PROXY STATEMENT
PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF
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| Soliciting Material Pursuant to §240.14a-12 | |||
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SHAREHOLDERS AND
PROXY STATEMENT
CONTENTS
DATE AND TIME
Tuesday, May 8, 2018
9:00 a.m. (local time)
PLACE
Popular Center Building
PH Floor
209 Muñoz Rivera Avenue
San Juan, Puerto Rico
RECORD DATE
March 9, 2018
ITEMS OF BUSINESS
Elect four directors assigned to “Class 1”
Authorize and approve an amendment to Article Seventh of our Restated Certificate of Incorporation to provide that directors shall be elected by a majority of the votes cast by shareholders at the annual meeting of shareholders, provided that in contested elections directors shall be elected by a plurality of votes cast;
Approve, onone-year term, an advisory basis, ourvote to approve executive compensation;
ApproveI encourage you to read our proxy statement, annual report and other proxy materials. Whether or not you plan to participate in the adjournmentAnnual Meeting, we urge you to vote as soon as possible, either online, by phone or postponementby mail. Please follow the voting instructions to ensure your shares are represented at the meeting. Your vote is important to us.
Consider such other business as may be properly brought before the meeting or any adjournments thereof.
Notice of Annual Meeting of Shareholders and Proxy Statement |
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Date and Time | Thursday, May 9, 2024 9:00 a.m. (Atlantic Standard Time) | ||||
Place | Popular Center Building, Lobby Conference Hall, 209 Muñoz Rivera Avenue, San Juan, Puerto Rico | ||||
Record Date | March 14, 2024 | ||||
How to Vote | Only shareholders of record at the close of business on March 14, 2024 are entitled to notice of, and to vote at, the meeting. Each share of common stock is entitled to one vote. Your vote is important. Whether or not you plan to attend, please vote as soon as possible so that we may be assured of the presence of a quorum at the meeting. | ||||
 | In Person Attend the Annual Meeting. | ||||
 | By Phone Call +1-800-690-6903 in the U.S. or P.R. to vote your shares. | ||||
 | By Internet Visit www.proxyvote.com and vote online. | ||||
 | By Mail Cast your ballot, sign your proxy card and return by free post. | ||||
Items of Business | • Elect 13 directors to the Board of Directors for a one-year term; | ||||
• Approve, on an advisory basis, the Corporation’s executive compensation; | |||||
• Ratify the appointment of PricewaterhouseCoopers LLP as Popular’s independent registered public accounting firm for 2024; and | |||||
• Consider such other business as may be properly brought before the meeting or any adjournments thereof. | |||||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 9, 2024: This 2024 Proxy Statement and our Annual Report for the year ended December 31, 2023 are available free of charge at www.popular.com and www.proxyvote.com. The 2024 Proxy Statement and form of proxy card are being distributed and made available to shareholders on or about March 27, 2024. | |||||
27, 2024.
Executive Vice President, Chief Legal Officer and
HOW TO VOTE
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Only shareholders of record at the close of business on March 9, 2018 are entitled to notice of, and to vote at, the meeting. Each share of common stock is entitled to one vote.
We encourage you to attend the meeting. Your vote is important. Whether or not you plan to attend, please vote as soon as possible so that we may be assured of the presence of a quorum at the meeting.
You may vote online, in person, by telephone or, if you received a paper proxy card in the mail, by mailing the completed proxy card. The instructions on the Notice of Internet Availability of Proxy Materials or your proxy card describe how to use these convenient services.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 8, 2018:
This 2018 Proxy Statement and our Annual Report for the year ended December 31, 2017 are available free of charge atwww.popular.comand www.proxyvote.com.
209 Muñoz Rivera Avenue
San Juan, Puerto Rico 00918
209 Muñoz Rivera Avenue San Juan, Puerto Rico 00918 |  | ||||
Table of Contents | ||||
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l | Proxy Statement Summary |
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We are asking shareholders to elect four directors. Popular’s directors are elected for a term of three years by the affirmative vote of a majority of the shares represented at the annual meeting in person or by proxy and entitled to vote. The table below sets forth information with respect to our four nominees standing for election. All of the nominees are currently serving as directors. Additional information about the director candidates and their respective qualifications can be found on the “Nominees for Election as Directors and Other Directors” section of this Proxy Statement.
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Proposal 1 |
| BOARD’S RECOMMENDATION  “FOR” EACH NOMINEE | ||||||||||||||||||||||
Election of Directors | ||||||||||||||||||||||||
We are asking shareholders to elect 13 directors for a one-year term. The table below sets forth information with respect to the 13 nominees. Additional information about the candidates and their respective qualifications can be found on the “Nominees for Election as Directors” section of this Proxy Statement. | ||||||||||||||||||||||||
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AGE | DIRECTOR SINCE | PRINCIPAL OCCUPATION | |||||||||
Ignacio Alvarez | 65 | 2017 | President and Chief Executive Officer of Popular, Inc. | ||||||||
Alejandro M. Ballester | 57 | 2010 | President of Ballester Hermanos, Inc. | ||||||||
Robert Carrady | 68 | 2019 | President and Chief Executive Officer of Caribbean Cinemas | ||||||||
Richard L. Carrión | 71 | 1991 | Chairman of the Board of Directors of Popular, Inc. | ||||||||
Bertil E. Chappuis | 57 | Nominee | Co-Founder and CEO of Xtillion, LLC | ||||||||
Betty DeVita | 63 | 2021 | Chief Business Officer of FinConecta | ||||||||
John W. Diercksen | 74 | 2013 | Principal of Greycrest, LLC | ||||||||
María Luisa Ferré Rangel | 60 | 2004 | Chief Executive Officer of FRG, LLC | ||||||||
C. Kim Goodwin | 64 | 2011 | Private Investor | ||||||||
José R. Rodríguez | 65 | 2021 | Chairman of the Board of Directors of CareMax, Inc. | ||||||||
Alejandro M. Sánchez | 66 | 2023 | President and CEO of Salva Financial Group of Florida | ||||||||
Myrna M. Soto | 55 | 2018 | CEO and Founder of Apogee Executive Advisors LLC | ||||||||
Carlos A. Unanue | 60 | 2010 | President of Goya de Puerto Rico, Inc. | ||||||||
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Proposal 2 |
| BOARD’S RECOMMENDATION “FOR” THIS PROPOSAL | |||||||||||||||
Advisory Vote to Approve Executive Compensation | |||||||||||||||||
We are asking shareholders to approve, on an advisory basis, the compensation of our named executive officers (“NEOs”) as described in the sections titled “Compensation Discussion and Analysis” and “2023 Executive Compensation Tables and Compensation Information.” We hold this advisory vote on an annual basis. |
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Proposal 3 | BOARD’S RECOMMENDATION “FOR” THIS PROPOSAL | ||||||||||||||||
Ratification of Auditors | |||||||||||||||||
We are asking shareholders to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024. Information on fees paid to PricewaterhouseCoopers LLP during 2023 and | |||||||||||||||||
PROXY STATEMENT SUMMARY | 1 | ||
Independent Board | ||
• 11 of our 13 current directors are independent. | ||
• Lead Independent Director with robust and well-defined responsibilities. | ||
• Regular executive sessions of independent directors. | ||
• 100% independent Board committees: | ||
- Audit Committee; | ||
- Corporate Governance and Nominating Committee; | ||
- Risk Management Committee; and | ||
- Talent and Compensation Committee. | ||
Strong Governance | ||
• Annual board, committee and individual director evaluations and self-assessments. | ||
• Diverse board in terms of gender, race, ethnicity, experience, skills, tenure and other demographics. | ||
• Independent third party retained, at least every three years, to perform board evaluation. | ||
• Stock ownership guidelines for executive officers and non-employee directors. | ||
• Prohibition on hedging and pledging of Popular, Inc.’s (“Popular” or the “Corporation”) securities. | ||
• Four new directors in the last five years and one new director nominated in 2024. | ||
Robust Board Oversight | ||
• The Board met 11 times during 2023. Each director attended 91% or more meetings of the Board and the meetings of committees of the Board on which each such director served. | ||
• Board oversight of the Corporation’s risk management program (including cyber and information security strategy and preparedness). | ||
• Board oversight of Popular’s corporate responsibility and sustainability (ESG) matters. Certain Board committees assigned specific ESG oversight responsibilities. | ||
• Board also oversees the development and implementation of the Corporation’s technology strategy and initiatives. | ||
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Shareholders’ Rights | ||
• All members of the Board of Directors are elected on an annual basis. | ||
• Majority voting in director elections. | ||
• No supermajority voting requirements for our shareholders. | ||
• Shareholders holding 20% or more of our outstanding common stock have the right to request a special meeting of shareholders. | ||
• Board receives and discusses shareholder communications addressed to the Board. | ||
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2 | 2024 POPULAR, INC. PROXY STATEMENT | ||||||||||||||||||||||||
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PROPOSAL 2
Amendment to Restated Certificate of Incorporation
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We are asking shareholders to approve an amendment to Article Seventh of Popular’s Restated Certificate of Incorporation to provide that directors shall be elected by a majority of the votes cast by shareholders at the annual meeting of shareholders, provided that if the number of nominees exceeds the number of directors to be elected, the director nominees shall be elected by a plurality of the votes cast. Additional information with respect to the proposed amendment can be found in “Proposal 2: Amendment to Article Seventh of Popular’s Restated Certificate of Incorporation to Amend the Voting Standard for the Election of Directors to Provide that Directors Shall be Elected by a Majority of the Votes Cast by Shareholders at the Annual Meeting of Shareholders, Except that in Contested Elections Directors Shall be Elected by a Plurality of the Votes Cast.” In addition, the text of the proposed amendment is set forth in Appendix A to this Proxy Statement.
2018 PROXY STATEMENT | 1
PROPOSAL 3
Advisory Vote to Approve Executive Compensation
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We are asking shareholders to approve, on an advisory basis, the compensation of our named executive officers (“NEOs”) as described in the sections titled “Compensation Discussion and Analysis” and “2017 Executive Compensation Tables and Compensation Information.” We hold this advisory vote on an annual basis.
PROPOSAL 4
Ratification of Auditors
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We are asking shareholders to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2018. Information on fees paid to PricewaterhouseCoopers LLP during 2017 and 2016 appears on the “Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm” section of this Proxy Statement.
PROPOSAL 5
Adjournment or Postponement of the Meeting
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We are asking shareholders to approve the adjournment of the meeting, if necessary or appropriate, in order to allow for the solicitation of additional proxies in the event that there are not sufficient votes at the time of the meeting to adopt Proposal 2. This Proposal relates to the amendment to Article Seventh of the Corporation’s Restated Certificate of Incorporation to provide that directors shall be elected by a majority of the votes cast by shareholders at the annual meeting of shareholders, provided that if the number of nominees exceeds the number of directors to be elected, the director nominees shall be elected by a plurality of the votes cast.
For additional information about the meeting please refer to the “General Information About the Meeting” section of this Proxy Statement.
2 | 2018 PROXY STATEMENT
2017 FinancialTABLE OF CONTENTS
2017 CORPORATE HIGHLIGHTS
Puerto Rico Popular remained as the market leader in Puerto Rico in auto loans and leases, personal loans, credit cards, mortgage loan origination, commercial loans and total deposits. During 2023, we increased total loans by $1.9 billion, led by commercial loans, which reflects the continued strength of the Puerto Rico economy and our diversified product offering. Banco Popular de Puerto Rico (“BPPR”) also achieved a net interest margin of 3.20% (up from 3.06% in 2022). As of 2023 year-end, Popular served over 2 million unique customers in Puerto Rico. Furthermore, our digital channels captured approximately 62% of total deposit transactions and Mi Banco (our online platform) active customers exceeded 1.1 million. | ||
United States In the mainland United States, Popular grew total loans during 2023 by $1.0 billion, principally in commercial and construction loans, and increased total deposits by $2.6 billion (of which approximately $144 million correspond to intercompany deposits), principally driven by time and savings deposits captured by Popular Bank’s online channel. | ||
Capital Strategy Over the past two years, the Corporation has continued to deploy capital through loan growth, stock repurchases and higher dividends. During the fourth quarter of 2023, we increased the quarterly common stock dividend from $0.55 to $0.62 per share. As of December 31, 2023, tangible book value per share was $59.74, a 33% increase from 2022. | ||
Transformation Initiative Popular continued to make progress in its broad-based multi-year technological and business process transformation aimed at making important investments in our technological infrastructure, adopting more agile practices and improving our customer experience. During 2023, the first full year of our transformation, the Corporation conducted a review of our fees for commercial services to align our price to value and the implementation of a simplified and faster process for the origination of commercial loans. The Corporation also continued to work on initiatives to achieve the target of 14% return on average tangible common equity (“ROATCE”) by the end of 2025. | ||
PROXY STATEMENT SUMMARY | 3 | ||
Social Commitment | ||
As part of Popular’s steadfast social commitment, financial and in-kind assistance was provided through Fundación Banco Popular, Popular Foundation and corporate donations and social programs impacting communities in Puerto Rico, the mainland United States and the Virgin Islands in the areas of education, financial inclusion and entrepreneurship. Our total social investment during 2023 amounted to approximately $12 million. We also maintained a strong branch presence in low- and moderate-income communities: 27% of BPPR and 43% of Popular Bank branches are located in these communities. | ||
Popular also started offering a hurricane parametric insurance product and, in collaboration with a non-profit organization, implemented a pilot program to offer secured personal loans to women victims of gender violence, enabling them to establish credit. During 2023, the Corporation also published Popular’s Human Rights Position Statement, in an effort to strengthen its transparency and responsible business practices. Popular’s Human Rights Position Statement is available at https://www.popular.com/en/corporate-sustainability/. | ||
Environment | ||
Demonstrating our commitment to further reduce the environmental impact of the Corporation’s operations, Popular has aimed to lower its carbon footprint through the use of liquified natural gas and continued the installation of photovoltaic systems in its facilities. Currently, 62 branches and 5 corporate buildings are powered in part by solar energy. During 2023, the Corporation integrated climate risk as part of the Corporation’s Risk Management Policy and strengthened its climate risk governance, creating a Climate Risk Unit within the Financial and Operational Risk Management Division and establishing a cross-functional climate risk working group to operationalize climate risk management efforts. | ||
Human Capital | ||
To improve the social and economic well-being of our employees, during 2023, we completed planned minimum base salary increases in Puerto Rico and the Virgin Islands and invested in merit increases, enabling us to retain top talent. | ||
During 2023, Popular also expanded the scope of the Employee Resource Groups (“ERGs”) to the U.S. mainland by establishing a Black/African American ERG and the Power of Women ERG for our U.S. mainland employees and expanding the Pride ERG to the U.S. mainland region. | ||
Popular also launched a comprehensive quarterly and annual employee engagement and experience survey program which will measure employee sentiment through employees’ recruiting, onboarding and exit journeys. | ||
Popular also enhanced its employees’ physical, emotional and financial well-being through expanded services in our Health and Wellness Center and an increased retirement savings plan matching contribution. During 2017, Popular also implemented several initiatives to develop a robust pool of leadership talent and give our employees tools to improve efficiency and customer satisfaction.
True to Popular’s core value of social commitment, our Puerto Rico and U.S. foundations sourced and provided valuable financial and in-kind assistance to areas severely impacted by the hurricanes, including the distribution of water, food and medical supplies. We launched the “Embracing Puerto Rico” initiative, contributed to the “Unidos por Puerto Rico” fundraising campaign and co-sponsored the “Somos Una Voz” concert which raised fundsincome for the benefit of earthquake victims in Mexico, and hurricane victims in Texas, Florida, Puerto Rico and the Caribbean.
2017 FINANCIAL HIGHLIGHTS
Our 2017 net incomeyear 2023 was $107.7approximately $586.6 million, reflecting the adverse effect of the hurricanes and the U.S. Tax Cut and Jobs Act’s impact on the value of Popular’s U.S. deferred tax asset (“DTA”). To provide meaningful information about the underlying performance of our ongoing operations, the $168.4 million DTA write-down is added backcompared to net income to express our results on an adjusted net income basis, which is a non-GAAP measure; on this basis, our adjusted net incomeof $807.8 million in 2022. This variance was $276.0 million. In addition, as outlinedmainly driven by higher provision for credit losses and higher operating expenses. The increase in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Board of Directors’ Compensation Committee (the “Committee”) decided to make further net income adjustments, directly attributableprovision was due to the hurricanes’ impact that was beyondrelease of loan loss reserves in the first half of 2022, continued loan growth during 2023 and the normalization of credit quality metrics in our unsecured consumer lending portfolios from the historically low levels experienced during the COVID-19 pandemic. The increase in operating expenses reflects the Corporation’s control, for purposesinvestment in its transformation initiative and in our people, as well as our efforts to expand our capabilities in cybersecurity, risk management, data and technology. Popular’s capital levels remained robust during 2023 with a year-end Common Equity Tier 1 ratio of certain incentive awards;16.3%. Tangible book value per share was $59.74 as of December 31, 2023, a 33% increase from 2022, primarily due to lower unrealized losses on this basis, our adjusted net income for incentives was $348.7 million. Refer to GAAP to non-GAAP reconciliation in Appendix B.investment securities and 2023 earnings.
4 | 2024 POPULAR, INC. PROXY STATEMENT | ||
CEO TRANSITION
As part of a planned leadership transition, Mr. Carrión, after 26 years as Chief 7% respectively during 2023.
2018 PROXY STATEMENT | 3
EXECUTIVE COMPENSATION PROGRAM HIGHLIGHTS
Our executive compensation program is designed to motivate and reward performance, align executives with shareholder interests, promote building long-term shareholder value, attract and retain highly qualified executives, and mitigate conduct that may promote improper sales practices or excessive or unnecessary risk taking. Our program is premised upon:
PAY-FOR-PERFORMANCE
Pay-For-Performance | ||
• Focus on variable, incentive-based pay |
• Combination of short-term (cash) and long-term (equity) incentives |
• Equity awards to promote performance and |
• Total compensation opportunity targeted at median of our peer group |
• No special retirement or severance programs | ||
• Limited perquisites | ||
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STRONG GOVERNANCE
Strong Governance | ||
• Incentivized risk mitigation through balanced compensation design and strong internal control framework |
• No speculative transactions in |
• Compensation Recoupment (clawback) Policy |
• Annual say-on-pay advisory vote |
• Independent compensation consultant |
• Compensation | ||
EXECUTIVE ALIGNMENT WITH LONG-TERM SHAREHOLDER VALUE
Executive alignment with long-term shareholder value | ||
• Stock ownership requirements for our executive officers |
• Extended equity vesting |
• Double-trigger equity vesting upon change in control | ||
4 | 2018 PROXY STATEMENT
PROXY STATEMENT SUMMARY | 5 | ||
2017 COMPENSATION PROGRAM AND PAY DECISIONSTABLE OF CONTENTS
For 2017,
Name and Principal Position
| Salary
| Bonus
| Stock Awards
| Non-Equity
| Change in
| All Other
| Total
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Richard L. Carrión Executive Chairman since July 1, 2017 (formerly Chief Executive Officer through June 30, 2017) |
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$1,300,000
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$50,205
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$
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2,100,000
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$1,016,133
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$170,591
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$209,168
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$4,846,097
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Ignacio Alvarez President and Chief Executive Officer since July 1, 2017 (formerly President and Chief Operating Officer through June 30, 2017) |
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807,500
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37,535
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1,145,670
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831,387
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—
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40,846
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2,862,938
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Carlos J. Vázquez Executive Vice President and Chief Financial Officer (“CFO”) |
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675,000
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28,225
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506,250
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537,030
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47,055
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21,089
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1,814,649
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Javier D. Ferrer Executive Vice President and Chief Legal Officer (“CLO”) |
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550,000
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22,932
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412,500
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437,953
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—
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13,639
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1,437,078
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Lidio V. Soriano Executive Vice President and Chief Risk Officer (“CRO”) |
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500,000
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20,863
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375,000
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365,764
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—
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12,855
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1,274,482
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Eli S. Sepúlveda Executive Vice President Commercial Credit Group |
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450,000
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18,905
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337,500
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363,050
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58,418
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22,342
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1,250,215
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BASE SALARY
Furtherat-risk, subject to ourcorporate and individual performance.
SHORT-TERM ANNUAL CASH INCENTIVE
non-financial goals that reinforce the Corporation’s business strategy and priorities. The short-term annual cash incentive is awarded based on the degree of achievement of the corporate results,adjusted after-tax net income goal, the annual adjusted after-tax ROATCE goal, the key milestones tied to the Corporation’s muti-year transformation initiative, and individual pre-determined financial and non-financial goals and leadership competencies. In 2017, it hadbased on each NEO’s role. For 2023, the total short-term cash incentive target as a target of 93.1%percentage of base pay for Mr. Carrión, 95.6% for Mr. Alvarez (both proratedsalary was 135% for the period beforeCEO and after the organizational changes) and 80% of base pay for the other NEOs. Actual payouts can range from zero to 1.5 times the target award. After considering all incentive components, the Talent and Compensation Committee granted(the “Committee”) approved annual cash incentive awards at 78.2%payments in respect of base pay for Mr. Carrión, 103.0%2023 equal to 96% of target for Mr. Alvarez, 79.6%94% of target for Mr. Vázquez, 79.6%98% of target for Mr. Ferrer, 73.2%92% of target for Mr. Soriano and 80.7%85% of target for Mr. Sepúlveda.
LONG-TERM EQUITY INCENTIVE
Chinea.
2018 PROXY STATEMENT | 5
NEOs, in recognition of each NEO’s strong leadership and contribution to Popular’s solid performance in 2022. Our executive compensation programs are discussed in more detail in the “Compensation Discussion and Analysis” and “2017“2023 Executive Compensation Tables and Compensation Information” sections of this Proxy Statement.
6 | 2024 POPULAR, INC. PROXY STATEMENT | ||
PAY MIX IN THE COMPENSATION PROGRAM
Our executive
PAY MIX IN THE EXECUTIVE COMPENSATION PROGRAM
Each element, at target,NEOs was as a % of base pay
Name and Principal Position | Salary ($) | Bonus ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||
Ignacio Alvarez President and Chief Executive Officer (“CEO”) | $1,130,000 | $47,083 | $3,081,501 | $1,466,740 | $— | $43,120 | $5,768,444 | ||||||||||||||||
Carlos J. Vázquez Executive Vice President and Chief Financial Officer (“CFO”) | 759,519 | 31,875 | 631,998 | 577,193 | 16,449 | 23,610 | 2,040,644 | ||||||||||||||||
Javier D. Ferrer Executive Vice President, Chief Operating Officer and Head of Business Strategy (“COO”) | 782,308 | 32,917 | 1,134,107 | 621,335 | — | 15,774 | 2,586,441 | ||||||||||||||||
Lidio V. Soriano Executive Vice President and Chief Risk Officer (“CRO”) | 585,481 | 24,583 | 486,157 | 433,355 | — | 22,868 | 1,552,444 | ||||||||||||||||
Manuel Chinea Executive Vice President and Chief Operating Officer of Popular Bank | 560,340 | — | 464,082 | 384,031 | 4,799 | 47,725 | 1,460,977 | ||||||||||||||||
PROXY STATEMENT SUMMARY | 7 | ||
6 | 2018 PROXY STATEMENT
Director Elections Risk Management CORPORATE GOVERNANCEDIRECTORS AND EXECUTIVE OFFICERSstrengtheningthe strength of our corporate culture and embeddingensure that our institutional values are embedded in our day-to-day business operations. The Board’s Corporate Governance and Nominating Committee recommends to the Board the adoption of corporate governance guidelines to protect and enhance shareholder value and to set forth the principles as to how the Board, its various committees, individual directors and management should perform their functions. The Corporate Governance and Nominating Committee considers developments in corporate governance and periodically recommends to the Board changes to our corporate governance principles.practices.DirectorIndependence Popular’s Corporate Governance Guidelines provide thatBoard shall consist of independent directors. At present, allBoard. Eleven of our non-employee13 current directors (eight of ten directors) are independent in accordance with the standards of The Nasdaq Stock Market (“NASDAQ”). The Board has determined that Messrs. Carrión and Alvarez are our only employee directors and are not considered independent.independent under NASDAQ rules.Independent LeadDirector Currently, the Board hasExecutive Chairman and a Lead Director. You can read about the respective roles and responsibilities of the Chairman and the Lead Director under “Board Leadership.”annual basis.Popular’sManagement.”Management”.Succession Planning developed by the CEO, to ensure an orderly succession of the CEO, and executive officers in both ordinary course and emergency situations.situations, and of the executive officers.Director Retirement Popular’s Corporate Governance Guidelines provide that directors7274ndth birthday and may not be initially elected or re-elected after reaching age 72.74. In December 2023, the Board granted a one-year waiver of the Director Retirement Age set forth in the Corporation’s Corporate Governance Guidelines in order to renominate Mr. Diercksen, the Board’s Lead Independent Director. This one-year waiver will allow Mr. Diercksen to stand for re-election at the 2024 Annual Meeting of Shareholders, notwithstanding having reached 74 years of age in 2023. The Board granted and approved this one-year waiver in light of the value of, and contributions made by Mr. Diercksen to the Board, as well as the leadership, skills and experience that he brings, considering the current composition of the Board.Stock Ownership
Stock Ownership Within three years of their election, directors must hold Popular stock with a value equal to five times the annual Board retainer. Within five years of designation, the | ||||||
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Prohibition on Pledging, Hedging and Speculative Transactions | Popular’s directors and executive officers are prohibited from pledging | |||||
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Annual Board, Committee and Individual Director Self-Assessments The Board, each of its committees and each | ||||||
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Executive Sessions of Non-Management Directors and Independent Directors Popular’s | ||||||
Limits on Board Service | To ensure that | |||||
Shareholder’s Ability to Call a Special Meeting of Shareholders Popular’s Amended and Restated By-laws provide shareholders holding at least 20% of the outstanding shares of common stock with the right to request a special meeting of shareholders. | ||||||
2018 PROXY STATEMENT | 7
for Messrs.Mr. Carrión, who is our former CEO and Executive Chairman, and Mr. Alvarez, have no material relationship with Popularwho is our current President and CEO, meet the independence standards of NASDAQ.
these positions if it determines that doing so would serve the best interests of Popular.
present structure provides Popular and the Board with strong and objective leadership, effective engagement with and oversight of management, and continuity of experience. As a highly regulated financial services provider, Popular and our
✓Preside over all
the Board at which the Chairman is not present.✓Presideindependent directors and preside over executive sessions of the independent directors. ��� ✓Have authority to call meetings of independent directors. ✓outsideindependent directors. ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓Be available for consultation and direct communication upon requestmajor shareholders.the Board at which the Chairman is not present. ✓ ✓
8 | 2018 PROXY STATEMENT
Popular encourages directors to participate in continuing director education programs. To assist the Board in remaining current with its duties, committee responsibilitiesMeetings and the many important developments impacting our business, Popular participates in the Corporate Board
Member’s Board Leadership Program. This program offers our directors access to a wide range of in-person, peer-based and webinar educational programs on corporate governance, committee duties, board leadership and industry developments.
BOARD MEETINGS AND EXECUTIVE SESSIONS
The Board met 1411 times during 2017.2023. Each director attended 75%91% or more meetings of the Board and the meetings of committees of the Board on which each such director served. Directors also are kept informed of our business through meetings and direct communications with the Chairman and the CEO regarding matters of interest to Popular and our shareholders. While Popular has not adopted a formal policy with respect to directors’ attendance at the meetings of shareholders, Popular encourages directors to attend all meetings.meetings of shareholders. All of Popular’sour directors attended the 20172023 annual meeting of shareholders
and all directors are expected to attend the 2018 annual meeting.
Each of the (i) responsibilities and organization of the committee, including adequacy of its charter; (ii) operations of the committee; (iii) the adequacy of meeting materials and information (iv) assessment of the committee’s Responsibilities Responsibilities the individual directors; Responsibilities Responsibilities management, including overseeing the development of the annual capital plan of the Corporation. pose to Popular. CONTENTS differences in the manner in which the Corporate Governance and Nominating Committee will evaluate nominees for director in the event the nominee is recommended by a shareholder. leadership, skills and experience that he brings, considering the current composition of the Board. Any shareholder who desires to contact the Board or any of its members may do so by writing to: Popular’s BOARD SELF-ASSESSMENTaimed at improvingthat is intended to determine whether the Board, its performance.committees and each individual director are functioning effectively and provides them with the opportunity to evaluate, reflect and improve processes, performance and effectiveness. As part of such assessment, each director completesis provided a written questionnaire that is designed to gather suggestions for improving Board and committee effectiveness and solicit feedback on a wide range of issues, including:including, among others:Board and committee composition, structure and operations; Board dynamics and standards of conduct;adequacy of materials and informationprovided;access to management; andBoard effectiveness and accountability.fourfive standing committees of the Board committeesis also conductsrequired to conduct its own written annual self-assessment, which generally includes issuesevaluates matters such as:
provided; andperformance.sincecompared to prior years.transparency.collegiality. The Board and Committee self-assessment report isresults are discussed byin the Corporate Governance and Nominating Committee, and then the Chair of the Corporate Governance and Nominating Committee leads the discussion with the full Board. The committee self-assessment reportsresults are also discussed at each committee, followed by a discussion of the results with the full Board led by theeach Committee Chair. The results of the individual director self-assessments are shared with the Chairman and Lead Independent Director which then engage on one-on-one conversations with the individual directors to obtain their assessment and provide feedback, as needed. Following the discussions of the results of the evaluations, appropriate action plans are developed and executed in partnership with management.discussesreviews the format and process to be used to carry out the Board, committee and committee self-assessment.individual director self-assessment, as well as evaluates potential enhancements to the process.
2018 PROXY STATEMENT911COMMITTEESfourestablished a Director Continuing Education Program that includes in-boardroom training and educational sessions, promotes individual director development and provides supplemental educational materials and resources. On an annual basis, the Corporate Governance and Nominating Committee of the Board establishes an annual in-boardroom training
On January 17, 2024, Mr. Bacardí informed the Corporate Governance and Nominating Committee of the Board of his decision not to stand for re-election to the Corporation’s Board upon the expiration of his current term, which expires at the Corporation’s 2024 Annual Meeting of Shareholders. Committees:committees: an Audit Committee, a Corporate Governance and Nominating Committee, a Risk Management Committee, a Talent and Compensation Committee and a CompensationTechnology Committee. All committees operate under written charters, which are posted inon our website under the heading Corporate Governance“Corporate Governance” at www.popular.com/en/investor-relations/investor-relations. The following highlightsHighlighted below are some of the key responsibilities of each standing committee, as well as information about committee members and their independence, number of meetings in 20172023 and last charter revision date, among others. For additional information on the role of certain of the standing committees in connection with risk oversight and oversight of ESG matters, please see the “Board Oversight of Risk Management” sectionand “Corporate Responsibility and Sustainability” sections of this Proxy Statement.AUDIT COMMITTEE Members:Alejandro M. BallesterJohn W. DiercksenC. Kim GoodwinWilliam J. Teuber, Jr. (Chair)Carlos A. UnanueIndependence:Each member of the committee is independentAudit CommitteeFinancial Expert:Messrs. Teuber and Diercksen and Ms. Goodwin are Audit Committee Financial Experts as defined by SEC rules2017: 11 meetings of which 2023were devoted to the discussion ofdiscussed earnings releases, Form 10-K and Form 10-Q filingsCharter last revised:December 14, 2017 Responsibilities:1934.1934 (the “1934 Act”). CORPORATE GOVERNANCE AND NOMINATING COMMITTEEMembers: (Chair)Maria Luisa FerréWilliam J. Teuber, Jr.Independence:Meetings in 2017: 5Charter last revised:January 26, 2018 Responsibilities:assessmentevaluation of their performance;the performance of the Board, its committees and 10 | 2018 PROXY STATEMENTRISK MANAGEMENT COMMITTEEMembers:David E. GoelC. Kim Goodwin (Chair)William J. Teuber, Jr.Independence:Meetings in 2017: 11Charter last revised:January 26, 2018 Responsibilities:theits oversight of:overallenterprise-wide risk management program, practices and framework; andoperational, liquidity,credit, market, interest rate, market,liquidity, operational, technology, cyber and information security, compliance, legal, complianceclimate, reputational, including social, and credit risks.strategic risks; COMPENSATION COMMITTEEMembers:David E. GoelMaria Luisa Ferré (Chair)William J. Teuber, Jr.Carlos A. UnanueIndependence:Meetings in 2017: 5Charter last revised:December 14, 2017 Responsibilities:subject to review by the full Board, relating to: Executive Chairman, CEO and all other executive officers;benefitbenefits programs;CRO,Chief Risk Officer, whether the incentives and risks arising from the compensation plans for all employees are reasonably likely to have a material adverse effect on Popular and taking necessary actions to limit any risks identified as a result of the risk-related reviews; andCompensation“Compensation Discussion and Analysis Section forAnalysis” section in Popular’s annual proxy statement in compliance with and to the extent required by applicable law, rules and regulations.2017,2023, a member of the board of directors or compensation committee (or other committee serving an equivalent function) of another company that has, or had during 2017,2023, an executive officer serving as a member of our Talent and Compensation Committee. Other than as disclosed in the “Certain RelationshipsMr. Ballester and Transactions” section of this Proxy Statement,Ms. Ferré, during 2023 none of the members of the Talent and Compensation Committee had any relationship with Popular requiring disclosure under Item 404 of Regulation S-K. On September 28, 2023, Mr. Ballester was appointed member and Chair of the Talent and Compensation Committee and Ms. Ferré ceased being a member of such committee. A summary of the relationships requiring disclosure under Item 404 of Regulation S-K are disclosed in the “Certain Relationships and Transactions” section of this Proxy Statement. 2018 PROXY STATEMENT | 11MEMBERSHIP IN BOARD COMMITTEES Name Audit Compensation Corp. Gov. & Nominating Risk Class 1 Ignacio Alvarez Alejandro M. Ballester
Richard L. Carrión Carlos A. UnanueClass 2Joaquín E. Bacardí, IIIJohn W. Diercksen
David E. GoelClass 3Maria Luisa FerréC. Kim GoodwinWilliam J. Teuber, Jr. (Lead Director) Member Chair Financial Expertbelow:next. Risk ManagementCommittee operational, liquidity,credit, market, interest rate, market,liquidity, operational, technology, cyber and information security, compliance, legal, complianceclimate, reputational, including social, and creditstrategic risks, while taking into consideration their alignment with Popular’s strategic and capital plans. Review and approve Popular’splans.• After each meeting, report to the full Board regarding its activities. 12 | 2018 PROXY STATEMENTAuditCommitteeResponsibilities:• Oversight of accounting and financial reporting principles and policies, internal controls and procedures, and controls over financial reporting.• Review reports from management, independent auditors, internal auditors, compliance group, legal counsel, regulators and outside experts, as considered appropriate, that include risks Popular faces and Popular’s risk management function.• Evaluate and approve the annual risk assessment of the Internal Audit Division, which identifies the areas to be included in the annual audit plan.• After each meeting, report to the full Board regarding its activities.CompensationCommitteeResponsibilities:• Establish Popular’s executive compensation and other incentive-based compensation programs, taking into account the risks to Popular that such programs may pose. Periodically evaluate,CRO,Chief Risk Officer, whether the incentives and risks arising from Popular’s compensation plans for all employees are likely to have a material adverse effect on Popular. After each meeting, reportfull Board regarding its activities.development and implementation of Popular’s technology planning, strategy and initiatives, as well as Popular’s technology functions, operations and needs. 
(a) On January 17, 2024, Mr. Bacardí informed the Corporate Governance and Nominating Committee of the Board of his decision not to stand for re-election to the Corporation’s Board upon the expiration of his current term, which expires at the Corporation’s 2024 Annual Meeting of Shareholders. (b) Nominated to be initially elected to the Board of Directors on May 9, 2024. NOMINATIONskill,skills, diversity, experience with business and other organizations, the interplay of the candidate’s experience with the experience of the existing Board members, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board. In practice, the Board has determined that for a community-based financial institution such as Popular it is more important to look for candidates with broad management experience than for persons with a specific skill set. Collectively, the members of our Board embody a range of viewpoints, backgrounds and expertise.shareholders. third-party search firms. The Corporate Governance and Nominating Committee has the authority to engage a third-party search firm or consultant to identify and provide information on potential candidates for review, based on the criteria described in this section.2018 meeting. Shareholders2024 annual meeting of shareholders.wish to submit nominees for director for considerationwas nominated by the Board of Directors on February 23, 2024, upon recommendation from the Corporate Governance and Nominating CommitteeCommittee.electionre-election at Popular’s 2019 annual meetingthe 2024 Annual Meeting of shareholders may do soShareholders, notwithstanding having reached 74 years of age in 2023. The Board granted and approved this one-year waiver in light of the value of, and contributions made by Mr. Diercksen to the Board, as set forth under “General Information Aboutwell as the Meeting—Shareholder Proposals.”new nominees for the position of independent director by considering the criteria outlined below:following criteria: Criteria for Nomination ✓ ✓ ✓ ✓ ✓demographic factors.demographics.
2018 PROXY STATEMENT1321BOARD DIVERSITYThe Corporate Governance and Nominating Committee does not have a specific diversity policy with respect to the director nomination process. Rather, the Committee considers diversity in the broader sense of how a candidate’s viewpoints, experience, skills, background and other demographics could assist the Board in light of the Board’s composition at the time. The Board believes that each director contributes to theoverall diversity by providing a variety of personal and professional experiences and backgrounds. The Board believes that, as shown below, the current directors and nominees reflect an appropriate diversity of gender, age, race, geographical background and experience and are committed to considering diversity issues in evaluating the composition of the Board.
DIRECTORS’ EXPERIENCE AND SKILLSThe main skills and experience of our director nominees are presented below:Global BusinessExperience 
Senior Managementand LeadershipExperience Business OperationExperience Financial, InvestmentM&Aorganizing the data for physical and transition risk analysis, and emissions calculations. 
Audit and RiskOversight Experience Financial Expertise/Literacy Marketing
MediaCommunications
Telecommunications Technology SystemsExperiencePublic CompanyGovernanceExperienceDistribution and SalesKnowledge andUnderstanding ofPopular’s MainMarkets80% are female or ethnically diverse 1 is African-American 6 are Hispanic 1 is Asian 2 are women Tenure Years of Service 0-5 6-10 11-15 >15 Average tenure: 9.5 yrs. Independence 80% Independent (all directors are independent except the Executive Chairman and the CEO and President) Age Retirement Age: 72 Average Age: 57 0 2 4 6 46-50 51-55 56-60 61-65 66-7014 | 2018 PROXY STATEMENTPopular’s Board recognizes that one of its most important duties is to ensure senior leadership continuity by overseeing the development of executive talent and planning for the efficient succession of the CEO and other executive officers. The Board has delegated primary responsibility for succession planning to the Compensation Committee. The Compensation Committee reviews annually a management succession plan, developed by the CEO, and reports annually to the Board on the management succession plan. The principal components of this plan are: (1) a proposed plan for emergency CEO succession, (2) a proposedplan for CEO succession in the ordinary course of business, and (3) the CEO’s plan for management succession for the other policy-making officers of Popular. The succession plan includes an assessment of the experience, performance, skills and planned career paths for possible candidates within the senior management team. Development initiatives supporting the succession plan include job enhancements and rotations, the Popular Leadership Academy, specialized external trainings and competency assessments.The Board has adopted a Code of Ethics to be followed by Popular’s employees, officers (including the Executive Chairman, President and CEO, CFO and Corporate Comptroller) and directors to achieve conduct that reflects our ethical principles. Directors, NEOs, executive officers and employees are required to read and complyCommunication with the Code. Popular requires that all new employees take Code training shortly after their start date and also provides periodic Code training to all employees. All employees must certify annually that they have read the Code and complete a declaration on possible conflicts of interest. In addition, other persons performing services for Popular by contract or other agreement may be subject to the Code of Ethics for Service Providers.The Code provides that any waivers for NEOs, executive officers or directors may be made only by the independent members of the Board and must be promptly disclosed to the shareholders. During 2017,Popular did not receive nor grant any request from directors, NEOs or executive officers for waivers under the provisions of the Code. The Code was last revised on September 27, 2017 and is available on the Corporate Governance section of Popular’s website at www.popular.com/en/investor-relations/. Popular will post on its website any amendments to the Code and any waivers to the Executive Chairman, President and CEO, the CFO, the Corporate Comptroller or directors.Popular expects employees to report behavior that concerns them or that may represent a violation of the Code. Popular offers several channels by which employees may raise an issue or concern, including any actual or potential violations of the Code. One such method is EthicsPoint, a website and telephone hotline that is available 24/7. EthicsPoint reports can be submitted anonymously.ethicspoint-en.ethicspoint-en. CLO andCorporate Secretary reviews all correspondence addressed to the Board or any of its members and provides the Board with copies of all communications that deal with the functions of the Board or its committees, or that otherwise require Board attention. Communications received by the Audit Committee that are not related to accounting or auditing matters may, in its discretion, be forwarded by the Audit Committee or any of its members to other committees of the Board or to Popular’s management for review.2018 PROXY STATEMENT | 15
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| Code of Ethics for Popular Suppliers | |||||
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Corporate Governance and Nominating Committee Charter | ||||||
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16
Founding member of Endeavor Puerto Rico since November 2017.director’sdirector nominee’s participation in Popular’s committees, age, principal occupation, business experience during the past five years (including positions held with Popular or its subsidiaries and the period during which each director has served in such capacity), directorships, expertise, skills and qualifications is set forth below. All of Popular’s directors are also directors of the following subsidiaries of Popular: Banco Popular de Puerto Rico (“BPPR”), Popular North America, Inc. and Banco Popular North America, which operates under the name Popular Community Bank.NOMINEES FOR ELECTION – CLASS 1 DIRECTORS (TERMS EXPIRING 2018)
Director since July 2017Age 59 IGNACIO ALVAREZBACKGROUND
Community Bank since July 2017. President of Popular, BPPR and Popular Community Bank since October 2014 and Chief Operating Officer of Popular and BPPR from October 2014 to July 2017. Executive Vice President and Chief Legal Officer of Popular from June 2010 to September 2014. President and CEO of Popular North America, Inc. and other direct and indirect wholly-owned subsidiaries of Popular. President of the Puerto Rico Bankers Association from October 2021 until September 2023 and from October 2017 to September 2019. Director of Popular since July 2017Centro Financiero BHD León, S.A. and of BPPR and Popular Community Bank since October 2014.Banco BHD León, from March 2018 to March 2019. Member of the Board of Trustees of Fundación Banco Popular, Inc. and of Popular Community Bank Foundation, Inc., since November 2015.QUALIFICATIONSAs President and Chief Operating Officer, Mr. Alvarez demonstrated his solid strategic and analytical skills, understanding of the markets in which we operate, business acumen and strength as a leader, delivering positive results in our Puerto Rico business despite challenging conditions and overseeing the repositioning of our operations in the United States. Mr. Alvarez’s understanding of the Corporation and excellent business skills, as well as his background as an attorney with vast experience on corporate matters, including regulatory and corporate governance, have proven to be a great asset. 
2018 PROXY STATEMENT | 17
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| Alejandro M.
Ballester | |||||
President of Ballester Hermanos, Inc. Independent Director Since 2010 Age 57 | Expertise & Skills  | |||||||
Background President of Ballester Hermanos, Inc., a major food and beverage distributor in Puerto Rico, since 2007.
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Qualifications Mr. Ballester has a comprehensive understanding of Puerto Rico’s consumer products and distribution industries acquired through over | ||||||||
Committees Talent and Compensation (Chair) Audit Corporate Governance and Nominating | ||||||||
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 | Robert Carrady | |||||||
President and CEO of Caribbean Cinemas Independent Director Since 2019 Age 68 | Expertise & Skills | |||||||
Background President and CEO of Caribbean Cinemas, a family-owned business and the largest movie theater chain in the Caribbean, since 2006. | ||||||||
Qualifications Mr. Carrady, as President of Caribbean Cinemas, has acquired extensive leadership and business operations experience by overseeing and managing a theater operation of approximately 570 cinema screens in 68 locations across Puerto Rico, the Dominican Republic and several other Caribbean islands, as well as in Guyana, Panama and Bolivia. His entrepreneurial skills have helped develop Caribbean Cinemas into the largest movie theater chain in the Caribbean and transformed the company, which today manages in-house the construction of new sites, theatre operations, film buying, food concessions, screen advertising, game room concessions, film production and real estate leasing and management. Mr. Carrady’s experience as a business leader and entrepreneur, as well as his thorough understanding of the Caribbean region, one of the markets where Popular operates, brings great value to our Board. | ||||||||
Committees Corporate Governance and Nominating Talent and Compensation | ||||||||
 | Richard L.
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Chairman of the Board of Directors of Popular, Inc. Director Since 1991 Age 71 | Expertise & Skills  | |||||||
Background Chairman of Popular since 1993 and Executive Chairman from July
November 2018. | ||||||||
Qualifications Mr. Carrión’s | ||||||||
Committees Technology (Chair) | ||||||||
18 | 2018 PROXY STATEMENT
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 | Bertil E. Chappuis | ||||||||||||
Co-Founder and CEO of Independent Director Nominee Age 57 | Expertise & Skills  | ||||||||||||
Background Chief Executive Officer and Co-Founder of Xtillion, LLC, a data engineering and artificial intelligence services firm serving major enterprises, since September 2023. Senior Partner at McKinsey & Company, Inc. from August 1995 until June 2022. Co-Founder and Partner at Intellect Partners, Inc., a Silicon Valley based intellectual property firm focused on technology licensing and commercialization, from August 1992 until August 1995. Founding Member and Chairman of Platform for Social Impact, a not-for-profit organization dedicated to the eradication of childhood poverty through economic mobility for families in Puerto Rico,
Puerto Rico from December 2017 until October 2022. | |||||||||||||
Qualifications Mr. | |||||||||||||
CLASS 2 DIRECTORS (TERMS EXPIRING 2019)
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 | Betty DeVita | |||||||
Chief Independent Director Since 2021 Age 63 | Expertise & Skills  | |||||||
Background Chief Business Officer and | ||||||||
Qualifications Ms. DeVita has over 42 years of experience in the | ||||||||
Committees Talent and Compensation Technology | ||||||||
2018 PROXY STATEMENT | 19
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 | John W.
Diercksen | |||||||
Principal of Greycrest, LLC Independent Director Since 2013 Age 74 Lead Independent Director of Popular, Inc. | Expertise & Skills  | |||||||
Background Principal of Greycrest, LLC, a privately-held financial and operational advisory services company, since October 2013. Chief Executive Officer of Beachfront Wireless LLC, a privately-held investment entity organized to participate in a Federal Communications Commission airwaves auction, from December 2015 to November 2016, when it was sold. Senior Advisor at Liontree Investment Advisors, an investment banking firm, since April 2014.
2023. | ||||||||
Qualifications Mr. Diercksen has | ||||||||
Committees Audit (Chair and Financial Expert) Corporate Governance and Nominating Risk Management Talent and Compensation Technology | ||||||||
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 | María Luisa Ferré Rangel |
20 | 2018 PROXY STATEMENT
CLASS 3 DIRECTORS (TERMS EXPIRING 2020)
| Chief Executive Officer of FRG, LLC Independent Director Age
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Background Chief Executive Officer of FRG,
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Qualifications Ms. Ferré Rangel has | ||||||||
| Committees
Corporate Governance and Nominating (Chair)
Technology | Other Current Public Company Boards W.R. Berkley Corporation (since May 2017) | ||||||
 | C.
Kim Goodwin | |||||||
Private Investor Independent Director Since 2011 Age 64 | Expertise & Skills  | |||||||
Background Private investor since 2008. Independent director of General Mills, Inc. since June 2022 and member of its Compensation and Finance Committees. Independent director of TJX Companies, Inc. since October 2020 and member of its Audit and Compensation Committees. Non-executive director of PineBridge Investments, LLC, a global asset management
Directors of the Princeton University Investor Company (Princo) since 2017. | ||||||||
Qualifications Ms. Goodwin’s experience as chief investment officer at several global financial services firms provides the Board with insight into the perspective of institutional investors. Her analytical skills and understanding of global financial markets have proved to be valuable assets. As Head of Equities at Credit Suisse Asset Management from 2006 to 2008, Ms. Goodwin oversaw enterprise risk functions for her global department. Through her experiences as a member of the Audit Committee of Akamai Technologies, Chair of the Audit Committee of PineBridge Investments and Chair of Popular’s Risk Management Committee, Ms. Goodwin has developed profound knowledge of the risks related to our business. She has also developed expertise in identifying, assessing and managing risk exposure, successfully leading the Board’s efforts on risk oversight. Finally, Ms. Goodwin also provides Popular with valuable insight regarding the use of technology by financial firms. | ||||||||
2018 PROXY STATEMENT | 21
| Committees
Risk Management (Chair and
Audit (Financial Expert) Technology |
| Other Current Public Company Boards The TJX Companies, Inc. (since October 2020) General Mills, Inc. (since June 2022) | |||||
 | José R. Rodríguez | |||||||
Chairman of the Board of Directors of CareMax, Inc. Independent Director Since 2021 Age 65 | Expertise & Skills  | |||||||
Background Certified public accountant since | ||||||||
Qualifications Mr. Rodríguez has over 39 years of experience as a Certified Public Accountant and is a well-recognized leader in the field of accounting. His vast knowledge and expertise in accounting, auditing, and financial sectors, as well as his many roles as a trusted advisor brings an invaluable and essential perspective to our Board. Mr. Rodríguez is NACD (National Association of Corporate Directors) Directorship Certified™. | ||||||||
Committees Audit (Financial Expert) Risk Management (Risk Management Expert) | Other Current Public Company Boards CareMax, Inc. (since June 2021) Primoris Services Corporation (since May 2021) | |||||||
 | Alejandro M. Sánchez | |||||||
President and Chief Executive Officer of Salva Financial Group of Florida Independent Director Since 2023 Age 66 | Expertise & Skills  | |||||||
Background President and Chief Executive Officer of Salva Financial Group of Florida, a financial services consulting and advisory firm, since January 2024. Executive Advisor to Nasdaq, Inc., since February 2024. Chief Executive Officer Emeritus of the Florida Bankers Association, an industry association representing Florida’s banks, since November 2023, President and Chief Executive Officer from 1998 until November 2023, and Senior | ||||||||
Qualifications Mr. Sánchez has over 26 years of banking industry experience, with over 25 years leading the Florida Bankers Association. He has served on various federal boards and agencies under different U.S. Presidents and held several gubernatorial appointments in the State of Florida. He has been a promoter and advocate for the banking industry before regulatory and legislative bodies in the State of Florida and Washington D.C. He brings a deep knowledge of the banking industry and the regulatory environments in which Popular operates, as well as his political insights, to our Board. Mr. Sánchez is a Lawyer and a US Air Force Veteran. | ||||||||
Committees Risk Management Talent and Compensation | ||||||||
 | Myrna M. Soto | |||||||
Chief Executive Officer and Founder of Apogee Executive Advisors LLC Independent Director Since 2018 Age 55 | Expertise & Skills  | |||||||
Background Chief Executive Officer and Founder, Apogee Executive Advisors LLC, a | ||||||||
Qualifications Ms. Soto has over 33 years of information technology | ||||||||
Committees Corporate Governance and Nominating Risk Management (Risk Management Expert) Technology | Other Current Public Company Boards CMS Energy Corporation (since January 2015) Spirit Airlines, Inc. (since March 2016) TriNet Group, Inc. (since May | |||||||
 | Carlos A. Unanue | |||||||||||
President of Goya de Puerto Rico, Inc. Independent Director Since 2010 Age 60 | Expertise & Skills | |||||||||||
Background President of | ||||||||||||
Qualifications Mr. Unanue has 37 years of experience at Goya Foods, Inc., a
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| Ignacio Alvarez President and Chief Executive Officer |
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Mr. Alvarez, age 65, has been Chief Executive Officer of | |||||||
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| Camille Burckhart Executive Vice President, Chief Information and Digital Strategy Officer Innovation, Technology and Operations Group | |||||
Ms. Burckhart, age 44, has been Executive Vice President and Chief Information and Digital Strategy Officer of Popular since July 2015. Prior to becoming Executive Vice President, Ms. Burckhart was the Senior Vice President in charge of the Technology Management Division from December 2010 to June 2015. She has been a member of the Board of Directors of Nuestra Escuela since August | ||||||||
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| Beatriz Castellví Executive Vice President and Chief Security Officer Corporate Security Group | |||||
Ms. Castellví, age 56, has been Executive Vice President and Chief Security Officer of Popular in charge of cybersecurity, data privacy and fraud since May 2018. Prior to becoming Executive Vice President, she was Senior Vice President and General Auditor of the Corporation from November 2012 to April 2018, after having held various other roles in the Corporation for the previous 15 years. Ms. Castellví has served as a member of the Executive Council of the Puerto Rico Ellevate Chapter since 2013 and as Treasurer from 2013 to January 2019, when she became a member of its Advisory Board. Since January 2021, Ms. Castellví has also been a member of the Board of the Jane Stern Dorado Community Library. | ||||||||
 | Luis E.
Cestero Executive Vice President Retail and Business Solutions Group | ||||
Mr. Cestero, age 50, has been Executive Vice President of BPPR in charge of the Retail | |||||
2018 PROXY STATEMENT | 23
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| Manuel Chinea Executive Vice President Chief Operating Officer of Popular Bank | ||
Mr. Chinea, age 58, has been Executive Vice President of Popular since January 2016 and Chief Operating Officer of Popular | |||||
| until March 2021. Mr. Chinea became a member of the Advisory Board of the Newark 40 Acres and a Mule Fund in September 2020 and, in January 2022, joined the New York State Department of Financial Services Superintendent Adrienne Harris' Advisory Council on community development financial institutions (“CDFI”) and minority depository institutions (“MDI”). | |||||
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 | José R. Coleman Tió Executive Vice President and Chief Legal Officer General Counsel and Corporate Matters Group | ||||
Mr. | |||||
 | Javier D. Ferrer Executive Vice President, Chief Operating Officer, Head of Business Strategy and Corporate Secretary COO and Corporate Business Strategy Group | ||||
Mr. Ferrer, age 62, has been Executive Vice President, Chief Operating Officer and Head of Business Strategy of Popular since January 2022. He has served as Secretary of the Board of Directors of Popular since October 2014 and a Director of BPPR since March 2015. From October 2014 until December 2021, he was Executive Vice President, Chief Legal Officer and General Counsel of Popular. In January 2019, he assumed oversight of the Corporation’s strategic planning function and in September 2019, became a member of the Trust Committee of the Board of Directors of BPPR. Prior to joining Popular, Mr. Ferrer was a Partner at Pietrantoni Méndez & Alvarez LLC, a San Juan, Puerto Rico based law firm, | |||||
 | Jorge J. García Designated Executive Vice President and Chief Financial Officer Corporate Finance Group | ||||
Mr. García, age 51, has been appointed Executive Vice President and Chief Financial Officer of Popular, effective April 1, 2024, succeeding Carlos J. Vázquez. Mr. García has served as Senior Vice President, Corporate Comptroller and Chief Accounting Officer of Popular since March 2012. Before assuming his current role as Corporate Comptroller and Chief Accounting Officer, Mr. García served as Senior Vice President and Director of Finance and Accounting of Popular Bank, Popular’s banking subsidiary in the mainland United States, from June 2009 to March 2012. | |||||
 | Maria Cristina (MC) González Executive Vice President and Chief Communications and Public Affairs Officer Corporate Communications and Public Affairs Group | ||||
Ms. González, age 49, has been Executive Vice President and Chief Communications and Public Affairs Officer of Popular since April 2021. Prior to joining Popular, Ms. González was the Senior Vice President of Global Public Affairs of The Estée Lauder Companies, Inc. from July 2016 to March 2021. From | |||||
| Directors of Televisa-Univision Communications, Inc., the leading Hispanic media company, since November 2020. | |||||
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 | Gilberto Monzón Executive Vice President Specialized Businesses Group | ||||
Mr. | |||||
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24 | 2018 PROXY STATEMENT
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 | Eduardo J.
Negrón Executive Vice President and Chief Administration Officer Administration Group | ||||
Mr. Negrón, age 59, has been Chief Administration Officer of Popular since February 2022 and Executive Vice President of Popular since April | |||||
| Desarrollo del Centro Financiero de Hato Rey, an entity engaged in promoting the economic and urban development of the district of Hato Rey, Puerto Rico. | |||||
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 | Eli S.
Sepúlveda Executive Vice President Commercial Credit and Services Group | ||||
Mr. Sepúlveda, age 61, has been Executive Vice President of Popular since February 2010 and of BPPR since December 2009. He has been the supervisor in charge of the Commercial Credit and Services Group since May 2023, and from January 2010 to April 2023, of the Commercial Credit Group in Puerto | |||||
| Since November 2020, Mr. Sepúlveda has also served as a trustee of the Ricky Martin Foundation. | |||||
|
| ||||
 | Lidio V.
Soriano Executive Vice President and Chief Risk Officer Corporate Risk Management Group | ||||
Mr. Soriano, age 55, has been the Executive Vice President and Chief Risk Officer of Popular since August 2011 and a Director of | |||||
| He served as a Director of BPPR from October 2014 to September 2019. Prior to joining Popular, Mr. Soriano served for 17 years as Chief Financial Officer, Head of Retail Bank and Mortgage Operations, Head of Commercial and Construction Mortgage and Head of Interest Rate Risk, among other positions, for other banks. He has been a member of the Board of Directors of the Puerto Rican League Against Cancer since August 2018. | |||||
|
| ||||
 | Carlos J.
Vázquez Executive Vice President and Chief Financial Officer Corporate Finance Group | ||||
Mr. Vázquez, age 65, has been the Chief Financial Officer of Popular since March 2013. He was President of Popular | |||||
2018 PROXY STATEMENT
OUR POLICY ON RELATED PARTY TRANSACTIONS
PRE-APPROVED CATEGORIES OF RELATED PARTY TRANSACTIONS
Pre-Approved Categories of
RELATED PARTY TRANSACTIONS
26 | 2018 PROXY STATEMENT
Ricoits employees, of Popular, through voluntary personal donations, are the main source of funds forof the BPPR Popular
The Popular Community Bank Foundation, Inc. (the “PCB Foundation”), a New York not for-profitnot-for-profit corporation, was created to strengthen the social and economic well-being of the communities served by Popular Community Bank. The PCB Foundation isAs Popular Community Bank’s philanthropic arm, andit provides support to charitable organizations forwith a focus on community development and education. During 2017, Popular Community Bank contributed approximately $90,000 toMr. Carrión is the PCB Foundation through the matching of employee contributions. The bank also made additional contributions of approximately $172,500 to the foundation. Popular Community Bank and its employees, through voluntary personal donations, are the main source of funds of the PCB Foundation.Chairman, while Messrs. Carrión, Alvarez, Vázquez, Chinea and Negrón are members, of the Board of Directors of the PCBPopular Foundation.
Certain directors and NEOs have immediate family members who are
During 2017
On September 1, 2023, the contract was renewed for an additional one-year term. The total amount of the contract for the additional one-year term is estimated to be approximately $989,000. During 2023, BPPR paid the Contracted Entity approximately $816,000 for the services rendered under the contract.
ordinary course of its business, on substantially the same terms, including interest rates and collateral, as those prevailing for comparable loan transactions with third parties. Except as discussed below, the extensions of credit have not involved and do not currently involve more than the normal risks of collection or present other unfavorable features.
In June 2006, afeatures or otherwise require disclosure under Item 404 of Regulation S-K of the Securities and Exchange Commission:
In March 2012, BPPR also entered into an agreement with Mr. Unanue’s same brother-in-law to pay $97,000 of the approximately $139,000 in credit card and personal loan debt (including accrued interest) owed by him. These loans were made in the ordinary course of business prior to the date that Mr. Unanue joined the Board. The borrower agreed to make monthly payments of $538 until the amount was paid in full. In July 2017, the borrower discontinued monthly
2018 PROXY STATEMENT | 27
payments, thereby defaulting on the indebtedness. Prior to the default, the borrower had paid $3,228 during 2017 and the outstanding debt balance as of December 31, 2017 was $65,258. The largest outstanding balance of the loan during 2017 was $68,486.
During 2017, a brother-in-law of Mr. Negrón owned a 50% equity interest in an entity which had a real estate development loan with BPPR. The loan was made in the ordinary course of business, on substantially the same terms, including interest rate and collateral, as those prevailing for comparable loan transactions with third parties at that time. The initial loan was in the amount of $1,650,000 and was originated by Westernbank in 2003. BPPR acquired this loan as part of a Federal Deposit Insurance Corporation (“FDIC”) assisted transaction in 2010. Mr. Negrón’s brother-in-law personally guarantees the loan which is payable from the proceeds of the sale of residential units and bears interest at a rate equal to 5.25%. This loan participated in the moratorium offered to BPPR’s commercial clients after Hurricane Maria. The outstanding balance on the loan as of December 31, 2017 was $114,706, which includes the capitalization of interest accrued during the moratorium. During 2017, $3,480 and $3,917 were paid in principal and interest, respectively. The largest outstanding balance of the loan during 2017 was $117,370.
In September 2008, a brother of Mr. Negrón obtained a $390,000 commercial loan from BPPR, secured by a commercial property. The loan was a fully amortizing 15-year loan with a variable interest rate of prime plus 0.50%. The loan was made in the ordinary course of business, on substantially the same terms, including interest rate and collateral, as those prevailing for comparable loan transactions with third parties at that time. In January 2015, BPPR approved the first of three 6-month temporary reductions to the borrower’s monthly principal payments in the aggregate amount of $13,500. In August 2016, the term of the temporary loan modifications expired, and the borrower started to pay the loan under its original terms. The outstanding balance on the loan as of December 31, 2017 was $200,917, and $22,750 and $7,268 were paid during 2017 in principal and interest, respectively. The largest outstanding balance of the loan during 2017 was $221,250. This loan participated in the moratorium offered to BPPR’s commercial clients after Hurricane Maria.
In July 2017, Mr. Cestero was named an Executive Vice President of BPPR. At the time, relatives of Mr. Cestero had the following outstanding
loans with BPPR that require disclosure in this proxy statement:
The brother of Mr. Cestero and his wife are the borrowers under a fully-amortizing30-year mortgage loan with an original principal amount of $104,177 and a fixed annual interest rate of 7.375%. The loan was made in 2006 and restructured in 2011. It is secured by a second mortgage on the borrowers’ residence. Payments of principal and interest of $874 and $4,162, respectively, were made during 2017. During the months from September to December, the loan participated in the moratorium offered to BPPR’s mortgage clients. No payments have been received thereafter. The largest outstanding balance of the loan during 2017, as well as the outstanding balance of the loan as of December 31, 2017 was $98,611. This amount includes the capitalization of interest accrued during the moratorium.
Mr. Cestero’s brother and his wife are also borrowers under a 15-year mortgage loan, with an original principal amount of $100,000 and a fixed annual interest rate of 5%. The loan is secured by a third mortgage on the borrowers’ residence and requires monthly payments of principal and interest. Since 2015 the borrowers have only made partial payments of principal, and therefore, are not in compliance with the payment terms of the loan. During 2017, only payments of principal in the amount of $5,000 were made. As of December 31, 2017, the outstanding balance of the loan was $93,702. The largest outstanding balance of the loan during 2017 was $98,702.
In June 2017, Mr. Ballester, acquired new family relationships by way of marriage. These Related Parties had the following outstanding loans, which were obtained prior to Mr. Ballester’s marriage, and require disclosure in this proxy statement:
In November 2003, an entity owned by two brothers-in-law of Mr. Ballester obtained a commercial loan in the aggregate amount of $700,000 from Westernbank. The loan was acquired by BPPR as part of a FDIC assisted transaction in 2010. The loan is a fully amortizing 30-year loan with a variable interest rate of prime plus 0.75%. It is secured by real estate and guaranteed by the two brothers-in-law and their wives. The outstanding principal balance on the loan as of December 31, 2017 was $374,206, and, during 2017, $26,351 and $24,261 were paid in
28 | 2018 PROXY STATEMENT
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In May 2001, another brother-in-law of Mr. Ballester obtained a $292,000 mortgage loan from Doral Bank, secured by a residential property. The loan was a fully amortizing 30-year loan with a fixed annual rate of 7.250%. The borrower became delinquent on his payments commencing in October 2011. After the FDIC placed Doral Bank in receivership in 2015, BPPR began to act as servicer of the loan for the benefit of a third-party investor. After exhausting various collection and loss mitigation efforts, BPPR, acting as servicer, and the borrower, negotiated and entered into a deed in lieu of foreclosure in June 2017. As a result of that transaction, the third-party investor acquired the residential property that secured the mortgage loan and recorded a loss of $220,414. No payments of principal and interest were made on the mortgage loan during 2017. At the time of closing of the deed in lieu of foreclosure transaction, the outstanding principal balance of the loan was $250,610 and the loan payoff amount, including principal, interest and other accrued fees was $370,376. The deed in lieu of foreclosure was approved and ratified by the Audit Committee under the Related Party Policy.
In 2010 as part of the Westernbank FDIC assisted transaction, BPPR acquired (i) four commercial loans made to entities that were wholly-owned by one brother-in-law of Mr. Ballester and (ii) one commercial loan made to an entity that was owned by same brother-in-law together with Mr. Ballester’s father-in-law and another brother-in-law.FDIC-assisted transaction. The loans wereare secured by real estate and personally guaranteed by the ownersbrother-in-law of each borrower.Mr. Ballester. The loans were originated by WesterbankWesternbank between 2001 and 2005 and had an aggregate outstanding principal balance of approximately $33.5 million when they were acquired by BPPR in 2010.BPPR. Between 2011 and 2014, the loans were restructured to consist ofof: (i) five notes with an aggregate outstanding principal balance of $19.7$19.8 million with a 6% annual interest rate (“Notes A”) and (ii) five notes with an aggregate outstanding balance of $13.5 million with a 1% annual interest rate, to be paid upon maturity (“Notes B”). The restructured notes had aan original maturity of September 30, 2016 and, thereafter, various interim renewals were approved to allow for the negotiation of a longer-term extension. On April 2022, one of these interim extensions decreased the interest rate applicable to the Notes A to 4.25% and maintained the Notes B at an interest rate of 1%. In November 2022, BPPR and the Related Parties of Mr. Ballester entered into a three-year extension of the loans, until November 2025, which, among other things: (i) increased the interest rate applicable to Notes A to 5.25% and maintained the Notes B at an interest rate of 1% and (ii) established a principal repayment schedule for Notes A, including a $700,000 mandatory prepayment. The three-year extension of the loans was approved by the Audit Committee in accordance with the last two renewals
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Mr. Carrión is President of and owns, together with his siblings, an entity which in turn owns 35% of a corporation that ownsis the owner of a commercial building.building in Puerto Rico. In addition, Mr. Carrión’s sister and brother-in-law are ownersis the owner of an entity that has a participation of 21.5% in the same corporation. ThisIn June 2001, this corporation obtained in June 2001, a $30.4 million commercial loan from Doral Bank to provide financing for the development of the commercial building. In March 2007, Westernbank acquired the loan from Doral Bank and increased the loan amount to $40.5 million through additional borrowings. The loan had a 40-year amortization schedule, an
2018 PROXY STATEMENT | 29
were made during 2017. This loan participated in the moratorium offered to BPPR’s commercial clients after Hurricane Maria.2023. The largest outstanding balance of the loan during 2017, as well as2023 was approximately $33.6 million. As of December 31, 2023, the outstanding balance of the loan as of December 31, 2017 was $38,209,359. This amount includes the capitalization of interest accrued during the moratorium, amounting to $491,019.approximately $32.4 million. The renewals, sale and refinancing described above were approved under the Related Party Policy.
On February 2018, BPPR entered into a definitive agreement for the acquisition and assumption of certain assets and liabilities of Reliable Financial Services and Reliable Finance Holding Company, Puerto Rico-based subsidiaries of Wells Fargo & Company, engaged in the auto finance business in Puerto Rico. Reliable Financial Services leases approximately 61,442 square feet of space (comprising approximately 34.54% of the rentable square feet) in the real estate property building securing the aforementioned commercial loan to Related Parties of
Mr. Carrión. Such lease is documented pursuant to a lease agreement between Reliable Financial Services and the corporation which is the borrower in the loan and of which Mr. Carrión’s Related Parties own 56.5% in the aggregate. As part of the acquisition transaction, BPPR has agreed to enter in an agreement with Reliable Financial Services to sublease the space necessary for BPPR to continue the acquired operations until the expiration of the lease in accordance with its terms in 2019. Rents paid pursuant to such sublease will be a source of repayment of, and serve as collateral to, the commercial loan. The estimated total amount to be paid during a 12-month period by BPPR to Reliable Financial Services under the sublease is approximately $2 million. BPPR’s agreement to enter into a sublease with Reliable Financial Services in connection with the acquisition transaction was ratified by the Audit Committee under the Related Party Policy.
30
III | Executive and Director Compensation |
20172023 compensation decisions regarding our named executive officers (“NEOs”).NEOs. For 2023, Popular’s NEOs were: For 2017, Popular’s NEOs were: Richard L. CarriónExecutive Chairman of the Board of Directors, since July 1, 2017 (formerly Chief Executive Officer through June 30, 2017) Ignacio Alvarez, since July 1, 2017 (formerly President and Chief Operating Officer (“COO”) through June 30, 2017) Chief Legal OfficerHead of Business Strategy (“CLO”COO”) Eli S. Sepúlveda Commercial Credit Group, BancoChief Operating Officer of Popular de Puerto RicoBankPopularbelowherein is provided in Appendix BA to this Proxy Statement. This discussion includes statements regarding financial and operating performance targets in the specific context of Popular’s executive compensation program. Shareholders should not readinterpret these statements in any other context.2017, we demonstrated the continued strength of our franchise while operating in2023, Popular delivered solid results despite a challenging economic environment impactedwhich included high interest rates, an uncertain geopolitical landscape and disruptions in the banking industry during the first half of the year. The Corporation’s results reflected solid earnings, robust loan growth, stable credit quality and continued customer growth. Important milestones were achieved by the unprecedented destruction and disruption caused by hurricanes Irma and Maria. Prior to the hurricanes, the Corporation’s annual net income result was projected to achieve payout under our incentive program. Notwithstanding the hurricanes’ impact, we persevered to achieve year-over-year growthCorporation, including surpassing two million unique customers in our net interest income, stable credit indicators and strong capital levels. BPPR’s Puerto Rico and Virgin Islands operations have substantially recovered fromsignificant progress was made in our transformation efforts.storms. We also experienced high loan demand in our U.S. operation, with a 16% growth in commercial loans.2018 PROXY STATEMENT | 31
2017 CORPORATE HIGHLIGHTS
Some of Popular’s key corporate accomplishments during 2017 includedFDIC Special Assessment, the following:
2017 FINANCIAL SUMMARY
Our 2017adjusted net income for the year 2023 was $107.7approximately $586.6 million, reflecting the adverse effect of the hurricanes and the U.S. Tax Cut and Jobs Act’s impact on the value of Popular’s U.S. deferred tax asset (“DTA”). To provide meaningful information about the underlying performance of our ongoing operations, the $168.4 million DTA write-down is added backcompared to net income to express our results on an adjusted net income basis, which is a non-GAAP measure; on this basis,
32 | 2018 PROXY STATEMENT
Hurricanes Irma & Maria In September 2017, hurricanes Irma and Maria devastated Puerto Rico and the U.S. and British Virgin Islands causing catastrophic damage to infrastructure, including communications, fuel supplies, electric power and water. Immediately following the disaster, our main priorityof $807.8 million in 2022. The variance was to ensure the safety and wellbeing of our colleagues and support the stabilization and recovery needs of the most impacted communities. In the face of this dire crisis, our employees responded bravely and selflessly in support of their colleagues and communities, distributing survival supplies and restoring essential financial services that serve as the lifeline of economic activity. Within one week after hurricane Maria, our employees had reopened 32% of branches and made 24% of ATMs operational. By December 93% of our 177 branches were open and 82% of our 655 ATMs were operational. Also, our digital channels were not interrupted by the hurricanes. Following the hurricanes, we offered a 3-month payment moratorium for consumer, mortgage, and commercial loans and temporarily waived ATM surcharges and late payment fees. We increased our Employee Emergency Fund to support those colleagues that suffered severe hurricane damage. Credit Quality Non-performing loans decreased by $7 million (1%) compared to 2016. Non-performing assets as a percentage of total assets decreased from 2.0% at December 2016 to 1.7% at December 2017. We are closely monitoring asset quality measures on our loan portfolios and the moratorium granted to certain consumers and commercial borrowers. Capital Strategy In 2017, our quarterly common stock dividend increased from $0.15 to $0.25/share, and we executed a common stock repurchase of $75 million. Our capital levels remained robust, with year-end Common Equity Tier 1 capital equal to 16.3%. Puerto Rico Business We currently serve 1.68 million customers, reflecting an increase of 2% from 2016. Total deposits rose $4.3 billion (17%) from 2016. Net interest margins remained strong at 4.32%. Our commercial and auto loan portfolios increased during 2017. BPPR’s commercial loan portfolio, excluding run-off from the Westernbank portfolio, increased by $135 million during the year, and auto loans grew by $122 million (8%). We remain focused on providing innovative solutions to our customers through our digital transformation. Digital deposits captured 40% of total deposit transactions, and Mi Banco active customers reached 751,000 in 2017, up 8% from 2016. United States Business Our total loan portfolio grew by 11%, mainly driven by a 16%higher provision for credit losses and higher operating expenses. The increase in the commercialprovision was due to the release of loan portfolio. We expandedloss reserves in the first half of 2022, continued loan growth during 2023 and the normalization of credit quality metrics in our unsecured consumer lending to U.S. customers through initiatives such as White Label credit card alliances. We launchedportfolios from historically low levels experienced during the pandemic. The increase in operating expenses reflects our private banking initiative to fulfill our customers’ credit, deposit, financial advisory and investment needs. Digital deposit transactions increased to 43% of all deposits in December 2017 from 35% in December 2016. Organizational Excellence We completed several initiatives to protect corporate assets, ensure cyber-security and mitigate against fraud (including chip technology on credit and debit cards). Our 3rd wave of Popular’s Leadership Academy was conducted, ensuring a robust pool of top-quality leadership talent. The 4th wave of our LEAN Six Sigma Academy was launched, providing employees with tools to seize opportunities to improve efficiency and customer satisfaction. We enhanced our employees’ physical, emotional and financial well-being through expanded services in our Healthtransformation initiatives, our people, and Wellness Center, mindfulness programsour efforts to expand our capabilities in cybersecurity, risk management, data and an increase in Popular’s savings plan matching contribution. Social Commitment Through Fundación Banco Popular and Popular Community Bank Foundation, valuable financial and in-kind assistance was provided to areas severely impacted by the hurricanes in Puerto Rico and the Virgin Islands. Over 500,000 pounds of water, food and medical supplies were disbursed to provide immediate relief to the most affected communities with the support of employees. We launched the “Embracing Puerto Rico” initiative, contributed to the “Unidos por Puerto Rico” fundraising campaign and co-sponsored the “Somos Una Voz” concert which raised $35 million for earthquake victims in Mexico, and hurricane victims in Texas, Florida, Puerto Rico and the Caribbean.
our adjusted net income was $276.0 million. In addition, as outlined later, the Board of Directors’ Compensation Committee (the “Committee”) decided to make further net income adjustments, directly attributable to the hurricanes’ impact that was beyond the Corporation’s control, for purposes of certain incentive awards; on this basis, our after-tax adjusted net income for incentives was $348.7 million.technology. Refer to the GAAP to non-GAAP reconciliation in Appendix B.
PopularA.
Banco Popular | ||
• Increased total loans by $1.9 billion compared to 2022. | ||
• Achieved a net interest margin of 3.20% (up from 3.06% in 2022). | ||
• Remained as market leader in Puerto Rico in auto loans and leases, personal loans, credit cards, mortgage loan originations, commercial loans and total deposits. | ||
• Served over two million customers as of 2023 year-end. Digital channels captured approximately 62% of total deposit transactions and Mi Banco (online platform) active customers exceeded 1.1 million. | ||
Popular Bank | ||
• Increased total loans by $1.0 billion compared to 2022. | ||
• Increased total deposits by $2.6 billion from 2022. | ||
Profitability and Credit Quality | ||
• Improved the credit quality of our portfolio, including a reduction of $82 million in non-performing loans. | ||
• Non-performing loans held-in-portfolio as a percentage of loans held in portfolio decreased to 1.0% in 2023 compared to 1.4% in the prior year. | ||
• Increased the Corporation’s net interest margin by 2 basis points (bps) year-over-year to 3.13%. | ||
Capital Strategy | ||
• Maintained strong capital levels with year-end Tier 1 Common Equity ratio at 16.3%. | ||
• Increased, during the fourth quarter, the quarterly common stock dividend from $0.55 to $0.62 per share. | ||
• Increased tangible equity by 33% or $14.77 per share. | ||
Organizational Excellence & Human Capital | ||
• Continued working on initiatives related to the multi-year corporate transformation designed to expand digital capabilities, modernize the technology platform, and implement agile and efficient business processes across the Corporation. | ||
• Redefined the Corporation’s purpose and streamlined the cultural framework to better reflect Popular’s core values and daily practices. | ||
• Enhanced our health and wellness programs by launching innovative clinical and preventive programs such as a leadership guide on mental health and expanded nutrition and psychological services in our On-Site Health and Wellness Center (which received over 15,000 visits). | ||
• Expanded the scope of the Corporation’s Employee Resource Groups (“ERG”) in the U.S. mainland by establishing a Black/African ERG and extending Popular Pride and Network of Woman in Popular ERGs to this region. | ||
• Launched a comprehensive Employee Engagement & Experience Survey program, shifting from biennial to quarterly/annual assessments, including additional surveys that measure employee sentiment through the recruiting, onboarding and exit journeys. Our current score of 84% positions us within the 75th percentile of the Qualtrics global benchmark and above the average benchmark of the financial industry. | ||
For additional information on the Corporation’s human capital initiatives, please refer to the Human Capital Management disclosure included in our Form 10-K for the year ended December 31, 2023. | ||
Environmental and Social Commitment | ||
• Maintained a strong branch presence in low- and moderate-income communities with 27% of BPPR and 43% of Popular Bank branches located in these areas. | ||
• Invested approximately $12 million in our communities, including corporate donations, programs to promote financial inclusion and entrepreneurship, and philanthropic contributions through our corporate foundations in Puerto Rico and the mainland U.S. | ||
• Demonstrated our commitment to further reducing our operational footprint by continuing the installation of solar panels, the operation of two Combined Heat and Power (CHP) systems and implementation of energy efficiency initiatives. Currently sixty-two branches and five corporate buildings have photovoltaic systems. | ||
• Financed several affordable housing projects in Puerto Rico, started offering a hurricane parametric insurance product and, in collaboration with a non-profit organization, implemented a pilot program to offer secured personal loans to women victims of gender violence, enabling them to establish credit. | ||
For additional information on the Corporation’s ESG efforts, please refer to the “Corporate Responsibility and Sustainability” section of this Proxy Statement. | ||
| • | Performance-Linked Pay. Popular’s overarching compensation philosophy has always been to provide our executive officers with pay that is linked to performance and supports the long-term interests of our shareholders, while deterring improper sales practices and excessive risk-taking. |
As described below, our executive compensation programs are designed to reward the achievement of annual and long-term goals that generate sustained company performance and strong returns to our shareholders.
OUR 2017 EXECUTIVE COMPENSATION PROGRAM AND ORGANIZATIONAL CHANGES
Popular’s overarching compensation philosophy has always been to provide our executive officers with pay that is linked to performance and supports the long-term interests of our shareholders. Performance-basedgraphs, performance-based short- and long-term incentives represent a large portionthe majority of our executive officers’NEOs’ target total compensation opportunity (63%(80% for the President and CEO and 61%-67% for the other NEOs). As discussed in the “Long-Term (Equity) Incentive Compensation Opportunity” section, we further aligned our NEOs’ and shareholders’ interests by providing all 2024 target pay adjustments solely through long-term incentives.
| • | 2023 Salary. Each NEO, except for the CEO, received a salary increase adjustment in 2023, ranging from 3.9% to 5.3%, determined based on market benchmarking and individual performance. |
| • | 2023 Short-Term Incentives. Based on the Talent and Compensation Committee’s (the “Committee”) assessment of performance under our 2023 short-term incentive (“STI”) plan, our NEOs’ 2023 STI payouts ranged from 85% to 98% of target, reflecting the Corporation’s solid results and favorable performance against pre-established financial and non-financial goals, as the Corporation delivered strong earnings, robust loan growth, stable credit quality and continued customer base expansion. For more information refer to the “2023 Executive Compensation Program and Pay Decisions” section of this Proxy Statement. |
| • | 2023 Long-Term Awards. Our long-term equity incentive (“LTI”) program is based on two equally weighted components: (i) one-half (50%) is granted as performance shares, with actual value based on future performance over a 3-year period (one-half of our performance shares are based on Total Shareholder Return (“TSR”) relative to banks with assets between $25 billion and $500 billion and the other half is based on an absolute 3-year average Return on Average Tangible Common Equity (“ROATCE”) goal); and (ii) one-half (50%) is granted as time-vested restricted stock. The performance shares are always granted at target since vesting reflects performance over a three-year period. The time-vested restricted stock has a target value of 50% of each executive’s LTI opportunity, but the actual grant may vary based on the Committee’s assessment of prior-year Popular and individual performance. |
| • | 2021-2023 Performance Share Vesting. Upon the conclusion of the 2021-2023 performance cycle, performance results indicated, and the Committee approved, vesting based on the following results: (i) 3-year TSR in the 92nd percentile relative to an industry index of U.S. banks with assets greater than $10 billion, resulting in a maximum award (150% of target shares) for that component, and (ii) 3-year average ROATCE of 14.18%, which exceeded the maximum goal of 12.0%, thereby yielding the maximum award (150% of target shares) for that component. |
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The Committee approves Popular’s compensation programs upon consideration of market competitive trends, regulatory guidelines and bestleading practices. Furthermore, our executive compensation program is designed to discourage excessive or unnecessary risk taking and improper sales practices through the adequate balance of short-term and long-term incentives, thresholds and caps to limit payouts, and a mix of financial and non-financial goals, among other design features.
Effective July 1, 2017, the Board of Directors appointed Richard L. Carrión, previously Popular’s Chairman and CEO, as Executive Chairman of the Board of Directors. Ignacio Alvarez, who had been President and COO since 2014, was named President and CEO and a member of the Board of Directors, effective July 1, 2017.
In this new position, Mr. Carrión collaborates with the new CEO on corporate strategy, with emphasis on mergers and acquisitions,
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In accordance with these organizational changes, the Committee, in consultation with its independent compensation consultant, reviewed market compensation practices and decided to reconfigure the respective levels and composition of target incentive compensation for the Executive Chairman and the President & CEO moving forward. The following table illustrates the annual cash and equity target award opportunities established for our NEOs in 2017. The result is a balanced perspective of financial and qualitative performance over a short- and long-term horizon.
2017 EXECUTIVE COMPENSATION PROGRAM
Target Incentive Opportunity
% of Base Pay
Short-Term (Cash) Incentive % of Base Pay
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Richard L. Carrión | Ignacio Alvarez | |||||||||||||||||||||
CEO Jan. - Jun. |
Executive Chairman Jul. - Dec. |
President & COO Jan. - Jun. |
President & CEO Jul. - Dec. | Other NEOs Jan.- Dec. | ||||||||||||||||||
Popular, Inc. Net Income
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30.0%
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25.0%
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27.5%
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30.0%
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25.0%
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Annual Goals(Financial/Non-Financial)
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50.0%
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45.0%
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45.0%
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50.0%
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40.0%
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Leadership
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20.0%
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15.0%
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17.5%
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20.0%
|
15.0%
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Total Short-Term (% of base pay)
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100.0%
|
85.0%
|
90.0%
|
100.0%
|
80.0%
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Long-Term (Equity) Incentive % of Base Pay
| ||||||||||||||||||||||
Richard L. Carrión | Ignacio Alvarez | |||||||||||||||||||||
CEO Jan. - Jun. |
Executive Chairman Jul. - Dec. |
President & COO Jan. - Jun. |
President & CEO Jul. - Dec. | Other NEOs Jan. - Dec. | ||||||||||||||||||
Performance Shares ( 1⁄2 Total Shareholder Return and 1⁄2 Earnings per Share) | 80.0% | 42.5% | 50.0% | 92.5% | 40.0% | |||||||||||||||||
Restricted Stock
|
80.0%
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42.5%
|
50.0%
|
92.5%
|
40.0%
| |||||||||||||||||
Total Long-Term (% of base pay)
|
160.0%
|
85.0%
|
100.0%
|
185.0%
|
80.0%
| |||||||||||||||||
Total Short- and Long-Term Incentives
|
260.0%
|
170.0%
|
190.0%
|
285.0%
|
160.0%
| |||||||||||||||||
34 | 2018 PROXY STATEMENT
The following key features of our executive compensation program reflect our focus on balanced performance-based or otherwise “at risk” pay, long-term shareholder value and prudentappropriate risk taking:
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What we do | | ||||
Use | |||||
| Balance short-term (cash) and long-term (equity) compensation to discourage short-term | ||||
| Use equity incentives to | ||||
| Require significant stock ownership from our executive officers to align their interests with shareholders’ interests. Our CEO has a stock ownership requirement equal to six times his base salary, and the other NEOs must own stock totaling three times their base salaries. |
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| Apply clawback features to | ||||
| Employ “double-trigger” vesting of equity awards in the event of a change | ||||
| Conduct annual incentives and sales practices risk reviews in | ||||
| Assess the competitiveness of our executive compensation program through benchmarking of industry and peer group practices. |
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Prohibit speculative transactions in | ||||
| Engage an independent compensation consultant who advises and reports directly to the Committee. | ||||
What we don’t do |  | ||||
No excessive perquisites for executives. | |||||
No encouragement of excessive risk-taking. | |||||
No special executive retirement programs or severance programs specific to executive officers. | |||||
No employment or change in control agreements with our NEOs. | |||||
No tax gross-ups provided for any compensation or benefits. | |||||
No pledging of common stock or other securities of the Corporation as collateral for margin accounts or | |||||
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COMPENSATION OBJECTIVES AND COMPONENTS
MOTIVATE AND REWARD HIGH PERFORMANCE
Ensuring and sustaining a proper pay-performance relationship is one of our key objectives. For Popular, performance means a combination of financial results, strategic accomplishments and a demonstration of leadership competencies, all designed to support our company’s business strategy and drive long-term shareholder value.
Base salary, as well as short- and long-term incentive compensation opportunities, are generally targeted at market median, with actual pay
varying according to each executive’s experience and performance. Our short-term incentive and performance share awards provide the opportunity to earn increased pay (up to 1.5 times target) for superior performance and similar downside (no payout) should we not achieve our performance goals. Furthermore, our incentive design seeks to dissuade our executives from taking excessive or unnecessary risks.
201846 | 2024 POPULAR, INC. PROXY STATEMENT | 35
As depicted in the following charts, our NEOs’ 2017 target incentive program had a strong focus on performance and shareholder alignment.
The bars below illustrate the components of each NEO’s total target compensation opportunity (fixed pay plus variable performance-based pay). The variable portion of 63% for the Executive Chairman, 74% for the President and CEO and 62% for the other NEOs represents at-risk pay whose actual payout depends on company and individual performance. A breakdown of the target incentive elements is provided in the section titled “Our 2017 Executive Compensation Program and Organizational Changes.”
PAY MIX IN THE COMPENSATION PROGRAM
Each element, at target, as a % of base pay
36 | 2018 PROXY STATEMENT
Short-term Incentive Annual cash award linked to the corporate and business unit results, individual goals and leadership competencies. 100% Cash Incentive Aligned with pay-performance; based on Popular, Inc. net income results, each NEO’s individual goals and leadership competencies. 50% Performance Shares One-half of the target equity award consists of performance shares, with actual earned shares determined at the end of a 3-year performance period: 1/2 based on Total Shareholder Return (“TSR”) - relative to an index of banks. 1/2 based on Earnings Per Share (“EPS”) – an absolute 3-year cumulative goal. 50% Restricted Stock One-half of the target equity award is restricted stock granted upon consideration of corporate and individual performance. Supports NEO stock ownership and retention. Shares vest 20% annually over 4 years, holding the remaining 20% to vest upon retirement Long-term Incentive Annual equity grant that rewards performance and aligns Popular’s NEOs with the interests of our shareholders.
ALIGN EXECUTIVES WITH SHAREHOLDER INTERESTS AND BUILD LONG-TERM SHAREHOLDER VALUE
2017
At Popular’s annual shareholders meeting in April 2017, the vast majorityMay 2023, 96.79% of voting shareholders (95.83%) approved our overall executive compensation policies and practices. We believe that this strong backing illustrates our shareholders’ support of our compensation philosophy and performance-based pay program. TheShareholders’ perspectives of shareholders and industry bestleading practices were taken into consideration by management and the Committee as they developed strategic objectives, business plans and compensation elements supportingthat underpinned the 2017Corporation’s 2023 compensation decisions. The Committee plans to continue consideringconsiders our shareholders’ perspectivesperspective on an annual basis.
Equity-based Compensation
A significant componentbasis through the results of ourthe Say on Pay vote.
(EPS) and stock appreciation (TSR) depending on the degree of achievement of pre-established EPS and TSR targets.
Restricted stock is awarded upon consideration of corporate and individual performance. It promotes executive stock ownership and retention as the shares vest over time—with a portion held until retirement—further aligning our executives’ interests with those of our shareholders.
Stock Ownership Guidelines
In addition, our NEOs are subject to stock ownership guidelines to reinforce their orientation toward long-term shareholder value. Within five years of appointment, the Executive Chairman and the CEO must reach and subsequently retain shares equivalent to six times their base salary; the requirement for the other NEOs is three times their base salary. Any shares pledged to secure grandfathered loans and any unvested performance shares are not considered to satisfy the requirement. As of February 2018, all NEOs had either met the requirement or were on track to comply within the designated timeframe.
ATTRACT AND RETAIN HIGHLY QUALIFIED EXECUTIVES
Popular’s executive compensation program seeks to attract, motivate and retainpractices are described below. They are supported and reinforced by the Committee’s review and advice on human capital strategies (encompassing succession, culture, employee engagement, talent needed to successfully deliver future earnings stabilitydevelopment, diversity, equity and inclusion).
Motivate and Reward High Performance | ||
Ensuring and sustaining a proper pay-for-performance relationship is one of our key objectives. For Popular, performance means a combination of financial results (e.g., net income, TSR, return on equity), strategic accomplishments and leadership, all designed to drive the Corporation’s business plans in support of our customers, employees and communities, while generating long-term shareholder value. | ||
Base salary, as well as short- and long-term incentive compensation opportunities, are targeted at market median, with actual pay varying based on corporate and individual performance. Our short-term incentive and equity awards provide the opportunity to earn increased pay (up to 1.5 times target) for superior performance and similar downside (no payout) should we not achieve our performance goals. | ||
Align Executives’ Interests with Shareholders’ Interests and Build Long-Term Shareholder Value | ||
A significant component of our compensation program is equity-based pay designed to promote long-term value by rewarding sustained earnings growth, long-term return on shareholders’ investment and the retention of key high-performing talent. Performance shares promote value creation by rewarding executives for future increases in profitability and stock appreciation depending on the degree of achievement against pre-established 3-year goals for ROATCE (absolute) and our TSR (relative to a broad industry index). Restricted stock is awarded upon consideration of corporate and individual performance; these awards are designed to promote executive stock ownership and retention as the shares vest over time, further aligning our executives’ interests with those of our shareholders. We also require significant stock ownership from our executive officers. | ||
Environmental, social and governance matters are integrated into our incentive program to ensure Popular conducts operations responsibly and addresses sustainability risks and opportunities, assessing potential impact on future corporate performance and value creation. | ||
Attract, Motivate and Retain Highly Qualified Executives | ||
Popular’s executive compensation program seeks to attract, motivate and retain the talent needed to successfully deliver future earnings stability and growth. Our mix of salary and performance-based short- and long-term incentives provides a competitive offering to attract the best executive talent and promote engagement and long-term career retention. In consultation with management and its independent compensation consultant, the Committee balances competitiveness and retention features, while considering individual performance, experience and qualifications, as well as market practices and Popular’s financial performance. | ||
Ensure Effective Controls and Sound Risk Management | ||
Our incentive design seeks to dissuade our executives from taking excessive or unnecessary risks or promoting improper sales practices and ensures sound risk management and effective controls. The Corporation takes a balanced approach to incentive compensation design, utilizing both short-term (cash) and long-term (equity) components, multiple performance perspectives (financial, strategic, leadership, shareholder value), and the use of threshold performance requirements and payout caps, focusing on long-term performance periods and rewards. The Corporation’s Compensation Recoupment Policy, which applies to cash and equity-based incentives, covers financial restatement and executive misconduct. The Committee may also adjust individual awards based on the executive’s compliance with policies, guidelines, laws and regulations; results and follow-up of audits and examinations; and operation within Popular’s risk appetite. | ||
consultation with management and its independent compensation consultant, the Committee balances competitiveness and retention features while considering individual performance, experience and qualifications, as well as market practices and Popular’s financial performance.
2018 PROXY STATEMENT | 37
The following key components of our compensation program, combined with strong succession and talent development initiatives, drive our ability to secure top executive-level talent over the long term.
COMPENSATION COMPONENTS—PURPOSE AND KEY DESIGN FEATURES
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
long-term.
BASE SALARY
Effective July 2017,2023 Executive Compensation Program and Pay Decisions
| NEO | New Base Salary | % of adjustment | ||||||
Richard L. Carrión
| $
| 1,200,000
|
|
| (14.3%
| )
| ||
Ignacio Alvarez
|
| 900,000
|
|
| 25.9%
|
| ||
During 2017, no other base pay adjustments were made for the other NEOs.
38
NEO | 2023 Base Salary(a) | % of Adjustment | ||||||
Ignacio Alvarez | $ 1,130,000 | 0.0% | ||||||
Carlos J. Vázquez | 765,000 | 3.9 | ||||||
Javier D. Ferrer | 790,000 | 5.3 | ||||||
SHORT- AND LONG-TERM INCENTIVE COMPENSATION OPPORTUNITY
NEO | 2023 Base Salary(a) | % of Adjustment | ||||||
Lidio V. Soriano | 590,000 | 4.1 | ||||||
Manuel Chinea | 565,000 | 4.5 | ||||||
| (a) | Base salary for the NEOs as of December 31, 2023. |
| Component | Level of Achievement | Executive R. Carrión | President / I. Alvarez | Other NEOs | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
<Threshold
| 0.0%
| 0.0%
| 0%
| |||||||||||||||||||||||||||||
| Corporate Net Income | Threshold (85%)
| 13.8%
| 13.9%
| 10%
| ||||||||||||||||||||||||||||
Target
|
27.7%
|
28.9%
|
25%
| |||||||||||||||||||||||||||||
Max (115%)
| 41.5%
| 43.9%
| 40%
| |||||||||||||||||||||||||||||
<Threshold
| 0.0%
| 0.0%
| 0%
| |||||||||||||||||||||||||||||
| Individual Annual Goals (financial/non-financial) | Threshold
| 23.8%
| 23.9%
| 20%
| ||||||||||||||||||||||||||||
Target
|
47.7%
|
47.8%
|
40%
| |||||||||||||||||||||||||||||
Max
| 71.5%
| 71.7%
| 60%
| |||||||||||||||||||||||||||||
Min
| 0.0%
| 0.0%
| 0%
| |||||||||||||||||||||||||||||
| Leadership | Target
| 17.7%
| 18.9%
| 15%
| ||||||||||||||||||||||||||||
Max
| 26.5%
| 27.8%
| 20%
| |||||||||||||||||||||||||||||
<Threshold
| 0.0%
| 0.0%
| 0%
| |||||||||||||||||||||||||||||
| Total Short-Term Incentive | Threshold
| 37.6%
| 37.8%
| 30%
| ||||||||||||||||||||||||||||
Target
|
93.1%
|
95.6%
|
80%
| |||||||||||||||||||||||||||||
Max
|
139.5%
|
143.4%
|
120%
| |||||||||||||||||||||||||||||
For the long-term incentive, the parameters below indicate the prevailing structure at the time of grant in February 2017, before the role and compensation changes were implemented.
| ||||||||||||||||||||||||||||||||
<Threshold
| 0%
| 0%
| 0%
| |||||||||||||||||||||||||||||
| Equity Incentive—Performance Shares | Min
| 40%
| 25%
| 20%
| ||||||||||||||||||||||||||||
Target
|
80%
|
50%
|
40%
| |||||||||||||||||||||||||||||
Max
| 120%
| 75%
| 60%
| |||||||||||||||||||||||||||||
<Threshold
| 0%
| 0%
| 0%
| |||||||||||||||||||||||||||||
| Equity Incentive—Restricted Stock | Threshold
| 40%
| 25%
| 20%
| ||||||||||||||||||||||||||||
Target
|
80%
|
50%
|
40%
| |||||||||||||||||||||||||||||
Max
| 120%
| 75%
| 60%
| |||||||||||||||||||||||||||||
<Threshold
| 0%
| 0%
| 0%
| |||||||||||||||||||||||||||||
| Total Long-Term Incentive | Threshold
| 80%
| 50%
| 40%
| ||||||||||||||||||||||||||||
Target
|
160%
|
100%
|
80%
| |||||||||||||||||||||||||||||
Max
| 240%
| 150%
| 120%
| |||||||||||||||||||||||||||||
<Threshold
| 0.0%
| 0.0%
| 0.0%
| |||||||||||||||||||||||||||||
| Consolidated Total | Threshold
| 117.7%
| 87.8%
| 70.0%
| ||||||||||||||||||||||||||||
Target
|
253.1%
|
195.6%
|
160.0%
| |||||||||||||||||||||||||||||
Max
| 379.6%
| 293.4%
| 240.0%
| |||||||||||||||||||||||||||||
2018 PROXY STATEMENT | 39
SHORT-TERM ANNUAL CASH INCENTIVE FOR 2017 (PAID IN 2018)
OurPopular’s short-term incentive rewards the achievement of annual financial and non-financial goals that reinforce our business strategy and strategic priorities, as well as the demonstration of our leadership competencies.priorities. Actual payouts depend on performance and are capped at 1.5 times the target award. CertainPre-defined threshold levels of performance are required tomust be achieved for any payouts to be awarded.
Awards
their base salary. The Committee assessedalso defined the performance criteria that would be used to determine payouts. Actual payouts for each component of the STI plan can range from 50% of target (for threshold performance) to 150% of target (for stretch performance). Actual performance below threshold results in no payout. Threshold performance is defined as 85% of budget, whereas stretch performance is defined as 115% of budget.
| • | Corporate Performance (50% weight): Financially driven and based on the Corporation’s 2023 adjusted after-tax net income (35% weight) and annual adjusted after-tax ROATCE (15% weight). Previously, adjusted after-tax net income was the only corporate-level financial metric applied to all executives. |
| • | Strategic Performance (25% weight): Aligned to the achievement of key milestones tied to a multi-year transformation initiative which aims to scale Popular’s successes, enabling the Corporation to tackle business challenges and ensure sustained growth and market leadership for years to come. This encompasses digital, technological, and business process transformation, enabling the opportunity for growth in the Corporation’s primary market and within the existing customer base. This award component is based on the collective transformation results led by the executive management team and is paid at the same degree of achievement for all executives. The collective nature of this component promotes collaboration among organizational groups to achieve common long-term strategic objectives. |
| • | Individual Performance (25% weight): Specific, predetermined financial and non-financial objectives based on each NEO’s role. |
Corporate Performance | Strategic Performance | Individual Performance | Total Payout (a) (b) | |||||||||||||||||
Net Income | ROATCE | |||||||||||||||||||
35% weight | 15% weight | 25% weight | 25% weight | |||||||||||||||||
NEO | % of Target Earned | % of Target Earned | Total Award ($) | |||||||||||||||||
Ignacio Alvarez | 62% | 72% | 117% | 137% | 96% | $1,466,740 | ||||||||||||||
Carlos J. Vázquez | 62 | 72 | 117 | 130 | 94 | 577,193 | ||||||||||||||
Javier D. Ferrer | 62 | 72 | 117 | 146 | 98 | 621,335 | ||||||||||||||
Lidio V. Soriano | 62 | 72 | 117 | 120 | 92 | 433,355 | ||||||||||||||
Manuel Chinea | 62 | 72 | 117 | 93 | 85 | 384,031 | ||||||||||||||
| (a) | Total target awards as a percentage of base salary for 2023 were 135% for Mr. Alvarez and 80% for the other NEOs. |
| (b) | Note that the percentages shown in the above table are rounded to the nearest whole percentage point. |
As previously discussed, 2017
In determining the 2017 The Committee’s use of adjusted after-tax net income is to ensure that participants are neither rewarded nor penalized for incentive purposes, the Committee, in consultation with its independent compensation consultant, viewed the combined effectitems that are non-recurring, unusual or not indicative of the hurricanes as an unprecedented catastrophic event that was outside the Company’s control and not in the normal course of business. Therefore, for incentive purposes, the Committee decided to adjust its GAAP net income result for: (i) the previously described deferred tax asset write-down, and (ii) expenses specifically attributable to the hurricanes (net of insurance receivables) pertaining to the provision for loan losses, operating expenses and foregone revenue. For information about how we calculated 2017 net income for incentive compensation purposes, see Appendix B. The Committee believes that these adjustments result in a level of net income that more appropriately reflects Popular’s underlying business trends and recognizes the senior management team’s performance during this extraordinarily challenging year.
ongoing operations.
40 | 2018 PROXY STATEMENT
Individual Annual Goals Component
| ||||||
Ignacio Alvarez, President & CEO |
| 137% of
| ||||
|
| |||||
2018 PROXY STATEMENT
| ||||||
Carlos J. Vázquez, Executive Vice President & CFO |
| 130% of | ||||
| ||||||
|
| |||||
|
| ||||
42 | 2018 PROXY STATEMENT
| ||||||
Javier D. Ferrer, Executive Vice President & COO |
| 146% of
| ||||
|
| |||||
| ||||||
Lidio V. Soriano, Executive Vice President & CRO | 120% of | |||||
Leadership Component
The leadership componentLed and oversaw continued improvement and stability in credit quality of Popular’s executive incentivethe Corporation’s loan portfolio, including a $82 million reduction in non-performing loans.
Manuel Chinea, Executive Vice President, COO of Popular Bank | 93% of target earned | |||||
Rico. Facing an unprecedented level of destruction and uncertainty following the hurricanes, members of senior management led their teams selflessly, rapidly and creatively to address the dire needs of our colleagues, customers and communities. Based on the above, the Committee granted the target leadership award for Mr. Carrión (17.7%), the maximum award for Mr. Alvarez (27.8%Grew total loans by $1 billion (11%) and total deposits by $2.6 billion (30%).
2018
TOTAL EARNED 2017 SHORT-TERM CASH INCENTIVE
The following table summarizes the 2017 short-term cash
| NEO | Corporate Net Income | Individual Performance | Leadership | Total Earned (1) | Total Award ($) | |||||||||||||||
Richard L. Carrión
|
| 22.3
| %
|
| 38.2
| %
|
| 17.7
| %
|
| 78.2
| %
|
| $1,016,133
|
| |||||
Ignacio Alvarez
|
| 23.1
|
|
| 52.1
|
|
| 27.8
|
|
| 103.0
|
|
| 831,387
|
| |||||
Carlos J. Vázquez
|
| 19.2
|
|
| 45.4
|
|
| 15.0
|
|
| 79.6
|
|
| 537,030
|
| |||||
Javier D. Ferrer
|
| 19.2
|
|
| 45.4
|
|
| 15.0
|
|
| 79.6
|
|
| 437,953
|
| |||||
Lidio V. Soriano
|
| 19.2
|
|
| 39.0
|
|
| 15.0
|
|
| 73.2
|
|
| 365,764
|
| |||||
Eli S. Sepúlveda
|
| 19.2
|
|
| 46.5
|
|
| 15.0
|
|
| 80.7
|
|
| 363,050
|
| |||||
|
LONG-TERM INCENTIVE FOR 2017 (GRANTED FEBRUARY 2017)
Popular’s equity incentive alignslong-term (equity) incentives align our executives’ compensation with sustained long-term performance and the interests of our shareholders. Each NEO has a target long-term equity award opportunity that reflects market practice for similar roles. The CEO’s target is defined as 270% of base salary, the COO’s target is 120% of base salary, and other NEOs’ targets are defined as 80% of their base salary.
award, as determined by the Committee, which considers corporate and individual performance.
Restricted
Our vest-at-retirement provision supports our desire to balance rewards with appropriate risk mitigation, as well as position the grants as a retirement benefit.
years.
Statement). Nevertheless, the Committee recognized theeach NEO’s strong leadership team’sand contributions to ending the yearPopular’s solid performance in a strong position with stable credit quality and solid capital levels.
Performance Shares
Performance shares, reflecting 50% of the long-term equity incentive opportunity, reward our future performance and vest only if pre-defined performance goals are achieved. Awards are2022.
3-year relative TSR compared to U.S. Banks with assets greater than $10 billion (as measured by SNL Financial)
3-year absolute cumulative EPS
Each performance measure has a pre-defined threshold (minimum result for which an incentive would be payable), target and maximum (stretch goal) level of performance that determines vesting at the end of the 3-year period. Performance below threshold results in forfeiture of the shares allocated to the corresponding performance measure. Dividend equivalents are accrued and paid at the end of the performance period based on the actual number of shares earned. Upon consideration of these factors, the Committee granted2023 equity awards to the NEOs based on percentage of base pay, with the grant date fair market valueas indicated in the table below. TheyThe awards will vest as previously described to the extent that the corresponding service and performance conditions are met.
44 | 2018 PROXY STATEMENT
| Restricted Stock | Performance Shares | Total Grant Date Fair Value | ||||||||||||||||
| NEO | % of base pay | $ | % of base pay | $ | % of base pay | $ | ||||||||||||
Richard L. Carrión
|
70.0%
|
|
$980,000
|
|
80.0%
|
|
$1,120,000
|
|
150.0%
|
|
$2,100,000
|
| ||||||
Ignacio Alvarez |
43.8
|
|
313,170
|
|
50.0
|
|
357,500
|
|
93.8
|
|
670,670
|
| ||||||
Carlos J. Vázquez
|
35.0
|
|
236,250
|
|
40.0
|
|
270,000
|
|
75.0
|
|
506,250
|
| ||||||
Javier D. Ferrer
|
35.0
|
|
192,500
|
|
40.0
|
|
220,000
|
|
75.0
|
|
412,500
|
| ||||||
Lidio V. Soriano
|
35.0
|
|
175,000
|
|
40.0
|
|
200,000
|
|
75.0
|
|
375,000
|
| ||||||
Eli S. Sepúlveda
|
35.0
|
|
157,500
|
|
40.0
|
|
180,000
|
|
75.0
|
|
337,500
|
| ||||||
|
SPECIAL EQUITY INCENTIVE AWARDED TO NEWLY APPOINTED CEO (GRANTED JUNE 2017)
In recognition The terms of Mr. Alvarez’s promotionthe awards include covenants with respect to the positionnon-solicitation of CEO, in consultation with its independent compensation consultant, the Committee approved a special one-time restricted stock grant of $475,000. employees or customers.
Performance Shares | Restricted Stock | Total Grant (value based on grant date stock price)(a) (b) | |||||||||||||||||||||||||||
NEO | % of Target | % of Base Salary | Value ($) | % of Target | % of Base Salary | Value ($) | % of Target | % of Base Salary | Value ($) | ||||||||||||||||||||
Ignacio Alvarez | 100% | 135% | $1,525,500 | 100% | 135% | $1,525,500 | 100% | 270% | $3,051,000 | ||||||||||||||||||||
Carlos J. Vázquez | 100 | 40 | 294,600 | 113 | 45 | 331,425 | 106 | 85 | 626,025 | ||||||||||||||||||||
Javier D. Ferrer | 100 | 60 | 450,000 | 150 | 90 | 675,000 | 125 | 150 | 1,125,000 | ||||||||||||||||||||
Lidio V. Soriano | 100 | 40 | 226,600 | 113 | 45 | 254,925 | 106 | 85 | 481,525 | ||||||||||||||||||||
Manuel Chinea | 100 | 40 | 216,320 | 113 | 45 | 243,360 | 106 | 85 | 459,680 | ||||||||||||||||||||
| (a) | The number of shares granted was determined by dividing the Total Grant by the Corporation’s closing stock price of $71.56 on the date of grant (February 27, 2023). |
| (b) | Note that the percentages shown in the table above are rounded to the nearest whole percentage point. |
PERFORMANCE SHARESPAYOUT—2015-2017 PERFORMANCE CYCLE
On February 27, 2015, the Committee approved a grant of performance shares in February 2021 designed to reward performance over the 3-year performance period (2015-2017)(2021-2023). The awards were granted at target with a potential payout of the 2015 performance shares rangedranging from 0%-150% of target, weighted 50% based on relative total shareholder return (TSR) among the comparative groupTSR compared to an industry index of United States banks with assets greater than $10 billion and 50% based on absolute cumulative earnings per share (EPS)ROATCE over the performance period. Results are based on a formula comparing the Corporation’s results to the pre-defined goals set in 2021. In January 2018,February 2024, the Committee reviewed Popular’s 2015-20172021-2023 performance and determined the degree to which the goals were attained.
2015-2017 The following is a summary of the payout:
Although (50% of Performance Shares)
2015-2017 Absolute EPS, as Adjusted
Consistent with In determining our 2021-2023 adjusted ROATCE values, the previously describedCommittee made the same adjustments for special items applied to the GAAP net income resultsas those made for our 2017the short-term annual cash incentive award determination.
The above decisions yielded a payout of 29% of the total combined target number of performance shares that had been granted, as indicated below.
| Payout (as Percentage of Target) 2015—2017 | ||||||||||||
Goal
|
0% of Target
| 50% of Target
| 100% Target
| 150% Target
| Performance
| Payout
| ||||||
Relative TSR (Weighted 50%)
| < 25th Percentile
| 25th Percentile
| 50th Percentile
| 75th Percentile
| 5th Percentile (1)
| 0%
| ||||||
Absolute EPS (Weighted 50%)
| < $10.25
| $10.25
| $10.88
| $11.52
| $10.36 (2)
| 58.7%
| ||||||
2018 PROXY STATEMENT | 45
BENEFITS AND PERQUISITES
Perquisites and other executive benefits do not represent a significant portion of our executive compensation program. We do not provide employment agreements, change in control arrangements, tax gross-ups, supplemental retirement benefits or club memberships to our executives.
executives. Popular owns an apartmentOn December 7, 2023, the Committee also approved the following awards to be granted to Mr. Vázquez in New York City, which is usedconsideration of his continued service through the Retirement Date:
DETERMINATION AND ASSESSMENT OF EXECUTIVE COMPENSATION
ROLE OF THE COMPENSATION COMMITTEE
As needed, the Committee also seeks information and advice from external legal counsel on regulatory and legal aspects of executive compensation, employee benefits and board committee governance.
Executive Compensation
Determinations and GrantsReviewed performance of executive officers (including NEOs) and approved short-term cash incentive payouts as well as equity grants.
Reviewed 2016 performance of executive officers (including NEOs), approving awards of short-term cash incentive, performance shares and restricted stock, which were paid or granted in early 2017.
Assessed the compensation competitiveness of all NEOs and other executive officers.
Reviewed executive officer equity holdings and compliance with Popular’s stock ownership guidelines.
Received education and updates from its compensation consultant and other sources concerning regulatory developments, market trends and bestleading practices in executive compensation.
Reviewed and approved the new duties and compensation program for the newly appointed Executive Chairman and CEO.
Validated the compensation peer group for future market comparisons.
Discussed incentive plan risks with the CRO and management, concluding that our incentive plans and sales practices did not encourage unnecessary or excessive risk taking.
Approved a Compensation Recoupment Policy intended to comply with the requirements of Rule 10D-1 of the Securities Exchange Act of 1934 and the Nasdaq Stock Market Listing Rule 5608.
Benefits
46 | 2018 PROXY STATEMENT
|
Reviewed the liability-driven investment strategy implemented for the BPPRBanco Popular de Puerto Rico Retirement Plan.
Other
Human Capital Strategies
Examined key human resources indicators, including headcount, personnel costs, turnover and employee engagement, among others.
Reviewed progress in Popular’s diversity, equity, and inclusion strategy, including gender-relatedefforts to address gender pay equity aspects of compensation programs.
Discussed the hurricane impactReceived updates on, employees, approving early payment of the customary Christmas Bonusamong other things, attraction and special recognition incentives for non-executive employees.
MetThe Committee met in executive session during each Committee meeting.
Although the Committee exercises its independent judgment in reaching compensation decisions, it currently utilizesalso receives advice from its independent compensation consultant as well as the adviceChairman, CEO and other key senior leaders of the following contributors:
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| |
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| |
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| |
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| |
|
|
* Neither the Corporation’s Executive Chairman norCommittee to ensure that the Presidentcompensation programs are aligned with Popular’s strategic objectives. They also discuss corporate strategy and business goals with the Committee and provide feedback regarding NEO performance. The CEO may not be present during voting or deliberations on his or her respective compensation.
ROLE OF THE COMPENSATION CONSULTANT
Role of the Compensation Consultant
competitive market practices among our
2018 PROXY STATEMENT | 47
compensation matters. During the entire period, Meridian reported directly to the Committee regarding these matters, and the firmMeridian had no other relationship with, nor provided any other services to, Popular.
COMPENSATION INFORMATION AND PEER GROUP
compensation information from financial institutions in theits headquarters market of Puerto Rico.
Our compensation
| |||||
|
| ||||
| PEER GROUP(1) | ||||
BOK FINANCIAL CORP |
| M&T BANK CORPORATION | |||
| CADENCE |
| NEW YORK COMMUNITY BANCORP, INC. | ||
| CITIZENS FINANCIAL |
| REGIONS FINANCIAL CORPORATION | ||
| COMERICA INCORPORATED |
| SYNOVUS FINANCIAL CORP | ||
| CULLEN/FROST BANKERS INC. |
| VALLEY NATIONAL BANCORP | ||
| EAST WEST BANCORP INC. |
| WEBSTER FINANCIAL CORPORATION | ||
| FIRST REPUBLIC BANK |
| WESTERN ALLIANCE | ||
| HUNTINGTON BANCSHARES INCORPORATED |
| WINTRUST | ||
KEYCORP | ZIONS BANCORPORATION | ||||
(1) Although it initially formed part of the 2023 peer group, Signature Bank Corp. was later removed due to bank failure.
TABLE OF OUR EXECUTIVE COMPENSATION PROGRAMCONTENTS
INCENTIVE RECOUPMENT GUIDELINE (CLAWBACK)
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
NASDAQ is open following the second complete day of trading following the release of the Corporation’s earning results for the first quarter of the calendar year. Equity grants to certain newly hired employees or promoted individuals, including executive officers, are made on the last business day prior to the 15th day of each month or the last business day of each month, whichever day first follows the date on which the newly-hired individual commences providing active services to the Corporation or the promoted individual commences providing active services to the Corporation at the promoted level.
48 | 2018 PROXY STATEMENT
compensation is deductible for income tax purposes if it is reasonable.meets the reasonable compensation test of the P.R. Internal Revenue Code. It is the Committee’s intention that the compensation paid to Popular’s NEOs be deductible, to the extent practicable, but the Committee reserves the ability to grant or pay compensation that is not deductible. For the fiscal year 2017,2023, all NEOs (except Mr. Chinea) were residents of Puerto Rico.
feedback mechanisms. Based on the review, the CRO did not identify any incentive plans or sales practices that would encourage employees to take unnecessary or excessive risks. In conjunction with risk management processes, the
Maria Luisa Ferré,
David E. Goel
William J. Teuber, Jr.
2018 PROXY STATEMENT
| Name and Principal Position | Year | Salary ($)(a) | Bonus ($)(b) | Stock Awards ($)(c) | Non-Equity Incentive Plan Compensation ($)(d) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(e) | All Other Compensation ($)(f) | Total ($) | ||||||||||||||||||||||||
Richard L. Carrión Executive Chairman since July 1, 2017 (formerly Chief Executive Officer)
|
|
2017
|
|
$
|
1,300,000
|
|
$
|
50,205
|
|
|
$2,100,000
|
|
|
$1,016,133
|
|
$
|
170,591
|
|
$
|
209,168
|
|
$
|
4,846,097
|
| ||||||||
| 2016 | 1,453,846 | 58,533 | 2,520,000 | 1,850,800 | — | 266,141 | 6,149,320 | |||||||||||||||||||||||||
|
| 2015
|
|
| 1,400,000
|
|
| 58,528
|
|
| 2,800,000
|
|
| 2,276,073
|
|
| —
|
|
| 281,848
|
|
| 6,816,449
|
| |||||||||
Ignacio Alvarez
President and Chief Executive Officer since July 1, 2017 (formerly President and Chief Operating Officer)
|
|
2017
|
|
|
807,500
|
|
|
37,535
|
|
|
1,145,670
|
|
|
831,387
|
|
|
—
|
|
|
40,846
|
|
|
2,862,938
|
| ||||||||
| 2016 | 742,500 | 29,822 | 804,375 | 845,155 | — | 15,130 | 2,436,982 | |||||||||||||||||||||||||
|
| 2015
|
|
| 695,769
|
|
| 29,817
|
|
| 893,750
|
|
| 1,038,277
|
|
| —
|
|
| 11,656
|
|
| 2,669,269
|
| |||||||||
Carlos J. Vázquez Executive Vice President and Chief Financial Officer
|
|
2017
|
|
|
675,000
|
|
|
28,225
|
|
|
506,250
|
|
|
537,030
|
|
|
47,055
|
|
|
21,089
|
|
|
1,814,649
|
| ||||||||
| 2016 | 700,962 | 28,220 | 607,500 | 709,250 | — | 13,617 | 2,059,549 | |||||||||||||||||||||||||
|
| 2015
|
|
| 670,192
|
|
| 28,215
|
|
| 675,000
|
|
| 842,855
|
|
| —
|
|
| 11,700
|
|
| 2,227,962
|
| |||||||||
Javier D. Ferrer Executive Vice President and Chief Legal Officer |
|
2017
2016 2015 |
|
|
550,000
571,154 550,000 |
|
|
22,932
22,927 22,922 |
|
|
412,500
495,000 550,000 |
|
|
437,953
477,950 583,697 |
|
|
—
— — |
|
|
13,693
14,296 10,162 |
|
|
1,437,078
1,581,327 1,716,781 |
| ||||||||
Lidio V. Soriano Executive Vice President and Chief Risk Officer
|
|
2017
2016 2015
|
|
|
500,000
519,231 476,923
|
|
|
20,863
20,858 20,853
|
|
|
375,000
450,000 500,000
|
|
|
365,764
526,500 617,300
|
|
|
—
— —
|
|
|
12,855
12,524 8,734
|
|
|
1,274,482
1,529,113 1,623,810
|
| ||||||||
Eli S. Sepúlveda Executive Vice President Commercial Credit Group
|
|
2017
|
|
|
450,000
|
|
|
18,905
|
|
|
337,500
|
|
|
363,050
|
|
|
58,418
|
|
|
22,342
|
|
|
1,250,215
|
| ||||||||
Name And Principal Position | Year | Salary (a) | Bonus (b) | Stock Awards (c) | Non-Equity Incentive Plan Compensation (d) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (e) | All Other Compensation (f) | Total | ||||||||||||||||||
Ignacio Alvarez President and Chief Executive Officer | 2023 | $ 1,130,000 | $ 47,083 | $3,081,501 | $1,466,740 | $— | $43,120 | $ 5,768,444 | ||||||||||||||||||
2022 | 1,125,385 | 47,083 | 3,022,051 | 2,093,300 | — | 35,889 | 6,323,708 | |||||||||||||||||||
2021 | 1,100,000 | 45,833 | 2,447,529 | 1,496,710 | — | 29,086 | 5,119,158 | |||||||||||||||||||
Carlos J. Vázquez Executive Vice President and Chief Financial Officer | 2023 | 759,519 | 31,875 | 631,998 | 577,193 | 16,449 | 23,610 | 2,040,644 | ||||||||||||||||||
2022 | 733,192 | 31,938 | 653,692 | 763,899 | — | 15,749 | 2,198,470 | |||||||||||||||||||
2021 | 708,145 | 29,792 | 568,850 | 762,416 | — | 18,574 | 2,087,777 | |||||||||||||||||||
Javier D. Ferrer Executive Vice President, Chief Operating Officer and Head of Business Strategy | 2023 | 782,308 | 32,917 | 1,134,107 | 621,335 | — | 15,774 | 2,586,441 | ||||||||||||||||||
2022 | 750,000 | 31,250 | 950,697 | 822,775 | — | 18,574 | 2,573,296 | |||||||||||||||||||
2021 | 634,615 | 28,125 | 486,115 | 749,890 | — | 18,574 | 1,917,319 | |||||||||||||||||||
Lidio V. Soriano Executive Vice President and Chief Risk Officer | 2023 | 585,481 | 24,583 | 486,157 | 433,355 | — | 22,868 | 1,552,444 | ||||||||||||||||||
2022 | 563,961 | 23,604 | 502,882 | 596,039 | — | 31,581 | 1,718,067 | |||||||||||||||||||
2021 | 533,954 | 22,917 | 421,370 | 566,275 | — | 25,446 | 1,569,962 | |||||||||||||||||||
Manuel Chinea Executive Vice President and Chief Operating Officer Popular Bank | 2023 | 560,340 | — | 464,082 | 384,031 | 4,799 | 47,725 | 1,460,977 | ||||||||||||||||||
2022 | 537,605 | — | 423,294 | 587,892 | — | 50,387 | 1,599,178 | |||||||||||||||||||
2021 | 498,458 | — | 388,809 | 535,436 | — | 46,669 | 1,469,372 | |||||||||||||||||||
| (a) |
|
| (b) | Includes Popular’s customary Christmas bonus provided to its Puerto Rico-based employees, equal to 4.17% of annual base |
| (c) | The awards reported in the “Stock Awards” column were provided in the form of restricted stock and performance shares granted on February |
|
| (d) | The amounts reported in the Non-Equity Incentive Plan Compensation column reflect the amounts earned by each NEO under |
50 | 2018 PROXY STATEMENT
| (e) | No additional benefits in the defined benefit |
|
| (f) | The amounts reported in the “All Other Compensation” column reflect, for each NEO, the sum of (i) the incremental cost to Popular of all perquisites and other personal benefits with an aggregate amount greater than or equal to $10,000, (ii) the amounts contributed by Popular to the Savings and Investment Plan, (iii) the imputed cost of coverage in excess of $50,000 for group-term life insurance, and |
|
|
|
|
|
|
| ||||||
|
|
| ||||||||||
| Name |
| Use Of Company-Owned Vehicle |
| Other(i) | |||||||
Ignacio Alvarez |
| • |
| • | ||||||||
Carlos J. Vázquez |
| • |
| • | ||||||||
| Javier D. Ferrer |
| • | • | ||||||||
Lidio V. Soriano | • | • | ||||||||||
Manuel Chinea | • | |||||||||||
| (i) |
|
Includes benefits provided to certain NEOs, the value of which does not exceed the greater of $25,000 or 10% of the total amount of |
| ||
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
2018 PROXY STATEMENT | 51
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(a) | Estimated Future Payouts Under Equity Incentive Plan Awards(b) | All Other Stock Awards: Number of Shares of Stock or Units (#)(c) | Grant Date Fair Value of Stock and Option Awards ($)(d) | ||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||
Ignacio Alvarez | $3,081,501 | ||||||||||||||||||||||||||||
2023 Short-Term Cash Incentive | $762,750 | $1,525,500 | $2,288,250 | ||||||||||||||||||||||||||
Restricted Stock | 27-Feb-23 | 21,318 | |||||||||||||||||||||||||||
Performance Shares | 27-Feb-23 | 10,660 | 21,318 | 31,978 | |||||||||||||||||||||||||
Carlos J. Vázquez | 631,998 | ||||||||||||||||||||||||||||
2023 Short-Term Cash Incentive | 306,000 | 612,000 | 918,000 | ||||||||||||||||||||||||||
Restricted Stock | 27-Feb-23 | 4,632 | |||||||||||||||||||||||||||
Performance Shares | 27-Feb-23 | 2,060 | 4,118 | 6,178 | |||||||||||||||||||||||||
Estimated Future Payouts Under
|
Estimated Future Payouts Under Equity Incentive Plan Awards (b)
| All Other
| Grant Date
| |||||||||||||||||||||||||||||||||
Name
| Grant Date
| Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| |||||||||||||||||||||||||||||
Richard L. Carrión | $2,100,000 | |||||||||||||||||||||||||||||||||||
2017 Short-Term Cash Incentive | $490,000 | $1,210,000 | $1,815,000 | |||||||||||||||||||||||||||||||||
Restricted Stock | 24-Feb-17 | 22,097 | ||||||||||||||||||||||||||||||||||
Performance Shares
|
| 24-Feb-17
|
|
| 12,628
|
|
| 25,254
|
|
| 37,882
|
| ||||||||||||||||||||||||
Ignacio Alvarez | 1,145,670 | |||||||||||||||||||||||||||||||||||
2017 Short-Term Cash Incentive | 305,125 | 771,750 | 1,157,625 | |||||||||||||||||||||||||||||||||
Restricted Stock | 24-Feb-17 | 7,062 | ||||||||||||||||||||||||||||||||||
Restricted Stock | 22-Jun-17 | 12,202 | ||||||||||||||||||||||||||||||||||
Performance Shares
|
| 24-Feb-17
|
|
| 4,032
|
|
| 8,062
|
|
| 12,094
|
| ||||||||||||||||||||||||
Carlos J. Vázquez | 506,250 | |||||||||||||||||||||||||||||||||||
2017 Short-Term Cash Incentive | 202,500 | 540,000 | 810,000 | |||||||||||||||||||||||||||||||||
Restricted Stock | 24-Feb-17 | 5,327 | ||||||||||||||||||||||||||||||||||
Performance Shares
|
| 24-Feb-17
|
|
| 3,044
|
|
| 6,088
|
|
| 9,132
|
| ||||||||||||||||||||||||
Javier D. Ferrer | 412,500 | |||||||||||||||||||||||||||||||||||
2017 Short-Term Cash Incentive | 165,000 | 440,000 | 660,000 | |||||||||||||||||||||||||||||||||
Restricted Stock | 24-Feb-17 | 4,341 | ||||||||||||||||||||||||||||||||||
Performance Shares
|
| 24-Feb-17
|
|
| 2,482
|
|
| 4,962
|
|
| 7,444
|
| ||||||||||||||||||||||||
Lidio V. Soriano | 375,000 | |||||||||||||||||||||||||||||||||||
2017 Short-Term Cash Incentive | 150,000 | 400,000 | 600,000 | |||||||||||||||||||||||||||||||||
Restricted Stock | 24-Feb-17 | 3,946 | ||||||||||||||||||||||||||||||||||
Performance Shares
|
| 24-Feb-17
|
|
| 2,256
|
|
| 4,510
|
|
| 6,766
|
| ||||||||||||||||||||||||
Eli S. Sepúlveda | 337,500 | |||||||||||||||||||||||||||||||||||
2017 Short-Term Cash Incentive | 135,000 | 360,000 | 540,000 | |||||||||||||||||||||||||||||||||
Restricted Stock | 24-Feb-17 | 3,552 | ||||||||||||||||||||||||||||||||||
Performance Shares
|
| 24-Feb-17
|
|
| 2,030
|
|
| 4,060
|
|
| 6,090
|
| ||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(a) | Estimated Future Payouts Under Equity Incentive Plan Awards(b) | All Other Stock Awards: Number of Shares of Stock or Units (#)(c) | Grant Date Fair Value of Stock and Option Awards ($)(d) | ||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||
Javier D. Ferrer | 1,134,107 | ||||||||||||||||||||||||||||
2023 Short-Term Cash Incentive | 316,000 | 632,000 | 948,000 | ||||||||||||||||||||||||||
Restricted Stock | 27-Feb-23 | 9,433 | |||||||||||||||||||||||||||
Performance Shares | 27-Feb-23 | 3,146 | 6,290 | 9,436 | |||||||||||||||||||||||||
Lidio V. Soriano | 486,157 | ||||||||||||||||||||||||||||
2023 Short-Term Cash Incentive | 236,000 | 472,000 | 708,000 | ||||||||||||||||||||||||||
Restricted Stock | 27-Feb-23 | 3,563 | |||||||||||||||||||||||||||
Performance Shares | 27-Feb-23 | 1,584 | 3,168 | 4,752 | |||||||||||||||||||||||||
Manuel Chinea | 464,082 | ||||||||||||||||||||||||||||
2023 Short-Term Cash Incentive | 226,000 | 452,000 | 678,000 | ||||||||||||||||||||||||||
Restricted Stock | 27-Feb-23 | 3,401 | |||||||||||||||||||||||||||
Performance Shares | 27-Feb-23 | 1,512 | 3,024 | 4,536 | |||||||||||||||||||||||||
| (a) | This section |
|
| (b) | This section |
| (c) | This section |
| (d) | Represents the grant date fair value, in accordance with FASB ASC Topic 718, of the performance shares and restricted stock granted in 2023. |
Stock Awards | ||||||||||||||
Name | Number of Shares or Units of Stock That Have Not Vested (#)(a) | Market Value of Shares or Units of Stock That Have not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(b) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||
Ignacio Alvarez | 95,502 | $7,837,849 | 37,924 | $3,112,423 | ||||||||||
Carlos J. Vázquez | 27,501 | 2,257,007 | 7,318 | 600,588 | ||||||||||
Javier D. Ferrer | 29,956 | 2,458,489 | 10,484 | 860,422 | ||||||||||
Lidio V. Soriano | 20,651 | 1,694,828 | 5,630 | 462,054 | ||||||||||
Manuel Chinea | 11,329 | 929,771 | 5,350 | 439,075 | ||||||||||
| (a) | Vesting dates of shares or units of stock that have not vested: |
Restricted Stock Awards | Performance Shares Award 2021(vi) | Total | ||||||||||||||||||||||||||||||||||||
Name | 2006(i) | 2015(i) | 2016(i) | 2017(i) | 2018(i) | 2019(i) | 2020(ii) | 2021(iii) | 2022(iv) | 2023(v) | ||||||||||||||||||||||||||||
Ignacio Alvarez | — | 3,113 | 3,518 | 1,368 | 3,757 | 4,871 | 12,276 | 9,462 | 12,063 | 20,650 | 24,424 | 95,502 | ||||||||||||||||||||||||||
Carlos J. Vázquez | 582 | 2,351 | 2,657 | 1,032 | 1,219 | 1,220 | 2,800 | 2,013 | 2,903 | 4,486 | 6,238 | 27,501 | ||||||||||||||||||||||||||
Javier D. Ferrer | — | 1,820 | 2,166 | 840 | 992 | 992 | 2,390 | 1,719 | 4,568 | 9,137 | 5,332 | 29,956 | ||||||||||||||||||||||||||
Lidio V. Soriano | — | 1,799 | 2,032 | 789 | 931 | 932 | 2,138 | 1,540 | 2,307 | 3,563 | 4,620 | 20,651 | ||||||||||||||||||||||||||
Manuel Chinea | — | 368 | 530 | 409 | 481 | 531 | 1,274 | 663 | 779 | 2,030 | 4,264 | 11,329 | ||||||||||||||||||||||||||
| (i) | The shares will vest upon termination of employment on or after age 55 and completing 10 years of service. |
| (ii) | 80% |
| (iii) | Shares vest in |
|
52 | 2018 PROXY STATEMENT
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth certain information with respect to the value of all restricted stock and performance shares previously awarded to the NEOs (based on the closing price of Popular’s common stock as of December 29, 2017, the last trading day of 2017, which was $35.49).
| Stock Awards | ||||||||||||||||
Name
| Number of Shares or Units of Stock That Have Not Vested (#) (a) | Market Value of Shares or Units of Stock That | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(b) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||
Richard L. Carrión
|
| 121,243
|
|
| $4,302,914
|
|
| 70,764
|
|
| $2,511,414
|
| ||||
Ignacio Alvarez
|
| 46,762
|
|
| 1,659,583
|
|
| 22,589
|
|
| 801,684
|
| ||||
Carlos J. Vázquez
|
| 26,697
|
|
| 947,477
|
|
| 17,060
|
|
| 605,459
|
| ||||
Javier D. Ferrer
|
| 21,264
|
|
| 754,659
|
|
| 13,902
|
|
| 493,382
|
| ||||
Lidio V. Soriano
|
| 19,331
|
|
| 686,057
|
|
| 12,637
|
|
| 448,487
|
| ||||
Eli S. Sepúlveda
|
| 16,546
|
|
| 587,218
|
|
| 10,887
|
|
| 386,380
|
| ||||
|
2005
| 2006
| 2015 Restricted
| 2015 Shares
| 2016
| 2017
| Total
| ||||||||||||||||||||||
Richard L. Carrión
|
|
6,069
|
|
|
6,931
|
|
|
30,207
|
|
|
10,429
|
|
|
45,510
|
|
|
22,097
|
|
|
121,243
|
| |||||||
Ignacio Alvarez
|
|
—
|
|
|
—
|
|
|
9,642
|
|
|
3,329
|
|
|
14,527
|
|
|
19,264
|
|
|
46,762
|
| |||||||
Carlos J. Vázquez
|
|
—
|
|
|
601
|
|
|
7,283
|
|
|
2,515
|
|
|
10,971
|
|
|
5,327
|
|
|
26,697
|
| |||||||
Javier D. Ferrer
|
|
—
|
|
|
—
|
|
|
5,934
|
|
|
2,049
|
|
|
8,940
|
|
|
4,341
|
|
|
21,264
|
| |||||||
Lidio V. Soriano
|
|
—
|
|
|
—
|
|
|
5,395
|
|
|
1,863
|
|
|
8,127
|
|
|
3,946
|
|
|
19,331
|
| |||||||
Eli S. Sepúlveda
|
|
—
|
|
|
70
|
|
|
4,532
|
|
|
1,565
|
|
|
6,827
|
|
|
3,552
|
|
|
16,546
|
| |||||||
|
|
| (vi) | The number of shares shown in the tables above are actual shares earned based on the degree to which the goals were attained during the |
|
|
2018 PROXY STATEMENT | 53
| (b) | Vesting dates of unearned shares, units or other rights that have not vested: |
2016 Performance
| 2017
| Total
| ||||||||||
Richard L. Carrión
|
|
45,510
|
|
|
25,254
|
|
|
70,764
|
| |||
Ignacio Alvarez
|
|
14,527
|
|
|
8,062
|
|
|
22,589
|
| |||
Carlos J. Vázquez
|
|
10,972
|
|
|
6,088
|
|
|
17,060
|
| |||
Javier D. Ferrer
|
|
8,940
|
|
|
4,962
|
|
|
13,902
|
| |||
Lidio V. Soriano
|
|
8,127
|
|
|
4,510
|
|
|
12,637
|
| |||
Eli S. Sepulveda
|
|
6,827
|
|
|
4,060
|
|
|
10,887
|
| |||
Name | 2022 Performance Shares Award(i) | 2023 Performance Shares Award(ii) | Total | ||||||||
Ignacio Alvarez | 16,606 | 21,318 | 37,924 | ||||||||
Carlos J. Vázquez | 3,200 | 4,118 | 7,318 | ||||||||
Javier D. Ferrer | 4,194 | 6,290 | 10,484 | ||||||||
Lidio V. Soriano | 2,462 | 3,168 | 5,630 | ||||||||
Manuel Chinea | 2,326 | 3,024 | 5,350 | ||||||||
| (i) | The number of performance shares shown in the tables above is based on achievement of target performance. The shares |
| (ii) | The number of performance shares shown in the tables above is based on achievement of target performance. The shares |
Stock Awards Number of Shares Value Realized Richard L. Carrión 21,447 $962,576 Ignacio Alvarez 6,846 307,259 Carlos J. Vázquez 5,170 232,038 Javier D. Ferrer 4,213 189,086 Lidio V. Soriano 3,830 171,897 Eli S. Sepúlveda 3,217 144,384 Value represents the number of shares that vested multiplied by the closing market value of our common stock on the applicable vesting dates.2017.
Acquired on Vesting (#)
on Vesting ($) (a) (a)(i)
PUERTO RICO
Retirement Plan
The Retirement Plan was frozen with regard to all future benefit accruals after April 30, 2009. It had previously been closed to new hires and was frozen as of December 31, 2005 to employees who were under 30 years of age or were credited with fewer than 10 years of benefit service. These actions also applied to the related retirement benefit restoration plans described below.
The Retirement Plan’s benefit formula is based on a percentage of average final compensation and years of service. Normal retirement age under the Retirement Plan is age 65 with five years of service and, in
general, benefits are paid for life in the form of a single life annuity plus supplemental death benefits, and are not reduced for Social Security or other payments received by the participants. Pension costs are funded in accordance with minimum funding standards under the Employee Retirement Income Security Act of 1974 (“ERISA”). The Retirement Plan is qualified in accordance with the U.S. Internal Revenue Code, which establishes limits on compensation and benefits. The Retirement Plan is also qualified under the laws of Puerto Rico.
54 | 2018 PROXY STATEMENT
Popular has adopted two Benefit Restoration Plans (“Restoration Plans”), which are not qualified in accordance with the U.S. Internal Revenue Code and are designed to restore benefits that would otherwise have been received by an eligible employee under the Retirement Plan but for the limitations imposed by the U.S. Internal Revenue Code. The Restoration Plans do not offer credit for years of service not actually worked, preferential benefit formulas or accelerated vesting of pension
benefits, beyond the provisions of the Retirement Plan. The restoration benefits of employees who are residents of Puerto Rico are funded through an ERISA pension trust that is qualified under the laws of Puerto Rico.
In addition, BPPR maintains an irrevocable trust as a source of funds for payment of benefit restoration liabilities to all non-Puerto Rico resident participants.
2023 Pension Benefits
| Name | Plan Name | Number of Years of Credited Service Through April 30, 2009 | Present Value of Accumulated Benefit ($) (a) | Payments During Last Fiscal Year ($) | ||||||||||
Richard L. Carrión |
Retirement Pension Plan | 32.917 | $1,355,096 | — | ||||||||||
Benefit Restoration Plan
|
| 5,904,676
|
|
| —
|
| ||||||||
Carlos J. Vázquez |
Retirement Pension Plan
| 8.750 | $341,799 | — | ||||||||||
Benefit Restoration Plan
|
| 904,118
|
|
| —
|
| ||||||||
Eli S. Sepúlveda |
Retirement Pension Plan
| 17.583 | 712,906 | — | ||||||||||
Benefit Restoration Plan
|
| —
|
|
| —
|
| ||||||||
Name | Plan Name | Number of Years of Credited Service Through April 30, 2009 | Present Value of Accumulated Benefit ($)(a) | Payments During Last Fiscal Year ($) | ||||||||||
Carlos J. Vázquez | Retirement Plan | 8.750 | $272,108 | — | ||||||||||
Restoration Plan | 719,751 | |||||||||||||
Manuel Chinea | Retirement Plan | 11.750 | 185,022 | — | ||||||||||
Restoration Plan | — | |||||||||||||
| (a) | This column represents the present value of all future expected pension benefit payments. Values were determined using year-end ASC 715 assumptions with the exception that payments are assumed to begin at the earliest possible retirement date at which benefits are unreduced. Each participating NEO has reached the aforementioned unreduced retirement eligibility. |
Normal retirement is upon reaching age 65 and |
Plan. The Popular, Inc. Puerto Rico Savings and Investment Plan is qualifiedtax-qualified under section 1081.01(a) and (d) of the Puerto Rico Internal Revenue Code of 2011, as amended. It allows eligible Puerto Rico-based employees who have completed 30 days of service to defer a portion of
their totaleligible annual cash compensation on a pre-tax or after-tax basis, subject to the maximum amount permitted by applicable tax laws.
Name | NEO Contribution in Last FY 2023(a) | Registrant Contribution in Last FY (2023) | Aggregate Earnings in Last FY (2023)(b) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE (12/31/2023) | ||||||||||||
Ignacio Alvarez | $648,096 | — | $285,181 | — | $2,638,153 | ||||||||||||
Carlos J. Vázquez | 117,334 | — | 120,279 | — | 949,997 | ||||||||||||
Javier D. Ferrer | 319,292 | — | 157,914 | — | 1,358,574 | ||||||||||||
Manuel Chinea | 56,159 | — | 354,588 | — | 2,601,377 | ||||||||||||
| (a) | Amounts reported in this column are included in the Salary column of the Summary Compensation Table. |
| (b) | Based on notional earnings and losses from notional investments made by participants in a slate of investment options available under the plan. As such, said earnings are not included as compensation in the Summary Compensation Table. |
Plan.The Popular, Inc. Puerto Rico Nonqualified Deferred Compensation Plan allows certain management or highly compensated Puerto Rico-based employees to defer receipt of a portion of their annual cash compensation in excess of the amounts allowed to be deferred under the Popular, Inc. Puerto Rico Savings and Investment Plan. Participants are fully vested in their deferrals at all times. The plan is an unfunded plan of deferred compensation for a select group of management or highly compensated employees intended to be exempt from the provisions of
Parts 2, 3 and 4 Title I, Subtitle B of ERISA. It is not intended to be a tax qualified retirement plan under Section 1081 of the Puerto Rico Internal Revenue Code.
Benefits are normally distributed upon termination of employment, death or disability.
2018 PROXY STATEMENT | 55
Withdrawals during participant’s service are allowed due to financial hardship and post-secondary education. A participant shall be considered
fully vested at all times. During 2017,2023, Messrs. Carrión, Alvarez, Vázquez, Ferrer and SepúlvedaFerrer participated in this plan.
The following table shows nonqualified deferred compensation activity and balances attributable to NEOs:
| Name | Executive Contribution in Last FY (2017)(a) | Registrant Contribution in Last FY (2017) | Aggregate Earnings in Last FY (2017)(b) | Aggregate Distributions | Aggregate Balance at Last FYE (12/31/2017) | |||||||||||||||
Richard L. Carrión
|
|
$37,615
|
|
|
—
|
|
|
$2,568
|
|
|
—
|
|
|
$40,183
|
| |||||
Ignacio Alvarez
|
|
—
|
|
|
—
|
|
|
10,681
|
|
|
—
|
|
|
81,822
|
| |||||
Carlos J. Vázquez
|
|
65,163
|
|
|
—
|
|
|
14,713
|
|
|
—
|
|
|
139,783
|
| |||||
Javier D. Ferrer
|
|
31,731
|
|
|
—
|
|
|
2,581
|
|
|
—
|
|
|
34,312
|
| |||||
Eli S. Sepúlveda
|
|
9,000
|
|
|
—
|
|
|
21,673
|
|
|
—
|
|
|
140,103
|
| |||||
|
|
UNITED STATES
USA Savings and Investment Plan
The Popular, Inc. 401(k) USA Savings and Investment Plan is qualified under section 401(a) and (k) of the United States Internal Revenue Code of 1986, as amended. It allows eligible U.S.-based employees who have completed 30 days of service to defer a portion of their total annual cash compensation on a pre-tax basis, subject to the maximum amount permitted by applicable tax laws. Popular matches 50% of employee pre-tax contributions up to eight percent of the participant’s cash compensation.
Popular North America, Inc. Deferral Plan
Plan. The Popular North America, Inc. (“PNA”) Deferral Plan is an unfunded plan of deferred compensation for a select group of management or highly compensated employees of PNA or its subsidiaries. Under this plan, participants may elect to defer a portion of their annual cash compensation. ItThe PNA Deferral Plan is intended to be exempt from the provisions of Parts 2, 3not tax-qualified and 4 Title I, Subtitle B of ERISA and to comply with the requirements of Section 409A of the United States Internal Revenue Code relating to non-qualified deferred compensation. is unfunded. During 2023, Mr. Chinea participated in this plan.
EMPLOYMENT AND CHANGE-OF-CONTROL AGREEMENTS
PopularControl Agreements; No Gross-ups. The Corporation does not have any employment or change ofin control agreements with our NEOs. Nevertheless, Popular’sNEOs and does not provide for any tax gross-ups. Please refer to the section entitled “CFO Service and Award Agreements” for a description of the Service Agreement entered into by the Corporation and Mr. Vázquez.
amendedthe Corporation’s previous incentive plan (the “Omnibus“2004 Omnibus Plan”), contains. The 2004 Omnibus Plan continues to govern awards outstanding under the 2004 Omnibus Plan. Both the 2020 Omnibus Plan and the 2004 Omnibus Plan contain provisions governing change ofin control with respect to outstanding equity awards. The Omnibus Plan was amended pursuant to shareholder approval at Popular’s 2013 annual meeting of shareholders to increase the maximum total number of shares of common stock that we may issue under the Omnibus Plan and revise certain provisions pertaining to change of control, among others.
AWARDS GRANTED UNDER THE OMNIBUS PLAN
The terms of the 2020 and 2004 Omnibus Plan, as in effect as of April 30, 2013,Plans provide for “double-trigger” vesting in the event of a Change of Control,change in control, which means that awards subject to time-based vesting will only vest if the holder’s employment is terminated without Cause, or if the holder terminates employment for Good Reason (each as defined in the 2020 and 2004 Omnibus Plan)Plans) within two years after a Change of Control.change in control. Except as otherwise set forth in an award agreement, awards subject to performance-based vesting will be deemed earned at the greater of target or actual performance through the Change of Controlchange in control date (or if no target level is specified, the maximum level) and will be subject to time-based vesting through the end of the original performance cycle for each such award, subject to accelerated vesting on a termination without Cause or for Good Reason within two years after the Change of Control.change in control. Awards granted under the Omnibus Plan before April 30, 2013 under the 2004 Omnibus Plan are generally vest on a Change of Control, with awards subject to performance-baseda single trigger requirement for accelerated vesting based on target performance.
56 | 2018 PROXY STATEMENT
in the event of a change in control. Under the 2020 Omnibus Plan, a Change of Controlchange in control generally occurs: (i) if, during any period of two years or less, the individuals of the Board of Directors of the Corporation cease to constitute a majority of the Board; (ii) if any person acquires directis or indirect ownershipbecomes a beneficial owner of 50%securities of the Corporation representing 30% or more of Popular’s outstandingthe combined voting stock; (ii) upon consummation (shareholder approvalpower of the Corporation’s then-outstanding securities eligible to vote for pre-April 30, 2013 awards)the election of any consolidation or merger in which we are not the surviving corporation; orBoard; (iii) upon shareholderthe consummation of a merger, consolidation, statutory share exchange or similar form of
PAYMENTS MADE UPON TERMINATION OF EMPLOYMENT
Regardlessservice; (ii) employees with five through fifteen years of the circumstances pursuant to which NEOs terminate their employmentemployment—three months of compensation plus two weeks of compensation per year of service; (iii) employees with Popular, they are entitled to receive certain amounts earned during their employment. Such amounts include:
Amounts contributed to Popular’s Savings and Investment Plan, including the vested portionmore than fifteen years of the employer-sourced funds;
Benefits accumulated under the Retirement Plan, including retiree medical and the Benefit Restoration Plan;
Awards under the Senior Executive Long-Term Incentive Plan granted in years 1997-1999 in the formemployment—six months of deferred stock; and
Any balances in the non-qualified deferred compensation plans.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Compensation or benefits previously earned by the NEO or equity awards that are fully vested;
The value of pension benefits that are disclosed in the Pension Benefits table above; and
The amounts payable under deferred compensation plans that are disclosed in the Nonqualified Deferred Compensation Plan table above.
Long-Term Incentive Plan ($)(b) | ||||||||||||||||
Name and Termination
| Total ($)
| Restricted Stock
| Performance Shares
| Senior Executive
| ||||||||||||
Richard L. Carrión | ||||||||||||||||
Retirement(c) | $ | 4,478,420 | $4,282,401 | $ | — | $196,019 | ||||||||||
Death & Disability | 6,989,834 | 4,282,401 | 2,511,414 | 196,019 | ||||||||||||
Change of Control(d) | 6,989,834 | 4,282,401 | 2,511,414 | 196,019 | ||||||||||||
Resignation(e) | 4,478,420 | 4,282,401 | — | 196,019 | ||||||||||||
Termination With Cause | 196,019 | — | — | 196,019 | ||||||||||||
Termination Without Cause
|
| 5,853,941
|
|
| 4,282,401
|
|
| 1,375,521
|
|
| 196,019
|
| ||||
Ignacio Alvarez | ||||||||||||||||
Retirement(c) | — | — | — | — | ||||||||||||
Death & Disability | 2,454,701 | 1,653,018 | 801,684 | — | ||||||||||||
Change of Control(d) | 2,454,701 | 1,653,018 | 801,684 | — | ||||||||||||
Resignation | — | — | — | — | ||||||||||||
Termination With Cause | — | — | — | — | ||||||||||||
Termination Without Cause
|
| 1,724,135
|
|
| 1,285,053
|
|
| 439,082
|
|
| —
|
| ||||
Carlos J. Vázquez | ||||||||||||||||
Retirement(c) | 942,508 | 942,508 | — | — | ||||||||||||
Death & Disability | 1,547,967 | 942,508 | 605,459 | — | ||||||||||||
Change of Control(d) | 1,547,967 | 942,508 | 605,459 | — | ||||||||||||
Resignation(e) | 942,508 | 942,508 | — | — | ||||||||||||
Termination With Cause | — | — | — | — | ||||||||||||
Termination Without Cause
|
| 1,274,126
|
|
| 942,508
|
|
| 331,619
|
|
| —
|
| ||||
2018
Long-Term Incentive Plan($)(b) | |||||||||||
Name and Termination Scenarios(a) | Total ($) | Restricted Stock | Performance Shares | ||||||||
Ignacio Alvarez | |||||||||||
Retirement(c) | $7,837,849 | $7,837,849 | $ — | ||||||||
Death & Disability | 10,950,272 | 7,837,849 | 3,112,423 | ||||||||
Change in Control(d) | 10,950,272 | 7,837,849 | 3,112,423 | ||||||||
Resignation(e) | 7,837,849 | 7,837,849 | — | ||||||||
Termination With Cause | — | — | — | ||||||||
Termination Without Cause(e) | 9,329,608 | 7,837,849 | 1,491,759 | ||||||||
Carlos J. Vázquez | |||||||||||
Retirement(c) | 2,257,007 | 2,257,007 | — | ||||||||
Death & Disability | 2,857,595 | 2,257,007 | 600,588 | ||||||||
Change in Control(d) | 2,857,595 | 2,257,007 | 600,588 | ||||||||
Resignation(e) | 2,257,007 | 2,257,007 | — | ||||||||
Termination With Cause | — | — | — | ||||||||
Termination Without Cause(e) | 2,544,744 | 2,257,007 | 287,737 | ||||||||
Javier D. Ferrer | |||||||||||
Retirement(c) | 2,458,489 | 2,458,489 | — | ||||||||
Death & Disability | 3,318,911 | 2,458,489 | 860,422 | ||||||||
Change in Control(d) | 3,318,911 | 2,458,489 | 860,422 | ||||||||
Resignation(e) | 2,458,489 | 2,458,489 | — | ||||||||
Termination With Cause | — | — | — | ||||||||
Termination Without Cause(e) | 2,860,030 | 2,458,489 | 401,541 | ||||||||
| Long-Term Incentive Plan ($)(b) | ||||||||||||||||
| Name and Termination Scenarios(a) | Total ($) | Restricted Stock | Performance Shares | Senior Executive Long-Term Incentive Plan(f) | ||||||||||||
Javier D. Ferrer | ||||||||||||||||
Retirement(c) | — | — | — | — | ||||||||||||
Death & Disability | 1,243,995 | 750,614 | 493,382 | — | ||||||||||||
Change of Control(d) | 1,243,995 | 750,614 | 493,382 | — | ||||||||||||
Resignation | — | — | — | — | ||||||||||||
Termination With Cause | — | — | — | — | ||||||||||||
Termination Without Cause
|
| 733,226
|
|
| 463,005
|
|
| 270,221
|
|
| —
|
| ||||
Lidio V. Soriano
| ||||||||||||||||
Retirement(c) | — | — | — | — | ||||||||||||
Death & Disability | 1,130,818 | 682,366 | 448,452 | — | ||||||||||||
Change of Control(d) | 1,130,818 | 682,366 | 448,452 | — | ||||||||||||
Resignation | — | — | — | — | ||||||||||||
Termination With Cause | — | — | — | — | ||||||||||||
Termination Without Cause
|
| 652,417
|
|
| 406,779
|
|
| 245,638
|
|
| —
|
| ||||
Eli S. Sepúlveda
| ||||||||||||||||
Retirement(c) | 584,130 | 584,130 | — | — | ||||||||||||
Death & Disability | 970,510 | 584,130 | 386,380 | — | ||||||||||||
Change of Control(d) | 970,510 | 584,130 | 386,380 | — | ||||||||||||
Resignation | 584,130 | 584,130 | — | — | ||||||||||||
Termination With Cause | — | — | — | — | ||||||||||||
Termination Without Cause
|
| 793,687
|
|
| 584,130
|
|
| 209,557
|
|
| —
|
| ||||
Long-Term Incentive Plan($)(b) | |||||||||||
Name and Termination Scenarios(a) | Total ($) | Restricted Stock | Performance Shares | ||||||||
Lidio V. Soriano | |||||||||||
Retirement(c) | — | — | — | ||||||||
Death & Disability | 2,156,882 | 1,694,828 | 462,054 | ||||||||
Change in Control(d) | 2,156,882 | 1,694,828 | 462,054 | ||||||||
Resignation(e) | — | — | — | ||||||||
Termination With Cause | — | — | — | ||||||||
Termination Without Cause(e) | 613,342 | 391,972 | 221,370 | ||||||||
Manuel Chinea | |||||||||||
Retirement(c) | 929,771 | 929,771 | — | ||||||||
Death & Disability | 1,368,846 | 929,771 | 439,075 | ||||||||
Change in Control(d) | 1,368,846 | 929,771 | 439,075 | ||||||||
Resignation(e) | 929,771 | 929,771 | — | ||||||||
Termination With Cause | — | — | — | ||||||||
Termination Without Cause(e) | 1,139,761 | 929,771 | 209,990 | ||||||||
| (a) | The annual performance incentive is not guaranteed; therefore, if termination of employment takes place before the date the award is paid, the NEO would not be entitled to receive the award. |
| (b) | Values of equity grants are based on |
Regular Restricted Stock | Performance Shares | |||||||
Retirement | Become Vested | Contingent Vesting | ||||||
Death & Disability | Become Vested | Become Vested | ||||||
Change in Control | Become Vested | Become Vested | ||||||
Resignation | Forfeiture | Forfeiture | ||||||
Termination With Cause | Forfeiture | Forfeiture | ||||||
Termination Without Cause | Prorated Vesting | Prorated Vesting | ||||||
|
| |||||||
|
|
| ||||||
|
|
| ||||||
|
|
| ||||||
|
|
| ||||||
|
|
| ||||||
|
|
|
| (c) | For grants prior to January 2014, retirement is defined as termination of employment on or after attaining age 55 and completing 10 years of service (except when termination is for cause). For grants after January 2014, the retirement definition was modified to be termination of employment on or after attaining the earlier of: (x) age 55 and completing 10 years of service, or (y) age 60 and 5 years of service (except when termination is for cause). Upon retirement, (i) regular restricted stock becomes vested and (ii) performance shares become vested with respect to the service requirement, but the actual number of shares earned is determined based on the achievement of the performance goals at the end of the performance period. |
| (d) | Outstanding awards granted in |
| (e) | For |
|
Under Puerto Rico law, if any employee hired prior to January 26, 2017 (including all of our NEOs) is terminated from his employment without “just cause”, as said term is defined by Puerto Rico Law No. 80 of May 30, 1976, he would be entitled to a statutory severance payment, which is calculated as follows: (i) employees with less than five years of employment—two months of compensation plus an
58
additional one week of compensation per year of service; (ii) employees with five through fifteen years of employment—three months of compensation plus two weeks of compensation per year of service; (iii) employees with more than fifteen years of employment—six months of compensation plus three weeks of compensation per year of service.
CEO |
|
$5,768,783 | |||
Median employee |
|
$49,113 | |||
Ratio of (A) to (B) |
117:1 | ||||
To identify
Mr. Alvarez’s annual total compensation above reflects six monthsTable in his current position as Presidentthis Proxy Statement.
Fiscal Year (a) | Summary Compensation Table Total for CEO(i) (b) | Compensation Actually Paid to CEO(ii)(iii) (c) | Average Summary Compensation Table Total for Non-CEO NEOs(i) (d) | Average Compensation Actually paid to Non-CEO NEOs(ii)(iii) (e) | Value of Initial Fixed $100 Investment Based on(iv): | Net Income ($ in thousands) (h) | Company Selected Measure: ROATCE adjusted(v) (i) | |||||||||||||||||||
Total Shareholder Return (f) | Peer Group Total Shareholder Return (g) | |||||||||||||||||||||||||
2023 | $5,768,444 | $ 8,623,025 | $1,910,127 | $2,524,242 | $159.58 | $106.87 | $541,342 | 10.19% | ||||||||||||||||||
2022 | 6,323,708 | | 5,415,141 | 2,022,253 | 1,811,951 | 124.26 | 110.67 | 1,102,641 | 15.47 | |||||||||||||||||
2021 | 5,119,158 | | 10,039,211 | 1,761,108 | 2,847,634 | 149.29 | 132.19 | 934,889 | 18.47 | |||||||||||||||||
2020 | 4,782,575 | | 4,607,841 | 1,569,334 | 1,423,613 | 100.16 | 92.50 | 506,622 | 10.90 | |||||||||||||||||
| (i) | For the years 2020, 2021 2022, and 2023 our CEO was Mr. Alvarez. Non-CEO NEOs refers to our NEO other than the CEO. For the years 2021, 2022, and 2023 the Non-CEO NEOs were: Messrs. C. Vázquez, J. Ferrer, L. Soriano, and M. Chinea. For 2020 the Non-CEO NEOs were: Messrs. C. Vázquez, J. Ferrer, L. Soriano, and E. Sepúlveda. |
| (ii) | Fair value or change in fair value, as applicable, of equity awards in the “Compensation Actually Paid” columns was determined by reference to (1) for restricted stock awards, closing price on applicable year-end dates or, in the case of vesting dates, the actual vesting price, (2) for performance-based awards (excluding TSR Awards), the same valuation methodology as restricted stock awards above except year-end and vesting date values are multiplied by the probability of achievement as of each such date, and (3) for TSR-based performance awards, the fair value calculated by a Monte Carlo simulation model as of the applicable year-end date(s) or, in the case of vesting date, the actual vesting price and probability of achievement. |
| (iii) | The adjustments (exclusions and additions) made to the Summary Compensation Total (SCT) to calculate the Compensation Actually Paid (CAP) amount are the following: |
CEO | Non-CEO NEOs | |||||||||||||||||||
Stock Awards Excluded from SCT | Change in Pension Value Excluded from SCT(a) | Value of Stock Awards Added to CAP Amount(b) | Average Stock Awards Excluded from SCT | Average Change in Pension Value Excluded from SCT(a) | Average Value of Stock Awards Included in CAP Amount(b) | |||||||||||||||
2023 | $3,081,501 | — | $5,936,082 | $679,086 | $5,312 | $1,298,513 | ||||||||||||||
| (a) | This column contains the required accounting representation of the annual change in present value of the pension benefit as of December 31st. No additional pension benefits were earned in 2023, as the Corporation’s defined benefit plans have been frozen since 2009. The 2023 increase for Non-CEO NEOs was mainly due to a decrease in the interest rates used for measuring plan liabilities. Present value for changes in pension value was determined using year-end Statement of Financial Accounting Standard Codification Topic 715 assumptions with the following exception: payments are assumed to begin at the earliest possible retirement date at which benefits are unreduced (age 55 with 10 years of service). |
| (b) | The amounts deducted or added in calculating the equity award adjustments are as follows: |
Year | Year-end fair value of equity awards granted during the year ($) | Year over year change in fair value of outstanding and unvested equity awards ($) | Fair value as of vesting date of equity awards granted and vested in the year ($)(A) | Year over year change in fair value of equity awards granted in prior years that vested in the year ($) | Fair value at the end of the prior year of equity awards that failed to meet vesting conditions in the year ($) | Value of dividends or other earnings paid on stock or option awards not otherwise reflected in fair value or total compensation ($) | Total equity award adjustments ($) | |||||||||||||||||||
CEO | 2023 | $ 3,678,340 | $ 1,820,379 | $ 47,802 | $ 233,677 | — | $ 155,884 | $ 5,936,082 | ||||||||||||||||||
Non-CEO NEOs | 2023 | 780,383 | 401,689 | 32,435 | 46,718 | — | 37,289 | 1,298,513 | ||||||||||||||||||
| (A) | The values in this column reflect the fair value of a portion of a restricted stock award that was vested and withheld upon the grant of such award to a retirement eligible NEO for purposes of satisfying applicable tax obligations of the retirement eligible NEO in connection with the restricted stock award. |
| (iv) | The peer group selected for TSR is the Nasdaq Bank Index, as reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. |
| (v) | Adjusted Return on Average Tangible Common Equity (“ROATCE”) measures how well the Corporation’s management is using its capital from investors to generate profits. ROATCE is computed by dividing net earnings applicable to common shareholders by average tangible common shareholders’ equity. Goodwill, other intangible assets (i.e., intellectual property, licenses, patents, etc.), and unrealized gains and losses from available for sale and held to maturity investments are excluded from the equity calculation. The value derived from the foregoing calculation is adjusted for items that are non-recurring, unusual or not indicative of ongoing operations. |
2018 PROXY STATEMENTthe most recently completed fiscal year:
Most Important Performance Measures | ||||||||
Net Income | ||||||||
Total Shareholder Return (TSR) | ||||||||
Return on Average Tangible Common Equity (ROATCE – adjusted) | ||||||||
2023 Compensation Program dividend equivalents.During 2015,In making its recommendations, the committee reviews the Board’s responsibilities and the compensation practices of our peers. In 2021, the Corporate Governance and Nominating Committee engaged Meridian Compensation Partners, LLC, a compensation consultant, to perform an analysis of Popular’sthe Corporation’s non-employee director compensation package which had been in effect since July 2004. After comparing our director compensationcompensation. Compensation was compared to the compensation of 17non-employee directors in the peer banks,group used for executive compensation benchmarking, which is comprised of all publicly traded companies similar to us in asset size Meridian concluded that Popular’s director compensation program was belowto the 25th percentile of the peer banks. On December 11, 2015, afterCorporation. After considering peer practices and various compensation structures, and upon recommendation of the Corporate Governance and Nominating Committee, in September 2021, the Board unanimously approved a revised director compensation program which became effective on the date of the 2022 annual compensation program. meeting of shareholders.current annual compensation program for non-management directors:directors in effect since May 2022:Compensation Amount ($) Restricted Stock Grant $100,000Retainer 50,000Lead Director Restricted Stock Grant 20,000 15,000
and Nominating Committee Chair
Retainer 10,000These payments representThe compensation forprogram corresponds to the twelve-month12-month period commencingthat commences on the date of the annual meeting of shareholders. All ofannual payments, exceptcurrent director compensation program, all retainers are paid in either cash or equity, at the annual restricted stock grant anddirector’s election. Similarly, all equity awards granted to the Lead Director restricted stock grant,director may be paid in either cashcommon stock or restricted stock units under Popular’s 2004 Omnibus Incentive Plan, atthe Corporation’selection. Alloption, the shares of common stock underlying the restricted stock awardsunit award are subjectdelivered to riskthe director either on the 15th day of forfeiture and restrictions on transferability untilAugust immediately following the date of retirement of the director whenor in equal annual installments on each 15th of August of the awards become vested. Any1st, 2nd, 3rd, 4th and 5th year after the date of retirement of the director.during the vesting period areunits that reflect reinvested in shares of common stock.(includingincluding the travel expenses of spouses if they are specifically invited to attend the event for appropriate business purposes).purposes.60 | 2018 PROXY STATEMENT
The following table provides compensation information for Popular’s non-employee directors during 2017:
| Name | Fees or Paid in Cash | Stock Awards ($)(b) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Joaquín E. Bacardí, III
|
|
$50,000
|
|
$
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
150,000
|
| |||||||
Alejandro M. Ballester
|
|
60,000
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
160,000
|
| |||||||
John W. Diercksen
|
|
50,000
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
| |||||||
Maria Luisa Ferré
|
|
60,000
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
160,000
|
| |||||||
David E. Goel
|
|
50,000
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
| |||||||
C. Kim Goodwin
|
|
65,000
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
165,000
|
| |||||||
William J. Teuber, Jr.
|
|
65,000
|
|
|
120,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
185,000
|
| |||||||
Carlos A. Unanue
|
|
50,000
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
| |||||||
|
|
2018
Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership(1) Percent of Class The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355 T. Rowe Price Associates, Inc.(3) 100 E. Pratt Street Baltimore, Maryland 21202 Hotchkis and Wiley Capital Management, LLC(4) 725 S. Figueroa Street 39th Fl, Los Angeles, CA 90017 State Street Corporation(5) State Street Financial Center, One Lincoln Street Boston, MA 02111 BENEFICIAL OWNERS AND MANAGEMENTpresents certain information as of December 31, 2017, with respect to any person, including any “group”, as that term is used in Section 13(d)(3)provides a summary of the Securities Exchange Act of 1934, as amended (the “1934 Act”), who is known by Popularcompensation awarded to beneficially own more than five percent (5%) of its outstanding common stock. 8,526,147 8.35% 7,112,528 6.90% 6,851,574 6.71% 6,047,691 5.93% (1)(a)For purposesRepresents the cash value of this table, “beneficial ownership” isthe $75,000 annual retainer for all directors, the $150,000 Chairman retainer for Mr. Carrión and the Committee Chair retainers for Mr. Ballester and Mss. Goodwin and Ferré each of whom elected to receive their Committee Chair retainers in cash.(b) Represents the award of common stock or restricted stock units (“RSUs”) granted to non-employee directors during 2023 under the Popular’s 2020 Omnibus Incentive Plan with a grant date fair value determined in accordance with Rule 13d-3 under the 1934 Act.(2)Based solely on information containedFASB ASC Topic 718. All directors received their stock awards in a Schedule 13G/A filed with the SEC on February 8, 2018 by The Vanguard Group reflecting itsRSUs, except for Mr. Sánchez who elected to receive his stock award in common stock holdingsof the Corporation. The awards reported in this column include the annual equity grant of $125,000 and the awards of RSUs granted to each director as dividend equivalents with a grant date fair value as follows: Mr. Bacardí, $24,165; Mr. Ballester, $24,165; Mr. Carrady, $38,588; Mr. Carrión, $23,367, Ms. Devita, $9,748; Mr. Diercksen, $47,154; Ms. Ferré, $24,165; Ms. Goodwin, $24,165; Mr. Rodríguez; $15,425; Ms. Soto, $34,821 and Mr. Unanue, $38,588. In the case of Messrs. Carrady, Diercksen, Rodríguez and Unanue, the amounts also include the $75,000 annual retainer which they elected to receive in RSUs instead of cash. The amounts for Mr. Diercksen also include the $25,000 Lead Independent Director Equity Grant and the $30,000 Audit Committee Chair retainer. The following represents the common stock or RSUs granted to each director as stock awards during 2023 under Popular’s 2020 Omnibus Incentive Plan: Mr. Bacardí, 2,300; Mr. Ballester, 2,300; Mr. Carrady, 3,679; Mr. Carríon, 2,300; Ms. DeVita 2,300; Mr. Diercksen, 4,691; Ms. Ferré, 2,300; Ms. Goodwin, 2,300; Mr. Rodríguez, 3,679; Mr. Sánchez, 2,300; Ms. Soto, 2,300 and Mr. Unanue, 3,679. The following amounts represent the RSUs granted to each director as dividend equivalents as of December 31, 2017. 2023: Mr. Bacardí, 392; Mr. Ballester, 392; Mr. Carrady, 626; Mr. Carrión, 379; Ms. DeVita, 158; Mr. Diercksen, 765; Ms. Ferré, 392; Ms. Goodwin, 392; Mr. Rodríguez, 250; Ms. Soto, 565; and Mr. Unanue, 626. Vanguard Group indicates that it has sole voting power with respect to 53,997 shares of restricted stock granted under Popular’s Omnibus Incentive Plans to directors as stock awards that remained outstanding at December 31, 2023 are as follows: Mr. Bacardí, 20,756; Mr. Ballester, 21,606; Mr. Carrady, 1,052; Mr. Diercksen, 20,702; Ms. Ferré, 34,400; Ms. Goodwin, 34,692; Ms. Soto, 2,765 and Mr. Unanue, 36,657, which represent in the aggregate 172,630 outstanding shares for all directors. These restricted stock awards are subject to restrictions on transferability until the retirement of the director, when the awards become vested. The RSUs granted under Popular’s Omnibus Incentive Plan to directors as stock awards that remained outstanding at December 31, 2023 are as follows: Mr. Bacardí 12,199; Mr. Ballester, 12,199; Mr. Carrady, 19,502; Mr. Carrión, 11,826; Ms. DeVita, 5,587; Mr. Diercksen, 23,890; Ms. Ferré, 12,199; Ms. Goodwin, 12,199; Mr. Rodríguez, 8,931; Ms. Soto, 17,079, and Mr. Unanue 19,502, which represent in the aggregate 155,113 outstanding restricted stock units for all directors. The shares of common stock shared voting power with respectunderlying the RSUs granted to 11,390Mr. Carrady, Mr. Carrión, Ms. Ferré, Ms. Goodwin and Mr. Rodríguez, and a portion of the RSUs granted to Ms. DeVita (4,074 RSUs) will be delivered to each director in a lump sum on the 15th of August following the date of termination of service as a director. The shares of Popular’s common stock sole dispositive power with respectunderlying the RSUs granted to 8,468,983 shares of Popular’s common stock,Mr. Bacardí, Mr. Ballester, Mr. Direcksen, Ms. Soto and shared dispositive power with respect to 57,164 shares of Popular’s common stock.(3)Based solely on information contained inMr. Unanue, and a Schedule 13G/A filed with the SEC on February 14, 2018 by T. Rowe Price Associates, Inc. (“Price Associates”) reflecting its common stock holdings as of December 31, 2017. Price Associates indicates that it has sole voting power with respect to 1,648,599 shares of Popular’s common stock and sole dispositive power with respect to 7,112,528 shares of Popular’s common stock. Popular has been informed by Price Associates that the securities are owned by various individuals and institutional investors for which Price Associates serves as investment adviser with power to direct investments and/or sole power to vote securities. For purposesportion of the reporting requirementsRSUs granted to Ms. DeVita (1,556 RSUs) will be delivered to each director in five equal annual installments on each 15th of August of the 1934 Act, Price Associates is deemedfirst five years following the date of termination of service as a director.(c) beneficial owner of such securities. However, Price Associates has informed Popular that it expressly disclaims that it is, in fact, the beneficial owner of such securities.director.
| |
IV | Security Ownership of Certain Beneficial Owners and |
|
62 | 2018 PROXY STATEMENT
COMMON STOCK
Name
| Amount and Nature of Beneficial Ownership(1)
| Percent of
| ||||||||||
Joaquín E. Bacardí, III
|
|
32,801
|
|
*
| ||||||||
Alejandro M. Ballester
|
|
23,632
|
(3)
|
*
| ||||||||
Richard L. Carrión
|
|
467,912
|
(4)
|
*
| ||||||||
John W. Diercksen
|
|
17,842
|
|
*
| ||||||||
Maria Luisa Ferré
|
|
78,657
|
(5)
|
*
| ||||||||
David E. Goel
|
|
10,638
|
|
*
| ||||||||
C. Kim Goodwin
|
|
42,509
|
|
*
| ||||||||
William J. Teuber, Jr.
|
|
60,527
|
|
*
| ||||||||
Carlos A. Unanue
|
|
128,013
|
(6)
|
*
| ||||||||
Ignacio Alvarez
|
|
111,097
|
(7)
|
*
| ||||||||
Javier D. Ferrer
|
|
32,201
|
(8)
|
*
| ||||||||
Eli S. Sepúlveda
|
|
42,970
|
| *
| ||||||||
Lidio V. Soriano
|
|
59,867
|
|
*
| ||||||||
Carlos J. Vázquez
|
|
100,289
|
(9)
|
*
| ||||||||
All directors, NEOs, executive officers and the Principal Accounting Officer and Comptroller as a group (21 persons in total)
|
| 1,415,777
|
| 1.38%
| ||||||||
PREFERRED STOCK
|
|
|
| |||||
|
|
|
| |||||
| ||||||||
Name | Amount and Nature of Beneficial Ownership(1) | Percent of Class(2) | ||||||
Joaquín E. Bacardí, III(3) | 32,541 | * | ||||||
Alejandro M. Ballester | 59,439(4) | * | ||||||
Robert Carrady | 5,953(5) | * | ||||||
Richard L. Carrión | 292,435(6) | * | ||||||
Bertil E. Chappuis | — | — | ||||||
Betty DeVita | — | — | ||||||
John W. Diercksen | 24,875 | * | ||||||
María Luisa Ferré | 48,448(7) | * | ||||||
C. Kim Goodwin | 41,982 | * | ||||||
José R. Rodríguez | — | — | ||||||
Alejandro M. Sánchez | 2,171 | * | ||||||
Myrna M. Soto | 3,192 | * | ||||||
Carlos A. Unanue | 132,191(8) | * | ||||||
Ignacio Alvarez | 275,868(9) | * | ||||||
Javier D. Ferrer | 78,916(10) | * | ||||||
Carlos J. Vázquez(11) | 138,462(12) | * | ||||||
Lidio V. Soriano | 94,806 | * | ||||||
Manuel Chinea | 42,048(13) | * | ||||||
All directors, nominees, NEOs, executive officers and the Principal Accounting Officer and Comptroller as a group (27 persons in total) | 1,536,614 | 2.13% | ||||||
| (1) | For purposes of the table above, “beneficial ownership” is determined in accordance with Rule 13d-3 under the 1934 Act, pursuant to which a person or group of persons is deemed to have “beneficial ownership” of a security if that person has the right to acquire beneficial ownership of such security within 60 days. |
| (2) | “*” indicates ownership of less than 1% of the outstanding shares of common |
| (3) | On January 17, 2024, Mr. Bacardí informed the Corporate Governance and Nominating Committee of the Board of his decision not to stand for re-election to the Corporation’s Board upon the expiration of his current term, which expires at the Corporation’s 2024 Annual Meeting of Shareholders. |
| (4) | Includes |
|
| (6) | Mr. Carrión has approximately a |
2018 PROXY STATEMENT | 63
|
Includes 75,731 shares held by Mr. Unanue’s mother, over which Mr. Unanue disclaims beneficial ownership. |
| (9) | Includes 8,101 shares owned by Mr. |
|
Includes 1,167 shares owned by Mr. Ferrer’s wife over which he disclaims beneficial ownership. |
On December 6, 2023, Mr. Vázquez announced his retirement as Executive Vice President and Chief Financial Officer of Popular, effective March 31, 2024. |
| (12) | Includes 468 shares held by a family member, over which Mr. Vázquez has investment authority. |
|
Section 16(a) of the 1934 Act requires Popular’s directors and executive officers to file with the SEC reports of ownership and changes in ownership of common stock and other equity securities. Officers and directors are required by SEC regulations to furnish Popular with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such reports furnished to Popular or written representations that no other reports were required, Popular believes that, with respect to 2017,2023, all filing requirements applicable to its officers and directors were (1) For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 under the 1934 Act. (2) Based solely on information contained in a Schedule 13G/A filed with the SEC on February 13, 2024 by The Vanguard Group reflecting its common stock holdings as of December 29, 2023. The Vanguard Group indicates that it has no sole voting power with respect to any shares of Popular’s common stock, shared voting power with respect to 35,630 shares of Popular’s common stock, sole dispositive power with respect to 8,881,218 shares of Popular’s common stock and shared dispositive power with respect to 112,684 shares of Popular’s common stock. (3) Based solely on information contained in a Schedule 13G filed with the SEC on February 14, 2024 by T. Rowe Price Associates, Inc. reflecting its common stock holdings as of December 31, 2023. T. Rowe Price Associates, Inc. indicates
satisfied,TABLE OF CONTENTS
| (4) | Based solely on information contained in a Schedule 13G/A filed with the SEC on February 9, 2024 by Dimensional Fund Advisors LP reflecting its common stock holdings as of December 29, 2023. Dimensional Fund Advisors LP indicates that it has sole voting power with respect to 4,058,602 shares of Popular’s common stock, no shared voting power with respect to any shares of Popular’s common stock, sole dispositive power with respect to 4,108,821 shares of Popular’s common stock and no shared dispositive power with respect to any shares of Popular’s common stock. |
| (5) | Based solely on information contained in a Schedule 13G filed with the SEC on February 9, 2024 by Wellington Management Group LLP (filed jointly with Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP, and Wellington Management Company LLP) reflecting its common stock holdings as of December 29, 2023. Wellington Management Group LLP indicates that it has no sole voting power with respect to any shares of Popular’s common stock, shared voting power with respect to 3,501,278 shares of Popular’s common stock, no sole dispositive power with respect to any shares of Popular’s common stock and shared dispositive power with respect to 3,816,736 shares of Popular’s common stock. |
V | Proposals |
64 | 2018 PROXY STATEMENT
|
|
| OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH NOMINEE TO THE |
2018 PROXY STATEMENT | 65
| ||||
| ||||
| OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS | |||
66 | 2018 PROXY STATEMENT
2018
December 31, 2023 | December 31, 2022 | |||||||
Audit Fees | $10,157,932 | $10,509,135 | ||||||
Audit-Related Fees(a) | 1,230,268 | 1,106,165 | ||||||
Tax Fees(b) | 864,287 | 279,447 | ||||||
All Other Fees(c) | 6,650 | 5,400 | ||||||
Total | 12,259,137 | $11,900,147 | ||||||
December 31, 2017
| December 31, 2016
| |||||||||||||||||||||||||||||
Audit Fees
|
|
$6,909,029
|
|
|
$6,541,513
|
| ||||||||||||||||||||||||
Audit-Related Fees(a)
|
|
1,001,013
|
|
|
843,434
|
| ||||||||||||||||||||||||
Tax Fees(b)
|
|
42,625
|
|
|
43,000
|
| ||||||||||||||||||||||||
All Other Fees(c)
|
|
3,600
|
|
|
9,605
|
| ||||||||||||||||||||||||
|
| $7,956,267
|
|
| $7,437,552
|
| |||||||||||||||||||||||||
| ||||||||
| (b) | Includes fees associated with tax return preparation and tax consulting services. |
| (c) | Includes software licensing fees.
|
 | ||||||||
68 | 2018 PROXY STATEMENT
| OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS | |||
2018 PROXY STATEMENT | 69
Popular’s financial statements, expressing an opinion as to their conformity with GAAP, and annually auditing the effectiveness of the Company’sCorporation’s internal control over financial reporting.
William J. Teuber, Jr.,
John W. Diercksen
70
WHAT IS THE PURPOSE OF THE MEETING?the electionElection of four “Class 1”13 directors for a three-yearone-year term;the authorization and approval of an amendment to Article Seventh of our Restated Certificate of Incorporation to provide that directors shall be elected by a majority of the votes cast by shareholders at the annual meeting of shareholders, provided that in contested elections, directors shall be elected by the plurality of votes cast;the approval,Approval, on an advisory basis, of ourthe Corporation’s executive compensation;the ratificationRatification of the appointment of Popular’s independent registered public accounting firm for 2018;the approvalConsideration of the adjournment or postponement of the meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the meeting to approve the proposed amendment to Article Seventh of our Restated Certificate of Incorporation; andconsider such other business as may be properly brought before the meeting or any adjournments thereof.onregarding the affairs of Popular.COULD OTHER MATTERS BE DECIDED AT
COULD OTHER MATTERS BE DECIDED AT THE MEETING? | |
WHAT DOCUMENTS DO I NEED TO BE ADMITTED TO THE MEETING?
Only Popular shareholders may attend the meeting. You will need a valid photo identification, such as a driver’s license or passport and proof of stock ownership as of the close of business on the Record Date. The use of mobile phones, pagers, recording or photographic equipment, tablets, or computers is not permitted.
2018 PROXY STATEMENT | 71
HOW MANY VOTES DO I HAVE? | |
HOW MANY VOTES CAN ALL SHAREHOLDERS CAST?
Shareholder
HOW MANY VOTES CAN ALL SHAREHOLDERS CAST? | |
HOW DO I VOTE?
HOW DO I VOTE? | |
vote over the Internet by following the instructions provided in the Notice of Internet Availability of Proxy Materials or proxy card;
vote by telephone by calling the toll-free number found on your proxy card; or
vote by mail if you receive or request paper copies of the proxy materials, by filling out the proxy card and sending it back in the envelope provided. To avoid delays in ballot taking and counting, and in order to ensure that your proxy is voted in accordance with your wishes, compliance with the following instructions is respectfully requested: when signing a proxy as attorney, executor, administrator, trustee, guardian, authorized officer of a corporation, or on behalf of a minor, please give full title. If shares are registered in the name of more than one record holder, all record holders must sign.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?
HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING? | |
WHAT VOTE IS REQUIRED AND HOW ARE ABSTENTIONS AND BROKER NON-VOTES TREATED?
The approval of the amendment to Article Seventh of the Corporation’s Restated Certificate of Incorporation to amend the voting standard for the election of directors requires the affirmative vote of the holders of not less than two thirds of the outstanding shares. Broker non-votes and abstentions will have the same effect as votes cast against the proposed amendments.
For the election of director nominees, the advisory vote related to executive compensation, the ratification of the appointment of our independent registered public accounting firm, the adjournment or postponement of the meeting in the event that there are not sufficient votes to approve Article Seventh of the amendment to the Restated Certificate of Incorporation and any other item voted upon at the meeting, the affirmative vote of the holders of a majority of the shares represented in person or
72
by proxy and entitled to vote on such item will be required for approval. Abstentions will have the same effect as a negative vote and broker non-votes will not be counted in determining the number of shares necessary for approval.
CAN I VOTE IF I PARTICIPATED IN ONETABLE OF POPULAR’S EMPLOYEE STOCK PLANS?CONTENTS
CAN I VOTE IF I PARTICIPATE IN ONE OF POPULAR'S SAVING AND INVESTMENT PLANS? | |
WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
We will report the voting results on a Current Report on Form 8-K filed with the SEC no later than May 14, 2018.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
The Board recommends that you vote as follows:
WHAT VOTE IS REQUIRED AND HOW ARE ABSTENTIONS AND BROKER NON-VOTES TREATED? | |
Item | Vote Required | Effect of Abstentions | Effect of broker Non-votes | ||||||||
Proposal 1: Election of Directors | Majority of the votes cast | No Effect | No Effect | ||||||||
Proposal 2: Advisory Vote to Approve Executive Compensation | Majority of the shares present or represented by proxy | Count as a vote AGAINST | No Effect | ||||||||
Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm | Majority of the shares present or represented by proxy | Count as a vote AGAINST | Not Applicable | ||||||||
WHAT HAPPENS IF THE MEETING IS POSTPONED OR ADJOURNED? | |
“FOR” each nominee to the Board;
“FOR” the amendment to Article Seventh of Popular’s Restated Certificate of Incorporation to amend the voting standard for the election of directors;
“FOR” the advisory vote related to executive compensation;
“FOR” the ratification of the appointment of Popular’s independent registered public accounting firm for 2018; and
“FOR” the adjournment or postponement of the meeting if necessary, to approve the amendment to Article Seventh of the Restated Certificate of Incorporation.
WHAT HAPPENS IF THE MEETING IS POSTPONED OR ADJOURNED?
Your proxy will still be valid and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is voted.
CAN I CHANGE MY VOTE?
CAN I CHANGE MY VOTES? | |
HOW DOES THE BOARD RECOMMEND THAT I VOTE? | |
Proposals | Board Recommendation | ||||||||||
Proposal 1: Election of Directors | “FOR” each nominee | ||||||||||
Proposal 2: Advisory Vote to Approve Executive Compensation | “FOR” | ||||||||||
Proposal 3: The Ratification of Appointment of Independent Registered Public Accounting Firm | “FOR” | ||||||||||
WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING? | |
the proxy materials over the Internet or to request a paper copy may be found in the Notice of Internet Availability of Proxy Materials. We encourage you to take advantage of the availability of the proxy materials on the Internet. 27, 2024.WHY DID I RECEIVE A NOTICE IN THE MAIL REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS INSTEAD OF A FULL SET OF THE PROXY MATERIALS?2018 PROXY STATEMENT | 7321, 2018.WHY DIDN’T I RECEIVE NOTICE IN THE MAIL REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS?e-mailemail to some shareholders, including those shareholders who have previously elected delivery of the proxy materials electronically. Those shareholders should have received an e-mailemail containing a link to the website where the materials are available and a link to the proxy voting website.WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?THERE ARE SEVERAL SHAREHOLDERS IN MY ADDRESS. WHY DID WE RECEIVE ONLY ONE SET OF PROXY MATERIALS?20172023 Annual Report, or Notice of Internet Availability of Proxy Materials, as applicable. This practice, known as “householding,” is designed to reduce our printing and postage costs. We currently do not “household” for shareholders of record.20172023 Annual Report or Notice of Internet Availability of Proxy Materials, you may call 1-866-540-7059, or send a written request to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, NY 11717 and we will promptly deliver a separate copy of this Proxy Statement and our 20172023 Annual Report or Notice of Internet Availability of Proxy Materials.WHAT IS INCLUDED IN THEMATERIALS?STATEMENT
WHAT IS INCLUDED IN THE PROXY MATERIALS? | |
WHO WILL BEAR THE COST OF SOLICITING PROXIES FOR THE MEETING?
This proxy is
WHO WILL BEAR THE COST OF SOLICITING PROXIES FOR THE MEETING? | |
74 | 2018 PROXY STATEMENT
cost is estimated at $9,500,$13,500, plus reimbursement of reasonable out-of-pocket expenses and customary charges. Our directors, officers and employees may also solicit proxies but will not receive any additional compensation for their services. Proxies and proxy materialmaterials will also be distributed at our expense by brokers, nominees, custodians and other similar parties.
ELECTRONIC DELIVERY OF ANNUAL MEETING MATERIALS
HOW DO I INSPECT THE LIST OF SHAREHOLDERS OF RECORD? | |
ELECTRONIC DELIVERY OF ANNUAL MEETING MATERIALS | |
HOW DO I SUBMIT A SHAREHOLDER PROPOSAL TO BE INCLUDED IN THE PROXY STATEMENT FOR NEXT YEAR’S ANNUAL MEETING?
HOW DO I SUBMIT A SHAREHOLDER PROPOSAL TO BE INCLUDED IN THE PROXY STATEMENT FOR NEXT YEAR'S ANNUAL MEETING? | |
HOW DO I NOMINATE A DIRECTOR OR BRING OTHER BUSINESS BEFORE NEXT YEAR’S ANNUAL MEETING, BUT NOT FOR INCLUSION IN THE PROXY MATERIALS?
HOW DO I NOMINATE A DIRECTOR OR BRING OTHER BUSINESS BEFORE NEXT YEAR'S ANNUAL MEETING? | |
| • | notify us in writing between January 9, 2025 and February 8, 2025, provided that in the event that the date of the 2025 Annual Meeting of Shareholders is more than 30 days before or after the anniversary date of the 2024 Annual Meeting of Shareholders, notice by a shareholder must be delivered not earlier than the 10th day following the day on which notice is mailed or a public announcement is first made by Popular of the date of such meeting, whichever occurs first; |
notify us in writing between November 9, 2018 and February 7, 2019, provided that in
include his or herproposing shareholder’s name, address, share ownership, a description about certain contractual arrangements or understandings, and provide specified representations;
with respect to notice of an intent to make a director nomination, includeprovide the name, address, and other certain information, including stock ownership information, of the proposed nominee, including a description of all arrangements and understandings among the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder,shareholder, providing the completed questionnaire, representation and agreement required by the Amended and Restated By-Laws and such other information regarding each proposed nominee as would have beenbe required to be included in a proxy statement pursuant to SEC rules had the nominee been nominated by our Board; and
with respect to notice of an intent to bring up any proposed business other matter or proposal,than a director nomination, provide a description of the matter, and any material interestthe text of the stockholderproposed business (including the text of the necessary resolutions for consideration), and the reasons for the shareholder or beneficial owner, if any, on whose behalf such business is being proposed, to propose such business at the meeting.
2018 PROXY STATEMENT | 75
|
| ||||
|  | ||||
Richard L. Carrión Chairman of the Board of Popular, Inc. | Javier D. Ferrer Corporate Secretary | ||||
76
PROPOSED AMENDMENT TO ARTICLE SEVENTH OF THE RESTATED CERTIFICATE OF INCORPORATION
RESOLVED, that Article Seventh
“SEVENTH: (1)Non-GAAP Measures
(2) Any vacancies in the Board of Directors, by reason of an increase in the number of directors or otherwise, shall be filled solely by the Board of Directors, by majority vote of the directors then in office, though less than a quorum, but any such director so elected shall hold office only until the next succeeding annual meeting of stockholders. At such annual meeting, such director shall be elected and qualified in the class in which such director is assigned to hold office for the term or remainder of the term of such class. Directors shall continue in office until others are chosen and qualified in their stead. When the number of directors is changed, any newly created directorships or any decrease in directorships shall be so assigned among the classes by a majority of the directors then in office, though less than a quorum, so as to make all classes as nearly equal in number as possible. To the extent of any inequality within the limits of the foregoing, the class of directorships shall be the class or classes then having the last date or the later dates for the expiration of its or their terms. No decrease in the number of directors shall shorten the term of any incumbent director.
(3) Any director may be removed from office as a director but only for cause by the affirmative vote of the holders of two-third (2/3) of the combined voting power of the then outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of two or more of the directors of the Corporation, which to the extent provided in the resolution or in the by-laws of the Corporation, shall have and may exercise the powers of the Board of Directors (other than the power to remove or elect officers) in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the by-laws of the Corporation or as may be determined from time to time by resolution adopted by the Board of Directors.
The Board of Directors may from time to time, in the manner provided for in the by-laws of the Corporation, hold its regular or extraordinary meetings outside of Puerto Rico.”
RESOLVED FURTHER, that the proper officers of the Corporation be, and hereby are, authorized and directed to take all actions, execute all instruments, and make all payments that are necessary or desirable, at their discretion, to make effective the foregoing amendment to the Restated Certificate of Incorporation of the Corporation, including without limitation on filing a certificate of such amendment with the Secretary of State of the Commonwealth of Puerto Rico.
2018 PROXY STATEMENT | 77
POPULAR, INC., RECONCILIATION OF NON-GAAP MEASURES
POPULAR, INC.
ADJUSTED NET INCOME FOR THE YEAR ENDED DECEMBERYear Ended December 31, 2017 (NON-GAAP)
(Unaudited)
| ||||||||||||
(In thousands)
| Pre-tax
|
Income tax
|
Impact on net
| |||||||||
U.S. GAAP net income
|
|
$107,681
|
| |||||||||
Non-GAAP Adjustments:
| ||||||||||||
Impact of the Tax Cut and Jobs Act[1]
|
|
—
|
|
|
168,358
|
|
|
168,358
|
| |||
Adjusted net income (Non-GAAP)
|
|
$276,039
|
| |||||||||
Hurricanes Impact[2]:
| ||||||||||||
Non interest income
|
|
31,000
|
|
|
(12,049
|
)
|
|
18,951
|
| |||
Provision for indemnity reserves on loans sold
|
|
3,436
|
|
|
(1,340
|
)
|
|
2,096
|
| |||
Provision for loan losses
|
|
67,615
|
|
|
(26,370
|
)
|
|
41,245
|
| |||
Operating expenses
|
|
16,981
|
|
|
(6,623
|
)
|
|
10,358
|
| |||
Adjusted net income, excluding the impact of the hurricanes (Non-GAAP)
|
|
$348,690
|
| |||||||||
(Unaudited) | |||||||||||
(In thousands) | Pre-tax | Income tax effect | Impact on net income | ||||||||
U.S. GAAP net income | $541,342 | ||||||||||
FDIC Special Assessment[1] | $71,435 | $26,170 | 45,265 | ||||||||
Adjusted net income for incentive purposes | $586,607 | ||||||||||
| [1] |
|
|
ADJUSTED NET INCOME FOR THE YEAR ENDED DECEMBER
(Unaudited)
| ||||||||||||
(In thousands)
| Pre-tax
|
Income tax
|
Impact on net
| |||||||||
U.S. GAAP net income
|
|
$216,691
|
| |||||||||
Non-GAAP Adjustments:
| ||||||||||||
Impact of EVERTEC restatement[1]
|
|
2,173
|
|
|
—
|
|
|
2,173
|
| |||
Bulk sale of WB loans and OREO[2]
|
|
(891
|
)
|
|
347
|
[4]
|
|
(544
|
)
| |||
FDIC arbitration award[3]
|
|
171,757
|
|
|
(41,108
|
)[4]
|
|
130,649
|
| |||
Goodwill impairment charge[5]
|
|
3,801
|
|
|
—
|
|
|
3,801
|
| |||
Other FDIC—LSA adjustments[6]
|
|
8,806
|
|
|
(2,380
|
)[4]
|
|
6,426
|
| |||
Income from discontinued operations[7]
|
|
(2,015
|
)
|
|
880
|
|
|
(1,135
|
)
| |||
Adjusted net income (Non-GAAP)
|
|
$358,061
|
| |||||||||
(Unaudited) | |||||||||||
(In thousands) | Pre-tax | Income tax effect | Impact on net income | ||||||||
U.S. GAAP net income | $1,102,641 | ||||||||||
Evertec Transactions[1] | (240,411) | 13,776 | (226,635) | ||||||||
Partial Reversal of Deferred Tax Valuation Allowance[2] | (68,236) | (68,236) | |||||||||
Adjusted net income for incentive purposes | $807,770 | ||||||||||
| [1] |
|
|
78 | 2018 PROXY STATEMENT
|
|
|
|
|
ADJUSTED NET INCOME FOR THE YEAR ENDED DECEMBER 31, 2015 (NON-GAAP)
(In thousands)
| Pre-tax
| Income tax
| Impact on net
| |||||||||
U.S. GAAP net income
|
|
$895,344
|
| |||||||||
Non-GAAP Adjustments:
| ||||||||||||
BPNA reorganization[1]
|
|
17,065
|
|
|
—
|
|
|
17,065
|
| |||
Doral Transaction[2]
|
|
25,576
|
|
|
(7,690
|
)
|
|
17,886
|
| |||
OTTI[3]
|
|
14,445
|
|
|
(2,486
|
)
|
|
11,959
|
| |||
Reversal DTA—PNA[4]
|
|
—
|
|
|
(589,030
|
)
|
|
(589,030
|
)
| |||
Loss on bulk sale of covered OREOs[5]
|
|
4,391
|
|
|
(1,712
|
)
|
|
2,679
|
| |||
Adjustment to FDIC indemnification asset[6]
|
|
10,887
|
|
|
(2,177
|
)
|
|
8,710
|
| |||
MSR’s acquired[7]
|
|
(4,378
|
)
|
|
1,707
|
|
|
(2,671
|
)
| |||
Impairment of loans under proposed portfolio sale[8]
|
|
15,190
|
|
|
(5,924
|
)
|
|
9,266
|
| |||
Bulk sale[9]
|
|
5,852
|
|
|
(2,282
|
)
|
|
3,570
|
| |||
Adjusted net income (Non-GAAP)
|
|
$374,778
|
| |||||||||
|
| [2] | During the fourth quarter of 2022, the Corporation recorded a partial reversal of the deferred tax asset |
|
|
|
|
|
(Unaudited) | |||||||||||
(In thousands) | Pre-tax | Income tax effect | Impact on income |
U.S. GAAP net income | $934,889 | ||||||||||
Adjusted net income for |
|
|
2018 PROXY STATEMENT | 79
EARNINGS PER SHARE (EPS)
(in thousands)
| 2015
| 2016
| 2017
| Cumulative
| ||||||||||||
Adjusted net income (non-GAAP)
|
$
|
374,778
|
|
$
|
358,061
|
|
$
|
348,690
|
|
|
$ —
|
| ||||
Preferred dividends
|
|
(3,723
|
)
|
|
(3,723
|
)
|
|
(3,723
|
)
|
|
—
|
| ||||
Net income for common stock
|
|
371,055
|
|
|
354,338
|
|
|
344,967
|
|
|
—
|
| ||||
Average common share outstanding[1]
|
|
102,967,186
|
|
|
103,275,264
|
|
|
103,478,247
|
|
|
—
|
| ||||
Adjusted EPS
|
$
|
3.60
|
|
$
|
3.43
|
|
$
|
3.33
|
|
|
$10.36
|
| ||||
|
80 | 2018 PROXY STATEMENT
$934,889 | |||||||
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| |||||||
|
C/O PROXY SERVICES
P.O. BOX 9142
FARMINGDALE, NY 11735-9544
IF YOU WISH TO VOTE BY TELEPHONE, INTERNET OR MAIL, PLEASE READ THE INSTRUCTIONS BELOW.
Popular, Inc. encourages you to take advantage of the convenient ways to vote for matters to be covered at the 2018 Annual Meeting of Shareholders. Please take the opportunity to use one of the three voting methods outlined below to cast your ballot.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and follow the simple instructions the Vote Voice provides you.
VOTE 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 Time the day before the 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.
VOTE BY MAIL
Please mark, sign, date and return this proxy card promptly using the enclosed postage prepaid envelope. No postage is required if mailed in the United States, Puerto Rico or the U.S. Virgin Islands.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E38616-P03031 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
| ||
2018 Annual Meeting Proxy Card
The Board of Directors recommends a vote “FOR” proposals 1, 2, 3, 4 and 5.
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PLEASE SIGN AS YOUR NAME(S) APPEAR(S) ON THIS FORM. IF SHARES ARE HELD JOINTLY, ALL OWNERS SHOULD SIGN. CORPORATION PROXIES SHOULD BE SIGNED BY AN AUTHORIZED OFFICER. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC. SHOULD SO INDICATE WHEN SIGNING.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The 2018 Notice and Proxy Statement and the Annual Report on Form 10-K are available at www.proxyvote.com.
E38617-P03031
This proxy is solicited by the Board of Directors
The undersigned hereby appoint(s) Richard L. Carrión, Carlos J. Vázquez and Ignacio Alvarez or any one or more of them as proxies, each with the power to appoint his substitute, and authorize(s) them to represent and to vote as designated on the reverse side all the shares of common stock of Popular, Inc. held of record by the undersigned as of the close of business on March 9, 2018, at the Annual Meeting of Shareholders to be held on the PH Floor of the Popular Center Building, 209 Muñoz Rivera Avenue, San Juan, Puerto Rico, on May 8, 2018, at 9:00 a.m., local time, or at any adjournments thereof. The proxies are further authorized to vote such shares upon any other business that may properly come before the meeting or any adjournments thereof.
Notice of Annual Meeting of Shareholders
*** Exercise YourRight to Vote ***
Important Notice Regarding the Availability of Proxy Materials for the
Shareholders Meeting to Be Held on May 8, 2018.
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— Before You Vote—
How to Access the Proxy Materials
| ||
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— How To Vote—
Please Choose One of the Following Voting Methods
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| ||||||||||||||
(In thousands) | 2021 | 2022 | 2023 | 3-yr. avg. | ||||||||||
Adjusted net income (non-GAAP) | $934,889 | $807,770 | $586,607 | |||||||||||
Preferred dividends | (1,412) | (1,412) | (1,412) | |||||||||||
Adjusted net income for common stock | 933,477 | 806,358 | 585,195 | |||||||||||
Average Tangible Common Equity | 5,054,689 | 5,212,836 | 5,745,420 | |||||||||||
Adjusted ROATCE | 18.47% | 15.47% | 10.19% | 14.71% | ||||||||||
(In thousands) | 2021 | 2022 | 2023 | ||||||||
Average Total Shareholders’ Equity[1] | $5,777,652 | $6,009,225 | $ 6,600,603 | ||||||||
Less: Preferred Stock | (22,143) | (22,143) | (22,143) | ||||||||
Less: Goodwill | (679,959) | (757,133) | (821,567) | ||||||||
Less: Other Intangibles | (20,861) | (17,113) | (11,473) | ||||||||
Average Tangible Common Equity | 5,054,689 | 5,212,836 | 5,745,420 | ||||||||
| [1] | Average balances exclude unrealized gains or losses on debt securities available-for-sale and unrealized losses on debt securities transferred to held-to-maturities. |
(located on the following page) and visit:
