts.
The Company makesWe make contributions to the DC Plan only if, and to the extent, a participant’s deferral under this plan reduces the contribution that would have been made under the Company’s ourtax-qualified defined contribution plan. No such contributions were made for any NEO for 2016.2017. Participants’ accounts are credited with earnings based on the investment performance of underlying investment funds, as selected by participants. The Company’sOur stock is one of the available investment options under the DC Plan. Earnings credited do not constitute “above-market” earnings as defined by the SEC. Earnings are credited daily.
Participants elect the time and form of payment of their accounts. Accounts may be distributed either in a lump sum, annual installments, or a formula acceptable to the Company.us. Accounts may also be paid while a participant is “in service” on apre-specified date, provided that the
that the distribution date is at least two years after the date of the last deferral.
Supplemental 401(k) Savings Plan
Under the Sallie Mae Supplemental 401(k) Savings Plan (“Supplemental 401(k)”), eligible employees may elect to defer five percent of their base salary and annual bonus or up to $750,000$770,000 of total eligible pay.
The CompanyWe may also make matching contributions to a participant’s account. The CompanyWe will match a participant’s contribution after the participant completes 12 months of service. Participants are fully vested in the Company’sour matching contributions at all times. Participants may elect to have their plan accounts deemed invested in the core investment funds offered under the Company’s ourtax-qualified 401(k) plan, and earnings are credited to participants’ Supplemental 401(k) accounts when such amounts would have been credited under the Company’s ourtax-qualified 401(k) plan. Earnings credited to the participants’ accounts do not constitute “above-market” earnings as defined by the SEC.
Participants elect the time and form of payment of their accounts. Accounts are paid in cash in a lump sum or inby annual installments over 10 years. A participant may request an early distribution if the participant experiences a substantial, unforeseen financial hardship (as defined in the plan).
Name | Plan Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY(1) ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | Plan Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY(1) ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | ||||||||||||||||||||||||||||||||||||||||
Raymond J. Quinlan | Supplemental 401(k) | 25,000 | 25,000 | 8,499 | — | 58,499 | Supplemental 401(k) | 25,000 | 25,000 | 22,458 | — | 130,957 | ||||||||||||||||||||||||||||||||||||||||
Steven J. McGarry | DC Plan Supplemental 401(k) | | — 23,375 |
| | — 23,375 |
| | 1,688 11,631 |
| | 8,557 — |
| | 19,513 173,545 |
| DC Plan Supplemental 401(k) | 25,000 | 25,000 | | 3,395 45,077 | | — — | | 22,908 268,622 | |||||||||||||||||||||||||||
Charles P. Rocha | Supplemental 401(k) | 23,375 | 23,375 | 7,601 | — | 142,158 | Supplemental 401(k) | 25,000 | 25,000 | 30,887 | — | 223,045 | ||||||||||||||||||||||||||||||||||||||||
Paul F. Thome | Supplemental 401(k) | 18,816 | 18,816 | 91,118 | — | 274,516 | Supplemental 401(k) | 25,000 | 25,000 | 21,522 | — | 346,038 | ||||||||||||||||||||||||||||||||||||||||
Jeffrey F. Dale | Supplemental 401(k) | 20,100 | 20,100 | 3,504 | — | 43,704 | ||||||||||||||||||||||||||||||||||||||||||||||
Laurent C. Lutz | — | — | — | — | — | — |
(1) | Registrant Contributions listed here are included under the heading “Employer Contributions to Defined Contribution Plans” in Footnote |
ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
Executive Severance Plan
Under the Company’sour Executive Severance Plan for Senior Officers (the “Severance Plan”), eligible officers who do not have an individually negotiated severance arrangement will receive a lump sum cash payment equal to: (1) a multiple of base salary and an average of the last 24 months of bonus compensation; plus(2) pro-rated target bonus for the year of termination, upon the following events: (a) resignation from employment for good reason (as defined in the plan); (b) the Company’sour decision to terminate an eligible officer’s employment for any reason other than for cause (as defined in the plan); (c) death or disability; or (d) upon mutual agreement of the Company and the eligible officer. The multiplier for each eligible officer position is as follows: Chief Executive Officer-2;Officer (x 2.0); Higher than Executive Vice President-1.5;President (x 1.5); Executive or Senior Vice President-1.0.President (x 1.0). Under the Severance Plan, in no event will a severance payment exceed a multiple of three times an officer’s base and incentive bonus.
In addition to the cash severance payment, eligible officers will receive subsidized medical benefits and outplacement services for 18 months (24 months for the Chief Executive Officer). Treatment of equity upon severance is governed by the terms of the applicable equity agreement and not the Severance Plan. All payments and benefits provided under the Severance Plan are conditioned on the participant’s continuing compliance with the terms of the Severance Plan and the participant’s execution of a release of claims, covenant not to sue, andnon-competition andnon-solicitation agreements.
Change in Control Severance Plan
Under the Company’s Change in Control Severance Plan for Senior Officers (the “Change in Control Severance Plan”), if a termination of employment for reasons defined in the plan occurs within 24 months following a change in control of the Company, the participant is entitled to receive a lump sum cash payment equal to two times the sum of his or her base salary and average annual performance bonus (based on the prior two years). A participant will also be entitled to receive apro-rated portion of his or her target annual performance bonus for the year in which the
termination occurs, as well as continuation of medical insurance benefits for atwo-year period. Under the Change in Control Severance Plan, equity awards made before January 1, 2009 vest upon a change in control pursuant to their terms, regardless of whether the participant’s employment terminates, and equity awards granted after January 1, 2009 become vested andnon-forfeitable in connection with a change in control only if the participant’s employment is terminated or if the acquiring or surviving entity does not assume the awards. The Change in Control Severance Plan does not allow forgross-ups. All payments and benefits provided under the Change in Control Severance Plan are conditioned on the participant’s continuing compliance with the Change in Control Severance Plan and the participant’s execution of a release of claims, covenant not to sue, andnon-competition andnon-solicitation agreements.
Employment Terms—Mr. Dale
Mr. Dale was offered employment by the Company for his services as Senior Vice President and Chief Risk Officer to begin on July 10, 2014. Under the terms of Mr. Dale’s offer, Mr. Dale was paid an initial annual base salary of $400,000, and was entitled to participate in the Company’s management incentive program with a target bonus opportunity of 100 percent of base salary in the amount of $400,000, and a guaranteed minimum bonus of $350,000 for 2014, provided that Mr. Dale was employed on the bonus payment date.
Shortly after Mr. Dale began his employment, pursuant to the terms of his offer, he received a deferred cash award (the “Signing Cash Award”) of $200,000, to be vested and paid out in equal amounts during the first quarter of each of 2015 and 2016, provided Mr. Dale was employed by the Company on such payment dates. Mr. Dale also received an equity grant with a grant value of $200,000, which vested in increments of one-third per year on each of the first, second and third anniversaries of the start of Mr. Dale’s employment. The equity grant consisted of RSUs subject to the standard terms and conditions in effect at the time of the grant.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The table below reflects the amount of compensation that would have been payable to Messrs. Quinlan, McGarry, Rocha, Thome, and DaleLutz on December 31, 2016,2017, if such individual��sindividual’s employment had terminated on that date, given the individual’s compensation and service levels as of December 31, 2016.2017. The values reported in the table below with respect to equity vesting are based on the Company’s closing stock price on December 30, 201629, 2017 of $11.02$11.30 per share.
The following severance arrangements were effective for Messrs. Quinlan, McGarry, Rocha, Thome, and DaleLutz on December 31, 2016:2017: (i) the Executive Severance Plan, (ii) the Change in Control Severance Plan, and (iii) equity acceleration and settlement provisions contained in awards issued pursuant to the Incentive2012 Plan and predecessor equity plans.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE
Change in Control without Termination(1) ($) | Change in Control with Termination without Cause or for Good Reason(2) ($) | Termination by the Company without Cause or by the Executive for Good Reason(3) ($) | Termination by the Company with Cause(4) ($) | Termination by the Executive upon Retirement(5) ($) | Termination by Death or Disability(6) ($) | Change in Control without Termination(1) ($) | Change in Control with Termination without Cause or for Good Reason(2) ($) | Termination by the Company without Cause or by the Executive for Good Reason(3) ($) | Termination by the Company with Cause(4) ($) | Termination by the Executive upon Retirement(5) ($) | Termination by Death or Disability(6) ($) | |||||||||||||||||||||||||||||||||||||
Raymond J. Quinlan | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity Vesting | — | 11,330,026 | 11,330,026 | — | — | 11,330,026 | — | 10,568,065 | 10,568,065 | — | — | 10,568,065 | ||||||||||||||||||||||||||||||||||||
Cash Severance | — | 5,550,450 | 4,087,725 | — | — | — | — | 5,900,615 | 4,625,533 | — | — | 4,625,533 | ||||||||||||||||||||||||||||||||||||
Medical Insurance/Outplacement | — | 20,120 | 35,120 | — | — | — | — | 19,525 | 34,525 | — | — | 34,525 | ||||||||||||||||||||||||||||||||||||
Total | — | 16,900,596 | 15,452,871 | — | — | 11,330,026 | — | 16,488,205 | 15,228,122 | — | — | 15,228,122 | ||||||||||||||||||||||||||||||||||||
Steven J. McGarry | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity Vesting | — | 2,853,531 | 2,853,531 | — | 2,856,531 | 2,853,531 | — | 2,555,215 | 2,555,215 | — | 2,555,215 | 2,555,215 | ||||||||||||||||||||||||||||||||||||
Cash Severance | — | 2,877,500 | 1,101,875 | — | — | — | — | 3,121,307 | 1,207,702 | — | — | 1,207,702 | ||||||||||||||||||||||||||||||||||||
Medical Insurance/Outplacement | — | 30,425 | 37,819 | — | — | — | — | 27,478 | 35,609 | — | — | 35,609 | ||||||||||||||||||||||||||||||||||||
Total | — | 5,761,456 | 3,993,225 | — | 2,856,531 | 2,853,531 | — | 5,704,000 | 3,798,026 | — | 2,555,215 | 3,798,026 | ||||||||||||||||||||||||||||||||||||
Charles P. Rocha | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity Vesting | — | 2,865,338 | 2,865,338 | — | — | 2,865,338 | — | 2,844,921 | 2,844,921 | — | — | 2,844,921 | ||||||||||||||||||||||||||||||||||||
Cash Severance | — | 2,877,500 | 1,101,875 | — | — | — | — | 2,743,480 | 1,112,745 | — | — | 1,112,745 | ||||||||||||||||||||||||||||||||||||
Medical Insurance/Outplacement | — | 27,670 | 35,753 | — | — | — | — | 27,478 | 35,609 | — | — | 35,609 | ||||||||||||||||||||||||||||||||||||
Total | — | 5,770,508 | 4,002,966 | — | — | 2,865,338 | — | 5,615,879 | 3,993,275 | — | — | 3,993,275 | ||||||||||||||||||||||||||||||||||||
Paul F. Thome | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity Vesting | — | 2,034,739 | 2,034,739 | — | 2,034,739 | 2,034,739 | — | 1,821,916 | 1,821,916 | — | 1,821,916 | 1,821,916 | ||||||||||||||||||||||||||||||||||||
Cash Severance | — | 2,482,000 | 903,000 | — | — | — | — | 2,416,010 | 974,503 | — | — | 974,503 | ||||||||||||||||||||||||||||||||||||
Medical Insurance/Outplacement | — | 22,148 | 31,611 | — | — | — | — | 21,553 | 31,165 | — | — | 31,165 | ||||||||||||||||||||||||||||||||||||
Total | — | 4,538,887 | 2,969,350 | — | 2,034,739 | 2,034,739 | — | 4,259,479 | 2,827,584 | — | 1,821,916 | 2,827,584 | ||||||||||||||||||||||||||||||||||||
Jeffrey F. Dale | ||||||||||||||||||||||||||||||||||||||||||||||||
Laurent C. Lutz | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity Vesting | — | 1,442,231 | 1,442,231 | — | — | 1,442,231 | — | 1,397,155 | 1,397,155 | — | — | 1,397,155 | ||||||||||||||||||||||||||||||||||||
Cash Severance | — | 2,157,420 | 861,855 | — | — | — | — | 3,480,225 | 935,681 | — | — | 935,681 | ||||||||||||||||||||||||||||||||||||
Medical Insurance/Outplacement | — | 20,120 | 30,090 | — | — | — | — | 27,636 | 35,727 | — | — | 35,727 | ||||||||||||||||||||||||||||||||||||
Total | — | 3,619,771 | 2,334,176 | — | — | 1,442,231 | — | 4,905,016 | 2,368,563 | — | — | 2,368,563 |
(1) | For Equity Vesting—Assumes all equity awards are assumed by the surviving/acquiring company in a change in control. |
(2) | For Equity Vesting—Amounts shown are the value of RSU awards (including all dividend equivalents) plus the spread value of net stock options that would vest for each individual on December |
(3) | For Equity Vesting—Upon termination, these awards generally continue to vest based on their original vesting terms. For Medical Insurance/Outplacement—Consists of the Company’s estimated portion of the cost of health care benefits for 18 months (24 months in Mr. Quinlan’s case), plus $15,000 of outplacement services. |
(4) | For Equity Vesting—Vested and unvested equity awards forfeit upon a termination for cause (as defined in the plan). |
(5) | For Equity Vesting—Retirement eligibility for equity treatment awards granted prior to 2013 is age 60 or more, or age plus service with the Company or its subsidiaries of 70 or more. |
(6) | For Equity Vesting—Unvested equity awards accelerate upon termination by death or disability (as defined in the plan). Amounts shown are the value of RSU awards plus the spread value of net stock options that would vest for each individual on December |
(7) | Mr. Rocha died on January 17, 2018; therefore, any post-employment compensation described above for Mr. Rocha is for illustrative purposes only. Following his death, Mr. Rocha’s estate received a lump sum severance payment of $2,051,613.38 and will receive monthly cash payments for 36 months equal to the difference between the COBRA premium and the premium charged to active employees for such coverage, to the extent his family members elect to participate in COBRA. |
Pay Ratio
In accordance with the requirements of Section 953(b) of the Dodd-Frank Act and Item 402(u) of RegulationS-K (which we collectively refer to as the “Pay Ratio Rule”), we are providing the following estimated information for 2017:
the median of the annual total compensation of all our employees (except our Chief Executive Officer) was $71,245;
the annual total compensation of our Chief Executive Officer was $5,754,527; and
the ratio of these two amounts was 81 to 1. We believe that this ratio is a reasonable estimate calculated in a manner consistent with the requirements of the Pay Ratio Rule.
SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies.
Methodology for Identifying Our “Median Employee”
Employee Population
To identify the median of the annual total compensation of all of our employees (other than our Chief Executive Officer), we first identified our total employee population from which we determined our “median employee.” We determined that, as of December 31, 2017, our employee population consisted of approximately 1,500 individuals (as reported in Item 1,Business, in our 2017 Form10-K). Our employee population consisted of our workforce of full-time, part-time, seasonal and temporary employees.
We selected December 31, 2017, which is within the last three months of 2017, as the date upon which we would identify the “median employee” because we wanted to measure the median employee’s compensation on the same date the CEO’s pay is calculated.
Determining our Median Employee
To identify our “median employee” from our total employee population, we compared the amount of base pay and bonus (base pay included all wages paid during the year, plus any equivalent paid time off, including but not limited to leave pay, military pay, volunteer pay and holiday pay, and the bonus calculation included any performance- based incentive payment). We identified our “median employee” using this compensation measure, which was consistently applied to all our employees included in the calculation. We did not make anycost-of-living adjustments in identifying our “median employee.”
Our Median Employee
Using the methodologies described above, we determined that our “median employee” was a full-time, salaried employee located in the United States who provides support in our operations business.
Determination of Annual Total Compensation of our “Median Employee” and our CEO
Once we identified our “median employee,” we then calculated such employee’s annual total compensation for 2017 using the same methodology we used for purposes of determining the annual total compensation of our NEOs for 2017 (as set forth in the 2017 Summary Compensation Table on page 38 of this Proxy Statement), adjusted to include the cost to the Company in 2017 of specified employee benefits that are provided on anon-discriminatory basis, including employee assistance benefits (including tuition reimbursements and participation in a medical and wellness assistance program).
Our CEO’s annual total compensation for 2017 for purposes of the Pay Ratio Rule is equal to the amount reported in the “Total” column in the 2017 Summary Compensation Table, adjusted, to the extent applicable, in a similar manner as the annual total compensation of our “median employee.”
Our directorsdirectors’ compensation program is designed to reasonably compensate ournon-employee directors for work required for a company of our size and to align the directors’ interests with that of our stockholders. The NGC Committee reviews the compensation level of ournon-employee directors on an annual basis and makes recommendations to the Board of Directors.
2016 Director Compensation Table2017 DIRECTOR COMPENSATION TABLE
The following table provides summary information for the year ended December 31, 2016,2017, relating to compensation paid to or accrued by us on behalf of ournon-employee directors who served in this capacity on December 31, 2016:during 2017.
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | All Other Compensation ($)(4) | Total($) | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | All Other Compensation ($)(4) | Total($) | ||||||||||||||||||||
Paul G. Child | 115,000 | 70,000 | — | 39 | 185,039 | 115,000
| 79,997
| —
| 39
| 195,036
| ||||||||||||||||||||
Carter Warren Franke | 90,000 | 70,000 | — | 39 | 160,039 | 90,000
| 79,997
| —
| 39
| 170,036
| ||||||||||||||||||||
Earl A. Goode | 90,000 | 70,000 | — | 39 | 160,039 | 90,000
| 79,997
| —
| 20
| 170,017
| ||||||||||||||||||||
Ronald F. Hunt | 90,000 | 70,000 | — | 39 | 160,039 | |||||||||||||||||||||||||
Ronald F. Hunt(5)
| 45,000
| —
| —
| 13
| 45,013
| |||||||||||||||||||||||||
Marianne M. Keler | 100,000 | 70,000 | — | 39 | 170,039 | 100,000
| 79,997
| —
| 39
| 180,036
| ||||||||||||||||||||
Jim Matheson | 90,000 | 70,000 | — | 39 | 160,039 | 90,000
| 79,997
| —
| 39
| 170,036
| ||||||||||||||||||||
Jed H. Pitcher | 105,000 | 70,000 | — | 39 | 175,039 | 105,000
| 79,997
| —
| 20
| 185,017
| ||||||||||||||||||||
Frank C. Puleo | 100,000 | 70,000 | — | 39 | 170,039 | 100,000
| 79,997
| —
| 25
| 180,022
| ||||||||||||||||||||
Vivian C. Schneck-Last | 90,000 | 70,000 | — | 39 | 160,039 | 90,000
| 79,997
| —
| 39
| 170,036
| ||||||||||||||||||||
William N. Shiebler | 100,000 | 70,000 | — | 39 | 170,039 | 100,000
| 79,997
| —
| 20
| 180,017
| ||||||||||||||||||||
Robert S. Strong | 90,000 | 70,000 | — | 39 | 160,039 | 90,000
| 79,997
| —
| 39
| 170,036
| ||||||||||||||||||||
Kirsten O. Wolberg(5) | 5,833 | — | — | 3 | 5,836 | |||||||||||||||||||||||||
Kirsten O. Wolberg
| 90,000
| 79,997
| —
| 39
| 170,036
|
(1) | Director fees are paid quarterly in arrears. |
(2) | Thenon-employee directors elected to |
(3) |
|
(4) | Includes annual premiums paid by |
(5) |
|
Director Compensation Elements
The following table highlights the material elements of our 2016 non-employee2017 director compensation program:
Membership/Retainer | Annual Cash Retainer | |
Board of Directors Retainer | $70,000 | |
Lead Independent Director Retainer | $25,000 | |
Committee Chair Retainer | ||
• Audit Committee | $25,000 | |
• Nominations, Governance and Compensation Committee | $20,000 | |
• Risk Committee | $20,000 | |
• Compliance Committee | $20,000 | |
Committee Membership Retainer | ||
• Audit Committee | $10,000 | |
• Nominations, Governance and Compensation Committee | $10,000 | |
• Risk Committee | $10,000 | |
• Compliance Committee | $10,000 |
In addition to the Committees above, some of ournon-employee directors are all also members of our Executive and Strategic Planning Committee and our Preferred Stock Committee. No fees arewere paid in 2017 in connection with these Committees. On November 30, 2017, the Board of Directors approved a Committee Chair Retainer of $10,000 and a Committee Membership Retainer of $5,000 for service on the Strategic Planning Committee, effective January 1, 2018, to be paid in arrears.
In addition to the cash retainers set forth above, ournon-employee directors each received $70,000$80,000 in restricted stock awards.awards, which resulted in a grant date fair value of $79,997. These restricted stock awards will vest and become transferable upon the Company’s 20172018 Annual Meeting. These awards will be forfeited if the grantee ceases to be a directormember of the Company’s Board of Directors prior to the vesting event for any reasons other than death, disability, or change of control.
We reimburse directors for anyout-of-pocket expenses incurred in connection with service as a director.
Stock Ownership Guidelines
We maintain stock ownership guidelines for ournon-employee directors. Under our stock ownership guidelines, each director is expected, within five years of initial election to the Board of Directors, to own Common
Stock with a value equivalent to four times his or her annual cash retainer for serving on our Board of Directors. As of
December 31, 2016,2017, all then current directors were in compliance with our stock ownership guidelines or are expected to achieve compliance within the applicable five-year period.
Other Compensation
We providenon-employee directors with company-paid business travel accident insurance.
Deferred Compensation Plan
Under our Deferred Compensation Plan for Directors (“Director Deferral Plan”),non-employee directors may elect annually to defer receipt of all or a percentage of their annual retainer, meeting fees, or per diem payments.retainer. Deferrals are credited with earnings based on the performance of certain investment funds selected by the participant. Deferrals are fully vested at all times and are payable in cash (in lump sum or in installments at the election of the director) or Company stock upon termination of the director’s service on the Board of Directors (except for hardship withdrawals in limited circumstances). During 2016,2017, none of thenon-employee directors actively participated in the Director Deferral Plan.
Other Matters for the 20172018 Annual Meeting
As of the date of this proxy statement, there are no matters the Board of Directors intends to present for a vote at the Annual Meeting other than the business items discussed in this proxy statement. In addition, Sallie Mae has not been notified of any other business proposed to be presented at the Annual Meeting. If other matters now unknown to the Board of Directors come before the Annual Meeting, the proxy given by a stockholder electronically, telephonically or on a proxy card gives discretionary authority to the persons named by Sallie Mae to serve as proxies to vote such stockholder’s shares on any such matters in accordance with their best judgment.
Stockholder Proposals for the 20182019 Annual Meeting
A stockholder who intends to introduce a proposal for consideration at Sallie Mae’s 2018 Annual Meeting2019 annual meeting may seek to have that proposal and a statement in support of the proposal included in the Company’s 20182019 proxy statement if the proposal relates to a subject that is permitted under SEC Rule 14a-8.14a-8 of the Exchange Act (“Rule14a-8”). To be considered for inclusion, the proposal and supporting statement must be received by the Company no later than January 5, 2018,4, 2019, and must satisfy the other requirements of Rule14a-8. The submission of a stockholder proposal does not guarantee it will be included in Sallie Mae’s 2019 proxy statement.
Sallie Mae’sBy-Laws provide that a stockholder may otherwise propose business for consideration or nominate persons for election to the Board of Directors, in compliance with federal proxy rules, applicable state law and other legal requirements and without seeking to have the proposal included in the Company’sour proxy statement pursuant to Rule14a-8. Sallie Mae’sBy-Laws provide that any such proposals or nominations for the Company’s 2018 Annual Meetingour 2019 annual meeting must be received by it not earlier than the close of business on February 22, 2018,21, 2019, nor later than on March 24, 2018.23, 2019. Any such notice must satisfy the other requirements in Sallie Mae’sBy-Laws applicable to such proposals and nominations. If a stockholder fails to meet these deadlines or fails to comply with the requirements of SEC Rule14a-4(c), under the Exchange Act, Sallie Mae may exercise discretionary voting authority under proxies it solicits to vote on any such proposal.
All expenses in connection with the solicitation of proxies for the Annual Meeting will be paid by Sallie Mae.us. Officers,
directors, regular employees or other agents of
Sallie Mae may solicit proxies by telephone, telefax, personal calls, or other electronic means. Sallie MaeWe will request banks, brokers, custodians and other nominees in whose names shares are registered to furnish to the beneficial owners of Sallie Mae’s Common Stock Notices of Availability of the materials related to the Annual Meeting, and including, if so requested by the beneficial owners, paper copies of the 20162017 Form10-K, this proxy statement and the proxy card and, upon request, the Companywe will reimburse such registered holders for theirout-of-pocket and reasonable expenses in connection therewith.
To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding stock but sharing the same address, Sallie Mae haswe have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain registered stockholders who have the same address and last name, and who do not participate in electronic delivery of proxy materials, will receive one copy of the Notice of Availability and, as applicable, any additional proxy materials that are delivered until such time as one or more of these stockholders notifies Sallie Maeus that they want to receive separate copies. We hereby undertake to deliver promptly, upon written or oral request, a separate copy of the Notice of Availability or proxy materials, as the case may be, to a stockholder at a shared address to which a single copy of the document(s) was delivered. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
If you are a registered stockholder and would like to have separate copies of the Notice of Availability or proxy materials mailed to you in the future, or you would like to have a single copy of the Notice of Availability or proxy materials mailed to you in the future, you must submit a request in writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717 or call at by calling1-866-540-7095. If you are a beneficial stockholder, please contact your bank or broker to opt in or out of householding.
However, please note that if you want to receive a separate proxy card or vote instruction form or other proxy materials for purposes of this year’s Annual Meeting, you should follow the instructions included in the Notice of Availability that was sent to you and we will deliver promptly upon written or oral request, separate copies of the proxy materials for this year’s Annual Meeting.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Who may vote?Only stockholders who owned shares of Sallie Mae’sour Common Stock, par value $.20 per share (“Common Stock”), at the close of business on April 25, 2017,2018, the record date for the Annual Meeting, are entitled to notice of, and to vote at, the Annual Meeting. Sallie Mae’s Common Stock is listed on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “SLM.” On April 25, 2017, 431,334,4042018, 435,221,198 shares of Common Stock were outstanding and eligible to be voted.
Why did I receive a “Notice Regarding the Availability of Proxy Materials”? Sallie Mae isWe are furnishing proxy materials to itsour stockholders primarily via the internet, instead of mailing printed copies of those materials to each stockholder. By doing so, Sallie Mae saveswe save costs and reducesreduce the environmental impact of the Annual Meeting. On or about May 5, 2017, Sallie Mae4, 2018, we mailed a Notice of Availability of Proxy Materials (“Notice of Availability”) to the Company’s stockholders. The Notice of Availability contains instructions on how to access Sallie Mae’sour proxy materials and vote online or vote by telephone. The Notice of Availability also contains a16-digit control number that you will need to vote your shares. If you previously chose to receive Sallie Mae’sour proxy materials electronically, you will continue to receive access to these materials via ane-mail that will provide electronic links to these documents unless you elect otherwise.
How do I request paper copies of the proxy materials? You may request paper copies of the proxy materials for the Annual Meeting by following the instructions listed in the Notice of Availability, atwww.proxyvote.com, by telephoning1-800-579-1639, or by sending ane-mail tosendmaterial@proxyvote.com.
What is the difference between holding shares as a beneficial owner in street name and as a stockholder of record?If your shares are held in street name through a broker, bank, trustee or other nominee, you are considered the beneficial owner of shares held in street name. As the beneficial owner, you have the right to direct your broker, bank, trustee or other nominee how to vote your shares. Without your voting instructions, your broker, bank, trustee or other nominee may only vote your shares on routine matters. Routine mattersDO NOT include Proposals 1 2, 4, and 5,2, but do include Proposal 3 (relating to the ratification of the appointment of the independent registered public accounting firm). Fornon-routine matters, your shares will not be voted without your specific voting instructions. Accordingly, Sallie Mae encourages you to vote your shares.
If your shares are registered directly in your name with Sallie Mae’sour transfer agent, Computershare, you are considered to be a stockholder of record with respect to those shares. As a stockholder of record, you have the right to grant your voting proxy directly to Sallie Mae or to a third party, or to vote in person at the Annual Meeting.
How do I vote?Sallie Mae encouragesWe encourage stockholders to vote in advance of the Annual Meeting, even if you plan to attend the Annual Meeting. You may vote in one of the following ways:
• | By Internet. You may vote electronically via the Internet at |
• | By Telephone. If you wish to vote by telephone, you may call the toll-free telephone number on the Notice of Availability or your proxy card, which is available24-hours a day, and follow thepre-recorded instructions. Please have your Notice of Availability or proxy card available when you call. If you hold your shares in street name, your broker, bank, trustee or other nominee may provide you additional instructions regarding voting your shares by telephone. Votes submitted telephonically must be received by 11:59 p.m., Eastern Daylight Time, on June |
• | In Person.If you hold shares directly in your name as a stockholder of record, you may either vote in person or be represented by another person at the Annual Meeting by executing a legal proxy designating that person as your proxy to vote your shares. If you hold your shares in street name, you must obtain a legal proxy from your broker, bank, trustee or other nominee and present it to the inspector of elections with your ballot to be able to vote at the Annual Meeting. To request a legal proxy, please follow the instructions at |
• | By Mail. If you hold your shares in street name through a broker, bank, trustee or other nominee, to vote by mail you must request paper copies of the proxy materials. Once you receive your paper copies, you will need to |
mark, sign and date the voting instruction form and return it in the prepaid return envelope provided. Your voting instruction form must be received no later than the close of business on June |
What if I hold my shares in street name and I do not provide my broker, bank, trustee or other nominee with instructions about how to vote my shares? You may instruct your broker, bank, trustee or other nominee about how to vote your shares using the methods described above. If you do not provide voting instructions to the firm that holds your shares prior to the Annual Meeting, the firm has discretion to vote your shares with respect to Proposal 3 on the proxy card (relating to the ratification of the appointment of the independent registered public accounting firm), which is considered a routine matter. However, the firm will not have discretion to vote your shares with respect to Proposals 1 2, 4 and 52 on the proxy card, as these are each considered to be anon-routine matter. You are encouraged to participate in the election of directors and vote on all of the proposals by returning your voting instructions to your broker, bank, trustee or other nominee.
How do I vote shares of Common Stock held in my 401(k) Plan?If you participate in Sallie Mae’sour 401(k) Plan, you may vote the number of shares equivalent to your interest, if any, as credited to your account on the record date. You will need to instruct the 401(k) Plan Trustee by telephone, internet or mail on how to vote your shares. Voting instructions must be received no later than the close of business on June 19, 2017.18, 2018. If you own shares through Sallie Mae’sour 401(k) Plan and do not provide voting instructions with respect to your plan shares, the Trustee will vote your plan shares in the same proportion as other plan shares have been voted.
How do proxies work?The Board of Directors is requesting your proxy. Giving your proxy means you authorize the persons named as proxies therein to vote your shares at the Annual Meeting in the manner you specify in your proxy (or to exercise their discretion as described herein). If you hold your shares as a record
holder and sign and return a proxy card but do not specify how to vote on a proposal, the persons named as proxies will vote your shares in accordance with the Board of Directors’ recommendations. The Board of Directors has recommended that stockholders vote:
“FOR” the election of each of the director nominees named in Proposal 1;
“FOR” advisory approval of Sallie Mae’s executive compensation set forth in Proposal 2; and
“FOR” ratification of the appointment of Sallie Mae’s independent registered public accounting firm set forth in Proposal 3;
“FOR” the approval of an amendment to the Incentive Plan and the material terms of the performance goals under the Incentive Plan set forth in Proposal 4; and
“1 year” as the frequency of future advisory votes on executive compensation as set forth in Proposal 5.3.
In the absence of voting instructions to the contrary, shares of Common Stock represented by validly executed proxies will be voted in accordance with the foregoing recommendations. Sallie Mae does not know of any other matters to be presented at the Annual Meeting as of the date of this proxy statement.
Can I change my vote?Yes. If you hold your shares as a record holder, you may revoke your proxy or change your vote at any time prior to the final tallying of votes by:
Delivering a written notice of revocation to Sallie Mae’s Corporate Secretary at the Office of the Corporate Secretary, 300 Continental Drive, Newark, Delaware 19713;
• | Submitting another timely vote via the Internet, by telephone or by mailing a new proxy (following the instructions listed under the “How do I vote?” section); or |
Attending the Annual Meeting and voting in person.
If your shares are held in street name, contact your broker, bank, trustee or nominee for instructions on how to revoke or change your voting instructions.
What constitutes a quorum?A quorum is necessary to transact business at the Annual Meeting. A quorum exists if the holders of a majority of Common Stock
entitled to vote are present in person or represented by proxy at the Annual Meeting, including proxies on which abstentions (withholding authority to vote) are indicated. Abstentions and brokernon-votes will be counted in determining whether a quorum exists.
Who will count the vote?Votes will be tabulated by Sallie Mae’s Corporate Secretary,our General Counsel, who will act as the Inspector of Elections at the Annual Meeting.
Who can attend the Annual Meeting? Only holders of Common Stock as of the record date, April 25, 2017,2018, or duly appointed proxies, may attend. No guests will be allowed to attend the Annual Meeting.
What do I need to attend the Annual Meeting and when should I arrive? The Annual Meeting will be held at Sallie Mae’s Headquarters, 300 Continental Drive, Newark, Delaware 19713. Admission to the Annual Meeting will begin at 10:00 a.m., Eastern Daylight Time.
In order to be admitted to the Annual Meeting, you should:
arrive shortly after 10:00 a.m., Eastern Daylight Time, to ensure that you are seated by the commencement of the Annual Meeting at 11:00 a.m., Eastern Daylight Time;
be prepared to comply with security requirements, which may include guards searching all bags and attendees passing through a metal detector;
leave your camera at home because cameras, transmission, broadcasting and other recording devices, including certain smart phones, will not be permitted in the meeting room; and
bring photo identification, such as a driver’s license, and proof of ownership of Common Stock on the record date, April 25, 2017.2018. If you are a holder of record, the top half of your proxy card or your Notice of Availability is your admission ticket. If you hold your shares in street name, a recent brokerage statement or a letter from your bank, broker, trustee or other nominee are examples of proof of ownership. If you want to vote your shares held in street name in person, you must get a legal proxy in your name from the broker, bank, trustee or other nominee that holds your shares of Common Stock.
Any holder of a proxy from a stockholder must present a properly executed legal proxy and a copy of the proof of ownership.
If you do not provide photo identification and comply with the other procedures outlined above for attending the Annual Meeting in person, you will not be admitted to the Annual Meeting.
SLM CORPORATION ATTN: CORPORATE SECRETARY 300 CONTINENTAL DRIVE NEWARK, DE 19713 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS VOTE BY PHONE -1-800-690-6903 VOTE BY MAILAppendix AVOTE BY INTERNET -www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Daylight 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. If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Daylight Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E35580-P00228 | KEEP THIS PORTION FOR YOUR RECORDS | |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. PLEASE VOTE, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. ADMISSION TICKET Bring this ticket and photo ID with you if you plan on attending the meeting. NOTE: Cameras, transmission, broadcasting and other recording devices, including certain smart phones, will not be permitted in the meeting room. Attendees will be asked to pass through a security screening device or adhere to other security measures prior to entering the Annual Meeting. We regret any inconvenience this may cause you and we appreciate your cooperation. IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, q DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
SLM CORPORATION Annual Meeting of Stockholders June Sallie Mae 300 Continental Drive Newark, DE 19713 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED STOCKHOLDER. IF NO CHOICE IS SPECIFIED BY THE STOCKHOLDER, THIS PROXY WILL BE VOTED “FOR” ALL PORTIONS OF PROPOSALS 1, 2 THIS CARD WILL ALSO BE USED TO PROVIDE VOTING INSTRUCTIONS TO THE TRUSTEE FOR ANY SHARES HELD FOR THE ACCOUNT OF THE UNDERSIGNED IN CERTAIN SLM CORPORATION 401(K) PLANS.
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