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Corporate Governance at State Street
We have a Standard of Conduct for Directors, which together with the Standard of Conduct for Employees, promotes ethical conduct and the avoidance of conflicts of interest in conducting our business. We also have a Code of Ethics for Senior Financial Officers (including the Chief Executive Officer), as required by the Sarbanes-Oxley Act and SEC rules. Each of these documents is available under the “Corporate Governance” section in the
“For Our Investors” section“Investor Relations” portion of our website at
www.statestreet.com.
Only our Board may grant a waiver for directors, senior financial officers or executive officers from a provision of the Standard of Conduct for Directors, the Standard of Conduct for Employees or the Code of Ethics for Senior Financial Officers, and any waivers will be posted under the “Corporate Governance” section in the “For Our Investors” section“Investor Relations” portion of our website atwww.statestreet.com.
Board Composition
In connection
The Nominating and Corporate Governance Committee, with
input from the Board, is responsible for nominating directors for election each year and evaluating the need for new director candidates as
appropriate, including skill sets, diversity, specific business backgroundappropriate. This assessment includes an evaluation of each director nominee’s skills and
global or international experience,
and independence, as well as consideration of diverse perspectives and experiences, and other characteristics, such as race/ethnicity, gender identity, sexual orientation and nationality, in the
Nominating and Corporate Governance Committee, with input fromcontext of the
entire Board and management, focuses onneeds of the
Board’s capabilities and functioning as a whole.Director Nominee Characteristics and Qualifications
The Board expects all directors and director nominees to possess the following attributes or characteristics:
Board.Director Nominee Characteristics and Qualifications |
The Board expects all director nominees to possess the following attributes or characteristics: |
• | • | | unquestionable business ethics, irrefutable reputation and superior moral and ethical standards |
• | |
| | • | | informed and independent judgment with a balanced perspective, financial literacy, mature confidence, high performance standards and incisiveness |
• | |
| | • | | ability and commitment to attend Board and committee meetings and to invest sufficient time and energy in monitoring management’s conduct of the business and compliance with State Street’s operating and administrative procedures |
• | |
| | • | | a global vision of business with the ability and willingness to work closely with the other Board members |
Taken as a whole, the Board expects one or more of its members to have the following skillsets, specific business background and global or international experience: |
• | |
Taken as a whole, the Board expects one or more of its members to have the following skill sets, specific business background and global or international experience:
| | • | | experience in the financial services industry |
• | |
�� | • | | experience as a senior officer of a well-respected public company |
• | |
| | • | | experience as a senior business leader of an organization active in our key international growth markets |
• | |
| | • | | experience in key disciplines of significant importance to State Street’s overall operations |
• | |
| | • | | qualification as an audit committee financial expert |
• | |
| | • | | qualification as a risk management expert |
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AnnualBoard, Committee and Director
EvaluationsTheSelf-Assessment
As part of the annual evaluation on the composition of the Board, the Nominating and Corporate Governance Committee annually assessesfacilitates an assessment of the performance and effectiveness of the Board and each principal standing committee. This evaluation also includes an annual assessment of each director’s performance and contributions to the overall effectiveness of the Board. Board and its committees.
The purpose of the Board and committee assessment is multi-facetted with the primary goal to evaluate the effectiveness, function, strength and productivity of the Board and its committees, and also to highlight potential areas for change and improvement. The Nominating and Corporate Governance Committee discussesalso leveraged the self-assessment process to guide Board refreshment and succession planning efforts, and in evaluating the key skills and qualifications of members of the Board that are aligned with State Street strategy and to determine the nominees to stand for annual shareholder election.
The Nominating and Corporate Governance Committee and the Board engaged an independent third-party advisory firm to assist with the 2021 self-assessment process. The Board and the Nominating and Corporate Governance Committee believe that the involvement of an advisory firm supported this year’s process with valuable insights and feedback. The self-assessment procedure illustrated below and performed for 2021 was developed with guidance from the advisory firm.
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Corporate Governance at State Street
Assessment Themes and Development Plans
As part of the Board and committee self-assessment process, the Nominating and Corporate Governance Committee and the Board met with the third-party advisory firm and discussed the themes and overall findings, including the strengths and areas of potential improvement of the Board and its various committees. In addition, the Chairman, the Chair of the Nominating and Corporate Governance Committee and the independent Lead Director discussed with the third-party advisor the feedback for the Board, the strengths and areas of potential development of each director and using the evaluation criteria illustrated below measuresdeveloped action plans to address recommended enhancements.
As part of director development, each
director’s performance.director was provided with individual feedback, insights on strengths and development opportunities. Based on the results of the
evaluation,2021 assessment process, the Board believes that each of the director nominees
serving at the time has substantial achievement in his or her personal and professional pursuits and has talents, experience,
judgementjudgment and integrity that will contribute to the best interests of State Street and to long-term shareholder value. The nominees as a group possess the
skill sets,skillsets, specific business background and global or international experience that the Board desires. The director nominee biographies set forth in this proxy statement under the heading “Item 1—Election of Directors” indicate each nominee’s qualifications, skills, experience and attributes that led the Board to conclude he or she should
continue to serve as a director of State Street.
Annual Board
2022 Notice of Meeting and
Committee Self-EvaluationIn addition, the Board and each Board committee conducts an annual self-evaluation of its performance and effectiveness. Directors complete a questionnaire evaluating the Board and each committee on which they serve, specifically focusing on areas of potential improvement. The overall performance of the Board—including its contributions toProxy Statement / State Street—and a compilation of director responses is reviewed and discussed by the Nominating and Street Corporation 6
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Corporate Governance
Committee and by the full Board. Similarly, the performance of each committee, along with specific committee member responses, is reviewed and discussed by the respective committee. The Nominating and Corporate Governance Committee further assesses whether each of the Examining and Audit Committee, Human Resources Committee, Nominating and Corporate Governance Committee, Risk Committee and Technology and Operations Committee has a functioning self-evaluation process and reports its findings to the Board. The Nominating and Corporate Governance Committee concluded, that for 2019, each of the respective committees had a functioning self-evaluation process. | | | | |
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Director Identification and Selection Process
The
In connection with its annual Board
regularlyand committee assessment, the Board annually reviews its composition and size to evaluate its overall effectiveness and alignment with Company strategy. As part of this review, the Nominating and Corporate Governance Committee, in conjunction with the Board, establishes the desired criteria, skills and areas of expertise needed to continue to support the Board in advancing
the Company’sState Street’s businesses and strategy. Once the desired characteristics are established, the Committee reviews each director candidate. Illustrated below is an overview of the process used to identify the desired attributes and to select new candidates for the Board.
Ms.
Marie Chandoha is a first-time nominee for election as a director by shareholders at the 2020 annual meeting. Ms. ChandohaDeMaio was first identified by a third-party search firm that was retained to identify potential director candidates. At the request of the Nominating and Corporate Governance Committee, the search firm first discussed with the members of the Committee the priority characteristics,
skills and experience of a new director candidate, in light of the preferred individual and Board qualities discussed above. The search firm provided the Committee a
listdiverse pool of
director candidates who were interested in State Street and who met the selection criteria,
experience and characteristics, and the Chairman of the Board,
independent Lead Director, Chair of the Nominating and Corporate Governance Committee and select members of the Committee and Board
personally conducted interviews. The Board
is nominatingelected Ms.
ChandohaDeMaio as a director in March 2022 as she meets
several of the criteria identified by the Board for new directors, including Ms.
Chanodha’s extensive leadershipDeMaio's broad experience
in theacross financial
services industrysectors and
track record of transforming businesses. Both the Nominating and Corporate Governance Committee and the Board of Directors believes that Ms. Chandoha has thecorporate audit background and
requisite experience to make significant contributions on many levels to State Street through her continued service as a director.enhanced the overall effectiveness and composition of the Board. Ms.
Chandoha wasDeMaio is deemed independent by the Board under the Corporate Governance Guidelines.
In carrying out its responsibility to identify the best qualified candidates for directors, the Nominating and Corporate Governance Committee will consider proposals for nominees from a number of sources, including recommendations from shareholders submitted upon written notice to the Chair of the Nominating and Corporate Governance Committee, c/o the Office of the Secretary of State Street Corporation, One Lincoln Street, Boston, Massachusetts
02111 (facsimile number(617) 664-8209).02111. The Committee seeks to identify individuals qualified to become directors, consistent with the identified criteria.
By following the procedures set forth under “General Information About the Annual Meeting—Proposals and Nominations by Shareholders,” shareholders also have the right under ourby-laws to directly nominate director candidates and, in certain circumstances, to have their nominees included in State Street’s proxy statement.
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Director Nominee Qualifications, Diversity and Skills
We believe that our Board of Directors should have a variety of qualifications, skill setsskillsets and experience that, when taken as a whole, best serve the Company and our shareholders. We recognize the importance of diversity with regard to the composition of the Board and strive to have a Board that provides diversity of thought and a broad range of perspectives. In an effort to achieve these objectives, the Nominating and Corporate Governance Committee and the Board consider a wide range of attributes when determining and assessing director nominees and new candidates, including personal and professional backgrounds, gender, race, national originindependence and tenure of Board service.service, and other demographics such as race and ethnicity, gender identity, sexual orientation and nationality, in the context of the needs of the Board. The Nominating and Corporate Governance Committee is committed to considering diversity in itsactively seeking diverse candidates for the pool from which director candidate recommendations.candidates are chosen. The Committee does not assign specific weight to the various factors it considers and no particular criterion is a prerequisite for nomination. As summarized below, each of our directors brings to the Board a variety of qualifications and skills and, collectively, these qualifications form a depth of broad and diverse experiences that help the Board effectively oversee our activities and operations.
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Director Nominee Skills, Qualifications and Demographics
Board Composition Highlights
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Board Leadership Structure
Leadership Transition
During the past year, the Company completed its leadership transition. On January 1, 2019, Ronald P. O’Hanley assumed the role of Chief Executive Officer and effective January 1, 2020, he was appointed as Chairman of the Board. In addition to serving as Chairman and Chief Executive Officer, Mr. O’Hanley has served as President since November 2017.
State Street’s leadership structure includes an independent Lead Director of the Board. This position is currently held by
Dame Amelia C. Fawcett.
Dame AmeliaShe was elected
to her third one-year term as Lead Director in May
2019 for a term that expires in May 2020.2021.
As Chairman, Mr. O’Hanley presides at all meetings of the Board of Directors during which he is present and he works with the independent Lead Director to establish the agendas for these meetings and
the matters on which the Board will vote.
Role of the Independent Lead Director
Role of the Independent Lead Director |
• | • | | Elected annually by the independent directors to serve aone-year term |
• | |
| | • | | Expected to participate in, and attend, meetings of all of the Board’s committees, providing valuable committee membership overlap to enable optimal agenda coordination, insight and consistency across all committees |
• | |
| | • | | Presides at all meetings of the Board during which the Chairman is not present, including all executive sessions of independent directors occurring at every regularly scheduled Board meeting |
• | |
| | • | | Serves as a liaison between the Chairman and the independent directors |
• | |
| | • | | Authorized to call additional meetings of the independent directors |
• | | | Communicates frequently with the Chairman to provide feedback and implement the decisions and recommendations of the independent directors |
• | • | | Conducts an annual process for reviewing the Chief Executive Officer’s performance and reports the results of the process to the other independent directors |
• | |
| | • | | Communicates
Meets at least annually with the Chairman to provide feedback and implement the decisions and recommendationssuch members of the independent directorssenior leadership team as the Lead Director determines from time to time |
• | |
| | • | | Represents the Board in discussions with stakeholders and communicates with regulators |
• | |
| | • | | Approves, in consultation with the Chairman, the agendas for Board meetings and information sent to the Board and the matters voted on by the full Board |
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Board Leadership Review Process
The Nominating and Corporate Governance Committee coordinates the annual independent Lead Director nomination and election process. In addition, the Board of Directors reviews the Board leadership structure at least annually to assess and determine the appropriate structure for the Company. The Board values the flexibility to permit
frequent review and determination of the appropriate leadership structure based on the opportunities and circumstances of the Company at any given time.
After the independent directors’ review and assessment, the Board of Directors
believescontinues to believe that Mr. O’Hanley’s role as Chairman, together with a strong independent Lead Director, is currently the most effective leadership structure for State Street and is in the best interests of the Board, State Street and its shareholders.
Among the factors considered by the Board in determining that the current leadership structure is the most appropriate are:
as our Chief Executive Officer, and with his experience in various leadership roles at State Street, Mr. O’Hanley has extensive knowledge of our business and strategy and is well positioned to work with the independent Lead Director to focus our Board’s agenda on the key issues facing State Street
oversight of State Street is the responsibility of our Board as a whole, which maintains a majority of independent directors (10(12 out of 1113 director nominees), and this responsibility can be properly discharged with a strong, active and engaged independent Lead Director
the Chairman and independent Lead Director work together to play a strong and active role in the oversight of State Street’s business strategy and operational management
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Corporate Governance at State Street
Communication with the Board of Directors
Shareholders and interested parties who wish to contact the Board of Directors or the Lead Director should address correspondence to the Lead Director in care of the Secretary. The Secretary will review and forward correspondence to the Lead Director or
the appropriate person or persons for response.
Lead Director of State Street Corporation
c/o Office of the Secretary
In addition, State Street has established a procedure for communicating directly with the Lead Director, by utilizing a third-party independent provider, regarding concerns about State Street or its conduct, including complaints about accounting, internal accounting controls or auditing matters. An interested party who wishes to contact the Lead Director may use any of the following methods, which are also described on State Street’s website at
www.statestreet.com:
| | | | | | | | | |
| | From within the United States
and Canada:
1-888-736-9833 (toll-free) | | | ATTN: State Street
5500 Meadows Road, Suite 500
Lake Oswego, OR 97035 USA | | | https://secure.ethicspoint.com/
domain/media/en/gui/55139/
index.html | |
For country-specific phone numbers, please visit
www.statestreet.com.The Lead Director may forward to the Examining and Audit Committee, or to another
Board committee, group or department, for appropriate review, any concerns the Lead Director receives. The Lead Director periodically reports to the independent directors as a group regarding concerns received.
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Corporate Governance at State Street
Meetings of the Board of Directors and Annual Meeting of Shareholders
During 2019,2021, the Board of Directors held 8 meetings, and each of the incumbent directors attended, either in-person or virtually, at least 7590 percent of the total of all meetings of the Board and committees for such period ason which the director served. served during his or her service as a director during the year.
Although State Street does not have a formal policy regarding attendance of directors at the annual meeting of shareholders, all directors are encouraged to attend. Each of the
12twelve directors on the Board at the time of our
20192021 annual meeting of shareholders attended the
virtual meeting.
Committees of the Board of Directors The Board of Directors has the following
principal committees to assist it in carrying out its responsibilities, and each operates under a written charter, a copy of which is available under the “Corporate Governance” section in the
“For Our Investors” section“Investor Relations” portion of our website at
www.statestreet.com. The charter for each committee, which establishes its roles and responsibilities and governs its procedures, is annually reviewed and approved by the Board.
Examining and Audit Committee
| | | |
• William C. Freda, Chair • Patrick de Saint-Aignan• Lynn A. Dugle
13 Meetings in 20192021 | | | Primary Responsibilities: | |
| | • Responsible for the appointment (including qualifications, performance, independence and periodic consideration of retaining a different firm), compensation, retention, evaluation and oversight of the work of State Street’s independent registered public accounting firm, including sole authority for the establishment of pre-approval policies and procedures for all audit engagements and any non-audit engagements | |
| | • Discusses with the independent auditor critical accounting policies and practices, alternative treatments of financial information, the effect of regulatory and accounting initiatives and other relevant matters | |
| | • Oversees the operation of our system of internal control covering the integrity of our consolidated financial statements and reports; compliance with laws, regulations and corporate policies; and the performance of corporate audit | |
| | • Reviews the effectiveness of State Street’s compliance program and conducts | |
| | • Conducts an annual performance evaluation of the General Auditor and reviews the performance of the Chief Compliance Officer and other senior members of management as appropriate | |
| | • Oversees the Company’s efforts to promote and advance a culture of compliance and ethical business practices | |
|
All members meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC and are considered audit committee financial experts (as defined by SEC rules).
| | • Oversees the compliance, culture and reporting components of State Street’s environmental, social and governance (ESG) obligations, initiatives and activities | | | |
| | All members meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC and are considered audit committee financial experts (as defined by SEC rules). | State Street Corporation
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Corporate Governance at State Street
Executive Committee
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Executive Committee
| | |
• Ronald P. O’Hanley, Chair • Patrick de Saint-Aignan• Lynn A. Dugle
• Richard P. SergelSara Mathew • GregoryWilliam L. Summe0Meaney
• Sean O’Sullivan
No Meetings in 20192021 | | | Primary Responsibilities: | |
| | • Committee members are the Chairs of each Committee, the independent Lead Director and Chairman of the Board and are authorized | |
| | • Authorized to exercise all the powers of the Board, except as otherwise limited by the laws of the Commonwealth of Massachusetts law or the Committee’s charter | |
| | • Reviews, approves and acts on matters on behalf of the Board at times when it is not practical to convene a meeting of the Board to address such matters | |
| | • Depending on meeting activities, if any, periodically reports to the Board | |
Human Resources Committee
| | | |
• Sara Mathew, Chair
• Amelia C. Fawcett
• William L. Meaney
• Richard P. Sergel Chair*• Kennett F. Burnes
• Amelia C. Fawcett
• William L. Meaney
7 Meetings in 2019*Sara Mathew, Chair-elect
(effective May 2020)
2021 | | | Primary Responsibilities: | |
| | • Oversees human capital management strategies, the operation of all compensation plans, policies and programs in which executive officers participate and certain other incentive, retirement, health and welfare and equity plans in which other employees participate | |
| | • Oversees the alignment of our incentive compensation arrangements with the safety and soundness of State Street, including the integration of risk management objectives and related policies, arrangements and control processes, consistent with applicable regulatory rules and guidance | |
| | • Acting together with the other independent directors, annually reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation; evaluates the Chief Executive Officer’s performance; and reviews, determines and approves, in consultation with the other independent directors, the Chief Executive Officer’s compensation | |
| | • Reviews, evaluates and approves the total compensation of all executive officers | |
| | • Approves the terms and conditions of employment and any changes thereto, including any restrictive provisions, severance arrangements and special arrangements or benefits, of any executive officer | |
| | • Adopts equity grant guidelines in connection with its overall responsibility for all equity plans and monitors stock ownership of executive officers who are members of the Management Committee | |
| | • Appoints and oversees compensation consultants and other advisors retained by the Committee |
All members meet the independence requirements of the listing standards of the NYSE.
| | | | |
| | • Oversees the human capital management components of State Street’s ESG obligations, initiatives and activities | State Street Corporation
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| | All members meet the independence requirements of the listing standards of the NYSE. | 10 |
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Corporate Governance at State Street
Nominating and Corporate Governance Committee
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• William L. Meaney, Chair
• Sara Mathew
• Richard P. Sergel
• Gregory L. Summe Chair• Kennett F. Burnes
• Sara Mathew
• Richard P. Sergel
5 Meetings in 20192021 | | | Primary Responsibilities: | |
| | • Assists the Board with respect to issues and policies affecting our governance practices, including management succession planning for executive officers, identifying and recommending director nominees and shareholder matters | |
| | • Recommends each committee’s composition and leads the Board in its annual review of the Board’s and each committee’s performance | |
| | • Reviews and approves State Street’s related personrelated-person transactions, reviews the amount and form of director compensation and reviews reports on regulatory, political and lobbying activities of State Street |
All members meet the independence requirements of the listing standards of the NYSE.
Risk Committee
| | |
| • Oversees the corporate governance components of State Street’s ESG obligations, initiatives and activities | |
| | All members meet the independence requirements of the listing standards of the NYSE. | |
Risk Committee
| | • Patrick de Saint-Aignan, Chair • Ronald P. O’Hanley• Sara Mathew
• Julio A. Portalatin
8 Meetings in 20192021 | | Primary Responsibilities: | |
• Oversees the operation of our global risk management framework, including the risk management policies for our operations | |
• Reviews the management of all risk applicable to our operations, including credit, market, interest rate, liquidity, operational, technology, business, compliance and reputation risks | |
• Oversees our strategic capital governance principles and controls, monitors capital adequacy in relation to risk and discharges the duties and obligations of the Board under applicable Basel, Comprehensive Capital Analysis and Review, Comprehensive Liquidity Assessment and Review and resolution and recovery planning requirements | |
• Conducts an annual performance evaluation of the Chief Risk Officer | |
• Oversees the risk management components, including climate risk, of State Street’s ESG obligations, initiatives and activities | |
Technology and Operations Committee
| | | |
Current Members:Members :
• Lynn A. Dugle,Sean O’Sullivan, Chair• Kennett F. Burnes
• William L. MeaneyPatrick de Saint-Aignan • Ronald P. O’HanleyJulio A. Portalatin • Sean O’SullivanJohn B. Rhea 8 Meetings in 20192021
| | | Primary Responsibilities: | |
| | • Oversees technology and operational risk management and the role of these risks in executing the Company’s strategy in support of the Company’sState Street’s global business requirements | |
| | • Reviews material strategic initiatives from a technology and operational risk perspective | |
| | • Reviews technology related risks, including corporate information security, cybersecurity, operational and technology resiliency and data management | |
| | • Oversees the technology and operational risk components of State Street’s ESG obligations, initiatives and activities | |
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Corporate Governance at State Street
Non-Management Director Compensation
The Nominating and Corporate Governance Committee annually reviews, and recommends to the Board, the form and amount of
non-employee non-management director compensation. In conducting its review, the Committee uses the
same peer groupCompensation Peer Group that is used by the Human Resources Committee
uses for executive compensation generally and, like the Human Resources Committee, used the services of Meridian Compensation Partners for
2019.2021. Information on State Street’s peer group and compensation consultant is described under the heading “Executive Compensation—Compensation Discussion and Analysis—Other Elements of
Our Process.Compensation.”
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The Committee did not treat peer groupCompensation Peer Group data as definitive when determiningnon-employee non-management director compensation. Rather, it referenced this peer group compensation, as well as trends in director compensation generally and within the industry, and formed its own perspective on compensation for ournon-employee non-management directors. In 2019,2021, the Committee made its recommendation to the Board, which, following the May 20192021 annual meeting of shareholders, approved director compensation for allnon-employee non-management directors effective through the 20202022 annual meeting of shareholders. There were no changes to director compensation from the prior year. Mr. O’Hanley, as an employee director, does not receive any additional compensation for his services as a director.
For the
2019–20202021–2022 Board year (the period between the
20192021 and
20202022 annual meetings of shareholders)
thenon-employee, non-management directors receive the following compensation:
| | | | | | |
| Compensation Component(1) | | Value ($)(2) | | | Vehicle(3) |
| | |
Annual Retainer | | $ | 90,000 | | | Cash or shares of State Street common stock |
| | |
Annual Equity Award | | | 195,000 | | | Shares of State Street common stock |
| | |
Additional Independent Lead Director Retainer | | | 125,000 | | | Cash or shares of State Street common stock |
| | |
Examining and Audit Committee and Risk Committee Chair Retainers | | | 30,000 | | | Cash or shares of State Street common stock |
| | |
Human Resources Committee Chair Retainer | | | 25,000 | | | Cash or shares of State Street common stock |
| | |
| Nominating and Corporate Governance Committee and Technology and Operations Committee Chair Retainers | | | 20,000 | | | Cash or shares of State Street common stock |
| | |
Examining and Audit Committee and Risk Committee Member Retainers(4) | | | 20,000 | | | Cash or shares of State Street common stock |
| | Annual Retainer | | | $90,000 | | | Cash or shares of State Street common stock | |
| | Annual Equity Award | | | 195,000 | | | Shares of State Street common stock | |
| | Additional Independent Lead Director Retainer | | | 125,000 | | | Cash or shares of State Street common stock | |
| | Examining and Audit Committee and Risk Committee Chair Retainers | | | 30,000 | | | Cash or shares of State Street common stock | |
| | Human Resources Committee Chair Retainer | | | 25,000 | | | Cash or shares of State Street common stock | |
| | Nominating and Corporate Governance Committee and Technology and Operations Committee Chair Retainers | | | 20,000 | | | Cash or shares of State Street common stock | |
| | Examining and Audit Committee and Risk Committee Member Retainers(4) | | | 20,000 | | | Cash or shares of State Street common stock | |
(1)
| A Board meeting fee of $1,500 applies after the 10th Board meeting attended during the Board year.Non-employee Non-management directors also receive reimbursement of expenses incurred as a result of Board service. |
(2)
| The annual retainer and annual equity award arepro-rated for anynon-employee non-management director joining the Board after the annual meeting. Committee retainers arepro-rated for anynon-employee non-management director joining a committee during the Board year. |
(3)
| Non-management directors may elect to receive their retainers in cash or shares of State Street common stock. Fornon-employee non-management directors elected at the annual meeting, all awards made in shares of State Street common stock are granted based on the closing price of our common stock on the NYSE on the date of the annual meeting that begins the period, rounded up to the nearest whole share, unless otherwise noted.share. Under the 2017 Stock Incentive Plan, with limited exceptions, the total value of all compensation components to anon-employee non-management director cannot exceed $1.5 million in a calendar year. |
(4)
| The Examining and Audit Committee and Risk Committee member retainer is payable to each member of the respective committee, other than the Lead Director and eachthe committee’s chair. |
For his service asNon-Executive Chairman during the 2019 calendar year, Mr. Hooley, our former Chief Executive Officer, received a cash annual retainer of $250,000 in January 2019 and an award of State Street common stock of $250,000, based on the closing price of our common stock on the NYSE on May 15, 2019, rounded up to the nearest whole share. These amounts were intended to recognize that theNon-Executive Chairman would serve for a limited duration and preside at all meetings of the Board of Directors during which he was present; work with the Chief Executive Officer and independent Lead Director to establish the agendas for Board meetings; serve as a resource to senior management and the Board on a variety of matters, including strategy, operations and stakeholder relations; and help guide the leadership transition.
Pursuant to State Street’s Deferred Compensation Plan for Directors,non-employee non-management directors may elect to defer the receipt of 0% or 100% of their (1) retainers, (2) annual equity award and/or (3) meeting fees.Non-employee directors also may elect to receive their retainers in cash or shares of State Street common stock.Non-employee Non-management directors who elect to defer the cash payment of their retainers or meeting fees may choose from four notional investment fund returns for such deferred cash. Deferrals of common stock are adjusted to reflect the hypothetical reinvestment in additional shares of common stock for any dividends or other distributions on State Street common stock.stock during the deferral period. Deferred amounts will be paid (a) as elected byat thenon-employee director, on either the date termination of the conclusion ofBoard service on the Board or on the earlier of such conclusion and a future date specified, and (b) in the form elected by thenon-employee director as either a lump sum or in installments over atwo- to five-year period.period, as elected by the non-management director.
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| | State Street Corporation
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Corporate Governance at State Street
| | |
Corporate Governance(cont.)
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
|
Director Stock Ownership Guidelines
Under our stock ownership guidelines, all
non-employee non-management directors are required to maintain a target level of stock ownership equal to
8eight times the annual retainer of $90,000 for a total of $720,000.
Non-employee Non-management directors must hold all net shares received until they reach the target ownership level. For purposes of these stock ownership guidelines, the value of shares owned is based on the closing price of our common stock on the NYSE on the date that we use for the beneficial ownership table
below under the heading “Security Ownership of Certain Beneficial Owners and Management.”
Non-employee Non-management directors are credited with all shares they beneficially own for purposes of the beneficial ownership table,
which includes all shares awarded as director compensation, including
any deferred share
awards that have been deferred.Non-employeeawards. Non-management directors are expected to attain the ownership level ratably over
a five-year period.five years.
Our Securities Trading Policy prohibits directors from
engaging in short selling,
State Street securities, engaging in hedging
transactionsor speculative trading in State Street
securities and engaging in speculative trading of State Street securities.
As of March
2, 2020, Mses.1, 2022, Ms. Chandoha and
MathewMessrs. Portalatin and
Messrs. Meaney and O’SullivanRhea exceeded the
pro-rated expected level of ownership but are below the full target ownership level, and therefore
are subject to the holding requirement.
Ms. DeMaio was not a member of the Board on March 1, 2022. Each of the other
non-employee non-management directors exceeded the full target level of ownership under the guidelines.
2019
2021 Director Compensation
The following table shows the compensation our
non-employee non-management directors
earnedwere paid during 2021 for their
services in 2019: | | | | | | | | | | | | | | | | |
| Name | | Fees Earned
or Paid in
Cash
($) | | | Stock Awards(1)
($) | | | All Other
Compensation(2)
($) | | | Total
($) | |
| | | | |
| (a) | | (b) | | | (c) | | | (g) | | | (h) | |
| | | | |
Kennett F. Burnes | | $ | 90,000 | | | $ | 195,011 | | | $ | 40,752 | | | $ | 325,763 | |
| | | | |
Marie A. Chandoha(3) | | | 71,667 | | | | 130,021 | | | | — | | | | 201,688 | |
| | | | |
Patrick de Saint-Aignan | | | 140,000 | | | | 195,011 | | | | 40,752 | | | | 375,763 | |
| | | | |
Lynn A. Dugle | | | 130,000 | | | | 195,011 | | | | 32,345 | | | | 357,356 | |
| | | | |
Amelia C. Fawcett | | | 215,000 | | | | 195,011 | | | | — | | | | 410,011 | |
| | | | |
William C. Freda | | | 140,000 | | | | 195,011 | | | | 40,752 | | | | 375,763 | |
| | | | |
Joseph L. Hooley(4) | | | 250,000 | | | | 250,021 | | | | 80,100 | | | | 580,121 | |
| | | | |
Sara Mathew | | | 110,000 | | | | 195,011 | | | | — | | | | 305,011 | |
| | | | |
William L. Meaney | | | 90,000 | | | | 195,011 | | | | 35,345 | | | | 320,356 | |
| | | | |
Sean P. O’Sullivan | | | 110,000 | | | | 195,011 | | | | — | | | | 305,011 | |
| | | | |
Richard P. Sergel | | | 135,000 | | | | 195,011 | | | | 29,999 | | | | 360,010 | |
| | | | |
Gregory L. Summe | | | 110,000 | | | | 195,011 | | | | 40,486 | | | | 345,497 | |
| | Marie A. Chandoha | | | $110,000 | | | $195,005 | | | $40,407 | | | $345,412 | |
| | Patrick de Saint-Aignan | | | 140,000 | | | 195,005 | | | 40,813 | | | 375,818 | |
| | Lynn A. Dugle(4) | | | — | | | — | | | 49,203 | | | 49,203 | |
| | Amelia C. Fawcett | | | 215,000 | | | 195,005 | | | 25,547 | | | 435,552 | |
| | William C. Freda | | | 140,000 | | | 195,005 | | | 40,813 | | | 375,818 | |
| | Sara Mathew | | | 115,000 | | | 195,005 | | | — | | | 310,005 | |
| | William L. Meaney | | | 110,000 | | | 195,005 | | | 70,547 | | | 375,552 | |
| | Sean P. O'Sullivan | | | 130,000 | | | 195,005 | | | — | | | 325,005 | |
| | Julio A. Portalatin(5) | | | 125,000 | | | 227,567 | | | — | | | 352,567 | |
| | John B. Rhea(5),(6) | | | — | | | 332,637 | | | 27,849 | | | 360,486 | |
| | Richard P. Sergel | | | 110,000 | | | 195,005 | | | 14,818 | | | 319,823 | |
| | Gregory L. Summe | | | 90,000 | | | 195,005 | | | 40,547 | | | 325,552 | |
(1)
| Ms. DeMaio was elected to the Board on March 28, 2022 and is therefore not included in the 2021 Director Compensation table. |
(2)
| On May 15, 2019,19, 2021, eachnon-employee non-management director except Mr. Hooley andother than Ms. Chandoha,Dugle received 3,1552,319 shares of State Street common stock valued at $195,011$195,005 based on the closing price of our common stock on the NYSE of $61.81.$84.09. Stock awards tonon-employee non-management directors vest immediately, and there were no unvestednon-employee non-management director stock awards as of December 31, 2019.2021. |
(3)
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| | 13 |
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Corporate Governance(cont.)
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
|
(2) | Perquisites received in 20192021 include director life insurance coverage, and business travel accident insurance paidand medical benefits abroad coverage for byinternational travel on behalf of State Street, ($752813 for Messrs. Burnes, de Saint-Aignan, Freda and Sergel; $486$547 for Dame Amelia Fawcett and Messrs. HooleyMeaney and Summe; and $345$407 for Ms. DugleChandoha, $349 for Mr. Rhea and Mr. Meaney)$203 for Ms. Dugle). Charitable contributions bynon-employee non-management directors are eligible for a Company matching contribution of up to $40,000 per calendar year under the State Street matching gift program. Matching charitable contributions made on behalf of thenon-employee non-management directors during 20192021 were $40,000 for Messrs. Burnes, de Saint-Aignan, Freda, Hooley and Summe; $35,000$70,000 for Mr. Meaney; $32,000Meaney, which included $30,000 of prior calendar year contributions matched in 2021 and $40,000 of 2021 calendar year contributions matched in 2021; $40,000 for Ms. Dugle; and $29,247 for Mr. Sergel. Mr. Hooley’s perquisites also include company car and driver ($14,225) and personal and home security ($25,389). The total amount of perquisites and other personal benefits for Dame Amelia, Mses. Chandoha and MathewDugle and Mr. O’SullivanMessrs. de Saint-Aignan, |
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Corporate Governance at State Street
Freda and Summe; $27,500 for Mr. Rhea; $25,000 for Dame Amelia Fawcett and $14,005 for Mr. Sergel. Ms. Dugle's perquisites also include a retirement gift ($9,000) in recognition of her six years of service as a member of the Board. Perquisites and other personal benefits for Ms. Mathew and Messrs. O'Sullivan and Portalatin have not been reported because the total did not exceed $10,000.
(4)
| Ms. Dugle retired from the Board effective May 19, 2021. The retainers and equity award for Ms. Dugle's Board service during 2021 were paid during 2020 and reported becausein our proxy statement for the total did not exceed $10,000.2021 annual meeting of shareholders. |
(3)(5)
| Ms. ChandohaMessrs. Portalatin and Rhea joined the Board in September 2019.March 2021. For hertheir service throughbetween March 2021 and the 20202021 annual meeting of shareholders, shethey each received (a) apro-rated annual retainer of $60,000retainer: $15,000 in cash for Mr. Portalatin and apro-rated annual equity award of 2,128189 shares of State Street common stock with a total value of $130,021$15,010 based on the closing price of our common stock on the NYSE on September 19, 2019March 5, 2021 of $61.10. Ms. Chandoha was appointed$79.42 for Mr. Rhea, who elected to the Examining and Audit Committee in October 2019 and for her service through the 2020receive his annual meeting, she received apro-rated member retainer of $11,667 in cash.
|
(4) | For his service as Non-Executive Chairman during 2019, Mr. Hooley, our former CEO, received a $250,000 cash retainer in January 2019common stock in lieu of cash, and 4,045(b) a pro-rated annual equity award of 410 shares of State Street common stock valued at $250,021with a total value of $32,562 based on the May 15, 2019 closing price of our common stock on the NYSE of $61.81. The table does not include compensation awarded to Mr. Hooley in 2019 related to his service as State Street’s Chief Executive Officer during 2018: 40,261 deferred stock awards valued at approximately $2,720,000; 61,344 performance-based restricted stock units valued at approximately $4,080,000; and previously disclosed deferred value awards and immediate cash awarded to Mr. Hooley on March 1, 2019. These awards remain subject5, 2021 of $79.42.
|
(6)
| Mr. Rhea elected to receive his annual retainer in common stock in lieu of cash. As a result, he received an additional 1,071 shares of State Street common stock with a total value of $90,060 based on the vesting schedules, recourse mechanisms, restrictive covenants and other terms and conditions described inclosing price of our common stock on the proxy statement for State Street’s 2019 annual meetingNYSE on May 19, 2021 of shareholders. The table also excludes dividend credits of $61,497 Mr. Hooley earned in 2019 on his outstanding deferred value awards granted for his service as State Street’s Chief Executive Officer. Mr. Hooley retired as Non-Executive Chairman of the Board on December 31, 2019.$84.09. |
Related PersonRelated-Person Transactions
The Board has adopted a written policy and procedures for the review of any transaction, arrangement or relationship in which State Street is a participant, the amount involved exceeds $120,000 and one of our executive officers, directors or 5% shareholders (or their immediate family members), who we refer to as “related persons,” has a direct or indirect material interest. A related person proposing to enter into such a transaction, arrangement or relationship must report the proposed related-person transaction to State Street’s
Chief Legal Officer.General Counsel. The policy calls for the proposed related-person transaction to be reviewed and, if deemed appropriate, approved by the Nominating and Corporate Governance Committee. A related-person transaction reviewed under the policy will be considered approved
or ratified if it is authorized by the Nominating and Corporate Governance Committee (or the Committee Chair) after full disclosure of the related person’s interest in the transaction.
Whenever practicable, theSuch reporting
and review
and approval willshall occur prior to the
effectiveness or consummation of the transaction.
If advance review is not practicable or was otherwise not obtained,The General Counsel may present a related-person transaction arising in the time period between meetings of the Committee
willto the Chair of the Committee, who shall review and
if deemed appropriate, ratifymay approve the related-person transaction. The
policy also permitsChair shall report on any related-person transaction reviewed by the
Committee Chair
to review and, if deemed appropriate, approve proposed related-person transactions that arise between Committee meetings, in which case they will be reported toat the
full Committee at its next
meeting.meeting of the Committee. Any ongoing related-person transactions are reviewed
annually.Considerations
As appropriate for the circumstances, the Nominating and Corporate Governance Committee (or the Committee Chair) will review and consider:
annually to evaluate whether or not they should be permitted to continue.Related-Person Transaction Considerations |
As appropriate for the circumstances, the Nominating and Corporate Governance Committee (or the Committee Chair) will review and consider: |
• | • | | the related person’s interest in the related-person transaction |
• | |
| | • | | the approximate dollar value of the amount involved in the related-person transaction |
• | |
| | • | | the approximate dollar value of the related person’s interest in the transaction without regard to any profit or loss |
• | |
| | • | | whether the transaction was undertaken in the ordinary course of State Street’s business |
• | |
| | • | | whether the transaction with the related person is on terms no less favorable to State Street than terms that could be reached with an unrelated third-party |
• | |
| | • | | the purpose of the transaction and the potential benefits to State Street |
• | |
| | • | | any other information regarding the related-person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction |
|
The Nominating and Corporate Governance Committee will review all relevant information available about the transaction. The Committee may approve or ratify the related-person transaction only if the Committee determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, State Street’sthe best interests.interests of the Company and its shareholders. The Committee may, in its sole discretion, impose such conditions as it deems appropriate on State Street or the related person in connection with approval of the related-person transaction.
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| | State Street Corporation
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Corporate Governance at State Street
| | |
Corporate Governance(cont.)
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
|
In addition to the transactions that are excluded by the instructions to the SEC’s related-person transaction disclosure rule, the Board has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related-person transactions for purposes of this policy:
interests arising solely from the related person’s position as an executive officer, employee or consultant of another entity (whether or not the person is also a director of such entity) that is a party to the transaction, where (1) the related person and his or her immediate family members do not receive any special benefits as a result of the transaction and (2) the annual amount involved in the transaction equals less than the greater of $1 million or 2% of the consolidated gross revenues of the other entity that is a party to the transaction during that entity’s last completed fiscal year; or
a transaction that involves discretionary charitable contributions from State Street to atax-exempt organization where a related person is a director, trustee, employee or executive officer, provided the related person and his or her immediate family members do not receive any special benefits as a result of the transaction, and further provided that, where a related person is an executive officer of thetax-exempt organization, the amount of the discretionary charitable contributions in any completed year in the last 3 fiscal years is not more than the greater of $1 million, or 2% of that organization’s consolidated gross revenues in the last completed fiscal year of that organization (in applying this test, State Street’s automatic matching of director or employee charitable contributions to a charitable organization will not be included in the amount of State Street’s discretionary contributions)
David G. Phelan, the son of David C. Phelan, our Executive Vice President, General Counsel and Secretary, was employed with State Street until December 2021 as a Vice President in State Street’s Global Markets division. In 2021, David G. Phelan received total compensation of less than $250,000. David G. Phelan’s compensation was determined by his manager and leadership in the Global Markets division in accordance with standard division and Company compensation practices applicable to similarly situated employees with no influence, input or involvement by David C. Phelan. In accordance with the policy, the Nominating and Corporate Governance Committee reviewed and approved the employment relationship between State Street and David G. Phelan.
Based on information provided by the directors and executive officers, and obtained by the legal department, no other related-person transactions are required to be reported in this proxy statement under applicable SEC regulations. In addition, neither State Street nor the Bank has extended a personal loan or extension of credit to any of its directors or executive officers.
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Corporate Governance at State Street
State Street’s employees are a core asset and a key driver of our long-term performance. Our employees drive the company’s value proposition, innovate better ways to serve our clients and act as custodians of our reputation. We seek to empower our employees by:
Providing development and learning opportunities to help each person reach their full potential
Promoting an inclusive, diverse and equitable workplace
Improving organizational effectiveness
Our focus on attracting, developing and motivating employees is a key component of our long-term strategy. Accordingly, we measure our executives’ performance and adjust their compensation based on critical leadership behaviors and culture traits that align with our human capital strategy, including progress towards our diversity goals.
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Corporate Governance at State Street
Highlights of our human capital strategy and initiatives from 2021 and early 2022 are noted below. Additional detail, including EEO-1 data, can be found on our website.
| | Managing and supporting approximately 39,000 employees located in 30 countries | | | Working to accelerate progress on our ID&E programs via our “10 Actions” | | | Offering comprehensive and flexible benefit programs designed to meet the changing needs of our employees and their families | |
| | Employee Profile | | | • Management Leadership for Tomorrow (MLT) independently certified our data-driven, comprehensive plan, which is focused on achieving five pillars
✔ Black representation at every level
✔ Compensation equity
✔ Inclusive, anti-racist work environment
✔ Racially-just business practices
✔ Racial justice contributions and investments
• Made tangible progress against our “10 Actions,” including engaging our entire workforce in inclusion and anti-racism conversations and enhancing our suite of training programs on these topics
• Announced the undertaking of an external Civil Rights audit to assess the impacts of our business products and services
• Leveraged 24+ Employee Networks with 100+ chapters globally to facilitate courageous conversations and drive engagement | | | • Flexible work programs help employees manage the demands of their personal and professional lives
• Physical, emotional and financial wellness programs make for a happier and healthier workforce
• Parental and caretaker support benefits provide aid through life’s important events
• Enhanced pandemic-related benefits maintained for 2021 (varying by location), providing support for COVID-19-related medical costs, additional time off, backup childcare options and reimbursement for home office equipment | |
| | | | | Women
(Global) | | | Employees of
Color
(U.S. only) | |
| | Management (Senior Vice President+) | | | 32% | | | 16% | |
| | Non-
Management | | | 45% | | | 35% | |
| | Overall | | | 45% | | | 34% | |
| | Note: Employee data as of December 31, 2021 | | | | | | | |
| | Leveraging shared traits and behaviors as a way to promote strong levels of employee connection to the company and to drive our business strategy and operating model | State Street Corporation
| | 15Developing and training our workforce through a learner-centric approach to skills-training, including easily-accessible education options | | | Impacting communities around the world through employee volunteering and financial support | |
| | • Embedding culture traits and enterprise-wide behaviors to drive business strategy
• Encouraging integrity and ethical decision making and providing multiple avenues to speak up about behavior inconsistent with our values fosters trust and accountability
• Frequent employee surveys provide insight into employee sentiment on topics such as engagement, development, alignment, work/life balance, manager qualities and risk excellence | | | • Internship and rotational programs to develop high-performing recent graduates to position them for early career success
• Rotational leadership development program and tailored development opportunities for high potential middle managers to build internal pipeline of talent for future leadership roles
• Developing and training our workforce to meet the evolving demands of our industry through enhanced learning curricula with modern, flexible learning options | | | • Partnering with charitable organizations in Poland to support refugees from Ukraine through humanitarian relief and employment assistance, such as translation, interview preparation, and resume drafting skills, and providing financial support through a grant to a Poland nonprofit and matching employee donations to Poland refugee relief on a 2:1 basis
• Supporting local non-profit organizations and driving employee engagement through skills-based volunteering
• Setting and working towards aggressive science-based environmental goals to reduce the environmental footprint of our business | |
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Corporate Governance at State Street
| | Motivating and rewarding high-performing employees with competitive incentive opportunities, encouraging employees to learn and grow in their careers | 2020 NOTICE OF MEETING AND PROXY STATEMENT
| | Providing monetary and non-monetary recognition for specific behaviors that drive our business strategy and culture | | | Supporting equal pay for equal work and working to increase the representation of women and employees of color throughout our organization, especially among our senior executives | |
| | • Employing a pay-for-performance philosophy and differentiating pay to reward our highest performers
• Aligning employee and shareholder interests by delivering a significant portion of incentive compensation in deferred equity-based pay to our senior executives
• Employing a performance management process that involves collaborative planning and ongoing performance assessments, accounting for evolving business priorities and enabling better performance differentiation
• Linking our culture to performance management by encouraging performance priorities that connect to critical enterprise-wide behaviors that drive our culture and by adjusting senior executive compensation based on progress against diversity initiatives
| | | • Expanding the use of our new recognition and rewards platform, which is designed to acknowledge and reward employees who exhibit or role model our culture traits
• Recognizing employees who exhibit exemplary risk management performance, encouraging ethical behavior and courage in speaking up
• Recognizing employees who embody the spirit of our “10 Actions,” and who role model allyship and commitment to our “10 Actions” principles
• Recognizing employees who have made outstanding volunteer contributions to charitable organizations in their communities
| | | • Applying a global policy to not ask for compensation history for both internal and external hires
• Requiring a diverse candidate slate for all management-level positions and some non management-level positions, and strongly encouraging interview panels that reflect demographic and geographic diversity
• Providing training on recognizing unconscious bias, making fair and consistent compensation decisions, and developing and applying inclusive management behaviors | |
Board and Management Oversight of Human Capital
Our Board of Directors’ Human Resources Committee has oversight of human capital management, including recruitment, retention, and inclusion and diversity initiatives. A management-level committee, the Enterprise Talent Management Committee, provides leadership and input on all aspects of our global talent-related initiatives that support achievement of our strategic priority to become a higher-performing organization. The Enterprise Talent Management Committee operates as a subcommittee of our Management Committee, which is a senior leadership committee overseeing our global business activities.
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Item
1 –1: Election of Directors
|
The Board of Directors unanimously recommends that you vote
each of the nominees for director (Item 1 on your proxy card) |
Each director elected at the
20202022 annual meeting of shareholders will serve until the next annual meeting of shareholders, except as otherwise provided in State Street’s
by-laws. Of the
1113 director nominees,
1012 are
independent,non-management directors and one serves as the Chief Executive Officer of State Street. All of the
non-management directors are independent, as determined by the Board under the applicable definition in the NYSE listing standards and the State Street Corporate Governance Guidelines.
Pursuant to State Street’s
by-laws, on February 20, 2020, the Board
has fixed the number of directors at
11 as of the 2020 annual meeting of shareholders.13. Unless contrary instructions are given, shares represented by proxies solicited by the Board of Directors will be voted for the election of the
1113 director nominees listed below. We have no reason to believe that any nominee will be unavailable for election at the annual meeting. In the event that one or more nominees is unexpectedly not available to serve, proxies may be voted for another person nominated as a substitute by the Board or the Board may reduce the number of directors to be elected at the annual meeting. Information relating to each nominee for election as director is described below, including:
age and period of service as a director of State Street
business experience during at least the past five years (including directorships at other public companies)
other experience, qualifications, attributes or skills that led the Board to conclude the director should serve or continue to serve as a director of State Street
The Board of Directors recommends that shareholders approve each director nominee for election based upon the qualifications and attributes discussed below. See “Corporate Governance at State Street—Board Composition” for a further discussion of the Board’s process and reasons for nominating these candidates.
2022 Notice of Meeting and Proxy Statement / State Street Corporation 22
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| | State Street Corporation
| | 16 |
Item 1: Election of Directors
| | |
Item 1(cont.)
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
|
| | |
 MARIE A. CHANDOHA
Age 58,60, Director since 2019
Board Roles and
Committees
• Examining and Audit Committee
• Technology and Operations Committee | | | |
| | • Retired President and Chief Executive Officer, Charles Schwab Investment Management, Inc., the investment management subsidiary of Charles Schwab Corporation, an NYSE-listed brokerage and wealth management firm (2010 to 2019); Chief Investment Officer (2010) |
| | • Director, Macy’s Inc., a retail department store (2022 to present) |
| | • Former Managing Director, Head, ETF, Index and Model-Based Fixed Income Portfolio Management, BlackRock, Inc., an investment management company (2009 to 2010); Global Head, Fixed Income Business, Barclays Global Investors (2007 to 2009) prior to acquisition by BlackRock, Inc. |
| | • Former Co-Head and Senior Portfolio Manager of the Montgomery Fixed Income Division, Wells Capital Management, an investment management company (1999 to 2007) |
| | Qualifications and Attributes In
|
| | Prior to retiring from her prior role as Presidentpresident and Chief Executive Officerchief executive officer of Charles Schwab Investment Management, Inc., Ms. Chandoha implemented a new vision of the business by reorganizing the leadership team, adding strong governance and risk management and by delivering transparent,low-cost and straightforward investment products and solutions. In addition, Ms. Chandoha transformed the technology and operational platform to efficiently scale and grow the company and increased third-party distribution capabilities. Before joining Charles Schwab Investment Management, Inc., Ms. Chandoha was the Global Headglobal head of the Fixed Income Divisionfixed income division of BlackRock, Inc. where she focused on commercialization, innovation and new product development. Ms. Chandoha’s more than 35 years of experience as a leader in the financial services industry and her record transforming businesses provides the Board with valuable expertise as State Street continues its technological innovation to continue meeting industry andexceeding client expectations. She currently serves as an advisory committee member for Zoe Financial, Inc. Ms. Chandoha is a trusteevice chair of the California chapter of the Nature Conservancy and previously served as member of the Boardboard of Governorsgovernors and Executive Committeeexecutive committee of the Investment Company Institute. She received a B.A. degree in economics from Harvard University. |
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Item 1: Election of Directors
DONNALEE DEMAIO
Age 63, Director Since 2022
Board Roles and
Committees
None | | | Career Highlights |
| • Retired Executive Vice President and Global Chief Operating Officer, General Insurance, American International Group, Inc. (AIG), an NYSE-listed global finance and insurance company (2018 to 2019); Executive Vice President and Chief Auditor (2017 to 2018); President and Global Head of Credit Lines (2015 to 2016); President and Chief Executive Officer, United Guaranty Corporation, an AIG subsidiary (2012 to 2017); Chief Operating Officer, United Guaranty Corporation (2012) |
| | • Director, Hiscox Ltd., a London Stock Exchange-listed international insurance group (2021 to present) |
| | • Former President and Chief Executive Officer, MetLife Bank N.A., a full-service retail bank (2005 to 2012); Vice President and Chief Financial Officer (2002 to 2005) |
| | • Former National Consulting Partner, PricewaterhouseCoopers (PwC), a multinational professional services network of firms (1999 to 2002); Client Services Partner (1993 to 1999); Senior Audit Manager (1983 to 1993) |
| | Qualifications and Attributes |
| | As executive vice president and global chief operating officer for AIG, Ms. DeMaio was responsible for all operational aspects of General Insurance globally, including shared services sites in Asia, the U.S. and Europe. She held a variety of senior roles at AIG including, oversight of technology, operations, procurement, risk and control and transformation. Ms. DeMaio also served as AIG’s chief auditor where she reported directly to the Audit Committee of the AIG board of directors. During her tenure at United Guaranty, a subsidiary of AIG, in which she held senior management roles, she successfully grew operating income and implemented a technology modernization strategy. Before joining AIG, Ms. DeMaio served as president and chief executive officer of MetLife Bank, pioneering their consumer lending business and substantially growing the business while building a risk management organization to oversee financial and operational risk matters. Ms. DeMaio’s significant experience in highly regulated entities in financial services and insurance, and her direction and leadership to significantly transform technology, finance and operations organizations, as well as her experience in audit and risk management, provides the Board with broad expertise and a global business perspective to guide State Street’s strategic initiatives. Ms. DeMaio is a CPA and received a B.A. degree from Muhlenberg College. |
 PATRICK DE SAINT-AIGNAN
Age 71,73, Director Since 2009
Board Roles and
Committees
• Examining and Audit Committee
• Technology and Operations
Committee | | | |
| | • Retired Managing Director and Advisory Director, Morgan Stanley, an NYSE-listed global financial services company (1974 to 2007); firm-wide head of the company’s risk management function (1995 to 2002) • Director, Edaris Health, Inc., a private healthcare information technology company (2007 to present) (2007 to 2016 as Forerun, prior to name change to Edaris Health, Inc. in 2016); member of the Compensation Committee
|
| | • Member of Supervisory Board, BH PHARMA, a private generic drug development company (2015 to present) |
| | • Former Director, Allied World Assurance Company Holdings AG, a former NYSE-listed specialty insurance and reinsurance company acquired by Fairfax Financial Holdings in 2017 (2008 to 2017); member of the Enterprise Risk Committee (Chairman), Compensation Committee, Audit Committee and Investment Committee |
| | • Former Director, Bank of China Limited (2006 to 2008); member of the Audit Committee (Chairman), the Risk Policy Committee and the Personnel and Remuneration Committee |
| | Qualifications and Attributes |
| | Mr. de Saint-Aignan’s extensive experience in risk management, corporate finance, capital markets and firm management brings to the Board a sophisticated understanding of risk, particularly with respect to the implementation of risk and monitoring programs within a global financial services organization. Mr. de Saint-Aignan’sservices. His service on the board of directors and committees of several other companies gives him additional perspective on global management and corporate governance. A dual citizen of the United States and France, he was honored with Risk Magazine’s Lifetime Achievement Award in 2004. Mr. de Saint-Aignan holds his B.B.A. degree from the Ecole des Hautes Etudes Commerciales and an M.B.A. from Harvard University. |
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2022 Notice of Meeting and Proxy Statement / State Street Corporation 24
TABLE OF CONTENTS
Item 1: Election of Directors
| | |
 Item 1AMELIA C. FAWCETT(cont.) | | 2020 NOTICE OF MEETING AND PROXY STATEMENT
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LYNN A. DUGLE
Age 60,65, Director Since 2015 2006
Board Roles and
Committees
• Examining and Audit CommitteeLead Director
• Technology and OperationsHuman Resources Committee (Chair) | | | |
| | • Retired Chief Executive OfficerGovernor, Wellcome Trust, a politically and Chairman, Engility Holdings, Inc., an NYSE-listed engineering and technology consulting company (2018 to 2019); Chief Executive Officer and Director (2016 to 2018); Director (2014 to 2018) (2014 to 2015 as TASC, prior to acquisition by Engility Holdings, Inc.; 2015 to 2018 as Engility Holdings, Inc., prior to acquisition by Science Applications International Corp. in 2019)• Director KBR, Inc., an NYSE-listed engineering, procurement, and construction company (February 2020financially independent global charitable science foundation (2019 to present); member of Audit Committee
• Director TE Connectivity Ltd., an NYSE-listed and Swiss-domiciled technology company (March 2020 to present); member of AuditRisk Committee
• Former Corporate Vice President (Chair) and President, Intelligence, Information and Services, Raytheon Company, an NYSE-listed defense contractor and electronics manufacturer (2004 to 2015); Vice President, Engineering, Technology and Quality, Network Centric Systems (2004 to 2009); Vice President, Support Engineering and Six Sigma (1997 to 1999)
• Former Vice President, Product, Systems Software Division, ADC Telecommunications, Inc., a former Nasdaq-listed communications company acquired in 2010 by Tyco Electronics (2002 to 2004); General Manager, Cable Systems Division (1999 to 2002)
• Former Vice President, Quality & Support Engineering, Texas Instruments, Inc., a Nasdaq-listed electronics manufacturer (1982 to 1997)
Qualifications and Attributes
As the former Chief Executive Officer and Chairman of Engility Holdings, a leading provider of integrated solutions and services for the U.S. government, Department of Defense, federal civilian agencies and international customers, Ms. Dugle brings to the Board valuable experience in leading the development of large businesses with a focus on information, technology and security matters. Her understanding of information and technology matters provides the Board with perspective as State Street continues to transform and digitize products and services. Prior to her role at Engility, Ms. Dugle was the president of Intelligence, Information and Services at Raytheon where she was responsible for the company’s advanced cyber solutions, cyber security services and information-based solutions. She also served as vice president of engineering, technology and quality for the former Network Centric Systems business at Raytheon and was responsible for the strategic direction, leadership and operations of the engineering, technology and quality functions. Prior to Raytheon, Ms. Dugle held executive positions at ADC Telecommunications with responsibility for leading teams across Europe, Middle East and Africa and the Asia-Pacific region. She holds B.S. and B.B.A. degrees from Purdue University and an M.B.A. with a concentration in international business from the University of Texas at Dallas.
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Item 1(cont.)
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
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AMELIA C. FAWCETT
Age 63, Director Since 2006
Board Roles and Committees
Lead Director
• Executive Committee
• Human Resources Committee
| | Career Highlights
• Chairman, Kinnevik AB, a Nasdaq Stockholm-listed long-term oriented investment company (2018 to present); Deputy Chairman (2013 to 2018);Non-Executive Director (2011 to present); member of Remuneration Committee (Chair) and Governance, Risk and Compliance Committee (Chair)
|
| | • Chairman, Standards Board for Alternative Investments (2011 to present) (2011 to 2017 as Hedge Fund Standards Board; 2017 to present as Standards Board for Alternative Investments) (U.K.), a global standard-setting body for the alternative investment industry• FormerNon-Executive Director, HM Treasury, the British Government’s Economic & Finance Ministry (2012 to 2018)
• FormerNon-Executive Director, Millicom International Cellular S.A.Member, Financial Policy Council, Bermuda Monetary Authority (BMA), an international telecommunicationsadvisory body to the BMA and media company (2014the Ministry of Finance, focused on financial system stability (2016 to 2016); member of the Remuneration Committee (Chair) and Compliance and Business Practices Committee
• FormerNon-Executive Chairman, Guardian Media Group plc, a privately held diversified multimedia business in London (2009 to 2013);Non-Executive Director (2007 to 2013)
present) |
| | • Former Vice Chairman and Chief Operating Officer of European, Middle East and Africa Operations, Morgan Stanley, an NYSE-listed global financial services company (2002 to 2006) and Morgan Stanley International Limited, London (2006 to 2007); Senior Adviser (2006 to 2007); Managing Director and Chief Administrative Officer for European Operations (1996 to 2002); Executive Director (1992 to 1996); Vice President (1990 to 1992) |
| | • Former Chairman, Kinnevik AB, a Nasdaq Stockholm-listed long-term oriented investment company (2018 to 2021); Deputy Chairman (2013 to 2018); Non-Executive Director (2011 to 2021); member of People and Remuneration Committee and Governance, Risk and Compliance Committee (Chair); |
| | • Former Chairman, Standards Board for Alternative Investments, (U.K.) (2011 to 2020), the global standard-setting body for the alternative investment industry |
| | • Former Non-Executive Director, HM Treasury, the British Government’s Economic & Finance Ministry (2012 to 2018) |
| | Qualifications and Attributes |
| | Dame Amelia Fawcett, a dual American and British citizen, has many years of extensive and diverse financial services experience. At Morgan Stanley, she served in many roles, including Vice Chairmanvice chairman and Chief Operating Officerchief operating officer of Morgan Stanley International, and had responsibility for development and implementation of the company’s business strategy (including business integration), as well as oversight of the company’s infrastructure and operational risk functions, infrastructure support and corporate affairs. Prior to joining Morgan Stanley, she was an attorney at the New York-based law firm of Sullivan & Cromwell, practicing primarily in the areas of corporate and banking law in both New York and Paris. Her service on both the Court of Directors of the Bank of England (the Board of the British Central Bank) and the British Treasury provided her with valuable experience with the complex regulatory and compliance frameworks of the financial industry, both in the U.K. and internationally. Dame Amelia was awarded a CBE (Commander of the Order of the British Empire) and a DBE (Dame Commander of the Order of the British Empire) by the Queen, in both instances for services to the finance industry, and in 2018 the Queen made her a Commander of the Royal Victorian Order for services as Chairman of The Prince of Wales’s Charitable Foundation. In addition, in 2004, she received His Royal Highness The Prince of Wales’s Ambassador Award recognizing responsible business activities that have a positive impact on society and the environment. Dame Amelia’s public policy experience and experience in the European banking markets provide a valuable international financial markets perspective to State Street. She formerly has served, or currently serves in the capacity as governor of the Wellcome Trust, chairmanchair of the Royal Botanic Gardens (Kew) (current),and a trustee of Project HOPE UK. Dame Amelia was formerly chairman of The Prince of Wales’s Charitable Foundation, deputy chairman and governor of the London Business School, a commissioner of theU.S.-U.K. Fulbright Commission, deputy chairman of the National Portrait Gallery, chairman of the American Friends of the National Portrait Gallery and a trusteecommissioner of Project Hope (current).the U.S.-U.K. Fulbright Commission. Dame Amelia received a B.A. degree from Wellesley College and a J.D. degree from the University of Virginia. |
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25 2022 Notice of Meeting and Proxy Statement / State Street Corporation
TABLE OF CONTENTS
Item 1: Election of Directors
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Item 1(cont.)
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
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 WILLIAM C. FREDA
Age 67,69, Director Since 2014
Board Roles and
Committees
• Examining and Audit Committee (Chair)
| | | |
| | • Retired Senior Partner and Vice Chairman, Deloitte, LLP, a global professional services firm (2011 to 2014); Managing Partner of Client Initiatives (2007 to 2011); member of U.S. Executive Committee |
| | • Chairman,Chair, Hamilton Insurance Group, a global insurance and reinsurance company (2014(2017 to present); Director (2014 to 2017) ; Chairman (2017 to present) |
| | • Director, Guardian Life Insurance Company, a mutual life insurance company (2014 to present) |
| | • Former Director, Deloitte Touche Tohmatsu Limited (2007 to 2013); member of Risk Committee (Chairman) (2011 to 2013) and Audit Committee (Chairman) (2008 to 2011) |
| | Qualifications and Attributes |
| | As senior partner and vice chairman of Deloitte, LLP, Mr. Freda served Deloitte’s most significant clients and maintained key relationships, acting as a strategic liaison to the marketplace as well as to professional and community organizations. Mr. Freda joined Deloitte in 1974 and built a distinguished record of service during his 40-year career, having served on a wide range of multinational engagements for many of Deloitte’s largest and most strategic clients. Mr. Freda brings to the Board key insight and perspective on risk management, international expansion and client relationships gained through his extensive experience interacting with audit committees, boards of directors and senior management. He serves as a trustee of Bentley University. Previously, Mr. Freda has served as the chairman of Catholic Community Services, the United Way of Essex and West Hudson and the AICPA Insurance Companies Committee and was a U.S. Representative to the International Accounting Standards Committee’s Insurance Steering Committee. Mr. Freda received a B.S. degree in accounting from Bentley University. |
| | |
 SARA MATHEW
Age 64,66, Director Since 2018
Board Roles and
Committees
• Executive Committee
• Human Resources Committee (Chair)
• Nominating and Corporate Governance Committee • Risk Committee
| | | |
| | • Retired Chairman and Chief Executive Officer, Dun & Bradstreet Corporation, an NYSE-listed international commercial data and analytics provider (2010 to 2013); President and Chief Operating Officer (2007 to 2009); Chief Financial Officer (2001 to 2007) |
| | • Non-Executive Chairman, Federal Home Loan Mortgage Company,Corporation, a government-sponsored firmenterprise operating in the secondary residential mortgage market (2019 to present); Director (2013 to present); member of Audit Committee (Chair), Executive Committee and Nominating and Governance Committee |
| | • Director, Reckitt Benckiser Group plc, an FTSE-listed Healthhealth and hygiene company (2019 to present); member of Audit Committee |
| | • Director, Xos Inc., a Nasdaq-listed electric mobility company (2021 to present); member of the Compensation Committee (Chair) and Audit Committee |
| | • Director, Dropbox, a Nasdaq-listed file sharing and cloud storage service (2021 to present); member of the Audit Committee and Compensation Committee |
| | • Former Director, NextGen Acquisition Corporation, a Nasdaq-listed special purpose acquisition company (SPAC) (2020 to 2021); member of the Audit Committee and Compensation Committee |
| | • Former Director, Campbell Soup Company, an NYSE-listed consumer food producer (2005 to 2019); member of Audit Committee (Chair) and Finance and Corporate Development Committee |
| | • Former Director, Shire Plc, a Nasdaq-listed FTSE 25 biopharmaceutical company (2015 to 2019; prior to acquisition by Takeda Pharmaceutical Company Limited in 2019); Chair of Audit and Risk Committee and member of Compliance and Nomination and Governance Committee • Former Director, Avon Products, Inc., an NYSE-listed beauty, household and personal care products manufacturer (2014 to 2016)
• Former Vice President of Finance, ASEAN, Australasia and India, Procter and Gamble Company, an NYSE-listed international manufacturer of consumer goods (2000 to 2001); Controller and Chief Financial Officer, Baby-Care and Paper Products (1998 to 2000); other various positions through her18-year tenure
|
| | Qualifications and Attributes In her prior role as
|
| | As chairman and chief executive officer of Dun & Bradstreet, Corporation, Ms. Mathew led the company’s transformation from a data collection business into an innovative provider of data analytics and insights. Prior to her role as chairman and chief executive officer, she served as president and chief operating officer, overseeing the company’s consumer segments, and as chief financial officer where she initiated and managed the redesign of the company’s accounting processes and controls. Before joining Dun & Bradstreet, Corporation, Ms. Mathew held various positions at Procter and Gamble Company within finance, accounting, investor relations and brand management. Her deep background in finance, technology, corporate strategy and operations, combined with her experiences18-year tenure leading and overseeing a diverse assortment of international consumer-focused companies and transformational initiatives, allows Ms. Mathew to provideprovides a unique, innovative and global perspective to State Street. Ms. MathewShe received a B.S. degree in physics, mathematics and chemistry from the University of Madras, India and an M.B.A. degree in finance and marketing from Xavier University. |
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2022 Notice of Meeting and Proxy Statement / State Street Corporation 26
TABLE OF CONTENTS
Item 1: Election of Directors
| | |
Item 1(cont.)
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
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 WILLIAM L. MEANEY
Age 59,61, Director Since 2018
Board Roles and
Committees
• Executive Committee
• Human Resources Committee
• TechnologyNominating and Operations CommitteeCorporate Governance (Chair) | | | |
| | • President, Chief Executive Officer and Director, Iron Mountain, Inc., an NYSE-listed information management and data backup and recovery company (2013 to present) |
| | • Former Director, Qantas Airways, an Australian Securities Exchange-listed airline (2012 to 2018); member of the Safety, Health, Environment and Security Committee and the Remuneration Committee |
| | • Former Chief Executive Officer, Zuellig Group, a privately owned long-term holding company based in Hong Kong (2004 to 2012) |
| | Qualifications and Attributes |
| | Mr. Meaney, a citizen of the United States, Switzerland and Ireland, has extensive domestic and international business experience across both established and emerging markets. As the president and chief executive officer of Iron Mountain, he has continued to lead the company as it evolves and expands its secure storage and digital transformation offerings. Before joining Iron Mountain, Mr. Meaney was the chief executive officer of Zuellig Group, where he was responsible for a diverse portfolio of Asia Pacific businesses that spanned a variety of heavily regulated and consumer-based industries, including health care, agriculture, pharmaceuticals and materials handling. He has held several senior positions throughout the airline industry, including chief commercial officer of Swiss International Airlines and executive vice president of South African Airways, founded and managed his own consulting firm and served as an operations officer with the U.S. Central Intelligence Agency. Mr. Meaney provides State Street’s Board with an acute global viewpoint on corporate strategy and business expansion founded upon his background in leading and developing large U.S. and international companies. Mr. Meaney is a member of both the FM Global advisory board and President’s Council of Massachusetts General Hospital and is a former trustee of Rensselaer Polytechnic Institute and Carnegie Mellon University. He holds a B.S. degree from Rensselaer Polytechnic Institute and an M.B.A. from Carnegie Mellon University. |
| | |
 RONALD P. O’HANLEY
Age 63,65, Director Since 2019
Board Roles and
Committees
• Executive Committee (Chair)
• Risk Committee • Technology and Operations Committee
| | | |
| | • State Street Corporation, Chairman (2020 to present); President and Chief Executive Officer (2019 to present); President and Chief Operating Officer (2017 to 2019); Vice Chairman (2017); Chief Executive Officer and President, State Street Global Advisors (2015 to 2017) |
| | • Director, Unum Group, an NYSE-listed provider of financial protection benefits in the United States and United Kingdom (2015 to present); member of the Human Capital Committee and Governance Committee |
| | • Former President of Asset Management & Corporate Services, Fidelity Investments, Inc., a multinational financial services corporation (2010 to 2014) |
| | • Former Chief Executive Officer and President, BNY Mellon Asset Management (2007 to 2010) |
| | Qualifications and Attributes |
| | Mr. O’Hanley joined State Street in 2015 to lead State Street’s investment management business as the Chief Executive Officerchief executive officer and Presidentpresident of State Street Global Advisors. Since that time, he has held several senior leadership positions within the Company, serving as Vice Chairmanvice chairman from January 2017 to November 2017 and Presidentpresident and Chief Operating Officerchief operating officer from November 2017 to February 2019. Effective January 1, 2019, Mr. O’Hanley began his service as Chief Executive Officerchief executive officer and as a member of the Board of Directors and effective January 1, 2020, he was appointed Chairmanchairman of the Board. His extensive leadership, executive management and operational experience over the last three decades in asset management and global financial services provides the Board with the experience necessary to help navigate the Company’s strategic priorities on data management, client experience and technology enhancement. Mr. O’Hanley received a B.A. degree from Syracuse University and an M.B.A. from Harvard Business School. |
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Item 1: Election of Directors
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Item 1(cont.)
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
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| | |
 SEAN O’SULLIVAN
Age 64,66, Director Since 2017
Board Roles and
Committees
• Executive Committee
• Technology and Operations Committee (Chair) | | | |
| | • Retired Group Managing Director and Group Chief Operating Officer, HSBC Holdings, plc., an NYSE-listed banking and financial services organization (2011 to 2014); Executive Director and Chief Technology and Services Officer, HSBC Bank plc. (2007 to 2010) ; other various positions throughout his34-year tenure |
| | Qualifications and Attributes |
| | As the Group Managing Directorgroup managing director and Group Chief Operating Officergroup chief operating officer of HSBC Holdings, plc., Mr. O’Sullivan led the bank’s global operations and information technology functions, with worldwide responsibilities for business transformation, organizational restructuring and operational effectiveness. Prior to assuming thethis role, of Group Managing Director and Group Chief Operating Officer, Mr. O’Sullivan held various positions throughout HSBC in the U.S., Canada and Europe. His long34-year tenure at HSBC provided him with valuable experience with the operational and technology challenges faced by a large, global financial institution as well as the management of overall company effectiveness and efficiency, including development of a global approach to expense management and operational risk management. Mr. O’Sullivan is a member of the Information Technology Advisory Committee at the University of British Columbia and a former trustee of the York University Foundation. He is a dual citizen of Canada and the U.K. and received a B.A. degree from the Ivey School of Business at Western University. |
 JULIO A. PORTALATINAge 63, Director Since 2021Board Roles andCommittees• Risk Committee
• Technology and Operations Committee | | | Career Highlights |
| • Retired Vice-Chair, Marsh & McLennan Companies, an NYSE-listed professional services firm (2019 to 2020); President and Chief Executive Officer, Mercer Consulting Group, Inc., a business of Marsh & McLennan Companies (2012 to 2019) |
| | • Director, SERVPRO, a private cleaning and restoration company (2021 to present) |
| | • Former President and Chief Executive Officer, Chartis Growth Economies, a division of American International Group (AIG), an NYSE-listed global finance and insurance company (2011 to 2012); President and Chief Executive Officer, Chartis Emerging Markets (2010 to 2011); President and Chief Executive Officer, AIG Europe S.A. (2008 to 2010); President, Worldwide Accident and Health, American International Underwriters (2003 to 2008) |
| | • Former Director, DXC Technology, an NYSE-listed information technology company (2017 to 2020); member of the Compensation Committee |
| | Qualifications and Attributes |
| | As president and chief executive officer of Mercer Consulting Group, Inc., Mr. Portalatin expanded Mercer’s global operations, increased revenue from emerging markets, executed transformative acquisitions and advised clients on $11 trillion of assets. He also led the reorganization of Mercer’s leadership team, established strong governance and risk management practices and developed transparent, low-cost and straightforward investment products and solutions. Prior to joining Mercer, Mr. Portalatin served in various senior leadership positions at American International Group (AIG), including as President and CEO of Chartis Growth Economies (now AIG Growth Economies), where he led the strategic global expansion of the business in several regions, including Asia-Pacific, Latin America, South Asia, Europe, Middle East and Africa. Mr. Portalatin also serves as a thought leader on the changing workforce and is a leading contributor on the dialogue of the future of work, human capital, diversity, global economic trends, financial wellness and pension systems. Mr. Portalatin’s strong international background and extensive experience in the strategic leadership and operation of complex global businesses provides the Board with valuable experience as the Company seeks to expand its global footprint and continue its risk excellence initiatives. Mr. Portalatin currently serves on the boards of AARP, Covenant House International and Hofstra University. He holds a B.S. degree in business management and an honorary doctorate from Hofstra University. |
2022 Notice of Meeting and Proxy Statement / State Street Corporation 28
TABLE OF CONTENTS
Item 1: Election of Directors
 JOHN B. RHEAAge 56, Director Since 2021Board Roles andCommittees• Technology and Operations Committee | | | Career Highlights |
| | • Partner, Centerview Partners LLC, an independent investment banking and advisory firm (2020 to present) |
| | • Founder and Managing Partner, RHEAL Capital Management, LLC, a real estate development and investment firm (2014 to present) |
| | • Director, Invitation Homes, Inc., an NYSE-listed Real Estate Investment Trust, (2015 to present); member of the Compensation and Management Development Committee (Chair) and Investment and Finance Committee |
| | • Former Senior Advisor and President, Corporate Finance and Capital Markets, Siebert Williams Shank & Co., LLC, an independent non-bank financial services firm (2017 to 2020) |
| | • Former Senior Advisor, Boston Consulting Group, a global management consulting firm (2014 to 2017) |
| | • Former Chairman and Chief Executive Officer, New York City Housing Authority (NYCHA) (2009 to 2014) |
| | Qualifications and Attributes |
| | Mr. Rhea has more than 30 years of experience as a trusted advisor to senior management, boards of directors and regulatory agencies on a wide range of strategic and finance matters. In his current role as partner at Centerview Partners LLC, he advises clients with a focus on capital advisory, merger and acquisitions, real estate and corporate impact. Prior to joining Centerview Partners, Mr. Rhea served as senior advisor and president of capital markets and corporate finance at Siebert Williams Shank & Co., LLC, where he led all corporate advisory, underwriting and markets businesses. He also previously served as senior advisor to the Boston Consulting Group and chairman and CEO for NYCHA, the largest public housing authority in North America. Prior to NYCHA, Mr. Rhea spent more than 18 years as an investment banker and strategy consultant and was recognized by Black Enterprise as one of the Top 75 Blacks on Wall Street. Mr. Rhea’s significant experience in corporate finance, capital markets and advising large complex organizations on mergers and acquisitions and strategic planning provides the Board with valuable perspective on corporate strategy and financing transactions. Mr. Rhea has served on and chaired several non-profit boards and is currently a director of Wesleyan University, Red Cross Greater New York and University of Detroit Jesuit School. He received a B.A. degree from Wesleyan University and an M.B.A from Harvard Business School. |
 RICHARD P. SERGEL
Age 70,72, Director Since 1999
Board Roles and
Committees
• Examining and Audit Committee • Executive Committee
• Human Resources Committee (Chair)
• Nominating and Corporate Governance Committee | | | |
| | • Retired President and Chief Executive Officer, North American Electric Reliability Corporation (NERC), a self-regulatory organization for the bulk electricity system in North America (2005 to 2009) |
| | • Director, Emera, Inc., a Toronto Stock Exchange-listed energy and services company (2010 to present) |
| | • Former President and Chief Executive Officer, New England Electric System (and its successor company, National Grid USA), an NYSE-listed electric utility (1998 to 2004) |
| | Qualifications and Attributes |
| | Mr. Sergel’s responsibilities as chief executive officer of the North American Electric Reliability Corporation included imposing statutory responsibility and regulating the industry through adoption and enforcement of standards and practices. To do so, he led NERC to establish the first set of legally enforceable standards for the U.S. bulk power system. Prior to joining NERC, he spent 25 years with the New England Electric System, where he oversaw the merger with National Grid in 2000. His extensive practical and technical expertise in navigating the energy market through regulatory change and major transactions offers the Board important perspective on the evolving financial services industry and regulatory environment. Mr. Sergel served in the United States Air Force reserveReserve from 1973 to 1979 and has served as a director of Jobs for Massachusetts and of the Greater Boston Chamber of Commerce. He is a former trustee of the Merrimack Valley United Way and of the Worcester Art Museum, prior chairman of the Consortium for Energy Efficiency and was a member of the Audit Committee for the Town of Wellesley, Massachusetts. Mr. Sergel received a B.S. degree from Florida State University, an M.S. from North Carolina State University and an M.B.A. from the University of Miami. |
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Item 1: Election of Directors
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Item 1(cont.)
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
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| | |
 GREGORY L. SUMME
Age 63,65, Director Since 2001
Board Roles and
Committees
• Executive Committee
• Human Resources Committee
• Nominating and Corporate Governance Committee (Chair) | | | |
| | • Managing Partner and Founder, Glen Capital Partners, LLC, an alternative asset investment fund (2013 to present) • Former Managing Director and Vice Chairman of Global Buyout, Carlyle Group, a Nasdaq-listed global asset manager (2009 to 2014)
• Former Chairman, Chief Executive Officer and President, PerkinElmer, Inc., an NYSE-listed developer and producer of life science equipment and services (1998-2009)
|
| | • Director, NXP Semiconductors, a Nasdaq-listed semiconductor manufacturer (2010 to present) ; member of the Nominating and Corporate Governance Committee (Chair); (Director, 2010 to 2015 and Chairman, 2013 to 2015 as Freescale Semiconductor, Inc., prior to its acquisition by NXP Semiconductors in 2015; 2015 to present as NXP Semiconductors) |
| | • Director, Avantor, Inc., an NYSE-listed chemical and materials company (2020 to present); member of the Nominating and Corporate Governance Committee (Chair) and Compensation and Human Resources Committee |
| | • Director, Virgin Orbit Holdings, Inc., a Nasdaq listed provider of satellite launching services (2021 to present); member of the Audit Committee (Chair) and Compensation Committee |
| | • Former Managing Director and Vice Chairman of Global Buyout, Carlyle Group, a Nasdaq-listed global asset manager (2009 to 2014) |
| | • Former Chairman, Chief Executive Officer and President, PerkinElmer, Inc., an NYSE-listed developer and producer of life science equipment and services (1998-2009) |
| | • Former Co-Chairman and Co-Founder, NextGen Acquisition Corporation I; NextGen Acquisition Corporation II, each a Nasdaq-listed special purpose acquisition company (SPAC) (2020-2021) |
| | • Former Director, LMI Aerospace, a Nasdaq-listed designer and provider of aerospace structures (2014 to 2017) |
| | Qualifications and Attributes |
| | Mr. Summe has extensive management experience leading large and complex corporate organizations in evolving environments. While vice chairman of Carlyle Group, he was responsible for numerous buyout funds in financial services, infrastructure, Japan, the Middle East and African markets and served on the firm’s operating and investment committees.services. His experience in private equity and M&A transactions has afforded him a deepened exposure to understanding varied business models, practices, strategies and environments and assessing value in varied international regions. During his tenure as chairman and chief executive officer at PerkinElmer, Mr. Summe led the company’s transformation from a diversified defense contractor to a technology leader in health sciences. Prior to joining PerkinElmer, Mr. Summe held leadership positions at AlliedSignal (now Honeywell), General Electric and McKinsey & Co. Mr. Summe holds B.S. and M.S. degrees in electrical engineering from the University of Kentucky and the University of Cincinnati, respectively, and an M.B.A. with distinction from the Wharton School of the University of Pennsylvania. He is also in the Engineering Hall of Distinction at the University of Kentucky. |
DIRECTOR NOT STANDING FOR REELECTION AT THE 2020 ANNUAL MEETING
Kennett F. Burnes’ service as a director will end at the 2020 annual meeting of shareholders and the Board thanks him for his service. Mr. Burnes currently serves on the Human Resources Committee, Nominating and Corporate Governance Committee and Technology and Operations Committee. He has been a member of the Board since 2003 and preceded Amelia Fawcett as the independent Lead Director.
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| | State Street Corporation
| | 23Kentucky’s Hall of Distinction. |
2022 Notice of Meeting and Proxy Statement / State Street Corporation 30
TABLE OF CONTENTS
| | |
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
|
Compensation Discussion and Analysis
In this compensation discussion and analysis, or CD&A, we describe our approach to executive compensation
includingand our
philosophy, design and process and the alignment of our incentive compensation with our risk management principles. We also describe compensation decisions for
20192021 for the following named executive officers, or NEOs:
Ronald P. O’Hanley — President and Chief Executive Officer
Eric W. Aboaf — Executive Vice President and Chief Financial Officer
Francisco Aristeguieta— Executive Vice President and Chief Executive Officer for International Businessof State Street Institutional Services
Jeffrey N. CarpAndrew J. Erickson — Executive Vice President, Chief LegalProductivity Officer and SecretaryHead of International
Andrew J. EricksonLouis D. Maiuri — Executive Vice President and Head of Global ServicesChief Operating Officer
In this CD&A, references to the Committee are references to the Human Resources Committee of the Board.
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| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
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TABLE OF CONTENTS
Corporate Performance Summary
In 2021, State Street demonstrated meaningful strategic, operational and financial progress. We continued to execute against our annual business goals and drive our long-term strategy:
✔
| Delivered strong financial results, including: |
| ○ | Earnings per share (EPS) growth and pre-tax margin improvement compared to 2020 |
| ○ | Record levels of servicing and management fee revenues, with total fee revenue increasing by 5% compared to 2020 and exceeding $10 billion for the first time |
| ○ | Positive fee and total operating leverage |
| ○ | Productivity efforts that delivered approximately $330 million of gross expense savings |
| ○ | Three-year total shareholder return (TSR) of 61.4%, exceeding both Direct Peers* |
✔
| Improved our sales effectiveness, achieving a record $3.5 trillion of assets under custody and administration (AUC/A) wins, as well as record full-year exchange-traded funds (ETF) net inflows |
✔
| Reignited a focus on the client experience, establishing a team dedicated to understanding and improving client sentiment across the firm; achieved favorable client net promoter score (NPS) results of +17, an increase of +3 compared to 2020 |
✔
| Restructured client management and progressed segment and country strategy with specific leadership assignments for revenue generation and retention, client engagement and investment prioritization |
✔
| Continued to execute on our State Street AlphaSM strategy,** with nine reported new Alpha clients and ten of 19 total Alpha clients live at year-end 2021 |
✔
| Launched an enhanced Investment Servicing strategy tailored to deliver better growth across regions and client segments, while improving client experience and relationship management |
✔
| Continued to improve our product capabilities, launching Alpha for private markets and our new State Street Digital division |
✔
| Announced our agreement to acquire the Brown Brothers Harriman (BBH) Investor Services business, which we expect to strengthen our market leadership in asset servicing, expand and deepen our international reach, propel our front-to-back Alpha strategy and enhance our financial profile and add strong talent and industry-leading service excellence*** |
✔
| Continued to invest in our talent to drive performance, implementing new talent strategies to attract, develop and motivate top talent in an increasingly tight labor market: strong recruitment and hiring practices helped to bring on key talent throughout the organization to support our strategic objectives. Also made tangible progress against our “10 Actions to Address Racism and Inequality” objectives, including increased use of diverse outside advisors and other vendors and year-over-year improvements in six of eight categories of diverse representation |
✔
| Maintained focus on continuously improving our risk management posture |
*
| Our Direct Peers are the peers with whom we compete most directly, Northern Trust Corporation and The Bank of New York Mellon Corporation. |
**
| State Street Alpha is the first front-to-back asset servicing platform from a single provider for institutional investment and wealth management firms. Alpha brings together our clients’ choice of real-time data and asset intelligence across the investment lifecycle to help them make better decisions and deliver growth for their clients. |
***
| The planned transaction is subject to the receipt of regulatory approvals and other closing conditions. |
The performance metrics used in our executive compensation programs are linked to the financial results below presented on a non-GAAP basis, unless otherwise noted. Additional performance indicators are presented under “Corporate Performance Summary” and “2021 Financial Performance Results.”
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To better align pay outcomes with both individual
| | Total fee revenue | | | $10,012 | | | $9,499 | | | 5.4% | |
| | Total revenue | | | 11,916 | | | 11,703 | | | 1.8% | |
| | Expenses | | | 8,662 | | | 8,542 | | | 1.4% | |
| | Operating Margin | | | 27.3% | | | 27.0% | | | 30 bps | |
| | EPS | | | 7.44 | | | 6.70 | | | 11.0% | |
| | Return on average common equity (ROE) (GAAP) | | | 10.7% | | | 10.0% | | | 70 bps | |
(1)
| Financial results in this section are presented on a non-GAAP basis, unless otherwise noted. Non-GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of notable items outside of State Street’s normal course of business. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. For a reconciliation of non-GAAP measures presented in this proxy statement, see Appendix C. |
(2)
| $ in millions, except per share data. |
| | 1-Year (12/31/20-12/31/21) | | | 31.0% | | | 3 | | | 30th | | | 25th | |
| | 3-Year (12/31/18-12/31/21) | | | 61.4% | | | 1 | | | 45th | | | 35th | |
| | 5-Year (12/31/16-12/31/21) | | | 36.3% | | | 3 | | | 25th | | | 20th | |
(1)
| TSR results based on S&P Capital IQ data and reflects cumulative shareholder return between the dates shown, including reinvestment of dividends. |
(2)
| State Street percentile positioning rounded to the nearest 5th percentile. References in this document to the S&P 500 Financial Index are to the Capital Markets and Banks subsets of the S&P 500 Financial Index. |
Determining 2021 NEO Compensation
We use a total incentive compensation approach, focusing primarily on corporate performance. The amount of each NEO’s incentive compensation award is determined using the same percentage of target for all NEOs based on corporate performance, resultswith an individual modifier applied as appropriate. The award is delivered through various cash and equity-based vehicles, including performance-based restricted stock units (RSUs). In the summary below, we describe how we determine total incentive compensation and then describe the vehicles through which we deliver it.
To determine our NEOs’ incentive compensation awards for
the year, including providing a more direct link to annual corporate results,2021, the Committee
approved a new compensation structure as described under the heading “New Compensation Program Features for the 2019 Compensation Year.” The payout under the 2019 program is determined based on individual performance (60% of the incentive award target) andstarted by evaluating overall corporate performance
(40% of the incentive award target).Corporate Performance Summary
2019 began with significant challenges, including financial market weakness, falling interest rates and increased client fee pricing pressure, and our revenue,pre-tax margin, diluted earnings per share (EPS) and return on average common equity (ROE) all decreased in 2019 from 2018. In the face of these headwinds, we acted aggressively to stabilize revenues and reduce expenses and made progress on key business objectives. Actions included:
strengthening our value proposition to clients, including the ongoingbuild-out of ourfront-to-back State Street Alpha platform
successfully executing a firm-wide expense savings program that exceeded initial targets and resulted in approximately $415 million in gross expense savings during 2019
reorganized the leadership of our multi-regional international business under a single executive to further our growth objectives
Due to these actions and the steady recovery of U.S. average market levels in 2019,our financial results in the second half of the year improved relative to the first half of the year. Total revenue for the second half of the year increased by approximately 3%, total fee revenue increased approximately 2% and EPS increased approximately 7%, in each case relative to the first half of the year. With regard to risk management performance, we made progress on initiatives to improve our financial risk posture, but did not achieve desired non-financial risk improvement. While we know more is required for us to advance our overall performance, we are nonetheless confident in the trajectory of our business and focused on continuing to improve our performance.
In determining our NEOs’ compensation for 2019, the Committee evaluated State Street’s overall corporate performance. Consistent with prior years, this evaluation included a structured assessment of corporate performance based on three discrete scorecards that capture State Street’s annual performance against financial, business and risk management objectives. Improvement ingoals. These goals were set at the second halfbeginning of 2021 and were measured throughout the year particularly with respect to financial and businessusing performance tempered the disappointing start to 2019. However, the Committee concluded that State Street’s full year Overall Performance was Below Expectations as a result of financial and risk management performance against objectives. Our corporate performance is described in more detail under the heading “2019 Compensation Decisions—Corporate Performance.” The Committee’s conclusions are shown below:
| | |
Corporate Performance Scorecards | | 2019 Committee Evaluation |
| |
Financial Performance | | Below Expectations |
| |
Business Performance | | At Expectations |
| |
Risk Management Performance | | Below Expectations |
| |
Overall Performance | | Below Expectations |
Corporate Performance Evaluation Outcome.Based on the Committee’s evaluation of State Street’s overall performance, the Committee applied a 62.5% factor against target for the corporate component of the 2019 incentive awards made to all executive officers, as described below.
NEO Performance Summary
In determining our NEOs’ compensation for 2019, the Committee also evaluated each NEO’s individual performance, including assessments of:
financial, business and risk management objectives derived from the corporate scorecards
leadership and talent-related performance, including a focus on diversity and inclusion and employee engagement and development
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While overall corporate performance for 2019 was Below Expectations, State Street’s management team took a number of actions that delivered strong results in the second half of 2019, reversing unsatisfactory revenue trends and exceeding expense management goals. The Committee’s review of each NEO’s individual performance is discussed in more detail in the discussion under “2019 Compensation Decisions—Individual Performance and Compensation Decisions” below.
NEO Incentive Compensation Decisions
For 2019, the Committee awarded our NEOs total incentive awards ranging from 83% to 97% of target, reflecting both our performance as a company as well as each NEO’s individual performance, as described in more detail under the heading “2019 Compensation Decisions—Individual Performance and Compensation Decisions.”
Given Mr. O’Hanley’s responsibility as Chief Executive Officer for overall company performance, the Committee’s decision on his compensation was primarily driven by its evaluation of overall company results, and he received a total incentive award of 83% of target. This decision resulted in equity- and cash-based incentive elements below target, as presented in the chart below:
NEO Incentive Compensation Mix(1)
Incentive awards are delivered through four award vehicles, as described in the “Compensation Vehicles and Design” table below. The incentive compensation mix emphasizes deferral and performance-based equity. 90% of incentive awards for our NEOs are deferred. In addition, 67% of our CEO’s and 62% of our other NEOs’ equity awards are performance-based restricted stock units, referred to as performance-based RSUs. This structure is designed to drive financial performance and to align incentives with the performance experienced by our shareholders. For 2019, incentive awards were delivered in: performance-based RSUs; deferred stock awards, referred to as DSAs; deferred value awards (deferred cash), referred to as DVAs; and immediate cash, as shown below:
| | |
| | 
|
(1) | Does not include Mr. Aristeguieta. In connection with his offer of employment, State Street agreed to provide Mr. Aristeguieta with 2019 incentive compensation via a pay mix consisting of: 40% performance-based RSUs; 25% DSAs; 20% DVAs; and 15% cash.
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Sound Compensation and Corporate Governance Practices
Our NEO compensation practices are designed to support good governance and mitigate against excessive risk-taking. We regularly review and refine our governance practices considering several factors, including feedback from ongoing engagement with our shareholders.
| | | | |
| | What We Do
| | |
| | • Long-term performance-based equity awards in the form of performance-based RSUs
• Significant deferred equity- and cash-based incentive compensation
• Active engagement with shareholders on compensation and governance issues
• Close interaction between the Human Resources Committee and our Risk Committee and Examining and Audit Committee
• Independent compensation consultant
| | • Clawback and forfeiture provisions to permit recoupment of incentive compensation
• “Double-trigger”change-of-control required for deferred incentive compensation acceleration and cash payments
• Stock ownership policy, including holding requirements for NEOs who are below full ownership guidelines
• Non-compete and other restrictive covenants
• Annual review of incentive compensation design for alignment with risk management principles
|
| | | | |
| | What We Do Not Do
| | |
| | • Nochange-of-control excise taxgross-up
• No “single-trigger”change-of-control vesting or cash payments
• No option repricing
| | • No short-selling, options trading, hedging or speculative transactions in State Street securities
• No taxgross-ups on perquisites(1)
• No multi-year guaranteed incentive awards
|
(1) | Excluding certain international assignment and relocation benefits.
|
Shareholder Outreach and“Say-on-Pay”
In reviewing compensation design and governance practices, the Committee considers market trends and regulatory guidance, as well as other factors, including shareholder feedback. The Committee receives feedback from our shareholders through two primary channels:
• | | Shareholder Outreach. We engage with our largest shareholders to understand their perspectives on our compensation and governance programs. For 2019, we engaged or requested engagement with shareholders representing more than half of our outstanding common stock
|
• | | “Say-on-Pay.” At our annual shareholder meeting, we ask our shareholders to approve anon-binding advisory proposal on executive compensation. At our 2019 annual meeting, our shareholders approved the proposal with over 90% of the votes cast
|
Based on discussions with our shareholders and the results of our“say-on-pay” vote, the Committee believes that our shareholders support our overall executive compensation program. For the 2019 compensation year, we therefore continued many of the elements of our existing compensation program, such as maintaining a high level of performance-based equity and deferral for incentive compensation awards to our NEOs. One area of specific discussion we had with several of our shareholders in recent years involved the clarity and transparency of the relationship between individual pay outcomes and company performance. For example, several shareholders requested additional detail on the relationship between scorecard-based evaluations of corporate performance and individual pay decisions. These discussions, together with long-term strategic and other considerations, informed the changes to the structure of our compensation program for 2019, described under “New Compensation Program Features for the 2019 Compensation Year,” below.
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Compensation Philosophy
State Street’s compensation program for NEOs and other executive officers aims to:
attract, retain and motivate superior executives and drive strong leadership behaviors
reward those executives for meeting or exceeding individual and company financial and business objectives
drive long-term shareholder value and financial stability
align incentive compensation with the performance results experienced by our shareholders through the use of significant levels of deferred equity-based compensation
provide equal pay for work of equal value
achieve the preceding goals in a manner aligned with sound risk management and our corporate values
New Compensation Program Features for the 2019 Compensation Year
To better align pay outcomes with both corporate and individual performance results for the year, the Committee approved a new compensation structure. The changes from thepre-2019 compensation program along with the associated rationale are outlined below:
Comparison of Pre-2019 Compensation Program vs. 2019 Compensation Program for NEOs Pre-2019 Compensation Program 2019 Compensation Program Incentive Compensation Targets and Delivery Vehicles Separate annual and long-term incentive targets established for each executive officer Annual incentive award varied within a range of 0 - 200% of target and was delivered through immediate cash and DVAs Long-term incentive award varied within a range of 80 - 120% of target and was delivered through performance-based RSUs and DSAs A single total incentive target established for each executive officer Incentive award may vary within a range of 0-200% of target and is delivered through the same four vehicles used previously and described below To determine final incentive value, target is split into individual performance and corporate performance components Determining Individual Compensation Awards Annual incentive award driven by enterprise- and individual-level scorecard-based evaluations of financial, strategic and risk management performance Long-term incentive award driven by State Street's long term performance trend and the core responsibilities associated with the NEO's role overtime, including leadership and talent-related performance Determining Individual Compensation Awards Individual performance component driven by individual-level scorecard-based evaluations of individual financial, strategic, risk and leadership and talent-related performance Corporate performance component driven by enterprise-level scorecard-based evaluations of financial, strategic and risk management performance Individual and corporate performance component values are summed and delivered through established incentive award mix Rationale for Changes Separate individual and corporate performance components provide clearer accountability for individual and corporate results Pay structure results in a wider range of possible pay outcomes and more closely links equity-based awards to current year performance Individual performance component increases individual accountability for current year outcomes and results in greater pay variability The same factor is applied to the corporate performance component for all executive officers, providing a more transparent link to annual corporate results and promoting shared accountability
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Accordingly, the Committee used the following framework to determine 2019 compensation year awards for the NEOs:
Preliminary Incentive Compensation (1C) Recommendation Consideration of Other Factors Outcome & Delivery Individual Component (Individual Performance = 60% of Total 1C Tarqet) Corporate Component (Corporate Performance = 40% of Total 1C Taraet) Based on performance against individual objectives: Financial Business Risk Excellence Leadership & Talent Based on Corporate Performance scorecards: Financial Business Risk Excellence Committee and Other Directors' Evaluation of the NEOs Market compensation levels, trends, and practices Relative Performance vs. Peer Companies(1) Final CEO 1C delivered in: 10% Immediate Cash 15% Deferred Value Awards 25% Deferred Stock Awards 50% Performance-based RSUs (represents 67% of equity delivered) Final Other NEO IC delivered in(2): 10% Immediate Cash 25% Deferred Value Awards 25% Deferred Stock Awards 40% Performance-based RSUs (represents 62% of equity delivered)
(1) | Our15-company compensation peer group is described below under the heading, “Other Elements of Our Process—Peer Group and Benchmarking.”
|
(2) | In connection with his offer of employment, State Street agreed to provide Mr. Aristeguieta with 2019 incentive compensation via a pay mix consisting of: 40% performance-based RSUs; 25% DSAs; 20% DVAs; and 15% cash.
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Compensation Vehicles and Design
Compensation Design. Total compensation for 2019 was delivered via base salary and incentive compensation. Incentive compensation for 2019 was delivered through the following vehicles:
| | | | |
Vehicle | | Vehicle Description | | Considerations and Rationale |
|
Equity-Based Incentive Compensation
(75% of incentive compensation for CEO; 65% for Other NEOs)
|
Performance-
Based Restricted
Stock Units
(RSUs)
| | • Number of performance-based RSUs ultimately earned based on State Street’s average annual ROE and pre-tax margin over the three-year performance period (2020 – 2022)
• ROE and pre-tax margin weighted equally in determining the performance-based RSU payout, resulting in a total payout range of 0 – 150%, shown in the table below
| | • Equity-based compensation directly aligns the rewards and risks shared by our NEOs and our shareholders
• Performance-based RSUs are aligned with our long-term performance and financial goals
• Performance-based RSUs granted for 2019 and 2018 performance included pre-tax margin as a second metric in equal weight with ROE, further aligning NEO compensation with our business strategy
|
|
50% Weighting 50% Weighting ROE ROE Performance Pre-tax Margin Pre-tax Margin Performance Total Payout Range < 8% No Payout + < 24% No Payout 8.0% Threshold + 24.0% Threshold 13.0% Target + 29.0% Target > 18.0% Maximum + >34.0% Maximum = 0 - 150% Total Payout
|
| | • Performance-based RSUs ultimately earned “cliff” vest in one installment in February 2023
• Paid in State Street shares upon vesting
| | |
Deferred Stock
Awards (DSAs)
| | • DSAs vest ratably in four equal annual installments (with the first installment vesting in February 2021)
• Paid in State Street shares upon vesting
| | • Subject to vesting requirements
• Equity-based compensation directly aligns the rewards and risks shared by our NEOs and our shareholders
|
|
Cash-Based Incentive Compensation
(25% of incentive compensation for CEO; 35% for Other NEOs)
|
Deferred Value
Awards (DVAs)
| | • DVAs are notionally invested in a money market fund
• Vest ratably in 16 quarterly installments (with the first installment vesting in May 2020)
• Paid in cash upon vesting
| | • Subject to vesting requirements
|
Immediate Cash
(non-deferred)
| | • Immediate cash award
| | • Provides a limited immediate incentive
|
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Recourse Provisions. All incentive compensation awards for our NEOs are subject to clawback and forfeiture provisions. For more information, see the discussion under “Other Elements of Compensation—Adjustment and Recourse Mechanisms” below.
Restrictive Covenants. Each of the deferred incentive compensation awards granted to our NEOs in 2019 includes restrictive covenants concerningnon-competition andnon-solicitation.
2019 Compensation Decisions
Total Compensation Approach
The Committee evaluates individual compensation for our NEOs and other executive officers by looking at total direct compensation, consisting of base salary and incentive compensation. The Committee evaluates base salary and incentive compensation levels at least annually.
Base Salary. Base salary is a relatively small portion of total compensation for the NEOs. None of the NEOs received a base salary increase in 2019.
Setting Individual Incentive Compensation Targets. The Committee establishes incentive compensation targets for our NEOs each year. The targets are based on each executive’s role and responsibilities, performance trend, competitive and market factors and internal equity.
For 2019, each NEO’s target total compensation was allocated as follows:
| | | | | | | | | | | | | | | |
| Name | | Base Salary Rate | | Total Target Incentive
Compensation | | Target Total
Compensation |
| | | |
Ronald P. O’Hanley | | | $ | 800,000 | | | | $ | 13,200,000 | | | | $ | 14,000,000 | |
| | | |
Eric W. Aboaf | | | | 700,000 | | | | | 5,800,000 | | | | | 6,500,000 | |
| | | |
Francisco Aristeguieta(1) | | | | 704,000 | | | | | 6,800,000 | | | | | 7,504,000 | |
| | | |
Jeffrey N. Carp | | | | 650,000 | | | | | 5,500,000 | | | | | 6,150,000 | |
| | | |
Andrew J. Erickson | | | | 500,480 | | | | | 6,009,600 | | | | | 6,510,080 | |
(1) | In connection with his offer of employment, State Street agreed to provide Mr. Aristeguieta with compensation designed to maintain his 2019 compensation near his expected level of compensation at his prior employer.
|
Determining Incentive Compensation Awards. Following the end of the performance year, the Committee evaluates the individual and corporate component values for each NEO in light of input from the CEO (on the other NEOs) as well as other directors, market compensation levels, trends and practices and corporate financial performance relative to peers to reach final total incentive award amounts, as described above under “New Compensation Program Features for the 2019 Compensation Year”. In evaluating performance, the Committee may consider additional factors or give greater or less weight to any factor.
Once the final incentive compensation amount has been determined, the total incentive value is delivered through the established mix of performance-based RSUs, DSAs, DVAs and immediate cash vehicles described in the “Compensation Vehicles and Design” table above.
Corporate Performance
Framework Evaluation.The corporate performance framework uses a structured evaluation of three discrete, multi-factor scorecards, which containincluded both qualitative and quantitative and qualitative metrics, and cover:
risk management performance
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The Committee considered the financial, business and risk management performance scorecards in July and December 2019, as well as final 2019 scorecards in early 2020. The full Board of Directors also reviews financial performance at each Board meeting. The Committee’s overall evaluation of corporate performance, balancing positive and negative performance outcomes in each of these scorecards, is a primary driver of incentive compensation decisions for our Chief Executive Officer and for the corporate performance incentive factor for our other NEOs.
Under the 2019 compensation program, all executive officers receive the same corporate performance factor for the 40% of their total target incentive that is based on the Committee’s evaluation of overall corporate performance. Improvement in the second half of the year, particularly with respect to financial and business performance, tempered the disappointing start to 2019. However, the Committee concluded that State Street’s full year performance was Below Expectations as a result of financial and risk management performance against objectives. Consequently, all executive officers received only 62.5% of the corporate performance component of their incentive compensation target, impacting both equity- and cash-based incentive compensation awards. A description of each of the three corporate performance scorecards, including second half trend evaluations, is found below.
Financial Performance.assessments. During its evaluation of 20192021 performance, the Committee had access toreviewed financial results presented in conformity with GAAP, as well as financial results presented on a basis that excludes or adjusts one or more items from GAAP. This latter basis is aGAAP (a non-GAAP presentation). A summary of each scorecard and the Committee’s evaluation are provided in the table below, with further detail provided under “2021 Performance and Compensation Decisions – Corporate Performance.”
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(1)
| Financial results in this section are presented on a non-GAAP basis, unless otherwise noted. Non-GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of notable items outside of State Street’s normal course of business. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. For a reconciliation of non-GAAP measures presented in this proxy statement, see Appendix C. |
Corporate Performance Evaluation Outcome. Based on all of the above factors, as reviewed in detail under “2021 Performance and Compensation Decisions—Corporate Performance” below, the Committee applied a corporate performance factor of 110% of target for the 2021 performance year incentive compensation awards made to all NEOs.
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NEO Performance and Incentive Compensation Award Decisions
In determining our NEOs’ incentive compensation awards for 2021, the Committee also evaluated each NEO’s individual performance, consisting of:
assessments of performance against individual financial, business and risk management objectives; and
evaluation of performance against pre-defined leadership- and talent-related goals for each NEO. These goals are intended to promote a focus on factors that the Committee assesses from both a short- and long-term perspective, such as inclusion, diversity and equity (ID&E), employee turnover and leadership behaviors.
For 2021, the Committee made total incentive compensation awards to our CEO at 115% of target and our other NEOs at 110% of target, primarily reflecting overall company performance. In determining whether individual performance-based adjustments from the corporate factor were warranted, the Committee considered performance against individual goals derived from our corporate goals and aligned to each NEO’s role.
The Committee’s decision to make a positive adjustment from the corporate factor for Mr. O’Hanley’s incentive compensation reflected his individual performance, including the important actions he took in 2021:
launching an enhanced Investment Servicing strategy;
continuing to execute on our Alpha strategy with nine new Alpha clients and the launch of Alpha for private markets;
driving our long-term strategy for State Street Global Advisors, including the launch of new environmental, social and governance (ESG) products in 2021; and
announcing our agreement to acquire the BBH Investor Services business.
Based on these actions and results, the Committee believed that Mr. O’Hanley demonstrated decisive leadership, while delivering strong results for our shareholders. As a result, Mr. O’Hanley received a 5% adjustment for individual performance, resulting in a total incentive compensation award of 115% of target. Additional detail on Mr. O’Hanley’s compensation decision is provided under the heading “2021 Performance and Compensation Decisions—Individual Compensation Decisions Summary.”
For the NEOs other than the CEO, the Committee determined that the corporate performance factor of 110% of target appropriately reflected the strong contributions of each NEO to the overall corporate results.
Additional detail on the Committee’s assessments of individual performance for each NEO is provided under the heading “2021 Performance and Compensation Decisions—Individual Compensation Decisions Summary.”
NEO Incentive Compensation Mix
Incentive compensation awards earned by our NEOs are typically delivered through short- and long-term award vehicles, including both cash and equity, as described in the “Compensation Vehicles” table. The 2021 incentive compensation mix emphasizes deferral and performance-based equity and is designed to drive financial performance and to align incentives with the performance experienced by our shareholders.
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For 2021, consistent with the 2020 performance year, the Committee eliminated the immediate cash payment for our CEO and shifted all of his cash-delivered incentive compensation into an equity-based vehicle to further promote alignment with the shareholder experience. Thus, the Committee awarded long-term cash-settled restricted stock units (CRSUs) in lieu of any immediate and deferred cash. As a result, Mr. O’Hanley’s 2021 incentive award was delivered in 100% deferred equity-based vehicles. For the 2021 performance year,
100% of incentive compensation for our CEO and 90% for our other NEOs was deferred;
100% of incentive compensation for our CEO and 65% for our other NEOs was equity-based; and
67% of equity-settled incentive compensation (i.e., performance-based restricted stock units (RSUs) and deferred stock awards (DSAs)) for our CEO and 62% for our other NEOs was tied to specific performance metrics (i.e., performance-based RSUs):
Linking Pay with Performance Over Time
The Committee reviews, evaluates and approves our executive compensation program annually, and designs our executive compensation program to effectively align pay with performance and shareholder interests over time. The design elements supporting this goal include our use of shareholder return-based metrics in assessing annual financial performance, heavy reliance on deferred equity-based compensation vehicles and the use of relative TSR in our long-term incentive design. As a result, realizable pay (the value of prior awards granted)(1) reflects our shareholders’ experience as shown in the charts below; the value ultimately received by our executives will continue to be impacted by changes in our stock price prior to vesting.
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(1)
| Realizable value reflects the value of CRSUs, Deferred Stock Awards and performance-based RSUs based on the closing share price of our common stock on the NYSE on December 31, 2021 of $93.00 (and assumes all shares are retained), plus the value of cash-delivered incentive compensation awarded. |
(2)
| Reflects cumulative shareholder return, including reinvestment of dividends from respective grant dates through December 31, 2021. |
(3)
| Reflects incentive compensation award targets for the performance year as approved by the Committee. |
(4)
| Reflects actual incentive compensation, as approved by the Committee based on year-end performance outcomes. While the graphs indicate how the Committee viewed the compensation awarded, the referenced amounts differ from amounts reported in the Summary Compensation Table for the referenced years. For further discussion on this topic relative to the 2021 compensation year, see “Individual Compensation Decisions Summary.” |
(5)
| Includes pro forma realizable value of performance-based RSUs based on performance of relevant criteria only for completed fiscal years within the three-year performance period through 2021. This performance has not been certified and is therefore subject to adjustment based on the terms of the relevant awards. No estimate of performance for 2022 and beyond has been made. Final payout will be based on satisfaction of the performance criteria as certified by the Committee following the end of the performance period. |
(6)
| Current estimated realizable value of performance-based RSUs reflects performance results certified by the Committee. See also footnote 1 above. |
Shareholder Outreach and Responsiveness
In 2021, we maintained the expanded shareholder outreach program we put in place in 2020, which allowed us to gain additional insight into shareholder perspectives, including on our executive compensation program. We conducted this enhanced engagement both before and after our 2021 “Say on Pay” vote, which received 94.3% support. Committee chair, Sara Mathew, participated in several of our 2021 shareholder meetings, which covered topics such as our executive compensation program design, corporate governance practices, climate and sustainability efforts, ID&E-related initiatives and progress made against the ‘‘10 Actions,’’ and other ESG topics, including the use of ESG performance measures in our executive compensation program. At these meetings, we receive valuable feedback that informs the design of our executive compensation program and our approach to disclosure.
Based on discussions with our shareholders and the results of our “Say on Pay” vote, the Committee believes that our shareholders support our overall executive compensation program. As discussed in last year’s CD&A, the current structure was informed by expanded investor outreach in 2020, resulting in several notable enhancements to our program and disclosures. These enhancements include redesigned incentive compensation awards based on corporate performance with an individual modifier and two new metrics in the long-term performance-based RSU vehicle aligned to our long-term strategy. For the 2021 performance year, based on the “Say on Pay” vote outcome and continuing dialogue with our investors, we maintained our existing compensation program, which we believe effectively aligns pay with performance and reflects shareholder input. We also continued our enhanced disclosure approach, providing additional detail on Committee considerations in assessing company and individual performance. Additional detail on our shareholder outreach in 2021 can be found under “Corporate Governance at State Street - Shareholder Engagement and Communications.”
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Sound Compensation and Corporate Governance Practices
Our NEO compensation practices are designed to support good governance and mitigate against excessive risk-taking. We regularly review and refine our corporate governance practices considering several factors, including feedback from ongoing engagement with our shareholders.
(1)
| Excluding certain international assignment and relocation benefits. |
State Street’s compensation program for NEOs and other executive officers aims to:
attract, retain and motivate superior executives and drive strong leadership behaviors
reward those executives for meeting or exceeding company and individual financial, business and leadership- and talent-related objectives
drive long-term shareholder value and financial stability
align incentive compensation with the performance results experienced by our shareholders through the use of significant levels of deferred equity-based compensation
provide equal pay for work of equal value
achieve the preceding goals in a manner aligned with sound risk management and our corporate values
2022 Notice of Meeting and Proxy Statement / State Street Corporation 38
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Total compensation for our NEOs is delivered via base salary and incentive compensation. Incentive compensation for 2021 was delivered through the following vehicles:
| | | | | Vehicle | | | Vehicle Description and Considerations | |
| | Equity-Based Incentive Compensation | |
| | 100% of
incentive
compensation
for the CEO
65% of
incentive
compensation
for other NEOs | | | Performance-
Based RSUs | | | • Earned based on performance on key metrics (ROE, Pre-Tax Margin and Fee Revenue Growth) over the three-year performance period
• Subject to modification based on three-year relative TSR (up to +/-25%)(1)
• Payout between 0–150% of target
• Vests in one installment in February 2025
• Payout opportunity is aligned with our long-term performance and financial goals and with the rewards and risks shared by our NEOs and other shareholders | |
| | Deferred Stock
Awards (DSAs) | | | • Vests in four equal annual installments beginning in February 2023
• Directly aligns the rewards and risks shared by our NEOs and other shareholders | |
| | Cash-Settled
Restricted Stock
Units (CRSUs)
(CEO Only) | | | • Vests in 12 quarterly installments (50% in three equal installments beginning in May 2022 and the balance in nine equal installments from February 2023 to February 2025)
• For performance years 2020 and 2021, provided in lieu of cash-based incentive compensation typically awarded to our CEO
• Further promotes alignment with shareholder experience, while providing the CEO with liquidity over time | |
| | Cash-Based Incentive Compensation | |
| | 0% of incentive
compensation
for the CEO
35% of incentive
compensation
for other NEOs | | | Deferred Value Awards (DVAs) | | |
• Notionally invested in a money market fund and vests in 16 equal quarterly installments beginning in May 2022
• Paid in cash upon vesting
| |
| | Immediate Cash (non-deferred) | | |
• Immediate cash award which provides limited monetization of the executive’s incentive compensation award
| |
(1)
| S&P 500 Financial Index (Capital Markets and Banks Subsets) used for relative comparisons, reflecting an external benchmark that includes our direct competitors and other companies with which we compete in some aspects of our businesses. |
Each of the deferred incentive compensation awards granted to our NEOs for the 2021 performance year includes non-competition and non-solicitation provisions. In addition, all incentive compensation awards granted to our NEOs are subject to clawback and forfeiture provisions, as described under “Other Elements of Compensation—Adjustment and Recourse Mechanisms.”
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The performance-based RSU design described below is intended to align the incentives for our executives with our long-term performance and financial goals. Our strategy and operating model are driving both organic and inorganic growth. As a result, the HRC was able to increase the performance targets for the performance-based RSUs granted in 2022, as described in more detail below.
(1)
| Core performance metrics, including prior year adjusted performance results are presented on a non-GAAP basis in this section, reflecting adjustments described in footnote 2. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. For a reconciliation of non-GAAP measures presented in this CD&A, see Appendix C. All performance metric targets reflect anticipated effects of the planned acquisition of the BBH Investor Services business. |
(2)
| All three core performance metrics are subject to adjustment for pre-established, objectively determinable factors. Prior to granting the performance- based RSU award, the Committee establishes the factors that could affect the performance measures during the performance period and which are then excluded from the performance measure calculation, such as: acquisitions, dispositions and similar transactions and related securities issuances and expenses; changes in accounting principles, tax or banking law or regulations; litigation or regulatory settlements arising from events that occurred prior to the performance period; and restructuring charges and expenses. In addition, the Committee retains the discretionary right to disregard any calculation adjustment that would result in an increase to average ROE, average pre-tax margin or fee revenue growth measured on a compound annual growth rate (CAGR) basis, and to reduce the payout under the performance award for other material items or events. |
(3)
| Achievement of ROE and pre-tax margin targets for the performance-based RSUs is calculated based on a simple average of the achievement in each year in the performance period. Achievement of the fee revenue target is calculated based on the CAGR during the performance period. |
(4)
| Linear interpolation is used between the points shown in this table. |
(5)
| Relative TSR Modifier percentage is added to or subtracted from the payout outcome calculated based on the three weighted metrics to determine the final payout percentage, except that the final payout percentage may be no greater than 150%. |
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2021 Performance and Compensation Decisions Total Compensation Approach
The Committee determines the amount of individual compensation to be awarded to our NEOs by looking at total direct compensation, consisting of base salary and incentive compensation. The Committee evaluates base salary and target incentive compensation levels at least annually.
Base Salary. Base salary is a relatively small portion of the total compensation for our NEOs. No base salary increases were provided to NEOs in 2021.
Setting Individual Incentive Compensation Targets. The Committee establishes incentive compensation targets for our NEOs each year. The targets are based on each executive’s role, responsibilities and performance trend, as well as competitive and market factors and internal equity.
For 2021, each NEO’s target total compensation was allocated as follows:
| | Ronald P. O’Hanley | | | $1,000,000 | | | $13,500,000 | | | $14,500,000 | |
| | Eric W. Aboaf | | | 700,000 | | | 6,300,000 | | | 7,000,000 | |
| | Francisco Aristeguieta | | | 700,000 | | | 6,575,000 | | | 7,275,000 | |
| | Andrew J. Erickson | | | 700,000 | | | 6,300,000 | | | 7,000,000 | |
| | Louis D. Maiuri | | | 700,000 | | | 6,300,000 | | | 7,000,000 | |
2021 – 2022 Target Incentive Compensation Changes. The Committee increased Mr. Aristeguieta’s target incentive compensation for 2021 from $6,300,000 to $6,575,000 and for 2022 from $6,575,000 to $7,300,000, consistent with his 2019 offer of employment to join State Street and reflecting the expansion of his role in 2020 as Chief Executive Officer of State Street Institutional Services. The Committee also increased Mr. Maiuri’s target incentive compensation for 2022 from $6,300,000 to $7,300,000, in recognition of his overall company leadership responsibilities and reflecting the expansion of his role to include oversight of our Marketing and Client Experience teams. The Committee considers the total target compensation for each NEO to be appropriate based on the scope of each executive’s role and in light of relevant internal and external benchmarks.
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Determining Incentive Compensation Awards. The Committee’s process for determining incentive compensation award amounts is illustrated in the framework below. (1)
| Relative performance is measured separately against both our Direct Peers (Northern Trust Corporation and The Bank of New York Mellon Corporation) and relevant indices, including the KBW Bank Index and the Capital Markets and Banks subsets of the S&P 500 Financial Index. |
(2)
| Incentive compensation awards may range from 0 to 200% of target. |
In determining incentive compensation award amounts, the Committee evaluates overall company performance as a primary factor and individual NEO performance as a potential modifier. The Committee also considers market compensation levels and expected trends. Overall company performance drives the final incentive compensation award amount unless individual performance and/or market considerations warrant an adjustment, which is limited to an addition to or subtraction from the corporate performance factor of up to thirty percent. In evaluating performance, the Committee may consider additional factors and does not assign a specific weight to any individual factor.
The Committee’s evaluation of overall company performance is based on a review of financial, business and risk management performance relative to corporate goals set at the beginning of each year. The Committee’s evaluation of individual NEO performance is based on a review of financial, business and risk management scorecards derived from the associated corporate goals, and based on each NEO’s role and responsibilities.
Our human capital strategy is a meaningful driver of our overall enterprise strategy. Therefore, the Committee evaluates performance against human capital-related objectives, including with respect to ID&E, both as part of its assessment of the company’s business performance and in evaluating each NEO’s individual performance.
Once the final incentive compensation amount is determined, it is delivered through a mix of vehicles. The mix used for 2021 incentive compensation awards is shown in the table above.
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Evaluation Process. The Committee reviewed preliminary corporate performance scorecards in July and December 2021, and the final 2021 scorecards in early 2022. The full Board of Directors also reviewed financial performance at each Board meeting, and the Risk Committee reviewed the risk management performance scorecards in July and December 2021. Based on its review of corporate performance, including “Above Expectations” financial and business performance and “At Expectations” risk management performance, the Committee concluded that State Street’s full-year corporate performance was “Above Expectations.”
Consequently, the Committee’s basis for determining the amount of 2021 incentive compensation for our NEOs, prior to differentiation based on individual performance, was 110% of target. More details on our performance against each of the three corporate performance scorecards are found below.
Financial Performance. During its evaluation of 2021 performance, the Committee reviewed financial results presented in conformity with GAAP, as well as financial results presented on a basis that excludes or adjusts one or more items from GAAP (a non-GAAP presentation). In general, our non-GAAP financial results exclude the impact of revenue and expenses outside of State Street’s normal course of business or other notable items. Management believes that this presentation of financial information facilitates an investor’s and the Committee’s further understanding and analysis of State Street’s financial performance and trends with respect to State Street’s business operations fromperiod-to-period, including providing additional insight into our underlying margin and profitability. Financial results are presented on anon-GAAP basis in this section, unless otherwise noted.Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. For a reconciliation ofnon-GAAP measures presented in this CD&A, seeAppendix
C.C.2019 began with significant challenges, including financial market weakness, falling interest rates
43 2022 Notice of Meeting and increased client fee pricing pressure, and our revenue,pre-tax margin, EPS and ROE all decreased in 2019 from 2018. In the face of these headwinds, we acted aggressively to stabilize revenues and reduce expenses. Actions included strengthening our value proposition to clients, including the ongoingbuild-out of ourfront-to-backProxy Statement / State Street Alpha platform, and the successful execution of a firm-wide expense savings program that exceeded initial targets and resulted in approximately $415 million in gross expense savings during 2019.Corporation
Due to these actions and the steady recovery of U.S. average market levels in 2019, our financial results in the second half of the year improved relative to the first half of the year.
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Financial Performance
| | | | | | | | | | | | | | | | |
| | | |
Performance Scorecard | | 2019 Performance Highlights | | | 2019 Committee Evaluation |
Key Areas Reviewed: | | Consolidated Financial Performance (excluding notable items,
non-GAAP(1)) | | | | | | | | | | | | | | Full Year Evaluation: Below Expectations |
• Revenue | | ($ in millions, except per share data) | | | 2019 | | | | 2018 | | | | Change | | | |
• Expenses | | Total fee revenue | | | $9,147 | | | | $9,462 | | | | (3.3)% | | | Second Half Trend: |
• Pre-tax Margin | | Total revenue | | | 11,712 | | | | 12,139 | | | | (3.5)% | | | At Expectations |
• EPS | | Expenses | | | 8,675 | | | | 8,625 | | | | 0.6% | | | |
• ROE | | Pre-tax margin | | | 25.8% | | | | 28.8% | | | | (300) bps | | | |
• Structural Expense Savings | | EPS | | | 6.17 | | | | 7.21 | | | | (14.4)% | | | |
| | ROE | | | 10.8% | | | | 13.7% | | | | (290) bps | | | |
| | | | | | | | | | | | | | | | |
| | ($ in millions, except per share data) | | | 2H 2019 | | | | 1H 2019 | | | | Change | | | |
| | Total fee revenue | | | $4,627 | | | | $4,520 | | | | 2.4% | | | |
| | Total revenue | | | 5,907 | | | | 5,805 | | | | 1.8% | | | |
| | Expenses | | | 4,263 | | | | 4,412 | | | | (3.4)% | | | |
| | Pre-tax margin | | | 27.7% | | | | 23.9% | | | | 380 bps | | | |
| | EPS | | | 3.48 | | | | 2.69 | | | | 29.4% | | | |
| | ROE | | | 11.9% | | | | 9.7% | | | | 220 bps | | | |
| | | | | | | | | | | | | | | | |
| | | | | |
| | Total Shareholder Return (TSR): | |
| State
Street |
| |
| Peer Group
Median(2) |
| |
| S&P
Financial Index |
| | |
| | 1-Year TSR | | | 29.3% | | | | 31.8% | | | | 32.1% | | | |
| | 3-Year TSR | | | 9.2% | | | | 24.8% | | | | 40.4% | | | |
Additional Financial Performance Detail
(excluding notable items,non-GAAP(1))
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Full Year 2019
| • | | Revenue declined approximately 3% from 2018, reflecting the elevated level of industry servicing fee pricing pressure, which began to moderate for us in the second half of 2019 | |
| • | | Expenses were well managed in 2019, up slightly from 2018 reflecting our acquisition of Charles River Development, which closed on October 1, 2018. We achieved approximately $415 million in structural/ gross expense savings in 2019, exceeding our initial goal of $350 million | |
| • | | 2019pre-tax margin, EPS and ROE declined from 2018 | |
| • | | We returned a total of $2.3 billion to our shareholders during 2019 in the form of common stock dividends and share repurchases | |
| • | | 2019 revenue growth, EPS and ROE were in the bottom quartile relative to our peer group on a GAAP basis. Ourone-year TSR improved from (34.0%) in 2018 to 29.3% in 2019, but was slightly below our peer group median | |
Executive Compensation
1H to 2H 2019
| • | | Total revenue and fee revenue both increased approximately 2% and servicing fees increased approximately 3% in the second half of 2019 relative to the first half of 2019 | |
| • | | Expenses decreased from the first half of 2019 by approximately 3% for the second half of 2019 as the company executed on its expense savings plan | |
| • | | Pre-tax margin increased from the first half of 2019 by 380 bps to 27.7% for the second half of 2019 | |
| • | | EPS increased from the first half of 2019 by $0.79 in the second half of 2019 | |
| • | | ROE increased from the first half of 2019 by 220 bps to 11.9% for the second half of 2019 | |
| • | | We increased our quarterly dividend 11% to $0.52 per share for each of the third and fourth quarters of 2019 | |
(1)
| Financial results are presented on anon-GAAP basis in this section, unless otherwise noted.Non-GAAP In general, our non-GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of notable itemsrevenue and expenses outside of State Street’s normal course of business.business or other notable items, such as acquisition and restructuring charges, repositioning charges, gains/losses on sales, as well as, for selected comparisons, seasonal items. Management believes that this presentation of financial information facilitates an investor's further understanding and analysis of State Street's financial performance and trends with respect to State Street’s business operations from period-to-period, including providing additional insight into our underlying margin and profitability. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. For a reconciliation ofnon-GAAP measures presented in this CD&A, seeAppendix C.C. |
(2)
| Our15-company compensation peer groupRelative performance is described below undermeasured separately against both of the heading, “Other Elementspeers with whom we compete most directly, Northern Trust Corporation and The Bank of Our Process—Peer GroupNew York Mellon Corporation, our Direct Peers, and Benchmarking.”
relevant indices, including the KBW Bank Index and the Capital Markets and Banks subsets of the S&P 500 Financial Index, which contained 23 and 37 other constituents, respectively, as of January 1, 2021. |
(3)
| Comparisons to peers are based on change relative to 2020 for all metrics other than operating margin and ROE, which are compared with peers based on one-year results for 2021. For the Direct Peers, the Committee reviewed financial results with similar adjustments to those made for State Street. Financial results reviewed by the Committee for constituents in the KBW Bank Index and the Capital Markets and Banks subsets of the S&P 500 Financial Index represented results from an external data provider, S&P Capital IQ, with standardized adjustments. Given that peer fourth quarter earnings had not been released at the time the Committee reviewed this scorecard, peer results included projections from the external data provider. |
(4)
| State Street percentile positioning rounded to the nearest 5th percentile. |
(5)
| TSR results based on S&P Capital IQ data and reflects cumulative shareholder return between the dates shown, including reinvestment of dividends. |
2022 Notice of Meeting and Proxy Statement / State Street Corporation 44
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| | Business Performance Scorecard | | | Committee Evaluation | |
| | | Committee Evaluation Summary: Business performance was “above expectations,” reflecting strong progress against our business goals. This progress included strengthening our sales effectiveness and results across Institutional Services and State Street Corporation | | 33 |
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Business Performance
| | | | |
| | |
Performance Scorecard | | 2019 Performance Highlights | | 2019 Committee Evaluation |
Key Goals:
• Be an essential partner—trusted, strategic and proactive
• Develop a scalable, configurableend-to-end operating model that setsGlobal Advisors, launching State Street Digital, announcing the industry standard
• Establish initial version of ourfront-to-back platform
• Establish leadership in our key products
• Be a global destination for talent and become a high performing organization
| | • Took key actionsagreement to drive our strategic and operational objectives, including:
– rolling outacquire the BBH Investor Services business, successfully executing multiple State Street Alpha client go-lives, and progressing IT remediation and resiliency milestones
| | | Above Expectations | |
| | 2021 Corporate Goals and Key Actions | | | Key Areas Measured | | | 2021 Business Performance Results | |
| | Grow Revenue
Above Expectations | | | • Deepen existing and develop new client relationships
• Continue State Street Alpha platform development and grow Alpha client base
• Win and retain more business than our competitors
• Position State Street Global Advisors for sustained revenue and profit growth | | | • Sales Wins
• Revenue Retention
• Client Sentiment | | | • Strengthened sales efforts and significantly exceeded sales targets; diversified pipeline across products and deal types with sizable increases in both account deepening and prospecting
• Restructured client management and progressed segment and country strategy with specific leadership assignments for revenue generation and retention, client engagement and investment prioritization
• Reported nine new State Street Alpha clients and continued delivery of new functionality via partnerships with trading platforms and data and analytics providers
• Launched State Street Digital to address the industry’s firstfront-to-back platform from a single provider;– re-engineering asset servicing design in supportgrowth of digital finance and executed on opportunities to build on our existing ESG thought leadership position
• Announced agreement to acquire the BBH Investor Services business to strengthen competitive positioning, expand product capabilities and geographic coverage and enhance our financial profile
• Added significant net new assets to State Street Global Advisors, driving revenue growth and margin expansion | |
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| | Transform the way we work
Above Expectations | | | • Increase efficiency and resiliency of our plannedend-to-end operating model;– completing our senior executive client coverage model for our largest clients; and
– implementing a new pricing committee that has brought a firm-wide view to client relationships, profitability and new revenue opportunities
• Aligned our operating model by combining Operations, Technology and Delivery teams
• Modernize our technology infrastructure
• Deliver on excellence in risk management | | | • Reduction in Manual Touchpoints
• Software Application Rationalization
• Timely Remediation of Issues | | | • Continued to strengthen businessour technology infrastructure and operational connectivityresiliency posture through investments in cyber risk management and technology risk management capabilities, further application rationalization and enhanced data center strategies and improved management of third-party relationships
• Initiated enhanced enterprise internal control programs to embed stronger controls within our processes | |
| | Build a systematic transformationhigher performing organization
At Expectations | | | • Transform organizational performance through productivity and culture
• Advance our “10 Actions” | | | • Employee Satisfaction
• Regrettable Employee Turnover
• Employee Diversity | | | • Delivered approximately $330 million of State Streetgross expense savings through company-wide productivity efforts, including through operations, IT and vendor management, allowing us to fund investments in our talent, technology, and business to drive future growth
• Established new incentive compensation model that incentivizes managers to drive ongoing productivity improvements and implemented a technology platform to capture and track individual productivity metrics
• Made tangible progress against our “10 Actions,” including an $850 million bond issuance, a majority of which was underwritten by minority-owned business enterprises, increasing the proportion of expenditures with a goal of improving client, employeediverse suppliers from 5.5% in 2020 to 8.2% in 2021 and shareholder experienceissuing $1 million in new grants to education and workforce development nonprofits focused on racial equity and social justice
• Broadened the composition of the company’s Management Committee, our most senior strategy and policy-making team, resulting in a more globally-focused and diverse body• Reorganized the leadershipWhile making year-over-year improvements across many of our multi-regional international business under a single executive to furthermeasures of workforce diversity, did not reach our growth objectives
on five of eight of these measures | | Full Year Evaluation:
At Expectations
Second Half Trend:
Consistent with Full Year Evaluation
|
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Risk Management
PerformancePerformance.| | Risk Management Performance Scorecard | | | Committee Evaluation | |
| | Committee Evaluation Summary: Risk management performance was “at expectations,” driven by strong financial risk management performance, additional focus required to meet expectations on non-financial risk initiatives and varied progress on key risk-related enterprise programs | | | At Expectations | |
| | 2021 Risk Management Performance ScorecardResults | | 2019 Performance Highlights | | 2019 Committee Evaluation |
Key Areas Reviewed:
| Financial Risks
Above Expectations | | | • Financial and non-financial risks• Progress against risk and compliance commitments and risk mitigation programs
• Process improvements in higher risk areas or activities
| | • Did not achieve desired non-financial risk improvement
• Demonstrated positive trends inMaintained strong financial risk performance including across measures of the Company’sas COVID-19-related market volatility abated with no persistent impacts to key financial risks as evidenced by credit, asset liability management, liquidity and capital adequacy activities
• Experienced higher operational loss rates relative to the last two years due to increasedre-investment in enterprise change programs
measures
• Completed the Federal Reserve’s 2019 CCAR process, without the Federal Reserve objectingComprehensive Capital Analysis and Review (CCAR) for 2021, exceeding all minimum regulatory capital requirements under stress scenarios | |
| | Non-Financial Risks
Below Expectations | | | • Demonstrated significant progress in technology and operational resilience measures, though continued focus is required to our 2019 capital planachieve targeted operating maturity levels in some areas | |
| | Full Year Evaluation:
Below
Key Enterprise Programs
At Expectations Second Half Trend:
Consistent with Full Year Evaluation
| | | • Overall, key enterprise programs progressing as expected | |
State Street’s
20192021 performance is reviewed in greater detail, along with relevant risks associated with our business, results of operations and financial condition, in our
20192021 annual report on Form
10-K, which accompanies this proxy statement and was previously filed with the SEC.
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Executive Compensation
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Individual Performance and Compensation Decisions
Summary
In evaluating each NEO’s individual performance, including with regard to leadership- and ID&E-related performance, the Committee reviewed individual performance scorecards derived from our corporate performance goalsgoals. In evaluating the CEO’s individual performance, the Committee and the full Board reviewed the corporate performance scorecards. For the other NEOs, the Committee reviewed scorecards tailored to each NEO inindividual containing three performance areas that correspond to the following areas: financial; business; risk management;three corporate performance scorecards. The Committee and leadershipthe other independent directors then evaluated the CEO’s performance, and talent. Performanceall directors, including the CEO, evaluated the other NEOs’ performance. Individual performance highlights and the Committee’s incentive compensation and total compensationaward decisions for 2019 for the NEOs2021 are presented in the summaries below.
Financial results are presented on a non-GAAP basis in this section, unless otherwise noted. Non-GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of notable items outside of State Street’s normal course of business. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. For a reconciliation of non-GAAP measures presented in this CD&A, see Appendix C.
For detail on the relationship between the 20192021 compensation amounts reported in the summaries below and those amounts reported in the Summary Compensation Table (as required by SEC rules) and related tables, please refer to the discussion under “2019“2021 Performance and Compensation Decisions—Individual Compensation Decisions” below.Decisions Summary.”
For 2021, the Committee made total incentive compensation awards to our CEO at 115% of target and our other NEOs at 110% of target, primarily reflecting overall company performance. In determining whether individual performance-based adjustments from the corporate factor were warranted, the Committee considered performance against individual goals derived from our corporate goals and aligned to each NEO’s role. For the NEOs other than the CEO, the Committee determined that the corporate performance factor of 110% appropriately reflected the strong contributions of each NEO to the overall corporate results.
47 2022 Notice of Meeting and Proxy Statement / State Street Corporation
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| | | | | | | |
Ronald P. O’Hanley, President and Chief Executive Officer
| | | | |
2019
| Performance HighlightsArea | | | 2021 Key Goals | | | Performance Factors and Results | |
Financial | Financial
Performance
Above
Expectations | Business | | Risk Excellence | | Leadership & Talent |
• Took swift actions to address financial headwinds– Stabilized servicingMeet our 2021 budget, growing fee revenues
– Announced approximately $1.8 trillion in new servicing business wins
– Announced a State Street record level of assets under management reflecting higher market levels and net inflows of approximately $100 billion
• Revenue declined from 2018, reflecting the elevated level of industry servicing fee pricing pressure;pre-taxreducing expenses, and improve operating margin EPS and ROE each declined from 2018
versus peers
• Actively managed expenses, driven byGrow balance sheet and optimize capital and liquidity utilization to support business growth | | | • Delivered strong financial results, including record fee revenue performance, positive fee and total operating leverage, meaningful pre-tax margin improvement and robust earnings growth. Made improvements in total revenue and three-year TSR compared to our Direct Peers relative to 2020
• Achieved record servicing wins of $3.5 trillion, with $2.8 trillion of new resource discipline, process reengineering and automation efforts. Exceeded initial targetbusiness won but yet to be installed at year-end
• Delivered approximately $330 million of $350 million in gross expense savings finishingthrough company-wide productivity efforts | |
| | Business
Performance
Above
Expectations | | | • Improve client sentiment through consistent service quality across products and services
• Further define, broaden and grow State Street Alpha platform along with relevant State Street products and services with clients and partners
• Execute regional strategies to deepen existing and develop new client relationships
• Improve productivity and transform the year at approximately $415 millioncost base through process simplification, automation and organizational redesign
• Execute against technology and operations resiliency plans
• Transform organizational performance through productivity and culture
• Advance our “10 Actions” | | | • Executed against our strategic and operational objectives–Announced proposed acquisition of the BBH Investor Services business
• Launched State Street Digital to address the growth of digital finance
• Reported nine new client wins for State Street Alpha the industry’s firstfront-to-back platform from a single provider; signed first four Alpha clients– Re-engineered asset servicing designand continued delivery of new functionality via partnerships with trading platforms and data and analytics providers
• Continued ESG focus through innovative investment solutions, measurement tools, research and thought leadership
• Achieved meaningful productivity savings while making controlled investments in our people via higher compensation and benefits and in our business to support our plannedend-to-end operating model– Completed our senior executiveproduct innovation, client coverage model for our largest clients
onboarding, operations and technology
• Combined Operations, Technology and Delivery teams to strengthen business and operational connectivity• Initiated a systematic transformation of State Street with a goal of improving client, employee and shareholder experience
| | • Improved transparency and accountability across senior leadership team to strengthen risk excellence in key focus areas
• Completed CCAR 2019, allowing for a capital return of approximately 116% of earnings(1), and executed an additional capital action, in addition to our original CCAR plan, with a redemption of $750M of preferred equity
• Enhanced Anti-Money Laundering program, Liquidity Risk, Model Risk Management and Recovery and Resolution Planning
• Demonstrated positive trends in financial risk performance
• Did not achieve desired non-financial risk improvement
• Experienced higher operational loss rates relative to the last two years asre-investment through enterprise change programs has increased
| | • Completed transition into Chief Executive Officer position
• Reorganized the leadership of our multi-regional international business under a single executive to further our growth objectives
• Broadened Management Committee to drive global strategies and improve diversity
• Improved company-wide performance management processes withReignited a focus on the client experience, establishing a team dedicated to understanding and improving employeeclient sentiment across the firm
• Restructured client management and progressed segment and country strategy with specific leadership assignments for revenue generation and retention, client engagement and recognitioninvestment prioritization
• IdentifiedImproved supplier diversity and articulated cultural traits and behaviors requiredincreased spend with diverse suppliers compared to achieve strategic2020
• While making year -over -year improvements across many of our measures of workforce diversity, did not reach our objectives |
| on five of eight of these measures | | |
| Risk
Management
Performance
At Expectations | | | • Deliver on key enterprise programs (including regulatory initiatives) to improve risk profile and regulatory posture
• Enhance risk culture and posture through greater accountability and transparency across all groups | | | • Completed the Federal Reserve’s 2021 CCAR, exceeding all minimum regulatory capital requirements throughout both tests
• Demonstrated significant progress in technology and operational resilience measures
• Improved regulatory posture across key regulatory, government, and industry relationships | |
| | Compensation for 20192021 | | |
| |
| Individual Performance-Based Compensation Adjustments: The Committee determined that Mr. O’Hanley receivedmet or exceeded individual performance expectations related to our 2021 corporate goals and demonstrated decisive leadership in developing and implementing a long-term vision for sustained growth. Based on these factors, the Committee applied a positive 5% individual modifier to Mr. O’Hanley’s incentive compensation award. | |
| | Given the corporate performance factor of 110% and the positive adjustment for individual performance noted above, Mr. O’Hanley’s total incentive compensation was awarded at 115% of target for 2021, resulting in total compensation of $11,800,000 for 2019. This compensation is an increase from his total compensation for 2018, which reflected his prior role of President and Chief Operating Officer. The individual component of his incentive was 97% of target reflecting both overall corporate results as well as his leadership on actions taken in light of the significant challenges described earlier. State Street’s corporate component was 62.5% of target for all executive officers. These components resulted in Mr. O’Hanley receiving total incentive compensation of $11,000,000 for 2019, representing83% of target.$16,525,000. | | 
|
(1) | Capital return represents total common stock dividends and common stock purchases of $2,331 million during 2019 as a percentage of net income available to common shareholders for the year ended December 31, 2019 of $2,009 million.
|
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2022 Notice of Meeting and Proxy Statement / State Street Corporation 48
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| | | |
Executive Compensation
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
|
| | |
Eric W. Aboaf,, Chief Financial Officer
| |
2019 Performance Highlights
| | Compensation for 2019
|
As Chief Financial Officer, Mr. Aboaf respondedis responsible for our corporate strategy and global finance functions, including treasury, tax, controllership enterprise decision support, investor relations, procurement and real estate. He also leads our commercial lending activity.
In evaluating Mr. Aboaf’s 2021 performance, the Committee focused on the most significant individual performance factors below: | |
| | Performance Area | | | 2021 Key Individual Goals | | | Performance Factors and Results | |
| | Financial
Performance
Above
Expectations | | | • Meet our 2021 budget, growing fee revenues and expand margin
• Optimize balance sheet capital deployment
• Further refine corporate portfolio strategy, develop structure & drive actions | | | • Delivered strong financial results compared to challenges in the2020 including record fee revenue environment with strong leadershipperformance, positive fee and execution• Revenue declined from 2018, reflecting the elevated level of industry servicing fee pricing pressure;total operating leverage, meaningful pre-tax margin EPSimprovement, and ROE each declined from 2018
• Enhanced net interest income performance with additional deposit gathering initiatives
robust earnings growth
• Actively managed expenses driven by newthrough resource discipline, footprint optimization and expense management initiatives
• Developed comprehensive approach to evaluating inorganic strategic opportunities and helped drive the proposed acquisition of the BBH Investor Services business | |
| | Business
Performance
Above
Expectations | | | • Improve business planning and partnerships to achieve better corporate outcomes
• Simplify and accelerate client profit and loss reporting
• Drive strategic change to improve third-party processes and outcomes | | | • Refreshed multi-year strategy to continue to advance State Street as an enterprise outsourcer and solutions provider
• Improved reporting timeliness for client profit and loss statements, streamlining cost allocation methodologies, and expanding the use of fully-loaded product profitability
• Established a new third-party management organization, bringing together Procurement and Third-Party Risk Management to improve operational effectiveness and risk management
• Reduced occupancy cost by 5%, excluding notable items, and achieved a 115% occupancy rate by permanently leveraging new ways of working
• Role-modeled commitment to ID&E, making progress on key priorities, including driving significant improvement in diverse supplier partnerships | |
| | Risk
Management
Performance
At Expectations | | | • Deliver on key enterprise programs to improve risk profile and regulatory posture | | | • Delivered on critical milestones for key enterprise programs, resulting in risk reduction in impacted areas
• Completed the Federal Reserve’s 2021 CCAR, exceeding all minimum regulatory capital requirements throughout both tests | |
| | Compensation for 2021 | | |
| |
| | Individual Performance-Based Compensation Adjustments:
The Committee determined that Mr. Aboaf met or exceeded individual performance expectations related to his financial, business and risk management goals. | |
| | Given the corporate performance factor of 110% and the individual performance described above, Mr. Aboaf’s total incentive compensation was awarded consistent with corporate performance at 110% of target for 2021, resulting in total compensation of $7,630,000. | |
49 2022 Notice of Meeting and Proxy Statement / State Street Corporation
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| | Francisco Aristeguieta, Chief Executive Officer of State Street Institutional Services | |
| | Mr. Aristeguieta is the CEO of Institutional Services (IS). In this role, he is responsible for bringing together the client segment, client management, sales, client experience, marketing, regional and local country teams to drive sustainable wallet share and revenue growth for the organization.
In evaluating Mr. Aristeguieta’s 2021 performance, the Committee focused on the most significant individual performance factors below: | |
| | Performance Area | | | 2021 Key Individual Goals | | | Performance Factors and Results | |
| | Financial
Performance
Above
Expectations | | | • Meet our 2021 budget, growing fee revenues and reducing expenses
• Improve pipeline in key growth markets and segments | | | • Strong fee revenue and servicing fee growth for IS relative to prior year and expectations
• Strengthened IS sales efforts, exceeding 2021 sales target by 10% and increasing sales by 26% compared to 2020
• Achieved record $3.5 trillion in AUC/A wins, with improvements in deal size mix and geographic diversification | |
| | Business
Performance
Above
Expectations | | | • Improve client sentiment through consistent service quality across products and services
• Appoint regional Segment Heads and establish Country Head management model, aligned to regional strategies | | | • Restructured client management and progressed segment and country strategy with specific leadership assignments for revenue generation and retention, client engagement and investment prioritization
• Expanded client coverage model to drive short-term and long-term opportunities to improve revenue growth and wallet share through better client relationship management
• Established Client Experience Office to drive a constantly improving client experience resulting in revenue retention and account deepening
• Improved client sentiment reflected in higher net promoter score
• Improved process reengineering and automation efforts. Exceeded initialoutcomes around diverse slates as part of our ID&E strategy; however, fell short on four of six diversity objectives | |
| | Risk
Management
Performance
At Expectations | | | • Deliver on key enterprise programs to improve risk profile and regulatory posture | | | • Drove accountability across internal business risk teams; partnered with Finance to revamp the billing operating model with senior executive management and updated governance routines focusing on simplification and standardization | |
| | Compensation for 2021 | | | | |
| | Individual Performance-Based Compensation Adjustments: The Committee determined that Mr. Aristeguieta met or exceeded individual performance expectations related to his financial, business and risk management goals. | |
| | Given the corporate performance factor of 110% and the individual performance described above, Mr. Aristeguieta’s total incentive compensation was awarded consistent with corporate performance at 110% of target for 2021, resulting in total compensation of $350$7,935,000. | |
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| | Andrew J. Erickson, Chief Productivity Officer and Head of International | |
| | Mr. Erickson is the Chief Productivity Officer and Head of State Street’s International business. In these roles, he oversees State Street’s Global Delivery, Productivity and Transformation teams, responsible for leading enterprise-wide change and State Street’s International business, providing regional and local entity focus for global business lines.
In evaluating Mr. Erickson’s 2021 performance, the Committee focused on the most significant individual performance factors below: | |
| | Performance Area | | | 2021 Key Individual Goals | | | Performance Factors and Results | |
| | Financial
Performance
At Expectations | | | • Execute regional strategies to deepen existing client relationships and develop new client relationships in key growth markets
• Continue execution of Transformation to drive revenue and deliver shareholder value | | | • Delivered approximately $330 million inof gross expense savings finishingthrough company-wide productivity efforts to help fund investment in our business
• Simplified the year at approximately $415 millionInternational organization by clarifying roles and responsibilities to optimize the global footprint, exceeding resource optimization targets | |
| | Business
Performance
Above
Expectations | | | • Implemented process improvements in financial reportingEstablish productivity measures to drive increasedcontinuous improvement and improve service quality
• Improve client sentiment through consistent service quality across products and services
• Execute regional strategies to deepen existing and develop new client relationships | | | • Executed against our plan to simplify State Street’s operating model and technology platform to transform client service delivery capabilities and improved our ability to operate at scale
• Scaled Talent Marketplace infrastructure for employee retention, redeployment and advancement of internal transparencytalent; exceeded internal redeployment rate target
• Amplified behavioral and accountabilitycultural changes around productivity. Implemented a technology platform to capture and track individual productivity metrics for employees; launched Productivity training to educate and reinforce productivity principles, value, benefits and process
• Completed CCAR 2019, allowingImproved operational automation through artificial intelligence and standardization resulted in improved processing times and accuracy and a better client experience | |
| | Risk
Management
Performance
At Expectations | | | • Improve engagement with key international regulatory authorities to maintain proactive, consistent and accountable regulatory relationships | | | • Improved regulatory posture across key international regulatory, government, and industry relationships through top tier engagement strategy
• Assessed issues to reduce risk and improve processes and controls | |
| | Compensation for a capital return2021 | | |
| |
| | Individual Performance-Based Compensation Adjustments: The Committee determined that Mr. Erickson met or exceeded individual performance expectations related to his financial, business and risk management goals. | |
| | Given the corporate performance factor of approximately 116% of earnings(1),110% and executed an additional capital action, in addition to our original CCAR plan, with a redemption of $750M of preferred equity• Demonstrated positive trends in financial riskthe individual performance
• Did not achieve desired non-financial risk improvement
• Effectively progressed headcount management and diversity initiatives in the Finance function
• Assumed responsibility for our Global Credit Finance Division, which offers a broad array of credit and liquidity products spanning various sectors to support our clients’ financing needs
| | described above, Mr. AboafErickson’s total incentive compensation was awarded consistent with corporate performance at 110% of target for 2021, resulting in total compensation of $6,325,000$7,630,000. | |
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| | Louis D. Maiuri, Chief Operating Officer | |
| | As Global Chief Operating Officer, Mr. Maiuri is responsible for 2019.Information Technology, Global Delivery/ Operations and State Street Alpha, bringing these groups together to deliver on our front-to-back Alpha platform capabilities. In addition, he has responsibility for Global Markets, State Street Digital and Charles River Development, and was critical to identifying and executing on the BBH Investor Services business opportunity.
In evaluating Mr. Maiuri’s 2021 performance, the Committee focused on the most significant individual performance factors below: | |
| | Performance Area | | | 2021 Key Individual Goals | | | Performance Factors and Results | |
| | Financial
Performance
Above
Expectations | | | • Meet our 2021 budget, growing fee revenues and reducing expenses | | | • Meaningful transformation and productivity efforts and solid progress versus budget:
— Significant productivity gains in operations and technology, while enhancing client service quality
— Charles River Development revenue growth of 11% compared to 2020
— Global Markets financials stronger than expected given declining market volatility | |
| | Business
Performance
Above
Expectations | | | • Execute against Product roadmap for market differentiation and growth to align with emerging client needs
• Further define, broaden and grow our State Street Alpha platform along with relevant State Street products and services with clients and partners
• Execute on plans to drive operational resiliency and technology simplification to achieve stability and quality | | | • Reported nine new State Street Alpha clients, with ten of 19 total mandates live at year-end; continued delivery of new client functionality
• Initiated and led negotiation of the planned acquisition of the BBH Investor Services business and related process to accelerate our vision, strategy and capabilities
• Acquired the private markets front-office technology provider Mercatus, enabling the first front-to-back solution for Private Markets
• Established State Street Digital to address the growth of digital finance
• Drove critical initiatives across information technology and operations, resulting in improved operations and technology resilience
• Strong talent recruitment and hiring at leadership levels; amplified ID&E objectives to improve outcomes throughout the organization; however, fell short on two of six diversity objectives | |
| | Risk
Management
Performance
Above
Expectations | | | • Enhance security and controls and reduce technology risk using a risk-based approach | | | • Demonstrated significant progress in technology and operational resilience measures
• Improved risk management processes using artificial intelligence
• Exceeded application rationalization target to reduce technology risk and maintenance costs | |
| | Compensation for 2021 | | | | |
| | Individual Performance-Based Compensation Adjustments: The Committee determined that Mr. Maiuri met or exceeded individual componentperformance expectations related to his financial, business and risk management goals. | |
| | Given the corporate performance factor of his110% and the individual performance described above, Mr. Maiuri’s total incentive compensation was 120% of target. State Street’sawarded consistent with corporate component was 62.5%performance at 110% of target for all executive officers. These components resulted2021, resulting in Mr. Aboaf receiving total incentive compensation of $5,625,000 for 2019, representing97% of target.
|
(1) | Capital return represents total common stock dividends and common stock purchases of $2,331 million during 2019 as a percentage of net income available to common shareholders for the year ended December 31, 2019 of $2,009 million.
|
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Executive Compensation
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
|
| | |
Francisco Aristeguieta, Chief Executive Officer for International Business
|
2019 Performance Highlights
| | Compensation for 2019 |
Mr. Aristeguieta joined State Street in July of 2019 as Chief Executive Officer for International Business and made significant progress on international strategy while establishing strong partnerships with the global leadership team
• Developed a new vision, strategy and organizational design for sustainable growth, consistency and scale across the firm’s global businesses
• Identified Latin America as a growth priority, developed a new strategy and enhanced resource deployment in the region
• Quickly established effective relationships with senior leaders across the globe to assess current state, focusing on opportunities for improved performance and client outcomes
| | Mr. Aristeguieta received 2019 incentive compensation of $6,800,000. Including an annualized base salary, his total compensation for 2019 would have been $7,504,000, as reflected in the 2019 Total Compensation Mix chart below. This compensation, together with equity-based awards granted to Mr. Aristeguieta in July 2019 and described under “Other Elements of Compensation—Other Awards and Agreements” below, were designed to provide compensation levels consistent with his expected compensation from his prior employer.
|
| | |
Jeffrey N. Carp, Chief Legal Officer and Secretary
| | |
2019 Performance Highlights
| | Compensation for 2019 |
| |
As Chief Legal Officer and Secretary, Mr. Carp set a high standard for proactive execution, risk excellence and executive collaboration
• Strengthened and evolved our legal, regulatory and security functions globally
• Effectively partnered with other senior leaders to drive targeted outcomes for risk, regulatory and business initiatives, including leading initiatives to create new capacity in risk-weighted assets and optimize capital and liquidity
• Provided a balanced approach to legal matters and overall thought leadership to the executive team, including as an important advisor to the Chief Executive Officer
• Through disciplined resourcing and headcount management, successfully delivered against expense management objectives for the legal, regulatory and security functions
• Provided effective oversight and coordination of overall relationships with regulators
| | Mr. Carp was awarded total compensation of $5,650,000 for 2019. The individual component of his incentive was 110% of target. State Street’s corporate component was 62.5% of target for all executive officers. These components resulted in Mr. Carp receiving total incentive compensation of $5,000,000 for 2019, representing91% of target.
|
| $7,630,000. | | | | |
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| | |
Executive Compensation
| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
|
| | |
Andrew J. Erickson, Head of Global Services
| | |
2019 Performance Highlights
| | Compensation for 2019 |
| |
As Head of Global Services, Mr. Erickson strengthened client partnerships through internal leadership and external collaboration
• Took aggressive actions to stabilize and strengthen revenues
• Implemented client initiatives to drive better service quality and deepen relationships
• Completed our senior executive client coverage model for our largest clients
• Introduced a new pricing committee that has brought a firm-wide view to client relationships, profitability and new revenue opportunities
• Introduced a new client onboarding process that enabled us to scale rapidly and take on an industry-leading $1.8 trillion in new servicing wins in 2019
• Successfully launched Global Clients Division, which is responsible for building strategic relationships with our largest and most complex global clients; also assumed responsibility for our Global Marketing Division
| | Mr. Erickson was awarded total compensation of $6,325,480 for 2019. The individual component of his incentive was 120% of target. State Street’s corporate component was 62.5% of target for all executive officers. These components resulted in Mr. Erickson receiving total incentive compensation of $5,825,000 for 2019, representing97% of target.
|
Executive Compensation
Individual Compensation Decisions
. SummaryThe
Compensation Committee’s
2021 NEO incentive compensation decisions
for 2019 for the NEOs relative to
their targetstarget are
presentedshown in the table below.
| | | | | | | | | | | | | | | | |
| | | Equity-Based Incentive | | | Cash-Based Incentive | |
| Named Executive Officer | | Actual | | | Target | | | Actual | | | Target | |
| | | | |
Ronald P. O’Hanley | | $ | 8,250,000 | | | $ | 9,900,000 | | | $ | 2,750,000 | | | $ | 3,300,000 | |
| | | | |
Eric W. Aboaf | | | 3,656,250 | | | | 3,770,000 | | | | 1,968,750 | | | | 2,030,000 | |
| | | | |
Francisco Aristeguieta(1) | | | 4,420,000 | | | | 4,420,000 | | | | 2,380,000 | | | | 2,380,000 | |
| | | | |
Jeffrey N. Carp | | | 3,250,000 | | | | 3,575,000 | | | | 1,750,000 | | | | 1,925,000 | |
| | | | |
Andrew J. Erickson | | | 3,786,250 | | | | 3,906,240 | | | | 2,038,750 | | | | 2,103,360 | |
| | Ronald P. O’Hanley | | | $0(1) | | | $3,375,000 | | | $15,525,000(1) | | | $10,125,000 | | | $15,525,000 | | | $13,500,000 | |
| | Eric W. Aboaf | | | 2,425,500 | | | 2,205,000 | | | 4,504,500 | | | 4,095,000 | | | 6,930,000 | | | 6,300,000 | |
| | Francisco Aristeguieta | | | 2,532,250 | | | 2,301,250 | | | 4,702,750 | | | 4,273,750 | | | 7,235,000 | | | 6,575,000 | |
| | Andrew J. Erickson | | | 2,425,500 | | | 2,205,000 | | | 4,504,500 | | | 4,095,000 | | | 6,930,000 | | | 6,300,000 | |
| | Louis D. Maiuri | | | 2,425,500 | | | 2,205,000 | | | 4,504,500 | | | 4,095,000 | | | 6,930,000 | | | 6,300,000 | |
(1)
| In connection with his offerEquity-based incentive is further above target for 2021 due to the use of employment, State Street agreedan equity-based vehicle in lieu of cash-based incentives typically awarded to provide Mr. Aristeguieta with compensation designed to maintain his 2019 compensation near his expected level of compensation at his prior employer.
our CEO, as described under “NEO Incentive Compensation Mix”. |
| | | | |
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| | 38 |
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| | 2020 NOTICE OF MEETING AND PROXY STATEMENT
|
The Committee’s total compensation decisions for 20192021 for the NEOs are presentedfurther detailed in the table below. Note (1) to the table below describes the relationship between the 20192021 amounts reported in the table below and those amounts reported in the Summary Compensation Table (as required by SEC rules) and related tables.While the tabletables above and below summarizessummarize how the Committee views annual compensation, it isthey are not a substitute for the tables and disclosures required by SEC rules.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Equity-Based Incentive | | | Cash-Based Incentive | | | | |
| Named Executive Officer | | Annual Base
Salary | | | Performance-
Based RSUs | | | DSAs | | | Immediate
Cash | | | DVAs | | | Total
Compensation(1) | |
| | | | | | |
Ronald P. O’Hanley | | | $800,000 | | | | $5,500,000 | | | | $2,750,000 | | | | $1,100,000 | | | | $1,650,000 | | | | $11,800,000 | |
| | | | | | |
Eric W. Aboaf | | | 700,000 | | | | 2,250,000 | | | | 1,406,250 | | | | 562,500 | | | | 1,406,250 | | | | 6,325,000 | |
| | | | | | |
Francisco Aristeguieta(2) | | | 704,000 | | | | 2,720,000 | | | | 1,700,000 | | | | 1,020,000 | | | | 1,360,000 | | | | 7,504,000 | |
| | | | | | |
Jeffrey N. Carp | | | 650,000 | | | | 2,000,000 | | | | 1,250,000 | | | | 500,000 | | | | 1,250,000 | | | | 5,650,000 | |
| | | | | | |
Andrew J. Erickson | | | 500,480 | | | | 2,330,000 | | | | 1,456,250 | | | | 582,500 | | | | 1,456,250 | | | | 6,325,480 | |
| | Ronald P. O’Hanley | | | $1,000,000 | | | $0 | | | $0 | | | $3,881,250 | | | $3,881,250 | | | $7,762,500 | | | $16,525,000 | |
| | Eric W. Aboaf | | | 700,000 | | | 693,000 | | | 1,732,500 | | | 0 | | | 1,732,500 | | | 2,772,000 | | | 7,630,000 | |
| | Francisco Aristeguieta | | | 700,000 | | | 723,500 | | | 1,808,750 | | | 0 | | | 1,808,750 | | | 2,894,000 | | | 7,935,000 | |
| | Andrew J. Erickson | | | 700,000 | | | 693,000 | | | 1,732,500 | | | 0 | | | 1,732,500 | | | 2,772,000 | | | 7,630,000 | |
| | Louis D. Maiuri | | | 700,000 | | | 693,000 | | | 1,732,500 | | | 0 | | | 1,732,500 | | | 2,772,000 | | | 7,630,000 | |
(1)
| The 20192021 compensation described in the table above, which summarizes how the Committee evaluates annual total compensation, differs from the compensation described in the Summary Compensation Table below in the following respects: |
—
| — | Annual Base Salary. The tablesalaries shown above reflectsfor NEOs not paid in U.S. dollars for all or a portion of theyear-end annual base salary rate applicable for each NEO. Column (c) year differ from the “Salary” column in the Summary Compensation Table presentsdue to rounding associated with the amountdelivery of base salary actually earned by each NEO during the relevant year.in other currencies. |
—
| — | DVAs. The table above, like the Summary Compensation Table, reflects the value of deferred cash compensation awarded by the Committee for the 2019 performance year. However, the table above does not reflect any dividends credited on DVAs outstanding during 2019, which are described in note (4) to the Summary Compensation Table.
|
| — | Equity-Based Incentive Compensation Awards. The Committee grants equity awards based on the prior year’s performance. In the table above, equity awards are shown for the year of performance (i.e., equityequity-based awards granted in 20202022 for 20192021 performance isare shown as 20192021 compensation). Under applicable SEC rules, the Summary Compensation Table presents equity awards in the year in which they are granted (e.g., equity granted in 20192021 for 20182020 performance is shown as 20192021 compensation). |
| — | Other Awards. In considering Mr. Aristeguieta’s 2019 incentive compensation, the Committee did not include Thus, the equity-based awards granted to Mr. Aristeguieta in July 2019 and described under “Other Elements of Compensation—Other Awards and Agreements.” Those awards were designed to replace deferred compensation at his former employer that Mr. Aristeguieta forfeited to join State Street and are therefore excluded from the Total Compensation column in this table. These awards consist solely of equity-based compensation, which, under applicable SEC rules, are presentedshown above for 2021 will be reported in the Summary Compensation Table in the year in which the awards were granted.
for 2022. |
—
| — | Total Compensation. The amounts disclosed above differ from the amounts reported in the “Total” column (j) of the Summary Compensation Table due to the different methodologies discussed in the notes above. Additionally, this table excludes several items required to be included in the “Total” column of the Summary Compensation Table that State Street does not view as primary components of regular annual compensation and therefore were not considered in setting incentive compensation award targets or determining incentive awards, such as the changevalue of international assignment benefits provided to Messrs. Aristeguieta and Erickson described in pension value (which is due solely to variancesmore detail in actuarial computations over time). |
(2) | In connection with his offerthe section entitled “Other Elements of employment, State Street agreed to provide Mr. Aristeguieta with compensation designed to maintain his 2019 compensation near his expected level of compensation at his prior employer.
|
| | | | |
| | State Street Corporation
| | 39Compensation—Perquisites.” |
53 2022 Notice of Meeting and Proxy Statement / State Street Corporation
