| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e) 2 )) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material under § 240.14a-12 |
| ☒ | No fee required |
| ☐ | Fee paid previously with preliminary materials |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and0-11. |
Dear Fellow Bread Financial Stockholders
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I thank you for your continued support of Bread Financial and our mission to challenge the status quo through simple, smart financial solutions created for all. On behalf of the Board of Directors, I am pleased to report that 2022 marked another successful year for Bread Financial.Financial achieved significant progress against its strategic objectives in 2023. Our talented team of executive leaders and associates navigated a challenging macroeconomic environment, generating responsible growth while significantly strengthening our capital position and enhancing financial resiliency. We continued to invest strategically in the business, advancing our technology capabilities to better serve our brand partners and cardholders.
The Company, led by President and CEO Ralph Andretta and our strong, experienced executive leadership team, confidently executed our transformational plans, as we continued to adapt, evolve and compete in a dynamic macroeconomic environment. We made significant progress in 2022 on our long-term strategic initiatives to support sustainable, profitable growth, improve capital positioning and reduce corporate debt.
At this juncture in our transformation, we are confident in our ability to further strengthen our competitive positioning as a top providerOn behalf of payment, lending and saving solutions. As I look back on 2022,the entire Board of Directors, I would like to highlightexpress my gratitude to our outstanding team of 7,000 global associates for their dedication and hard work throughout the year. I would also like to thank you, our stockholders, for your continued support and confidence. Bread Financial has achieved significant operational, financial, and strategic progress over the past several years of its transformation, and we enter 2024 well-positioned to build on this positive momentum.
Experienced Leadership
Led by President and Chief Executive Officer Ralph Andretta, Bread Financial’s executive leadership team
is distinguished by its depth of financial services sector experience and track record in navigating cyclical economic conditions and regulatory dynamics. Our executive team brings a wealth of knowledge and expertise to their roles, and I am confident in their leadership managing and adapting to varied macroeconomic and regulatory challenges and uncertainties through responsible, disciplined decision-making.
As the business prepares for the anticipated implementation of the waysConsumer Financial Protection Bureau’s final rule limiting the Board and leadership team have been working on your behalf this past year.
Independent Oversight and Integrated Corporate Governance
As Chairman of the Board, I have worked alongside my fellow directorssafe-harbor amount that credit card issuers are permitted to help guide the Company and provide the sound corporate governance expected of us, all while ensuring that we are mindful of the diverse priorities and interests of our key stakeholders. Together, we ensure the Board fulfills its obligations to oversee the Company’s operations, including sustainable, stakeholder-centric practices and risk-mitigation efforts that drive our long-term performance and profitable growth. The Board remains focused on maintaining a balance of diverse perspectives, strategic skill sets and professional experience relevant to its oversight of Bread Financial’s strategic objectives.charge customers
for late fees, our management team, again, stands ready. For more than a year since the rule was proposed, the Company has worked diligently to develop comprehensive mitigation strategies to help offset the expected financial impact on the business. In developing these mitigation plans, our leadership team has worked closely with our brand partners to ensure that Bread Financial’s value proposition remains compelling and continues to provide an exceptional experience for cardholders. We remain laser-focused on generating strong returns through prudent capital and risk management.
Financial Resilience and Strategic InitiativesBoard Oversight
Our Board is deeply engaged and committed to sound corporate governance through a strong and effective oversight structure that supports the Company’s mission, vision, and values, as well as overall performance. The challenges of the past few years continue to strengthen the focus of the Board and leadership team on generating long-term value for our stockholders, and meeting the needscomposition of our partners, customers, associatesBoard reflects diversity across experience, perspectives, gender and community. These efforts are paying off, as evident inethnicity, which ensures we bring breadth and depth to our year-end results. Fiscal 2022 was another strong year for the Company, delivering positive operating leveragegovernance responsibilities. Each Director is committed to fostering transparency, accountability, and double-digit year-over-year increases in revenue, average loans and PPNR.
In addition, we’ve strengthened our position as a more focused, tech-forward financial services company with increased flexibility and growth potential supporting our long-term business strategy. Bread Financial entered 2022 with positive momentum, positioning the Company to further strengthen our balance sheet, drive stronger profit margins and improve our risk profile — all of which provided more layers and confidence in our financial resilience. With our rebrand during the year reflecting our tech modernization efforts, we invested more than $125 million in incremental marketing, technology, digital and product innovation, and completed the transition of our core processing services to Fiserv.
Sustainable Business
Investing in core capabilities and technology and expanding our digital product offerings provided the important foundation for the Company’s competitive positioning and strategic differentiation. As such, maintaining a modernized tech stack and prudently investing in data and analytics, product innovation and technology advancements remains central to Bread Financial’ s long-term growth and future success. Ensuring strongcollaboration, enabling effective oversight of the Company’s enterpriseoperations, strategic direction, and risk management programmitigation efforts.
As part of our ongoing commitment to Board refreshment and succession planning, I am pleased to announce a new independent director nominee to this year’s slate of directors. We are excited that John Fawcett, most recently the former executive vice president and chief financial officer of CIT Group Inc., has agreed to join our Board, if elected, and in doing so would bring decades of additional executive-level banking and financial services expertise to our Board, among other skills. Together with the appointment of banking-industry veteran Joyce St. Clair to our Board in July 2023, the nomination of Mr. Fawcett reflects the continued transformation of our business into a pure-play financial services institution, focused on providing simple, personalized payment, lending and saving solutions.
Capital Allocation
We seek to build long-term stockholder value by employing a disciplined capital allocation will continuestrategy focused on profitable growth and strengthened
financial resilience. To enhance our growth, we have continued to be areas of focus fordiversify our product offering, while renewing and expanding our brand partner relationships. At the Board’s attentionsame time, we carefully manage our risk by strategically tightening credit in 2023. Further, asresponse to the macroeconomic landscape evolves,headwinds and in anticipation of the aforementioned regulatory changes.
Over the past year, Bread Financial achieved considerable progress in strengthening its balance sheet. During this time frame, we increased capital and reduced our parent debt. With these important balance sheet actions, we have enhanced our financial resilience and flexibility for strategic capital allocation.
To further drive responsible, profitable growth, we continue to work with management on proactively executinginvest in a range of technology innovations. These investments, which include data and customer analytics, and enhanced digital capabilities, help deliver exceptional value and experiences for our recession readiness playbook, which seeksbrand partners and cardholders. These investments also generate operational efficiencies, enabling us to ensurereinvest in strategic initiatives that returns meetsupport long-term growth and achievement of our profitabilitytargeted returns
Environmental, Social and risk tolerance thresholds.
ESGGovernance (ESG)
We areBread Financial has long been committed to responsible business practices that drive long-term success by creating shared value for all our stakeholders.practices. The full Board oversees the managementCompany’s ESG strategy and executionprograms, including initiatives that promote diversity, equity, inclusion, and belonging (DEIB), environmental stewardship, and stakeholder engagement. Rooted in all facets of our ESG strategy. The Nominatingdaily operations and long-term goals, our sustainability strategy encompasses corporate governance, customer experience, associate engagement, protecting our planet, and community investing. By acting responsibly, we build trust and credibility with our stakeholders, reduce risks, and create lasting value for our business and society.
In an evolving regulatory environment, our Board remains focused on maintaining the highest standards of corporate governance. Our Corporate Governance CommitteeGuidelines provide the framework for the governance of ourthe Company, addressing, among other things, the Board’s roles and responsibilities, director qualifications, Board of Directors provides oversight on our ESGleadership and sustainability strategies. Our sustainability strategiesBoard structure and goals center on five key areas:processes.
| Bread Financial | 2024 Proxy Statement |
Additionally, our eight independent director nominees, coupled with clear and distinct separation between the Board Chair and CEO positions, further ensures optimal Board composition and oversight effectiveness.
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Managing Our Business Responsibly | |||
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Empowering Customers | |||
 | Engaging Our Associates | |||
 | Protecting Our Planet | |||
 | Creating Possibilities for Our Communities |
Our upcoming 2022 ESG Report will detailConclusion
We have strengthened our progress against these five tenets, and how we are addressing the business risks and opportunitiesfinancial resilience while delivering solid financial performance that drive long-term, sustainable performance. Our ESG Report also identifies ongoing practices and recent accomplishments in the areashas built enduring value for all stakeholders. The future of environmental risk and impact management, social responsibility, and diversity, equity and inclusion (DE&I). Additionally, this proxy statement contains more information about our ESG practicesBread Financial is bright, and the Board’s oversight of such practices. As the longest-serving Board member, I have never been more optimistic about the Company’sremains confident in our strategic direction its leadership team and our associates who are empowered, engaged and committedoutlook. Bread Financial continues to deliverexecute on our promises to all those we serve. As a valued stockholder,long-term vision and achieving goals that ensure our success and sustainability. On behalf of the entire Board, thank you for your confidence in Bread Financial and our future, which you will help shape through your voting decisions.support.
Sincerely,
Roger H. Ballou
ChairmanChair of the Board of Directors
| Bread Financial | |
Notice of Annual Meeting of Stockholders
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Date & Time: |
Place: |
Record Date: | ||||
Tuesday, May 9:00 a.m., Central Time | Via Webcast @ www. proxydocs.com/BFH | March | ||||
How to Vote: | ||||||
You are cordially invited to attend the virtual meeting, but whether or not you expect to attend, we urge you to grant your proxy to vote your shares by telephone or through the Internet by following the instructions included on the Notice of Internet Availability of Proxy Materials that you received, or if you received a paper copy of the proxy card, to mark, date, sign and return the proxy card in the envelope provided. You may still vote electronically if you attend the virtual meeting, even if you have given your proxy (other than for | ||||||
Items of Business
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| 03 | COMPENSATION | ||||||
| 04 | PUBLIC | ||||||
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Admission
Important Notice Regarding Admission to the 20232024 Virtual Annual Meeting of Stockholders:
The meeting will be held on Tuesday, May 16, 202314, 2024 at 9:00 a.m. Central Time. Stockholders or their legal proxy holders who wish to attend the Annual Meeting of Stockholders may register in advance at www.proxydocs.com/BFH and enter the control number on their proxy card, Notice of Internet Availability of Proxy Materials or instructions accompanying their proxy materials previously received. See additional instructions for admission and attendance under the heading “Attending the Virtual Annual Meeting” below in this proxy statement. This year’s meeting will be held exclusively online; we are not holding an in-person meeting. Stockholders will be able to attend, vote and submit questions (both before, and during a portion of, the meeting) virtually.
The Notice of Internet Availability of Proxy Materials or, if requested, a printed copy of the Proxy Materials, was first mailed on or about April 5, 20233, 2024 to all stockholders of record as of March 23, 2023.20, 2024.
| By order of the Board of Directors, | ||
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| Joseph L. Motes III | April | |
| Corporate Secretary | 7500 Dallas Parkway, Suite 700 Plano, Texas 75024 |
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May
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| Bread Financial | |
Table of
Contents
Proxy
Summary
This summary highlights certain information about Bread Financial, including our core practices, business highlights, corporate governance, ESGsustainability strategy and compensation program. Stockholders are encouraged to read our entire Proxy Statement and 20222024 Annual Report carefully before voting.
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| Bread Financial | | i |
Items of Business
01 | ELECTION OF DIRECTORS
The Board of Directors recommends that stockholders vote FOR the election of each of the nominees.
02 | ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Board of Directors recommends that stockholders vote FOR the compensation paid to our named executive officers as disclosed in this proxy statement.
03 | ADVISORY VOTE ONAPPROVAL OF THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION2024 OMNIBUS INCENTIVE PLAN
The Board of Directors recommends that stockholders vote to hold future advisory votes to approve executive compensation every ONE YEAR.FOR the approval of the 2024 Omnibus Incentive Plan.
04 | RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors recommends that stockholders vote FOR the ratification of the selection of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for 2023.2024.
Bread Financial
Despite the headwindsWe are a tech-forward financial services company providing simple, personalized payment, lending and saving solutions. We create opportunities for our customers and brand partners through digitally enabled choices that offer ease, empowerment, financial flexibility and exceptional customer experiences. Driven by a digital-first approach, data insights and white-label technology, we deliver growth for our brand partners through a comprehensive suite of a volatile macroeconomic environment, 2022 was another successful transformational year for the Company.payment solutions that includes private label and co-brand credit cards and Bread Pay™ buy now, pay later products. We achievedalso offer direct-to-consumer products that give customers more access, choice and freedom through our 2022 financial targets, and we executed on our strategic objectives, including expanding our product offerings with the launch of thebranded Bread Cashback™TM American Express® credit card, securing new, diverse program agreementsCredit Card and long-term renewals with iconic brands, and advancing our technology modernization through major enhancements to our core platform and digital assets.Bread SavingsTM products.
Core Practices that Drive our Success
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| ii | Bread Financial | |
20222023 Business Highlights & Awards
Despite the headwinds of challenging macroeconomic conditions and an uncertain regulatory environment, we made great progress in 2023 against our strategic objectives. Below is a snapshot of certain of our business highlights and recognitions from 2023. These figures are either as of, or for the year ended, December 31, 2023, as applicable, and the comparative figures in parentheses are year-over-year comparisons relative to 2022. A more detailed discussion of our 2023 strategic objectives and achievements can be found below under “Compensation Discussion and Analysis—Company Highlights and 2023 Focus Areas” beginning on page 52.
NET INCOME (continuing operations)
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$ | | AVERAGE LOANS $18.2B( | ||||
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$513M)PPNR* $2.2B( | | COMMON EQUITY TIER 1 CAPITAL RATIO 12.2%( | ||||
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~$500M | |
$6.5B | ||||
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| Bread Financial | | iii |
SELECTED 2023 Director Nominees
Awards & Recognitions
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Directors | Occupation | Age | Director Since | Independent | Audit | Compensation & HC | N&CG | Risk | ||||||||||||
| Ralph J. Andretta | President and CEO, Bread Financial Holdings, Inc. | 62 | 2020 |
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| Roger H. Ballou | Former CEO and Director of CDI Corporation | 72 | 2001 | ● | ● | ● |
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| John C. Gerspach, Jr. | Former CFO of Citigroup, Inc. | 69 | 2020 | ● | µ |
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| Rajesh Natarajan | Chief Product and Strategy Officer of Globalization Partners | 53 | 2020 | ● |
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| Timothy J. Theriault | Former EVP, Global CIO and Advisor to CEO of Walgreens Boots Alliance, Inc. | 62 | 2016 | ● | ● |
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| Laurie A. Tucker | Founder and Chief Strategy Officer of Calade Partners LLC | 66 | 2015 | ● |
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| Sharen J. Turney | Former CEO of Victoria’s Secret | 66 | 2019 | ● |
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Bloomberg Gender Equality Index |
Benchmark Portal Center of Excellence |
Great Place to Work Certified | ||||||||||
Ragan Workplace Wellness Award |
Newsweek’s America’s Most Responsible Companies |
Newsweek’s America’s Most Trustworthy Companies | ||||||||||
µ Chair ● Member
As previously disclosed, Karin J. Kimbrough, a director since 2021, has decided not to stand for re-election and therefore her term as a director and as a member of the Compensation & Human Capital Committee and Risk Committee will expire at the 2023 annual meeting.
| iv | Bread Financial | |
2024 Director Nominees
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Directors | Occupation | Age | Director Since | Independent | Audit | Compensation & HC | N&CG | Risk & Technology | ||||||||||||
| Ralph J. Andretta | President and CEO, Bread Financial Holdings, Inc. | 63 | 2020 |
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| Roger H. Ballou | Former CEO and Director of CDI Corporation | 73 | 2001 | ● | ● | ● |
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| John J. Fawcett | Former EVP and Chief Financial Officer of CIT Group Inc. | 65 | N/A | ● | ● |
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| John C. Gerspach, Jr. | Former CFO of Citigroup, Inc. | 70 | 2020 | ● | µ |
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| Rajesh Natarajan | Chief Product and Strategy Officer of Globalization Partners | 54 | 2020 | ● |
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| Joyce St. Clair | Former EVP and Chief Human Resources Officer of Northern Trust Corporation | 65 | 2023 | ● |
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| Timothy J. Theriault | Former EVP, Global CIO and Advisor to CEO of Walgreens Boots Alliance, Inc. | 63 | 2016 | ● | ● |
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| Laurie A. Tucker | Founder and Chief Strategy Officer of Calade Partners LLC | 67 | 2015 | ● |
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| Sharen J. Turney | Former CEO of Victoria’s Secret | 67 | 2019 | ● |
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µ Chair ● Member
| Bread Financial | 2024 Proxy Statement | v |
Director Nominees Snapshot
| INDEPENDENCE | DIRECTOR TENURE | AGE DISTRIBUTION | DIVERSITY | |||||||||||||||||||||||||
| Independent | 6 | 0-4 years | 4 | <50 years | 0 | Female | 28.5% | 8 | 0-4 years | 5 | <50 years | 0 | Female | 33.3% | ||||||||||||||
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| Not-Independent | 1 | 5-9 years | 2 | 50-60 years | 1 | National Diversity | 14% | |||||||||||||||||||||
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| Non-Independent | 1 | 5-9 years | 3 | 50-60 years | 1 | National Diversity | 11% | |||||||||||||||||||||
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| 10-14 years | 0 | 61-75 years | 6 | Ethnic Diversity | 14% |  |  |  | ||||||||||||||||||||
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| 10-14 years | 0 | 61-75 years | 8 | Ethnic Diversity | 11% | |||||||||||||||||||||||
| 15+ years* | 1 | Average Age: 64 | Director Self-Identification of Race/Ethnicity: | |||||||||||||||||||||||||
 | 1 Asian 0 Black 0 Hispanic or Latinx 6 White | |||||||||||||||||||||||||||
Average Director Tenure: 7 years | | |  | |||||||||||||||||||||||||
| 15+ years | 1 | Average Age: 65 | Director Self-Identification of Race/Ethnicity: | |||||||||||||||||||||||||
EXPERIENCE/QUALIFICATIONS/SKILLS/ATTRIBUTES
 | Accounting / Auditing / Risk Management |
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A detailed breakdown of our director nominees’ skills and qualifications can be found below under “Proposal 1: Election of Directors - Skills Matrix and Description of Director Knowledge, Skills and Experience.”
BOARD INDEPENDENCE | | BOARD AND COMMITTEE MEETINGS IN FISCAL 2022 | DIRECTOR ELECTIONS | |||||||
Independent Board Committees: All | ||||||||||
| 6 | Full Board Meetings | ANNUAL Frequency of Board Elections | ||||||||
| Independent Director Nominees | 16 | Audit Committee | MAJORITY Voting Standard for Uncontested Elections | |||||||
6/7 | 7 | Compensation and Human Capital | ||||||||
75 | Mandatory Retirement Age | 4 | Nominating and Corporate Governance | |||||||
| 4 | Risk Committee | |||||||||
| vi | Bread Financial | |
Corporate Governance Highlights
Corporate governance at Bread Financial is designed to promote the diverse priorities and interests of all of our stakeholders, strengthen Board and management accountability and foster responsible decision-making. A few of our corporate governance highlights are set forth in the table below, and more detail can be found in the “Corporate Governance” section of this proxy statement.
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BOARD INDEPENDENCE | | BOARD AND COMMITTEE MEETINGS IN FISCAL 2023 | DIRECTOR ELECTIONS | |||||||
Independent Board Committees: All | ||||||||||
| 7 | Full Board Meetings | ANNUAL Frequency of Board Elections | ||||||||
| Independent Director Nominees | 19 | Audit Committee | MAJORITY Voting Standard for Uncontested Elections | |||||||
8/9 | 7 | Compensation & Human Capital Committee | ||||||||
75 | Mandatory Retirement Age | 4 | Nominating & Corporate Governance Committee | |||||||
| 4 | Risk & Technology Committee | |||||||||
| Bread Financial | | vii |
Corporate Governance Highlights
 | • Proxy access for stockholders • Majority voting for uncontested director elections • Responsive, active and ongoing stockholder engagement program | • Annual election of all directors • Stockholder right to call a special meeting • Annual advisory vote on executive compensation • No poison pill | ||
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• Independent Chair of the Board of Directors • Annual Board and committee self-assessments • Individual director assessments by independent third-party facilitator • All independent director nominees, except CEO • Independent directors frequently meet in executive session • Diverse and highly-skilled Board, with three female directors and one ethnically-diverse director • Demonstrated commitment to Board refreshment and Board diversity, with 7 new directors nominated since 2019 • Committed to seeking women and underrepresented minority candidates to include in every pool from which Board nominees are chosen • Skills matrix-driven nominee selection and Board composition • Two female directors serve as Board committee chairs | • All financially literate Audit Committee members and multiple Audit Committee Financial Experts • Strong commitment to ESG matters and sustainability • Mandatory retirement age of 75 years for directors • Comprehensive director onboarding program • Significant stock ownership requirements for directors and executive officers • Prohibition on hedging, pledging and speculative trading of Company securities • Codes of Ethics for associates, directors and senior financial officers, with annual acknowledgment and training • Limitations on directors’ public company board and audit committee service | |||
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• Active Board and committee oversight of the Company’s business plan, corporate strategy and risk management • Monitors the “tone at the top” and our workplace culture and values • Active Board engagement in managing talent and succession planning for executives • Periodic reports and presentations to Board and Audit and Risk & Technology committees focusing on cybersecurity | • Annual dedicated Board retreat focused on corporate strategy • Risk & Technology Committee oversight of our enterprise risk management and enterprise technology functions • Nominating & Corporate Governance Committee oversight of ESG matters • Compensation & Human Capital Committee oversight of human capital management strategies and diversity, equity, inclusion and belonging (DEIB) initiatives | |||
| viii | Bread Financial | 2024 Proxy Statement |
Sustainability Highlights
Our Board of Directors is committed to integrating Environmental, Social and Governance (ESG)ESG principles throughout our business in ways that optimize opportunities to make positive impacts while advancing long-term financial and reputational goals. Our Board-approved strategy is intended to drive additional progress on initiatives that promote sustainability, diversity, equity, & inclusion (DE&I),and belonging, and increased transparency in our disclosures.
Information regarding our Commitment to Sustainability begins on page 21, and a
A few highlights of our 20222023 accomplishments as they align with the tenets of our ESGsustainability framework are set forth below. Additional information regarding our Commitment to Sustainability begins on page 24.
Managing our Business Responsibly
Empowering Our Customers
| • | Launched Bread CashbackTM mobile app |
Engaging Our Associates
| • | Earned Great Place to Work Certification® in both the U.S. and India |
| Bread Financial | | ix |
Protecting Our Planet
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Creating Possibilities for Our Communities
| x | Bread Financial | |
Stakeholder Engagement & Transparency
During the past year, we engaged with our stockholders, as well as a broad range of our stakeholders, on a variety of topics.
80% We contacted stockholders representing approximately 80% of our shares |
Holders of approximately | |
~150 Total number of equity investors we engaged with | ~100 Total number of debt investors we engaged with | |
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Stockholder Engagement Management and, where appropriate, directors engage with stockholders through various means, including investor meetings, conferences and video/phone calls. We use the information and viewpoints gathered in our discussions with stockholders to help inform our priorities and strategies. Below are certain key topics frequently discussed with our stockholders. | Sustainability & ESG Engagement We | Commitment to Transparency We are committed to visibility and transparency into our business and to sharing our perspectives on matters of interest to our stakeholders, including our commitment to social responsibility. Below are certain examples of our commitment to transparency. | ||||||||
• Business strategy and outlook
• Board composition and succession planning • Risk management
• ESG
• Corporate governance
• Data privacy and security
• Executive
For more detail, see “Corporate Governance – Investor Engagement” (page 19) and “Compensation Discussion and Analysis–Say-On-Pay and Stockholder Engagement” | • Associates
• Brand partners
• Customers
• Stockholders
• Regulators and government officials
• Community and non-governmental organizations
For more detail, see “Commitment to Sustainability” beginning on page | • Financial reporting presentation now aligns more closely to bank holding company peers, allowing for greater comparability for investors
• Enhanced compensation disclosures
• Annual Sustainability Report
• Other disclosures addressing matters critical to stakeholders can be found on our website, including:
• Human Rights Statement
• Environmental Policy Statement
• Codes of Ethics
• Supplier Code of Conduct
• Political Contributions and Activity Policy |
| Bread Financial | | xi |
Executive Compensation Program GoalsSummary & Responsiveness
Executive Compensation Program Goals and Components
Our executive compensation program supports our business strategy by properly incentivizing and rewarding our executives for performance, aligning our executives’ interests with the long-term interests of our stockholders, and allowing us to attract, retain and motivate the highest level of executive talent to guide our business and successfully execute our strategy. We seek to achieve these goalsobjectives by linking individual pay with the Company’s performance on a diverse set of financial and non-financialmeasures, as well as financial andkey strategic goals. Our compensation programs are structured to encourage our executives to deliver strong results over the short-term while making decisions that create sustained value for our stockholders over the long-term.
TheConsistent with our compensation philosophy, the total target direct compensation of our named executive officers (NEOs) is heavily weighted towards variable, at-risk compensation that is tied to performance, with 85%87% of our CEO’s total pay at risk and 77%79% of our other NEOs’ average total pay at risk. The 20222023 performance-based component offor our CEO’sCEO and our other NEOs’ compensationNEOs comprised 61%62% and 60%, respectively, of such executive officers’ total direct compensation.
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| (1) | These pay mix charts exclude amounts listed in the column titled “All Other Compensation” in the Summary Compensation Table included in this proxy statement. |
At our 2022 annual meeting
| xii | Bread Financial | 2024 Proxy Statement |
Below is a more detailed summary of stockholders, we received approximately 83% approval for the “say-on-pay” advisory vote on the compensationeach component of our NEOs. We value the input of our stockholders and their advisors and, in recent years, in response to that feedback, the Compensation & Human Capital Committee has made significant improvements to our executive compensation program, practices and disclosures.program. We use each component of compensation to satisfy one or more of our compensation objectives. The changes aim to enhanceCompany places a significant portion of the performance-drivenoverall target compensation structure, further alignfor our executive compensation practices with best practices and principles and enhance the transparency of our disclosures, which changes include the following:officers “at risk,” without encouraging excessive or unnecessary risk-taking.
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Period
Criteria | Objectives | For More Information | ||||||||||
Base Salary | Cash; Fixed | Ongoing | Alignment of | • Compensates for day-to-day performance • Attracts, retains and • Reflects experience and job scope | Page 64 | |||||||
Annual Incentive Compensation (AIC) | Cash; Performance-Based | One Year | Results of metrics on balanced scorecard, adjusted upwards or downwards by strategic modifiers | • Incentivizes performance on a range of financial and non-financial metrics in the • Rewards successful execution of key annual strategic goals | Page 64 | |||||||
Long-Term Equity Incentive Compensation |  | 60% Performance-Based RSUs (PBRSUs) | Three-Year Cliff Vesting | Return on Equity (ROE) | • Aligns incentives with • Focuses our executives on delivering exceptional performance | Page 72 | ||||||
 | 40% Time-Based RSUs (TBRSUs) | Vests Ratably Over Three-Year Period | Time-based, subject to | • Increases retention • Promotes direct alignment with stockholder interests • Rewards creation of long-term value | Page 72 | |||||||
| Bread Financial | | |
Say-on-Pay Responsiveness
At our 2023 annual meeting of stockholders, we held an advisory vote on our 2022 executive compensation program, and approximately 75% of the votes cast were in support of the program. While still representing significant support for our compensation practices, we were nonetheless disappointed in the results of last year’s say-on-pay vote, and we are focused on understanding and responding to our stockholders’ feedback reflected in this vote.
In 2023, we engaged in proactive and extensive outreach with investors, including:
| • | reaching out to stockholders representing approximately |
| • | actively engaging with stockholders representing approximately |
| • | actively engaging on executive compensation |
| • | Our CFO participating in meetings with approximately 120 discrete stockholders, and in many cases meeting multiple times throughout the year with particular stockholders |
| • | Our CEO participating in meetings with approximately 80 discrete stockholders, and in many cases meeting multiple times throughout the year with particular stockholders |
| • | Our Board Chair participating in meetings with certain larger stockholders, where appropriate, representing approximately 18% of our common stock |
For more information regarding our engagement efforts with both equity and debt investors, please see “Corporate Governance – Investor Engagement.” For additional information regarding our engagement efforts with our stakeholders more broadly, please see “Proxy Summary - Stakeholder Engagement & Transparency.”
Through our engagement efforts, we sought to elicit stockholders’ perspectives related to our executive compensation program, including program design elements, and specific actions to inform appropriate responses to the say-on-pay vote. The feedback received during these meetings was then shared and discussed with the Compensation & Human Capital Committee will continue to considerCommittee.
A detailed discussion regarding the long-term interests of the Companyfeedback we heard from stockholders, and our stockholders when making decisions regarding our compensation program.
Our executive compensation program is discussed in detailhow we are responding, can be found under the “Compensation Discussion and Analysis” section of this proxy statementAnalysis—Say-On-Pay and Stockholder Engagement” beginning on page 56 below.
| Bread Financial | |
Agenda
& Voting
Recommendations
Proposal 01
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Proposal 02
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ELECTION OF DIRECTORS The Board of Directors recommends that stockholders vote FOR the election of each of the following
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ADVISORY VOTE ON The Board of Directors recommends that stockholders vote FOR the compensation paid to our named executive officers as disclosed in this proxy statement. | |||||||||||||||
• Ralph J. Andretta • Roger H. Ballou (Chair) • John J. Fawcett • John C. Gerspach, Jr. | • Rajesh Natarajan • Joyce St. Clair • Timothy J. Theriault • Laurie A. Tucker • Sharen J. Turney | |||||||||||||||
Proposal 03
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Proposal 04
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The Board of Directors recommends that stockholders vote |
RATIFICATION OF THE SELECTION OF The Board of Directors recommends that stockholders vote FOR the ratification of the selection of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for
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| Bread Financial | | 1 |
Corporate
Governance
Overview
Corporate governance at Bread Financial is designed to promote the diverse priorities and interests of our stakeholders, strengthen Board and management accountability and foster responsible decision-making. Just as we are committed to delivering sustainable financial performance, we remain considerate of the material risks and opportunities involved in delivering value to our stockholders, brand partners, customers, vendors, associates and communities.
Following a long tradition of sound governance, our Board of Directors continues to develop, support and oversee the implementation of sustainable, stakeholder-centric practices consistent with the evolving governance environment, our stakeholders’ expectations, and the commitments we have made to them. Our Board is guided by our Corporate Governance Guidelines, which provide a framework for the governance of the Company. These guidelines address, among other things, the roles and responsibilities of our Board, the qualification and selection of directors, director orientation and education, board leadership, board structure, director time commitments and board process. Our Board reviews the Corporate Governance Guidelines, Committee charters and other governance policies annually and updates them as appropriate to address evolving corporate governance practices.
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Corporate Governance Highlights
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Board Leadership
Our Board of Directors oversees and interacts with management to serve the long-term interests of the Company and our stockholders. In assessing these interests, the Board considers, as appropriate, the day-to-day needs of other stakeholders, including our associates and surrounding communities. Focus areas such as Company strategy, risk assessment and mitigation, cybersecurity, compliance, leadership development and succession, human capital management, operational performance, corporate governance, community investment and sustainability comprise the Board’s typical span of oversight.
Our bylaws require the Board of Directors to select a Board chair from among the directors and a chair for each Board committee, while our Corporate Governance Guidelines allow the Board to decide, in its business judgment, the appropriate leadership structure for our Company. The Board periodically
reviews the Company’s leadership structure to determine what best serves the Company and our stockholders. The Board currently believes having a non-executive chair is best practice, and, since December 2009, a non-executive director has occupied the role of Board chair. This structure enablesprovides a clear and distinct separation between the Board Chair and our Chief Executive Officer and enables our CEO to focus on the day-to-day operation of our business.
The Board chair,Chair, among other duties, presides over Board meetings and executive sessions, promotes the effective flow of constructive feedback between Board members and management, advises and counsels the CEO, assists in setting meeting agendas and facilitates Board communication with our stockholders. Assuming the stockholders elect our director nominees, Mr. Ballou will continue his term as our non-executive Board chair.Chair.
Director Independence
We have adopted general standards for determining director independence that are consistent with the NYSE listing standards. For a director to be deemed independent, the Board of Directors must affirmatively determine that the director has no material relationship with us or our subsidiaries, affiliates or any member of our senior management or their affiliates. Our Board annually reviews the independence of its non-employee directors. In making this determination, the Board considers relationships and transactions during the past three years between each director or any member of their immediate family, on the one hand, and our company, our subsidiaries, affiliates and senior management, on the other hand. For relationships not covered by certain bright-line criteria set forth in the NYSE listing standards, the determination of whether the relationship is material and, therefore, whether the director would be independent, is made by the Board of Directors. Directors have an affirmative obligation to inform our Board of any material changes in their circumstances or relationships that may impact their designation as
“independent.” Additional independence requirements established by the SEC and the NYSE apply to members of the Audit Committee and Compensation & Human Capital Committee.
Our Board undertook a review of director independence and considered transactions and relationships between each of the director nominees and the Company (including our subsidiaries, affiliates and senior management). Among other things, the Board considers whether directors serve as officers or directors of other companies with which the Company engages in business or has some other form of relationship. As a result of its director independence review, the Board of Directors affirmatively determined that none of director nominees Ballou, Fawcett, Gerspach, Natarajan, St. Clair, Theriault, Tucker or Turney has a material relationship with the Company (including our subsidiaries, affiliates and senior management) and, therefore, each is independent as defined by the rules and regulations of the SEC and the listing standards of the NYSE.
| Bread Financial | 2024 Proxy Statement | 3 |
Board of Directors and Committees
We are managed under the direction of our Board of Directors. Under our bylaws, the size of our Board may be between six and twelve directors. Our Nominating & Corporate Governance Committee regularly assesses the appropriate size of the Board. We currently have eight directors, including seven non-employee directors. All directors are elected annually and serve a one-year term. KarinOur Board has nominated an additional non-employee director, John J. Kimbrough, a director since 2021 and member ofFawcett, for election to the Compensation & Human Capital Committee and Risk Committee, has decided not to stand for re-election and therefore her term as a director and committee member will expireBoard at the 20232024 annual meeting. Accordingly, assuming all director nominees are elected, sevennine directors will be elected at the annual meeting, and the size of the Board will be reducedincreased to seven.nine.
During 2022,2023, our Board of Directors met 67 times. Each of our directors attended at least 75% of the meetings of the Board and Board committees on which they serve.served during such director’s tenure, other than Ms. St. Clair. Ms. St. Clair joined the Board in July 2023 and her absences related to scheduling conflicts with the existing Board calendar due to prior commitments. In accordance with our Corporate Governance Guidelines, we expect all director nominees to attend the annual stockholder meeting, but understand there may be exigent circumstances.meeting. All director nominees except John C. Gerspach, Jr., attended the 20222023 virtual annual meeting of stockholders.
Our Board presently has four standing committees, consisting of the Audit Committee, Compensation & Human Capital Committee, Nominating & Corporate Governance Committee and Risk & Technology Committee. Our Board has adopted a written charter for each committee, which sets forth their respective roles and responsibilities. The charters for each of these committees, as well as our Corporate Governance Guidelines and our Codes of Ethics for our senior financial officers, our Board members and our associates, are posted on our website at www.breadfinancial.com.
Our Board has determined that all current members and nominees of each of our standing committees are independent and fulfill the requirements applicable to each committee on which they serve.their designated committees. In addition, the Board has determined that all current members and nominees of the Audit Committee are financially literate and each of Mr. Ballou, Mr. Gerspach and Mr. GerspachFawcett possesses accounting or related financial management expertise within the meaning of the NYSE listing standards and are Audit Committee financial experts within the meaning of applicable SEC rules.
| 4 | Bread Financial | |
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Roger H. Ballou John C. Gerspach, Jr. (Chair) Timothy J. Theriault *John J. Fawcett
Independent/ Each member is independent
Audit Committee Mr. Ballou, * If John J. Fawcett is elected as a director, he will serve on the Audit Committee after the 2024 annual meeting. Mr. Fawcett is independent, financially literate and an Audit Committee Financial Expert. | Roles and Responsibilities
The Audit Committee’s primary roles and responsibilities include:
• assisting our Board in fulfilling its oversight responsibilities
• preparing the Audit Committee report included in this proxy statement
• reviewing our consolidated financial statements and related disclosures to be included in filings with the SEC
• appointing, compensating, and overseeing our independent registered public accounting firm
• approving audit and permissible non-audit services to be performed by our independent registered public accounting firm • overseeing our internal audit function
• reviewing and approving related party transactions
• reviewing the audit practices, guidelines and policies of our bank subsidiaries
• reviewing certain business and client contracts of the Company and our bank subsidiaries, as well as proposed acquisition or divesture, merger, outsourcing or similar agreements exceeding certain thresholds
• establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters
• overseeing our finance function and reviewing significant finance-related policies • providing risk oversight as set forth under the caption “Board’s Role in Risk Oversight” below
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| Bread Financial | | 5 |
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Joyce St. Clair Laurie A. Tucker Sharen J. Turney (Chair)
Independent Each member is independent
| Roles and Responsibilities
The Compensation & Human Capital Committee’s primary roles and responsibilities include:
• overseeing matters relating to executive compensation and our benefit plans, as well as strategies and policies related to human capital management
• annually reviewing the compensation levels of our executive officers
• reviewing and approving
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• reviewing and approving our compensation philosophy, programs and plans for associates
• reviewing and
• periodically reviewing director compensation practices and recommending appropriate revisions to the Board
• administering certain matters with respect to our equity-based compensation plans • reviewing and recommending for approval by the Board our Compensation Recoupment Policy and administering such policy
• reviewing disclosure related to human capital management and executive and director compensation in our proxy statements and discussing the Compensation Discussion and Analysis annually with management
• reviewing management’s human capital management strategies, including initiatives, policies and practices related to recruiting, retention and career development and associate engagement and effectiveness
• reviewing our associate
• preparing the Compensation & Human Capital Committee report included in this proxy statement
• providing risk oversight as set forth under the caption “Board’s Role in Risk Oversight” below
Compensation & Human Capital Committee Interlocks and Insider Participation
No member of the Compensation & Human Capital Committee is or has ever been one of our officers or other associates. No interlocking relationship exists between our executive officers or the members of our Compensation & Human Capital Committee and the board of directors or compensation committee of any other company.
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Rajesh Natarajan Laurie A. Tucker (Chair) Sharen J. Turney * John J. Fawcett
Independent Each member is independent * If John J. Fawcett is elected as a director, he will serve on the Nominating & Corporate Governance Committee after the 2024 annual meeting. Mr. Fawcett is independent. | Roles and Responsibilities
The Nominating & Corporate Governance Committee’s primary roles and responsibilities include:
• identifying qualified Board members
• recommending to the Board the director nominees for
• developing criteria for the selection of directors, including procedures for reviewing potential nominees proposed by stockholders
• reviewing with the Board the desired experience, mix of skills and other qualities, including diversity of race/ethnicity and gender, to assure appropriate composition of the Board
• reviewing and monitoring the size and composition of the Board and its committees • developing a Board succession plan and making recommendations to the Board on director succession matters
• reviewing our Corporate Governance Guidelines to ensure they reflect best practices and recommending proposed changes to the Board
• administering and leading the Board in its annual self-assessment performance review of the Board and its committees
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• overseeing our ESG and sustainability strategies, including the review of target, standards and metrics to track performance, and receiving reports and advising management on
• overseeing our initiatives, programs, practices and formal reporting related to
• providing risk oversight as set forth under the caption “Board’s Role in Risk Oversight” below
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| Bread Financial | | 7 |
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John C. Gerspach, Jr.
Rajesh Natarajan Joyce St. Clair Timothy J. Theriault (Chair)
Independent Each member is independent
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The Risk & Technology Committee’s primary roles and responsibilities include:
• assisting our Board in fulfilling its oversight responsibilities with respect to (1) our Enterprise Risk Management (ERM) Framework, including our policies, guidelines and practices related to credit, market, liquidity, strategic, reputational, operational, compliance, model and other identified
• overseeing our risk assessment and
• reviewing and recommending to the Board for approval our
• reviewing and assessing our operation within
• reviewing and assessing the alignment of our strategy and capital plans with our risk appetite statements
• reviewing and discussing with our Chief Risk Officer each of our bank subsidiaries’ risk assessment and risk management governance, practices, guidelines and policies, as well as related processes and methodologies
• monitoring risk • reviewing and overseeing our compliance with applicable laws and regulations
• overseeing our enterprise technology function, including governance, planning and strategy • overseeing cybersecurity and other information technology risks • advising on significant enterprise technology projects, investments and expenditures • providing risk oversight as set forth under the
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| 8 | Bread Financial | 2024 Proxy Statement |
Executive Sessions
We regularly conclude our Board meetings with executive sessions. In most instances, either the Board chair or the CEO leads the Board in a director-only executive session. After the CEO leaves the meeting, the Board chair then leads the non-management members of the Board in an executive session. Each committee meeting may also conclude, at the election of such committee members, with an executive session. At the conclusion of each quarterly meetingmeetings of the Audit Committee, Mr. Gerspach, the committee chair, typically leads an executive session during which the Chief Financial Officer, the Vice President of Global Audit and representatives of the independent registered public accounting firm may each meet separately with the committee. TheAt the conclusion of quarterly meetings of the Risk & Technology Committee, may also elect to meet in executive session, and at quarterly meetingsthe committee typically meets with the Chief Risk Officer in executive session apart from management. The Compensation & Human Capital Committee meets in executive session to discuss compensation matters regarding the CEO. The Board and each of its standing committees meet in executive session to review and discuss the results of their respective annual self-assessments.
evaluations.
Annual Board and Committee Evaluations
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Our Board conducts an annual evaluation of the Board and its committees, which is administered and overseen by the Nominating & Corporate Governance Committee. As part of the Board evaluation, each director completes a written questionnaire on an anonymous, unattributed basis that is designed to assess the Board’s performance and to solicit feedback for improving Board effectiveness. Directors consider various topics related to Board composition, structure, effectiveness and responsibilities, as well as the overall mix of skills, experience, diversity and backgrounds represented on the Board. In addition, each Board committee conducts a similar evaluation to assess committee performance and effectiveness, the results of which are reviewed by the respective committees in executive session and reported to the Board. The Board meets in executive session to discuss the evaluation results, including input received from the committees. Following such discussion, the Board takes action, either directly or with the assistance of management, to implement changes as appropriate to address feedback and any areas of concern identified in the evaluation process. In 2023, the Nominating & Corporate Governance Committee supplemented its annual evaluation process by engaging an independent third party to interview each director and gain additional insight, as set forth in more detail below.
Annual Evaluation Process
REVIEW OF PROCESS Our Nominating & Corporate Governance Committee annually examines our evaluation process, determining the appropriate format, approach and questions to ensure process effectiveness | u | QUESTIONNAIRE Directors provide written responses to the Board and committee evaluations on an anonymous, unattributed basis, assessing performance and effectiveness and identifying areas for improvement | u | SUMMARY OF RESULTS The General Counsel provides summarized results to the Board and each committee. The results are discussed with the full Board and each committee during executive sessions | u | FOLLOW UP Evaluation results that require follow up or identify areas for improvement are considered and implemented, as appropriate | ||||||
| Bread Financial | 2024 Proxy Statement | 9 |
2023 Individual Director Interviews with Third-Party Facilitator
DIRECTOR INTERVIEWS In 2023, the Nominating & Corporate Governance Committee supplemented its annual evaluation process by engaging an independent third party to conduct candid, one-on-one interviews with each director to gain additional insight on, among other things, individual director performance, Board and committee performance and effectiveness and board dynamics | u | INDIVIDUAL DIRECTOR FEEDBACK The third party synthesized the results and comments from the interviews and had subsequent conversations with each director to provide individualized feedback from the evaluation process | u | BOARD DISCUSSION/FEEDBACK The third party also met with the full Board in executive session to review the results and feedback regarding the Board and discuss any opportunities identified through the interview and evaluation process | ||||
Feedback Incorporated
Over the past few years, feedback from the Board evaluation process has led to, among other things:
| • | periodic check-ins by our Board Chair with individual directors |
| 10 | Bread Financial | |
Director Selection Process
Identification, EvaluationIdentifying and Selection ofEvaluating Candidates for Nomination to the Board of Directors
The Nominating & Corporate Governance Committee is responsible for reviewing with the Board the qualifications for Board membership and for identifying, assessing and recommending qualified candidates for the Board’s consideration. The committee developed and maintains a skills matrix that is based on the Company’s strategic plan and is reviewed and updated on a regular basis. The skills matrix assists the committee in its consideration of existing directors and potential candidates to ensure the Board has the appropriate balance of experience, skills and attributes.
The committee evaluatesuses a variety of methods for identifying and evaluating potential director candidates, againstincluding third-party search firms, recommendations from current Board members, senior executives and stockholders, and research using subscription-based portal resources. Regardless of the skills matrix when determining whethermethod used, the Board has committed to recommendensuring that every pool from which Board nominees
are chosen includes women and underrepresented minority candidates. The committee will consider all candidates for initial electionidentified through the methods described above, and will evaluate each of them, including incumbent directors and candidates recommended by stockholders, based on the same criteria.
The committee conducts comprehensive reviews and assessments of potential candidates and discusses their qualifications and expected contributions to the Board during committee and when determining whether to recommend existing directors for re-election. CurrentBoard meetings. Any candidates that advance from this process are interviewed by members of ourthe Nominating & Corporate Governance Committee and other Board with skillsmembers, including the Chair. The committee recommends favorable candidates to the Board for approval.
Director Qualifications and experience that are relevantNominations to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of our Board with that of obtaining relevant new skills, experience or perspective.
There are no firm prerequisites to qualify as a candidate for our Board of Directors, but we seek a diverse group of candidatesdirectors who possess the requisite background, knowledge, experience, expertise and time, as well as, where appropriate, diversity with respect to race/ethnicity and gender, that wouldand who will strengthen and increase the diversity, skills and qualifications of our Board. The committeeWhen selecting director nominees, the Nominating & Corporate Governance Committee also considers other relevant factors as it deems appropriate, including the current composition of the Board, the balance of management and independent directors, and the need for Audit Committee or other particular expertise. We seek director candidates who
have thesufficient time to make a significant contribution to our Board, to our Company and to our stockholders. Each member of our Board is expected to ensure that other existing and
planned future commitments do not materially interfere with his or hertheir service as a director. Directors are expected to attend meetings of the Board and the Board committees on which they serve and to spend the time needed to prepare for meetings.
When determining the slate of directors, the committeeNominating & Corporate Governance Committee considers current Board members as well as candidates identified through other methods, which may include recommendations from stockholders, our senior executives or Board members, research, including subscription-based portal resources that contain search tools to identify specific skill sets, diversity and relationships of potential candidates to the Company, and third-party search firms. Regardless of the method by which new candidates are identified, the Board has committed to ensuring that every pool from which Board nominees are chosen includes women and underrepresented minority candidates. The committee will consider all candidates identified through the methods described above, and will evaluate each of them, including incumbent directors and candidates recommended by stockholders, based on the same criteria.mentioned above. After completing a thorough evaluation of thecurrent directors and any potential candidates, the committee recommends qualified candidatesprovides its recommendations to our Board for review and approval. After careful consideration, the Board will determine the director nominees to recommend to our stockholders for election or re-election at our annual stockholder meeting.
| Bread Financial | | 11 |
Board Refreshment
Our Board has maintained an active and successful Board refreshment process, nominating 5with 7 new directors in the last 5 years,nominated since 2019, increasing the Board’s diversity and providing it with a strong mix of experience, skills and backgrounds.
| 12 | Bread Financial | |
Stockholder Recommendations and Nominations of Director Candidates
In addition to theother methods for identifying director candidates described above, our stockholders may recommend or nominate one or more persons for election to our Board of Directors in accordance with the requirements discussed below.
Stockholder Recommendations. Stockholders who wish to recommend a prospective nominee for our Nominating & Corporate Governance Committee to consider for election to our Board may notify our Corporate Secretary in writing with whatever supporting material the stockholder considers appropriate. Recommendations should be addressed to: Joseph L. Motes III, Corporate Secretary, Bread Financial Holdings, Inc., 7500 Dallas Parkway, Suite 700, Plano, Texas 75024.
Stockholder Nominations. Stockholders may nominate one or more persons for election to our Board at an annual meeting of stockholders if the stockholder complies with the nomination requirements set forth in our bylaws and any applicable rules and regulations of the SEC. For additional information on the process and deadlines for director nominations by stockholders, see
“Additional Information – What is the deadline for submitting proposals, including director nominations, for our 20242025 annual meeting” below.
Section 3.4 of our bylaws sets forth an advance notice procedure for director nominations that are not submitted for inclusion in the proxy statement but that a stockholder instead wishes to present at an annual meeting. Such nominations will not be included in the proxy statement and form of proxy distributed by our Board of Directors.
Further, Section 3.5 of our bylaws provides proxy access rights that permit eligible stockholders to nominate persons for election to our Board in our proxy statement. These proxy access rights permit any stockholder, or group of up to 20 stockholders, owning continuously for at least 3 years shares of our company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, to nominate and include in our proxy materials director nominees constituting up to 20% of our Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements set forth in our bylaws.
Director Succession and Retirement Policy
Director succession planning is also a focus of the Nominating & Corporate Governance Committee with an emphasis on striking a balance between board refreshment and the need for new or additional skill sets, with maintaining the institutional knowledge about our business and operating history. Our Corporate Governance Guidelines provide for a mandatory retirement age of 75, but allow directors turning 75 to complete their term. Our guidelines also allow our Board of Directors to nominate for re-election a director who has surpassed the age of 75 if it is in the best interests of the Company and its stockholders. The average age
Within the next few years, two of our director nominees standing for election at this year’s annual meeting of stockholders is 64,current Board members, Mr. Ballou (age 73) and no nominee is near theMr. Gerspach (age 70), will reach our mandatory retirement age atof 75. Mr. Ballou is our Board Chair and serves on our Audit Committee and Compensation & Human Capital Committee and Mr. Gerspach is the Chair of our Audit Committee and also serves on our Risk & Technology Committee. With this time.in mind, our Nominating & Corporate Governance Committee has been actively engaged in director succession planning to help ensure the Board is well-positioned with directors who have the appropriate leadership, expertise and other valuable attributes that these directors currently provide.
| Bread Financial | | 13 |
Director Service on Other Public Company Boards
Pursuant to our Corporate Governance Guidelines, directors must advise the Board Chair in advance of accepting any invitation to serve on another public company board. Our directors are also prohibited from serving on more than four other public company boards, and our CEO may not serve on more than one other public company board. Further, a director who serves on the Audit Committee cannot simultaneously serve on more than two other public company audit committees. These provisions are in place to help ensure directors are able to comply with our expectations on a director’s time and availability.
Director Orientation and Education
We have a director orientation program that familiarizes new directors with our business, and includes presentations by senior management on several areas, including director duties, applicable securities laws, as well as our policies, key associates, strategic plans, financial reporting, Code of Ethics and auditing processes. All directors are invited to attend the orientation presentations. In addition, our directors are assigned certain of our associate training courses relating to, among other topics, our Code of Ethics, information security, privacy, insider trading and regulatory compliance.
For ongoing director education, outside experts are periodically invited to present to the Board on various topics of interest to help enhance our directors’ knowledge and keep them current on corporate and other developments relevant to our business and to their work as directors. Board members are also regularly informed of upcoming director education courses and encouraged to attend such courses as they deem appropriate.
Board’s Role in Risk Oversight
Our Board of Directors, as a whole and through its committees, maintains responsibility for the oversight of risk management, whileincluding monitoring the “tone at the top” and our management is responsible for the day-to-day resolution of risks our Company faces.risk culture and overseeing emerging and strategic risks. Our Board exercises this oversight both directly and indirectly through its four standing committees, each of which is delegated responsibility for risks within their respective areas of oversight. Our CEO and other senior leaders regularly report to the Board receivesand its committees to discuss risks, including credit risk, market risk, liquidity risk, operational risk (including cybersecurity matters), compliance risk, model risk and reputational risk. These reports, along with reports from each of the committeesBoard committee regarding topics discussed at committee meetings, includingassist in the areasBoard’s oversight of risk they oversee.risk. On at least an annual basis, our Board reviews our long-term strategic plans, including discussion of strategic, operational and competitive risks.
| 14 | Bread Financial | 2024 Proxy Statement |
The chart below provides an overview of the allocation of risk management responsibilities among each of the Board committees.
Committees | Primary Areas of Risk Oversight | |
Risk & Technology Committee | • provides oversight on our enterprise risk management framework, including significant enterprise risk management-related strategies, guidelines, policies and risk limits • provides oversight on our enterprise technology function, including governance, planning and strategy
• evaluates risk information provided by our Chief Risk Officer and reports to the Board those material risks that might adversely affect the achievement of our strategic, financial, compliance, operational and enterprise objectives • monitors and evaluates trends and developments in technology, as well as industry trends, that may affect our strategic plans
• reviews and assesses whether we are operating in accordance with our established risk appetite and assesses the alignment of our strategy and capital plans with our risk appetite statements
• meets with senior executives and receives reports on risk topics, including, regulatory examination reports,
• provides oversight on the Company’s compliance with applicable laws and regulations
• reviews risk assessment and risk management governance and practices at our bank subsidiaries • provides oversight as set forth under the caption “Board Oversight of Information Security and Cybersecurity” below | |
Audit Committee | • provides oversight on risks relating to the Company’s consolidated financial statements, financial reporting and accounting processes and controls • provides oversight on our finance function, including annual operating budget, corporate debt and capital planning
• reviews with management matters related to the effectiveness of the Company’s operational risk management control environment and the status of corrective actions
• together with the Risk & Technology Committee, reviews the Company’s major financial risk exposures and management’s response to monitor and control such exposures, including financial risks relating to litigation or other legal, regulatory or compliance matters
• together with the Risk & Technology Committee, reviews key guidelines and policies governing the Company’s significant processes for risk assessment and risk management | |
Compensation & Human Capital Committee | • provides oversight on risks related to compensation matters, including the design of our compensation programs to ensure they align the interests of participants with those of our stockholders and provide safeguards against and do not promote excessive risk-taking by program participants
• approves performance targets and ranges in our annual and long-term incentive programs and the subsequent achievement of previously-approved performance targets • provides oversight on risks related to human capital management, including recruiting, retention and career development, | |
Nominating & Corporate Governance Committee | • provides oversight on risks related to corporate governance, including governance matters that could impact the Company’s performance or reputation or that are of concern to stockholders, including board composition, diversity and refreshment,
• provides oversight on risks related to ESG and sustainability issues, including | |
| Bread Financial | | |
Board Oversight of Data Privacy and Information Security Includingand Cybersecurity
Protecting and respecting the privacy of our clients’, customers’ and customers’associates’ personal information and maintaining the security of our systems and networks are priorities at Bread Financial. Our Board of Directors is committed to ensuring that the Company continues to maintainhas effective privacy and security controls and protections in order to maintain the trust of our clients, customers and customersassociates in an evolving environment.
Our Board considers cybersecurity risk to be a critical part of its risk oversight function and has delegated to the Risk & Technology Committee primary oversight of cybersecurity and other information technology risks, including oversight of management’s implementation of our cybersecurity risk management program. The Audit Committee also reviews cybersecurity matters as part of its oversight of major financial risk exposures.
The Risk & Technology Committee has primary responsibility for overseeing the Company’s riskreceives regular reports from management program relating to
data privacy and cybersecurity. To this end, the Board and Risk Committee receive at least quarterlyon our cybersecurity risks as well as updates on both data privacy and cybersecurity matters. These reports focus on, among other things, the evolving threat environment, vulnerability assessments, specific cyber incidents and management’s efforts to stay current and comply with applicable privacy regulations and monitor, detect and prevent cyber threats to the Company.
Data Privacy
Based upon In addition, management updates the NIST Privacy Framework, our privacy program drives our commitment to the responsible collection, use and sharing of personal information, and we balance our product development activities with a commitment to transparency, fairness and non-discrimination. We designed our multi-layered information security and data privacy programs and practices to ensure the security and responsible use of the information and data our stakeholders entrust to us. Our associates receive annual privacy awareness
training addressing relevant topics from best practices to more role-based topics. Our programs leverage third-party assessments and advicecommittee, as necessary, regarding best practices from consultants, peer companies and advisors. We closely monitor and track proposed privacy legislative and regulatory changesany material cybersecurity incidents, as well as industry-related trends and adjustany incidents with lesser impact potential. The Risk & Technology Committee periodically reports to the program accordingly as the privacy landscape evolves.
Board regarding its activities, including those related to cybersecurity. Board members receive presentations on cybersecurity topics from our Chief Information Security Officer (CISO) or external experts as part of the Board’s continuing education.
Our management team, including Cybersecurityour CISO, Chief Risk Officer and Chief Operational Risk Officer, is responsible for assessing and managing our material risks from cybersecurity threats. Our management team has primary responsibility for our overall cybersecurity management and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.
Based upon the NIST Cybersecurity Framework, our information security program deploys a defense-in-depth strategy to ensure that security is an integral and integrated part of our technology investment. We leverage multiple industry solutions to provide data protections with automated controls and ongoing penetration testing of both the internal and external environment. We partner across the lines of defense and with outside parties to continually evaluate our program effectiveness due to the ever-changing threat landscape and to assure alignment with regulatory guidance. An essential component of our program is using current trends to train our associates on a continuous basis. We conduct tabletop exercises with various subject matter experts across the Company on a regular cadence to walk
through cybersecurity incidents and continue to improve our internal processes, several of which are facilitated by an independent third party. Additionally, we provide in-depth all-associate training on an annual basis, additional targeted role-based training, general awareness training and continuous phishing simulation and awareness testing based on real-life scenarios. We maintain an active networkinformation and cybersecurity risk management program that is designed to protect the confidentiality, integrity and availability of collaborationcritical information and information systems. The program is designed based on the National institute of Standards and Technology Cybersecurity Framework. We use this framework as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Our cybersecurity risk management program includes:
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Board Oversight of Strategy
Our Board and its committees are actively engaged with management to provide guidance on, and oversight of, the Company’s corporate strategy. The Board oversees strategy and strategic risk through robust and constructive engagement with management, taking into consideration the Company’s key priorities, trends impacting our business, regulatory developments and innovations and disruptors in our industry. The Board has an annual strategic planning retreat, which includes
presentations from senior management regarding strategic plans and priorities for the business, and discussions on risks and opportunities facing the Company. In addition, various elements of our strategy are regularly discussed at meetings of the Board and its committees. To assess performance against the Company’s strategic plans, the Board receives regular updates on progress and execution and provides direction to senior management throughout the year.
Management Oversight of Risk
Our management is responsible for the day-to-day handling of risks our Company faces and implementing and supervising risk management processes and policies. We have a comprehensive Enterprise Risk Management (ERM) program that is designed to ensure that all significant risks are identified, measured, monitored and addressed. Our ERM program reflects our risk appetite, governance, culture and reporting. We manage enterprise risk using our Board-approved Enterprise Risk ManagementERM Framework, which includes board-level oversight, risk management committees, and a dedicated risk management team led by our Chief Risk Officer. Our Chief Risk Officer is responsible for establishing and implementing standards for the identification, management, measurement, monitoring and reporting of risk on an enterprise-wide basis. The Chief Risk Officer regularly reports on risk management matters to the Risk & Technology
Committee as well
as the Risk and Compliance Committees of our bank subsidiaries.
We also operate several internal management risk committees to oversee our risks, including a Bank Risk Management Committee and effective January 2023, an IT Governance Committee at each of our bank subsidiaries. The Bank Risk Management Committees and IT Governance Committees are the highest-level management committees at our bank subsidiaries to oversee risks and are responsible for risk governance, risk oversight and making recommendations on the risk appetite for our bank subsidiaries and their affiliates.subsidiaries. Each of our internal management risk committees provides risk governance, risk oversight and monitoring for their respective risk category(ies) of responsibility. Each committee reviews key risk exposures, trends and significant compliance matters and provides guidance on steps to monitor, control and escalate significant risks.
Director Independence
We have adopted general standards for determining director independence that are consistent with the NYSE listing standards. For a director to be deemed independent, the Board of Directors must affirmatively determine that the director has no material relationship with us or our subsidiaries, affiliates or any member of our senior management or his or her affiliates. Our Board annually reviews the independence of its non-employee directors. In making this determination, the Board considers relationships and transactions during the past three years between each director or any member of his or her immediate family, on the one hand, and our company, our subsidiaries, affiliates and senior management, on the other hand. For relationships not covered by certain bright-line criteria set forth in the NYSE listing standards, the determination of whether the relationship is material and, therefore, whether the director would be independent, is made by the Board of Directors. Directors have an affirmative obligation to inform our Board of any material changes in their circumstances or relationships that may impact their designation as “independent.” Additional
independence requirements established by the SEC and the NYSE apply to members of the Audit Committee and Compensation & Human Capital Committee.
Our Board undertook a review of director independence and considered transactions and relationships between each of the director nominees and the Company (including our subsidiaries, affiliates and senior management). Among other things, the Board considers whether directors serve as officers or directors of other companies with which the Company engages in business or has some other form of relationship. Ms. Turney serves as a director of Academy Sports and Outdoors, Inc., which is one of our business clients. Our Board determined that this relationship does not constitute a material relationship that would impair the independence of Ms. Turney. As a result of its director independence review, the Board of Directors affirmatively determined that none of Ballou, Gerspach, Natarajan, Theriault, Tucker or Turney has a material relationship with us and, therefore, each is independent as defined by the rules and regulations of the SEC and the listing standards of the NYSE.
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Certain Relationships and Related Party Transactions
Since the beginning of the last fiscal year, the Company has not entered into any transactions, nor are there any proposed transactions, in which the Company was, or is to be, a participant and in which any related person had or is expected to have a direct or indirect material interest.
Our Board of Directors has adopted a written Related Party Transactions Policy, which prohibits us from entering into any “related party transaction” unless the Audit Committee approves such transaction in accordance with the guidelines set forth in the policy, or the transaction is approved by a majority of disinterested directors of the Company. In approving any related party transaction, the Audit Committee must determine that the transaction is beneficial to the Company and the terms of the related party transaction are fair to the Company.
Our Related Party Transactions Policy defines a “related party” to include directors, director nominees, executive officers, five percent or greater stockholders of the Company or an immediate family member of any of these persons. A “related party transaction” includes any transaction or series of related transactions in which: (1) the Company, or any of its subsidiaries, is a participant, (2) the aggregate amount exceeds $120,000 and (3) the related party has or will have a direct or indirect material interest.
Our Related Party Transactions Policy deems the following transactions to be pre-approved and does not require further review:
| (1) | compensation of directors that has been approved in accordance with the Compensation & Human Capital Committee charter; |
| (2) | employment and compensation of an executive officer that has been approved in accordance with the Compensation & Human Capital Committee charter; |
| (3) | a transaction in which the interest of the related party arises solely from the ownership of a class of the Company’s equity securities and all holders of that class receive the same benefit on a pro rata basis; |
| (4) | transactions involving certain indemnification payments and payments under directors and officers liability insurance policies; |
| (5) | a transaction in which the rates or charges involved therein are determined by competitive bids; |
| (6) | a transaction that involves services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services; and |
| (7) | certain company charitable contributions. |
At each Audit Committee meeting, management recommends any related party transactions, if applicable, to be entered into by the Company. After review, the Audit Committee approves or disapproves such transactions and at each subsequently scheduled meeting, management is required to update the Audit Committee as to any material change to those approved transactions. If management becomes aware of an existing related party transaction that has not been pre-approved by the Audit Committee, management must promptly notify the chair of the Audit Committee and the Audit Committee will review and determine whether to ratify such transaction. The Audit Committee establishes such guidelines as it determines are necessary or appropriate for management to follow in its dealings with related parties in related party transactions.
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StockholderInvestor Engagement
Stockholder engagementEngagement with our stockholders and our debtholders remains an important part of our corporate governance practices and is essential to our ongoing business transformation.commitment to transparency.
Our Board and management value the insights, opinions and feedback of our stockholders.stockholders and other stakeholders. In addition to regularly engaging in dialogue with stockholders through quarterly earnings calls, investor meetings and conferences and other communication channels, we also proactively engage with our stockholders and debtholders throughout the year to discuss matters relevant to our business. This engagement allows us to provide visibility and transparency into our business and share our perspectives on issues that are important to our stockholders and to better understand their views and expectations and answer any questions they may have. StockholderInvestor interactions most frequently involve our CEO, CFO and/or investor relations team, but other members of management, including our General Counsel, Chief Sustainability Officer and executive compensation team, as well as the Chairman of our Board Chair, also met with our stockholders in 2022.2023. Our Board receivesand our Compensation & Human Capital Committee receive regular updates throughout the year from our investor relations team and management on our stockholderinvestor engagement and feedback received from stockholders and other investors. We This engagement allows us to:
provide visibility and transparency into our business, including our corporate governance, ESG and compensation practices;
share our perspectives on issues that are important to our investors and better understand their views and expectations and answer any questions they may have; and
use the information and viewpoints gathered in our discussions with stockholders to help inform our priorities, strategies and strategies in the relevant areas.practices.
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20222023 Engagement
We continued to increase our stockholderinvestor engagement in 2022,2023, demonstrating our ongoing commitment to transparency and our desire to engage in two-way dialogue with our investors.
Contacted investors representing approximately 80% of our common stock | Investors representing approximately
of our common stock responded and engaged | Engaged with approximately 150 discrete equity investors | ||||||
Engaged with approximately 100 discrete debt investors | CFO met with over 200 discrete equity and debt investors | CEO met with over 80 discrete equity and debt investors | ||||||
Attended 11 industry conferences | Held 11 non-deal roadshows | Held 15 meetings with ratings agencies | ||||||
Investors representing approximately 41% of our common stock engaged on executive compensation issues | Investors representing approximately 43% of our common stock engaged on ESG-related issues | Board Chair met with investors representing approximately 18% of our common stock | ||||||
Key Topics Discussed
• business strategy and outlook • board composition and succession planning • risk management • • corporate governance • data privacy and security • executive compensation, including response to our annual say-on-pay votes | ||||||||
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Actions Taken in 2022Timeline of Annual Stockholder Engagement
As we focused onWe believe that stockholder engagement is an ongoing process that should occur throughout the year during multiple touchpoints. The following provides an overview of our continued business transformation, improving our stockholder outreach and our responsiveness to stockholder feedback, we tookengagement process throughout the following actions in 2022:year:
Engagement Process | ||||||
Early Spring Publish our proxy statement and annual report; offer to engage with stockholders on executive compensation and other matters that stockholders may wish to discuss in advance of our annual meeting |
Annual meeting of stockholders; analyze voting results following the annual meeting to | |||||
Publish our |
Seek to | |||||||
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| Throughout the year, engage with stockholders in one-on-one meetings and | during conferences, road shows and earnings calls | ||||||
Say-on-Pay Responsiveness
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At our 2023 annual meeting of stockholders, we held an advisory vote on our 2022 executive compensation program, and approximately 75% of the votes cast were in support of the program. While still representing significant support for our compensation practices, we were nonetheless disappointed in the results of last year’s say-on-pay vote, and we are focused on understanding and responding to our stockholders’ feedback reflected in this vote.
As referenced above under “—2023 Engagement,” we engaged in proactive and extensive outreach with investors in 2023. Through our engagement efforts, we sought to elicit stockholders’ perspectives related to
our executive compensation program, including program design elements, and specific actions to inform appropriate responses to the say-on-pay vote. Stockholders representing approximately 41% of our common stock did engage with us on compensation-related matters, and the feedback received during these meetings was then shared and discussed with the Compensation & Human Capital Committee.
A detailed discussion regarding the feedback we heard from stockholders, and how we are responding, can be found under “Compensation Discussion and Analysis—Say-On-Pay and Stockholder Engagement” beginning on page 56 below.
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Communications with the Board of Directors
Our Board of Directors has adopted a process for stockholders and other interested parties to communicate with the Board or any individual director. Stockholders and other interested parties may send communications to the Board or any individual director in care of Joseph L. Motes III, Corporate Secretary, Bread Financial Holdings, Inc., 7500 Dallas Parkway, Suite 700, Plano, Texas 75024. All communications will be compiled and submitted to the Board or the individual directors on a periodic basis. The Corporate Secretary, however, reserves the right not to forward any abusive, threatening, or otherwise inappropriate communications.
Stockholders and other interested parties may also submit questions or comments to the Board through our Ethics Office by email at CorporateEthics@breadfinancial.com or, on an anonymous basis if desired, through the Ethics Helpline at (877) 217-6218 or www.breadfinancial.ethicspoint.com. Concerns relating to accounting, internal control over financial reporting or auditing matters will be brought to the attention of the Audit Committee and handled in accordance with our procedures with respect to such matters.
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Code of Ethics
We haveOur Board has adopted a Code of Ethics that applies to our associates, officers and directors, and provides an overview of policies and procedures and guidance for behaving ethically and responsibly. In addition, we haveour Board has adopted a Code of Ethics for Senior Financial Officers and a Code of Ethics for Board Members, which are intended to supplement the Code of Ethics.Ethics and provide additional guidance applicable to those designated individuals. Each of these Codes of Ethics is posted on our website at www.breadfinancial.com. A
copy of each is also
available upon written request directed to Joseph L. Motes III, Corporate Secretary, Bread Financial Holdings, Inc., 7500 Dallas Parkway, Suite 700, Plano, Texas 75024. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to or waiver from a provision of our Code of Ethics if any,for designated officers or directors by posting such information on our website.
Political Contributions and Activity
Engagement in political, legislative and regulatory processes can be important to the success of the Company. The Company works to educate government officials and impact legislative and regulatory matters (at the federal, state and statelocal levels) on issues important to the best interests of the Company and its associates, customers, and clients.brand partners. This effort often involves working with industry partners and outside consultants and, at times, engaging directly with government officials and their staffs. The Company hasWe have adopted a Political Contributions and Activity Policy that sets forth the ways by which the Company and its associates may participate in political, legislative and regulatory processes. All
Company political contributions and activities comply
with applicable laws, and we disclose our contributions publicly as required by law.
Eligible associates may also voluntarily participate in the political process by supporting the Company’s non-partisan political action committee (PAC), which is governed by comprehensive federal regulations that require the filing of reports with the Federal Election Commission among other reporting and disclosure requirements. Our General Counsel provides oversight for the Company’s political engagements. For further information, please see our Political Contributions and Activity Policy, available on our website at www.breadfinancial.com.
Director Orientation and Education
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We have a director orientation program that familiarizes new directors with our business, and includes presentations by senior management on several areas, including director duties, applicable securities laws, as well as our policies, key associates, strategic plans, financial reporting, Code of Ethics and auditing processes. All directors are invited to attend the orientation presentations. In addition, our directors are assigned certain of our associate training courses relating to, among other topics, our Code of Ethics,
information security, privacy, insider trading and regulatory compliance.
For ongoing director education, outside experts are periodically invited to present to the Board on various topics of interest relevant to the business to help enhance our directors’ knowledge and keep them current on corporate and other developments relevant to their work as directors. Board members are also regularly informed of upcoming director education courses and encouraged to attend such courses as they deem appropriate.
ManagementCEO and Key Executive Succession Planning
Our Board recognizes the importance of identifying and developing executive talent to ensure we continue to have effective executive leadership in place both now and in the future. The Board has delegated to the Compensation & Human Capital Committee the responsibility to review and discuss with management our succession planning for key executive officers.
At least annually, the Board reviews the Company’s program forleadership pipeline and talent and management succession planning with the CEO. Our CEO meets with his direct reports at least annually to review potential successors and development plans for key executive positions.positions, identifying and assessing each such potential successor’s relevant experience, strengths and skills as well as any areas where additional development may better prepare an individual for a future role. Where appropriate, development plans to address any gaps in skills or other attributes of such successors are also reviewed
to ensure that potential successors are well-equipped for the role to which they might be elevated. Our CEO then meets with our Board in
executive session to discuss and provide recommendations relating toand assessments of potential successors for key executive positions.
Our independent directors also meet in executive session, either with our Chief People & Culture Officer or using reports and information provided, to discuss and plan for CEO succession. Our Board regularly conducts a talent review that includes reviewing the Company’s leadership pipelinemakes sure it has sufficient opportunities to meet with, and successionassess development plans for, potential CEO and key executive positions.successors, including through management presentations to the Board and committees, attendance at Board meetings, our annual Board strategy retreat, and periodic informal meetings and communications.
