UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN

PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

OFG Bancorp

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

March 14, 201918, 2021

Dear Shareholder:

You are cordially invited to attend our annual meeting of shareholders, which will be held at our offices located at Oriental Center, 254 Muñoz Rivera Avenue, Ground Floor, San Juan, Puerto Rico,virtually on Wednesday, April 24, 2019.28, 2021 at www.virtualshareholdermeeting.com/OFG2021.  The meeting will begin promptly at 10:00 a.m. (EST).

Details of the business to be conducted at the annual meeting are given in the attached notice of annual meeting and proxy statement.  Only shareholders of record as of February 27, 2019,March 3, 2021, are entitled to notice of, and to vote at, the annual meeting or any adjournments or postponements thereof.

Your vote is important.  Please review the enclosed proxy statement and complete, sign and returnsubmit your proxy cardvote promptly in the accompanying reply envelope, even if you plan to attend the virtual meeting. We encourage you to vote over the Internet or by telephone prior to the meeting.  

If youTo attend the virtual meeting, you must show at the entrancewill need to the meeting prooflog in with a 16-digit control number found on your notice of ownershipavailability of our shares of common stock, such as a broker’s statement showing the shares held by you and a proper identification card.  If your shares are not registered in your own name and you plan to attend the meeting and vote your shares in person, you must contact your broker or agent in whose name your shares are registered to obtain a broker’s proxy issued in your name and bring it to the meeting in order to vote.  Remember that you may also vote by telephone or over the Internet.materials.  For more details and instructions, please refer to the enclosed proxy statement and proxy card.

We look forward to seeing you at theour virtual annual meeting.

Sincerely,

Julian S. Inclán

Chairperson

P.O. Box 195115

San Juan, Puerto Rico 00919-5115

NOTICE OF VIRTUAL ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON APRIL 24, 2019April 28, 2021

Notice is hereby given that the annual meeting of shareholders of OFG Bancorp (“we,” “us,” “our,” or the “Company”), a financial holding company and corporation organized under the laws of the Commonwealth of Puerto Rico, is scheduled to be held virtually at Oriental Center, 254 Muñoz Rivera Avenue, Ground Floor, San Juan, Puerto Rico,www.virtualshareholdermeeting.com/OFG2021 commencing at 10:00 a.m. (EST) on Wednesday, April 24, 2019,28, 2021, to consider and vote upon the following matters described in this notice and the accompanying proxy statement:

These matters are described more fully in the accompanying proxy statement, which you are urged to read thoroughly.  The Company’s Board of Directors recommends a vote “FOR” each of the proposals.  Only shareholders of record at the close of business on February 27, 2019,March 3, 2021, are entitled to notice of, and to vote at, the annual meeting.

To assure representation at the annual meeting, shareholders are urged to return a proxy as promptly as possible either by voting through the Internet or telephone, or by signing, dating and returning a proxy card in accordance with the enclosed instructions. Any shareholder attending the annual meeting may vote in personat the meeting even if he or she previously returned a proxy.

In San Juan, Puerto Rico, on March 14, 2019.18, 2021.

By order of the Board of Directors,

Carlos O. Souffront

Secretary

TABLE OF CONTENTS

PROXY STATEMENT FOR THE VIRTUAL ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON WEDNESDAY, APRIL 24, 2019Wednesday, April 28, 2021

This proxy statement contains important information related to the annual meeting of shareholders of OFG Bancorp (“we,” “us,” “our,” or the “Company”) to.  Our annual meeting of shareholders will be held virtually at www.virtualshareholdermeeting.com/OFG2021 on Wednesday, April 24, 201928, 2021 at 10:00 a.m. (EST), at its offices located at Oriental Center, 254 Munoz Rivera Avenue, Ground Floor, San Juan, Puerto Rico, or any adjournments or postponements thereof. This proxy statement and the accompanying proxy card are expected to be made available to shareholders on or about March 14, 2019.18, 2021.

General Questions about the Annual Meeting

What information is contained in this proxy statement?

The information in this proxy statement relates to the proposals to be voted on at the annual meeting, the voting process, our Board of Directors and its committees, the compensation of our directors and executive officers, and other required information.

Who is soliciting my vote?

Our Board of Directors is soliciting your vote at the annual meeting.

Who will bear the costs of soliciting proxies for the annual meeting?

This solicitation of proxies is made on behalf of our Board of Directors, and we will bear the costs of solicitation. The expense of preparing, assembling, printing and mailing this proxy statement and the materials used in this solicitation of proxies also will be borne by us.  It is contemplated that proxies will be solicited principally through the internet or mail, but our directors, officers and employees may solicit proxies personally or by telephone.  Upon request, we will reimburse banks, brokers and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for distributing these proxy materials to our shareholders.

We have retained Georgeson LLC, an independent proxy solicitation firm, to assist us with the solicitation of proxies for a fee not to exceed $12,500, plus reimbursement for out-of-pocket expenses.

What is the purpose of the annual meeting?

At the annual meeting, shareholders will act upon the matters outlined in the accompanying notice of annual meeting of shareholders, including the election of seven directors, the advisory vote related to executive compensation, the ratification of the selection of the Company’s independent registered public accounting firm for 2019,2021, and the transaction of any other business that may properly come before the meeting or any adjournments or postponements thereof. Proxies solicited hereby may be exercised only at the annual meeting, including any adjournments or postponements thereof, and will not be used for any other purpose.

Who is entitled to vote?

Only shareholders of record at the close of business on the record date, February 27, 2019March 3, 2021 are entitled to receive notice of the annual meeting and to vote the shares of common stock that they held on that date at the meeting, or any adjournments or postponements thereof.  As of the close of business on the record date, there were 51,293,92451,548,692 shares of our common stock outstanding.

What is the difference between a holder of record and a beneficial owner ofshares held in street name?

Holder of Record.  If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered the holder (or shareholder) of record with respect to those shares.  As a holder of record, you should have been furnished this proxy statement and a proxy card directly by us.

Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a securities broker, bank or other similar organization acting as a nominee, then you are considered the beneficial owner of shares held in “street name.” The organization holding your account is considered the holder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account. Accordingly, you should have been furnished this proxy statement and a voting instruction form by that organization.

How cando I vote?

HolderYou can vote by proxy prior to the meeting or through the virtual meeting platform during the meeting. We highly recommend that you vote by proxy prior to the meeting even if you plan to attend the meeting.  Detailed instructions on how to vote by proxy through the internet, by telephone or by mail will be set forth in the notice of Record. internet availability of proxy materials that you will receive through the mail.  This notice will also include a 16-digit control number that you will need to attend the virtual meeting and vote your shares at the meeting through the virtual meeting platform.  Your vote by proxy must be received as of the close of Tuesday, April 27, 2021, the business day immediately preceding the annual meeting.  You may also vote on the day of the meeting by attending the meeting and registering your vote through the virtual meeting platform.

To avoid delays in ballot taking and counting, and in order to ensure that your proxy is voted in accordance with your wishes, we respectfully request that you give your full title when signing a proxy as attorney, executor, administrator, trustee, guardian, authorized officer of an entity, or on behalf of a minor.  If shares are registered in the name of more than one shareholder of record, all shareholders of record must sign the proxy card.

What should I do if I have not received a notice of internet availability of proxy materials by mail?

If you are a holderbeneficial owner of record, you may vote either in person at the annual meeting, via the Internet (by following the instructions provided on the proxy card), by telephone (by calling the toll free number found on the proxy card), or by mail (by filling out the proxy card and returning it in the reply envelope provided).

Beneficial Owner of Shares Held in Street Name. If you hold your shares held in “street name,” you should receive a voting instruction form from your securities broker, bank or other similar organization acting as a nominee asking you how you want to vote your shares. If you do not,name”, you should contact your securities broker, bank or other similar organization acting asnominee that holds your shares to request a nomineecopy of your notice and obtain a voting instruction form from them. verify that they have your correct address in their records.  

If you plan to attend the annual meeting and vote your shares in person, you mustare a holder of record, contact the securities broker, bankOFG Bancorp Investor Relations 254 Muñoz Rivera Avenue, San Juan, PR 00918; E-mail: Gary Fishman at gfishman@ofgbancorp.com or other similar organization acting as a nominee in whose name your shares are registered to obtain a broker’s proxy issued in your name and bring it to the annual meeting in order to vote.Steven Anreder at sanreder@ofgbancorp.com; Telephone: (212) 532-3232.

How many votes do I have?

Each outstanding share of our common stock entitles its holder to cast one vote on each matter to be voted upon, except with respect to the election of directors in which you may cumulate your votes.

Pursuant to our articles of incorporation and by-laws, you have the right to cumulate your votes at annual meetings in which more than one director is being elected.  Cumulative voting entitles you to a number of votes equal to the number of shares of common stock held by you multiplied by the number of directors to be elected.  As a holder of our shares of common stock, you may cast all or any number of such votes for one nominee or distribute such votes among any two or more nominees as you desire.  Thus, for example, for the election of the seven nominees being considered at this annual meeting, a shareholder owning 1,000 shares of our common stock is entitled to 7,000 votes and may distribute such votes equally among the nominees for election, cast them for the election of only one of such nominees, or otherwise distribute such votes as he or she desires.

If you return an executed proxy but do not expressly indicate that your votes should be cumulated in a particular fashion, the votes represented by your proxy will be distributed equally among the nominees designated by our Board of Directors or in such other fashion as will most likely ensure the election of all the nominees.

How does our Board of Directors recommend that I vote?

Our Board of Directors recommends that you vote “FOR” the election of each nominee to the Board, “FOR” the advisory vote related to the compensation of our executives, and “FOR” the ratification of our independent registered public accounting firm for 2019.2021.

Each proxy also confers discretionary authority on our Board of Directors to vote the proxy with respect to:  (i) the approval of the minutes of the last annual meeting of shareholders; (ii) the election of any person as director if any nominee is unable to serve or, for good cause, will not serve; (iii) matters incident to the conduct of the annual meeting; and (iv) such other matters as may properly come before the annual meeting.  Except with respect to procedural matters incident to the conduct of the annual meeting, we are not aware of any business that may properly come before the meeting other than those matters described in this proxy statement.  However, if any other matters should properly come before the annual meeting, it is intended that proxies solicited hereby will be voted with respect to those other matters as recommended by our Board of Directors or, if no recommendation is given, in accordance with the judgment of the proxy holders.

What constitutes a quorum at the annual meeting?

The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date will constitute a quorum, permitting us to hold the meeting.  As of the record date, 51,293,92451,548,692 shares of our common stock were outstanding.  Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting for purposes of determining quorum.  A “broker non-vote” occurs when a securities broker, bank or other nominee indicates on the proxy card that it does not have discretionary authority to vote on a particular matter.  Votes cast by proxy will be counted by Broadridge Financial Solutions, Inc., an independent third party.  We urge you to vote by proxy even if you plan to attend the meeting, so that we will know as soon as possible that enough votes will be present for us to hold the meeting.

How do I vote?

You can vote either in person at the meeting or by proxy even if you plan to attend the meeting.  If you complete and properly sign the accompanying proxy card and return it in the enclosed reply envelope, it will be voted as you direct.  If you are a shareholder of record and attend the meeting, you may deliver your completed proxy card in person.  Alternatively, in lieu of signing the accompanying proxy card and returning it in the enclosed reply envelope, shareholders of record can vote their shares over the Internet, or by calling a specially designated telephone number.  Internet and telephone voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to provide their voting instructions and to confirm that their instructions have been recorded properly.   Specific instructions for shareholders of record who wish to use the Internet or telephone voting procedures are set forth in the enclosed proxy card.

Beneficial owners of shares held in “street name” who wish to vote at the meeting will have to obtain a proxy from the securities broker, bank or other nominee that holds their shares.  Such beneficial owners may vote their shares by telephone or the Internet if the brokers, banks or other nominees that hold their shares make those methods available.  If that is the case, each broker, bank or other nominee will enclose instructions with the proxy statement.

To avoid delays in ballot taking and counting, and in order to ensure that your proxy is voted in accordance with your wishes, we respectfully request that you give your full title when signing a proxy as attorney, executor, administrator, trustee, guardian, authorized officer of an entity, or on behalf of a minor.  If shares are registered in the name of more than one shareholder of record, all shareholders of record must sign the proxy card.

Can I change my vote after I return my proxy card?

Yes.  After you have submitted your proxy card, you may change your vote at any time before the proxy is exercised.  To do so, just send in a new proxy card with a later date or cast a new vote by telephone or over the Internet, or send a written notice of revocation to the Secretary of our Board of Directors, P.O. Box 195115, San Juan, Puerto Rico 00919-5115, delivered before the proxy is exercised.  If you attend the meeting and want to vote, in person, you may request that your previously submitted proxy not be used.  Attendance at the meeting will not by itself revoke a previously granted proxy.

What vote is required to approve each item and how are abstentions and broker non-votes treated?

Action with respect to the election of directors will be taken by a majority of the votes cast by shareholders represented in personby attendance or by proxy at the annual meeting and entitled to vote on the election of directors (which number will take into account the accumulation of votes described above). To be elected, each director nominee must receive more votes cast “FOR” such nominee’s election than votes cast “WITHOLD AUTHORITY” for such nominee’s election.  Abstentions and broker non-votes will not be counted as either an affirmative vote or a negative vote regarding the election of directors and, therefore, will not have a legal effect on such election.

For the advisory vote on the compensation of our executives and the ratification of our independent registered public accounting firm for 2019,2021, the affirmative vote of the holders of a majority of the shares represented in person

or by proxy at the meeting and entitled to vote will be required for approval.  Abstentions will have the same effect as a negative vote, and broker non-votes will not be counted in determining the number of shares necessary for approval.

What happens if I do not give specific voting instructions?

Holder of Record. If you are a holder of record and you sign and return a proxy card without giving specific instructions, then the proxy holders will vote your shares in the manner recommended by our Board of Directors and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the meeting.

Beneficial Owner of Shares Held in Street Name. If you are a beneficial owner of shares held in “street name” and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform us that it does not have the authority to vote on such matter with respect to your shares (that is, a “broker non-vote”).  Except for the ratification of our independent registered public accounting firm for 2019,2021, we believe that each of the proposals set forth in this proxy statement will be considered non-routine under the rules of the New York Stock Exchange (which apply to brokers), and therefore, there could be broker non-votes on such proposals.

What happens if the annual meeting is adjourned or postponed?

Your proxy will still be valid and may be voted at the adjourned or postponed meeting.  You will still be able to change or revoke your proxy before it is exercised.

How can I obtain directions to attend the annual meeting?

If you need directions to be able to attend the annual meeting and vote in person, please visit our website at www.ofgbancorp.com or contact Anreder & Company, our investor relations firm, at (212) 532-3232; email: ofg@anreder.com.

Proposal 1: ElectionElection of Directors

Our Board of Directors consists of one class of sevennine directors elected annually until the end of their one-year term and until their successors are duly elected and qualified.  Our Board currently has one vacancy and will have a second vacancy at the annual meeting upon the end of the term of Mr. Juan Carlos Aguayo, who will not stand for reelection.  Our bylaws provide that directors in uncontested elections will be elected by a majority of the votes cast by our shareholders, rather than a plurality of the votes cast.  Our Director Resignation Policy requires that any director that does not receive the majority of votes cast by our shareholders in an uncontested election submit his or her resignation to our Board of Directors promptly after the certification of the voting results.  Thereafter, our Board of Directors will have 90 days to evaluate the resignation, and if the resignation is not accepted, will disclose the reasons therefore to our shareholders.

There are no arrangements or understandings between us and any person pursuant to which such person has been elected as a director.  No director is related to any of our directors or executive officers, by blood, marriage or adoption (excluding those that are more remote than first cousin).

Set forth below is certain information with respect to each nominee.

Stock Ownership Policy Compliance as of December 31, 2018:2020:

*****

Stock Ownership Policy Compliance as of December 31, 2018:2020:

*****

Stock Ownership Policy Compliance as of December 31, 2018:

*****

Stock Ownership Policy Compliance as of December 31, 2018:2020:

*****

Stock Ownership Policy Compliance as of December 31, 2018:

*****

Stock Ownership Policy Compliance as of December 31, 2020:

*****

Stock Ownership Policy Compliance as of December 31, 2020:

*****

Stock Ownership Policy Compliance as of December 31, 2018:2020:

*****

Stock Ownership Policy Compliance as of December 31, 2018:2020:

*****

If any person named as a nominee is unable or unwilling to stand for election at the time of the annual meeting, the proxy holders will nominate and vote for a replacement nominee or nominees recommended by our Board of Directors.  At this time, the Board knows of no reason why any of the nominees listed above may not be able to serve as a director if elected.

Our Board of Directors recommends that you vote “FOR ALL” in this proposal.

Information with Respect to Certain Executive Officers Who Are Not Directors

The following information is provided with respect to the executive officers who do not serve on our Board of Directors.  There are no arrangements or understandings pursuant to which any of the following executive officers was selected as an officer of the Company.  No executive officer is related to any of our directors or executive officers, by blood, marriage or adoption (excluding those that are more remote than first cousin).

Stock Ownership Policy Compliance as of December 31, 2018:2020:

*****

Stock Ownership Policy Compliance as of December 31, 2018:2020:

*****

Stock Ownership Policy Compliance as of December 31, 2018:2020:

*****

Stock Ownership Policy Compliance as of December 31, 2018:

*****

Stock Ownership Policy Compliance as of December 31, 2018:2020:

*****

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information as to our shares of common stock beneficially owned by persons, including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), known to us to be beneficial owners of more than 5% of the outstanding shares.  The information is based exclusively upon filings made by such persons or entities pursuant to the Exchange Act.

The following tables set forth information as to the number of our shares of common stock and serial preferred stock beneficially owned as of December 31, 2018,2020, by (i) theour directors; (ii) the Chief Executive Officer, Chief Financial Officer, the three most highly compensatedour named executive officers other than the CEO and CFO, who were serving as executive officers on December 31, 2018, and an additional individual for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer of the registrant at the end of 20182020 (collectively, the “Named Executive Officers” or “NEOs”); and (iii) theour directors and executive officers, including the NEOs, as a group.  The information is based upon filings made by such individuals pursuant to the Exchange Act, and information furnished by each of them.

For purposes of the foregoing tables, beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which shares are deemed to be beneficially owned by a person if he or she directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares the power to vote or direct the voting of the shares, and/or the power to dispose or direct the disposition of the shares, whether or not he or she has any economic interest therein.  Unless otherwise indicated in the foregoing tables, the named beneficial owner has sole voting and investment power with respect to the shares, subject, in the case of those directors and officers who are married, to the marital community property laws of Puerto Rico.  Under Rule 13d-3, a person is deemed to have beneficial ownership of any shares of common stock which he or she has a right to acquire within 60 days, including, without limitation, pursuant to the exercise of any option, warrant or right.  Shares of common stock which are subject to such options or other rights of acquisition are deemed to be outstanding for the purpose of computing the percentage of outstanding common stock owned by such person but are not deemed outstanding for the purpose of computing the percentage of common stock owned by any other person.

Board Independence, Leadership Structure and Risk Oversight

Except for José Rafael Fernández, who is our President and CEO, all of our directors are “independent” pursuant to the corporate governance listing standards adopted by the New York Stock Exchange (“NYSE”) for listed companies.

Our Board of Directors has adopted standards and definitions to assist it in the evaluation of the independence of its members.  The standards and definitions adopted by the Board describe various types of relationships that could potentially exist between a director and the Company and sets thresholds at which such relationships would be deemed to be material.  If no relationship or transaction exists that would disqualify a director from being independent under such standards and definitions, and no other relationships or transactions exist of a type not specifically mentioned therein that in the Board’s opinion, taking into account all facts and circumstances, would impair a director’s ability to exercise his or her independent judgment, the Board will deem such director to be independent. Such standards and definitions are available on our website at www.ofgbancorp.com.www.ofgbancorp.com.

Our Board of Directors has sevennine positions and only one who is a non-independent member, the CEO.  At present, the roles of Chairperson and CEO are split.  The position of Chairperson is held by Mr. Inclán, an independent director since 2008, and the position of CEO is held by Mr. Fernández, a director and CEO since 2005.2004.

Pursuant to our bylaws, and as part of its review of corporate governance and succession planning, our Board of Directors, led by the Corporate Governance and Nominating Committee, conducts an annual self-evaluation and determines the most effective board leadership structure for the Company.  Our Board of Directors also recognizes that different structures may be appropriate for the Company at different times.  In this regard, the Board chooses whether to keep the roles of CEO and Chairperson separate or whether to have one person serve in both capacities.  At this time, the Board has decided that the most appropriate structure for the Company is to have a corporate leadership structure that splits the roles of the Chairperson of the Board and the CEO.  The position of Board Chairperson is held by Mr. Inclán, an independent director, whereas the position of CEO is held by Mr. Fernández.ndez, who also serves as Vice Chairperson of the Board.

In order toTo align the interests of our directors and top executives with our shareholders, the Board adopted the Officers and Directors Stock Ownership Policy.  Pursuant to such policy, our directors are required to hold common and preferred stock of the Company with a total value that is not less than four times their annual cash compensation within a period of 3 years of their first equity award.

Our Board of Directors, its Audit Committee, Compensation Committee, Risk and Compliance Committee, Corporate Governance and Nominating Committee, and the Bank’s Credit Committee and Trust Committee, and management’s Asset and Liability Management CommitteeTeam (the “ALCO Committee”“ALT”), Credit Risk Committee andTeam, Risk Management and Compliance Committee,Team, Consumer Compliance Team and various credit committees are actively involved in overseeing the management of the risks involved in our business and operations.  However, the Board ultimately determines the level of risk that is acceptable for the Company within general guidelines and regulatory requirements. The Board considers that effective risk management is a fundamental part of good management practice and is committed to maintaining sound risk management systems.  To this end, the Board is responsible for adopting several risk policies and reviewing the effectiveness of our risk management program.  In order to appropriately discharge their risk oversight functions, the Board and its committees have access to senior management and the right to consult with and retain independent legal and other advisors at our expense pursuant to our Corporate Governance Principles and Guidelines.  The Board, the Audit Committee and the Risk and Compliance Committee also regularly meet with and receive written reports from senior management, including our Chief Risk and Compliance Officer and Internal Audit Department, who evaluate significant risk exposures and contribute to our risk management and internal control system.  The Compensation Committee assists the Board in ensuring that our compensation program encourages decision-making that is in the best long-term interest of the Company and its shareholders and does not encourage excessive or inappropriate risk-taking. Moreover, the ALCO CommitteeALT has responsibility for overseeing the management of our assets and liabilities to balance our risk exposures.  Its principal objective is to enhance profitability while maintaining appropriate levels of liquidity and interest rate risks.  The Credit Committee of the Bank’s Board and management’s Credit Risk Committee and various credit committees have responsibility for setting and implementing strategies to achieve our credit risk goals and objectives in accordance with the credit policy approved by our Board of Directors.  The management Risk Management and Compliance CommitteeTeam has responsibility for overseeing the implementation of our risk management program.  In sum, all such committees assist and report to

the Board in connection with the monitoring and oversight of certain risks and/or the implementation of the policies and objectives adopted by the Board.

Board Meetings

Our Board of Directors held 115 meetings in 2018.2020.  No incumbent director attended fewer than 75% of the aggregate of the total number of Board meetings and the total number of meetings of Board committees in which he served in that year.  Board members are required to attend our annual meeting of shareholders.  All Board members then in office attended last year’s annual meeting of shareholders.

Executive Meetings of Non-Management Directors

Our Board of Directors holds regular meetings of “non-management directors” (that is, directors who are not executive officers of the Company) to promote open discussions and better communication among such directors.  Julian S. Inclán, the Chairperson of the Board, has been chosen to preside at such meetings.

Board Committees

Our Board of Directors has a standing Audit Committee, Risk and Compliance Committee, Compensation Committee and Corporate Governance and Nominating Committee, and Strategic Committee.

The Audit Committee assists our Board of Directors in its oversight of our financial reporting process and meets without management’s presence.  It fulfills its oversight responsibilities by reviewing:  (a) the integrity of the financial reports and other financial information provided by us to any governmental or regulatory body or to the public; and (b) our auditing, accounting, and financial reporting processes generally.  The members of this committee are Pedro Morazzani, Chairperson, Jorge Colón-Gerena and Julian S. Inclán.n, Vice Chairperson, and Susan Harnett.  Ms. Harnett was appointed to the Audit Committee on November 10, 2020.  Our Board of Directors has determined that each member of this committee is financially literate or has accounting or related financial management expertise, and that Pedro Morazzani is an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of U.S. Securities and Exchange Commission (“SEC”) Regulation S-K.  It met 712 times in 2018.2020.

The Audit Committee operates pursuant to a written charter that has been approved by our Board of Directors, a current copy of which is available on our website at www.ofgbancorp.com.  All of its members are independent directors as required by the NYSE and the SEC.

The Risk and Compliance Committee assists our Board of Directors in its oversight of our internal controls, enterprise risk management, and legal and regulatory compliance.  It fulfills its oversight responsibilities by reviewing our systems of internal controls regarding finance, accounting, legal and regulatory compliance, and ethics that management and our Board of Directors have established.  The members of this committee are Néstor de Jesús, Chairperson, Juan C. Aguayo,Julian S. Inclán, Vice Chairperson, and Julian S. Inclán.Susan Harnett.  It met 104 times in 2018.2020.

The Risk and Compliance Committee operates pursuant to a written charter that has been approved by our Board of Directors, a current copy of which is available on our website at www.ofgbancorp.com.  All of its members are independent directors.

The Compensation Committee discharges the responsibilities of our Board of Directors relating to compensation of our directors and executive officers.  Its general responsibilities are:  (a) reviewing and approving corporate goals and objectives relevant to the compensation of the CEO; (b) evaluating the CEO’s performance in light of those goals and objectives; (c) making recommendations to our Board of Directors with respect to CEO compensation, and approving director and executive officer compensation; (d) producing a committee report on executive compensation; (e) succession planning; and (f) conducting an annual performance evaluation of itself.  This committee also administers our equity-based compensation plan and is given absolute discretion to, among other things, construe and interpret the plan; to prescribe, amend and rescind rules and regulations relating to the plan; to select the persons to whom plan awards will be given; to determine the number of shares subject to each plan award; and to determine

the terms and conditions to which each plan award is subject.  The members of this committee are Jorge Colón-Gerena, Chairperson, Julian S. Inclán,Edwin Pérez, Vice Chairperson, and Edwin Pérez.Julian S. Inclán.  It met 43 times in 2018.2020.

The Compensation Committee operates pursuant to a written charter that has been approved by our Board of Directors, a current copy of which is available on our website at www.ofgbancorp.com.  All of its members are independent directors as required by the NYSE.

The Corporate Governance and Nominating Committee assists our Board of Directors by:  (a) identifying individuals qualified to become directors consistent with criteria approved by the Board; (b) selecting or recommending that the Board select the director nominees for the next annual meeting of shareholders; (c) developing and recommending to the Board a set of corporate governance principles applicable to us that are consistent with sound corporate governance practices and in compliance with applicable legal, regulatory, or other requirements; (d) monitoring and reviewing any other corporate governance matters which the Board may refer to this committee; and (e) performing an annual evaluation of the Board, Board committees and each of the directors individually. The members of this committee are Juan Carlos Aguayo, Chairperson, Julian S. Inclán,Néstor de Jesús, Vice Chairperson, and Néstor de Jesús.Julian S. Inclán. It met 23 times in 2018.2020.

The Corporate Governance and Nominating Committee operates pursuant to a written charter that has been approved by our Board of Directors, a current copy of which is available on our website at www.ofgbancorp.com.  All of its members are independent directors as required by the NYSE.

Pursuant to our by-laws, no nominations for directors, except those made by our Board of Directors upon the recommendation of the Corporate Governance and Nominating Committee, will be voted upon at the annual meeting unless other nominations by shareholders are made in writing, together with certain information about the nominating shareholder and the nominee, including the nominee’s qualifications for service and his or her written consent to serve on our Board of Directors if elected, and delivered to the Secretary of the Board at least 120 days prior to the anniversary date of the mailing of proxy materials in connection with last year’s annual meeting.  Ballots bearing the names of all of the persons nominated by our Board of Directors and by shareholders, if properly made,

will be provided for use at the annual meeting.  The Corporate Governance and Nominating Committee has not established any specific, minimum qualifications that it believes must be met by a nominee recommended by such committee for a position on our Board of Directors.  The Committee instead considers general factors, including, without limitation, the candidate’s experience with other businesses and organizations, the interplay of such experience with the experience of other Board members, and the extent to which the candidate would be a desirable addition to the Board and any of its committees.

Board Diversity

The Corporate Governance and Nominating Committee generally identifies qualified candidates based on recommendations made by existing directors, management, or independent consultants.  There are no differences in the manner in which the committee evaluates nominees for director based on whether the nominee is recommended by a shareholder.  The committee will consider potential nominees by management, shareholders or other members of the Board, and develop and evaluate information from a variety of sources regarding the potential nominee before making a decision.

Pursuant to its charter, the Corporate Governance and Nominating Committee considers diversity, among other factors such as competencies, experience, age and other appropriate qualities, to determine which candidates it recommends to our Board of Directors for approval as nominees.  The committee focuses mainly on achieving a balance of experience on the Board that represents a cross-section of the local community, including directors with experience in the public and private sectors, experience in the medical, legal and accounting professions, and experience in a variety of industries relevant to our business needs.

After evaluating our strategic planOur Board currently has one woman director and the current compositionseven men directors who are of ourHispanic ethnicity.  Our Board our Corporate Governance and Nominating Committee has identified the need to recruit women candidates and candidates based in the continental United States.  To assist with our search for qualified women candidates, our Corporate Governance and Nominating Committee engaged the serviceswill have two vacancies as of the National Association of Corporate Directors (“NACD”).annual meeting.  Our Corporate Governance and Nominating Committee has already interviewed severalis in the process of identifying candidates for the two vacancies and, consistent with its appointment in 2019 of two women candidates and continues to evaluate the candidates identified by the NACD.  To ensure an appropriately diverse Board, our Corporate Governance and Nominating Committeedirectors, is committed to recruitingselecting a second woman candidate in the short-term.director to serve on our Board.

Corporate Social ResponsibilityENVIRONMENTAL, SOCIAL AND GOVERNANCE PROGRAM

Our Company’s corporate social responsibility program seeksEnvironmental, Social and Governance (“ESG”) Program was established in 2020 with the adoption by the Board of Directors of our ESG Policy.  Our ESG Policy establishes as the Company’s policy to harnesscontinuously strive to be socially and environmentally sustainable and to have effective governance practices that protect our culture of constant innovation that has led tokey stakeholders – our success to improveclients, employees, shareholders and the communities we serve.  It establishes the Company’s human rights and environmental impact policy.  Our program carries out this spirithuman rights policy requires the Company to respect the human rights of transformation through three pillars, social innovation, educationall individuals and entrepreneurship.  Through this program,to not do business with any company that engages in human rights violations.  Our environmental impact policy recognizes the impact of greenhouse gases on global warming.  As such, our policy is to strive to become carbon neutral, decrease consumption of natural resources, promote the use of recyclable and biodegradable materials, and avoid any developments that have an adverse effect on high biodiversity environments.  In addition, we coordinated over 1,000 community service hourswill evaluate our credit underwriting practices to consider what environmental practices we may incentivize as may be appropriate given our size, complexity and market and consistent with our business strategy.

Pursuant to the ESG Policy, our General Counsel will establish and implement an ESG Program under the supervision of the CEO for monitoring and reporting our Company’s performance along established ESG metrics.  Our ESG Program is overseen by our participant employees last yearBoard of Directors. In addition, the ESG Program will establish long term ESG goals that complement and have provided more than 30 grantssupport our business strategy.  Our ESG Policy requires that we prepare and publish an annual ESG report to cover higher education expensesour stakeholders.  Initially, the Company has adopted the commercial banking, mortgage finance and consumer finance standards of children ofthe Sustainability Accounting Standards Board as our employees.framework for disclosing our ESG performance to our various stakeholders.  More information regarding our corporate social responsibility program, including our commitmentrelated to our workforce, isESG Program and our Company’s published ESG reports are available in the ESG page on our website at www.orientalbank.comwww.ofgbancorp.com.

Corporate Governance Principles and Guidelines

We have adopted a set of Corporate Governance Principles and Guidelines to promote the functioning of our Board of Directors and its committees, to protect and enhance shareholder value, and to set forth a common set of expectations as to how the Board, its various committees, individual directors and management should perform their functions.  We have also adopted a Code of Business Conduct and Ethics that reaffirms our basic policies of business conduct and ethics for our directors, officers, employees and agents.  It consists of basic and general standards of business as well as personal conduct.  The Corporate Governance Principles and Guidelines and the Code of Business Conduct and Ethics are available on our website at www.ofgbancorp.com.

Any shareholder who desires to contact our Board of Directors or any of its members may do so by writing to:  Chairperson of the Board, OFG Bancorp, P.O. Box 195145, San Juan, Puerto Rico 00919-5145.  Alternatively, any interested party, including, without limitation, shareholders and employees, may communicate directly with the independent members of the Board or report possible legal or ethical violations, including, without limitation, concerns regarding questionable accounting or auditing matters.  Any such interested party may direct his or her written communication or report, anonymously, to the Chairperson of the Audit Committee.  The mailing, postage prepaid, should be marked “confidential”“confidential” and addressed as follows:

Proposal 2: Advisory Vote on Executive Compensation

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), we are required to have a separate non-binding shareholder vote to approve the compensation of our Named Executive Officers at least once every three years.  This is commonly known as a “say-on-pay” vote.  At the annual meeting of shareholders held in 2018,2017, a majority of our shareholders voted in favor of holding the say-on-pay vote every year.  As previously disclosed, the Company has decided to hold such vote every year until the next shareholder advisory vote on the frequency of future advisory votes on executive compensation.

We have in place a comprehensive executive compensation program under the oversight of the Compensation Committee of our Board of Directors.  Our program is described under the heading “Compensation Discussion and Analysis” and in the tabular and narrative disclosures related to Named Executive Officers in this proxy statement.  The Compensation Committee continually monitors the program as well as general economic, regulatory and legislative developments affecting executive compensation.

Our executive compensation program is intended to reward achievements of Company performance objectives aligned with our strategic plan and the creation of shareholder value.  We seek to attract and retain the most talented and effective executive team for the Company by providing an appropriate mix of fixed versus variable compensation while emphasizing pay-for-performance in accordance with our short and long-term goals.  We will continue to pursue compensation arrangements that are intended to align the financial interests of our executives with the long-term interests of our shareholders.

This proposal gives you the opportunity to vote for or against, or abstain from voting on, the following resolution related to the compensation of our Named Executive Officers:

RESOLVED, that the compensation paid to the Company’s named executive officers disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.

Since your vote is advisory, it is not binding on the Company or our Board of Directors, and maywill not be construed as overruling any of our executive compensation decisions.  However, our Board of Directors and its Compensation Committee may take into account the voting results when considering future compensation arrangements.

Our Board of Directors recommends that you vote “FOR” this proposal.

Compensation Discussion and Analysis

Overview

Our executive compensation program aims to promote our long-term success, to attract and retain qualified and talented leaders and motivate them to accomplish our financial goals.  To this end, our executive compensation program considers our corporate results in light of our competitive position and goals, and also each executive’s individual performance, commitment and achievements.

This Compensation Discussion and Analysis explains our executive compensation program for our Named Executive Officers (“NEOs”) listed below.  It also describes how compensation decisions are made and the reasons for specific decisions made in 2018.2020.

Executive Summary

2018 Compensation Highlights.  During 2018, we enhanced our equity compensation program to better align our NEOs’ interests with creating long-term shareholder value.  Upon the recommendation of our independent external consultant and based on feedback received from shareholders, our Compensation Committee adopted a framework under our Omnibus Plan governing future grants of equity awards.  Under such framework, half of the value (50%) of equity awards granted to our NEOs will be in the form of performance shares with a three-year performance cycle.  To further increase our focus on long-term performance-based compensation, for both Mr. Fernández and Mr. Kumar, the Compensation Committee approved grants of performance shares and decreases to their annual cash bonus targets.  In addition, our Board increased the minimum stock ownership requirements for our CEO to five times base salary and adopted an anti-hedging and pledging policy and clawback policy.

2018 Advisory Vote on Executive Compensation.  At the 2018 annual meeting of shareholders, our executive compensation program received the support of 75% of our shareholders, which was lower than the levels of support we have received in the past.  As a result, we communicated with shareholders to better understand their expectations and engaged Pearl Meyer & Partners, LLC (“Pearl Meyer”), an independent compensation consultant, to provide us with recommendations as to how we can better align our compensation program with evolving best practices and better meet our shareholders’ expectations.  Based on these efforts, we increased our focus on long-term performance-based equity compensation to better align our executives’ interests with creating long-term shareholder value.  We continue to believe that our executive compensation program is designed to support the Company and our business strategies in concert with our compensation philosophies and objectives.

20182020 Business and Financial Highlights.  In 2018,2020, we executedcontinued to execute on our strategy of distinguishing Oriental Bank as a leader in quality of service among Puerto Rico banks and of diversifying our credit risk geographically into the continental United States.banks.  Below are some highlights of the Company’s financial and operational performance for 2018:2020:

2020 Compensation Highlights.  The Compensation Committee took a number of actions in light of the Company’s significant growth resulting from the aftermathacquisition of Hurricanes IrmaScotiabank’s operations in Puerto Rico and Mariathe U.S. Virgin Islands and in response to the Covid-19 pandemic.

Summary of Executive Compensation Practices.  Our executive compensation program includes the following practices and policies, which we believe promote sound compensation governance and are in the best interests of our shareholders and NEOs.

2020 Advisory Vote on Executive Compensation.  At the 2020 annual meeting of shareholders, our executive compensation program received the support of 82% of our shareholders.  We believe that our executive compensation program is designed to support the Company and our business strategies in concert with our compensation philosophies and objectives.

What Guides Our Program

Compensation Philosophy and Objectives.  The philosophy of our executive compensation program is to provide competitive compensation that rewards achievementsachievement of our strategic objectives supporting the creation of shareholder value.  Accordingly, the main objectives of our program are to:

Our philosophy is to align the interests of our executives with our shareholders by promoting ownership of our Company’s common stock through equity awards and minimum stock ownership requirements.  Furthermore, a significant component of our compensation program for executives, including theour NEOs, is incentive (variable) compensation that is primarily tied to financial, operational and strategic results over both short and long-term performance periods.  For certain executives, such as Mr. Rosado and Mr. Cruz, we provide incentives tied to the accomplishment of business unit and individual objectives to reward their contributions.

We are cognizant of our competitive environment for superior executive talent and seek to maintain a compensation strategy that is competitive in the financial services industry in Puerto Rico and the United States.

Elements of Compensation. To assure the appropriate mix of fixed versus variable compensation and focus on both short and long-term business performance, weWe have established three primary elements for our executive compensation program: base salary, annual cash bonus awards and long-term equity-based compensation.  These elements are reviewed to ensure an appropriate mix of fixed versus variable compensation and focus on both short and long-term business performance.

Base salary is designed to be competitive with comparable executive positions in peer group companies in the U.S. and Puerto Rico and considers the complexity and unique challenges of each executive’s position, individual skills, experience, background and performance.  

Annual cash bonus awards are based on a balanced scorecard that takes into consideration the accomplishment of Company-wide performance goals and, for somecertain executives, their business unitunit’s performance and individual performance goals as well.evaluation.

Long-term incentives are granted to our executives in the form of performance-based and time-based awards to foster ownership of the Company’s common stock, link our executives’ compensation to shareholder value and support our leadership retention objectives.

Compensation Mix.  The charts below show the target total direct compensation of Mr. Fernández, our CEO, Mr. Kumar, our COO and second highest ranking officer, and the average of our other NEOs for 2018.2020.  These charts illustrate that a significant portion of such compensation is variable and performance-based.

2018 CEO COMPENSATION MIX Restricted Units 16% Performance Shares 16% Annual Cash Bonus 29% Base Salary 39% 2018 COO COMPENSATION MIX Restricted Units 12% Performance Shares 12% Annual Cash Bonus 38% Base Salary 38%

2018 NEOS (OTHER THAN CEO AND COO) COMPENSATION MIX Restricted Units 10% Performance Shares 10% Annual Cash Bonus 22% Base Salary 58%

Determination of Compensation Decisions

The Company’s Compensation Committee, senior management and independent compensation consultant play key roles in making compensation decisions with respect to our executives.

The Role of the Compensation Committee.  The Compensation Committee of our Board of Directors plays a key role in the development and oversight of our compensation program.  It consists entirely of independent directors and operates under a written charter approved by our Board of Directors, which is publicly available at www.ofgbancorp.com.  The Compensation Committee approvesrecommends for approval by the Board of Directors the employment agreement that governs the compensation of our CEO Mr. Fernández, approves the corporate scorecard used to determine all or a significant portion of the annual cash bonus for our NEOs, and grants equity awards to all executives under our long-term incentive plan.  As appropriate, it looks to our senior management and independent compensation consultants for support in its work. While the Compensation Committee values input and advice from these and other sources, it exercises its independent judgment in reaching its decisions.

The Compensation Committee approves base salary increases and the incentive compensation of the CEO.  His compensation level is guided by the terms of his 2018 Employment Agreement, as amended.  The Compensation Committee may increase his salary after the first year, and his target performance bonus under our annual bonus plan is 75% of his base salary, and his target long-term incentive is 80%are based on a percentage of his base salary.salary established by the Compensation Committee.

In conducting its annual evaluation of the CEO’s performance, the Compensation Committee considers the CEO’s contributions to the overall performance of the Company, including his personal attributes and merits.individual performance.  It also reviews our key operating results along with the accomplishment of our key strategic initiatives and considers the standard of living in San Juan, Puerto Rico, where our main offices are located.  As part of this process, the Compensation Committee reviews all relevant information or data, including the results of our CEO’s performance scorecard and compensation levels for chief executive officers at peer group companies and the operating environment in which the Company does business.  Furthermore, the Chairpersons of our Board of Directors and Compensation Committee meet periodically with our CEO to discuss his performance.  The progress results of these meetings are reported to our Board of Directors.  The CEO does not participate in any decision regarding his compensation.

Our Compensation Committee also considers other relevant factors in making compensation decisions or recommendations for our CEO, including salary data for comparable positions at peer group companies in Puerto Rico and the U.S., and compensation levels at the Company.

Determining Goals.  The Compensation Committee is responsible for establishing both short and long-term goals that guide both our cash bonus award and the level of achievement of performance shares.  For the Compensation Committee to perform its goal-setting functions, the following process is followed.

Prior to the beginning of the year, the Board reviews and approves the Company’s strategic plan, and senior executives and department or division heads meet and discuss the Company’s strategic plan and the goals for the Company in the upcoming year that will form part of the Company scorecard.  At the beginning of the year, the Board reviews and approves an annual budget for the Company on a consolidated basis and separately for its banking subsidiary.  The Compensation Committee then reviews and assesses performance goals presented by management and determines the structure of the annual goals for the Company scorecard that determines the payout of all or a significant portion of annual bonus awards and the three-year goals for determining the payout of performance shares.  These goals include minimum performance thresholds that must be met to earn any award, as well as performance levels required to achieve maximum payouts.  Performance goals that form part offor the business unit scorecards forunits that impact the annual cash bonus are established by the CEO with the support of the Finance and Human Resources Departments.

In 2020, this process was delayed as a result of several extraordinary events, namely the earthquakes that significantly affected the island of Puerto Rico throughout the month of January and the implementation of one of the strictest government lockdowns in the United States to combat the Covid-19 pandemic.  As a result of these significant events, management developed a revised budget, and the Compensation Committee refocused its goals for the year to ensure the accomplishment of key goals considering the significant uncertainty caused by the Covid-19 pandemic and the need to decrease expenses to realize the benefits of the Scotiabank acquisition.

The level of achievement of such goals that form part of the Company and business unit scorecards playscorecard plays an essential role in the determination of the annual cash bonus awards.  On a quarterly basis, senior management and our Board of Directors review our actual financial performance against the goals set for the year.  In addition, our Board of Directors receives quarterly reports detailing our actual financial performance compared to these goals.  Such reports are discussed in the corresponding Board meetings.

Each annual cash bonus performance goal is assigned a weight and requires a threshold level of accomplishment of 70%100% for any payout in connection with such goal.  Each performance goal hasPerformance goals do not have a maximum level of achievement of either 100% or 125%.achievement.  Executives must achieve a minimum rating on their individual performance evaluations to be eligible for any annual cash bonus, and the Company must have a minimum level of earnings for any payout with respect to all company-wide performance goals or all business unit performance goals.bonus.  Each target bonus is expressed as a percentage of the executive’s base salary.

The Role of Senior Management.  Our CEO, with the assistance of our Human Resources Director and an independent compensation consultant, establishes the base salary and target cash bonus award of all other executives of the Company and recommends to our Compensation Committee equity awards for other executives.  

In making compensation decisions, our CEO, with the assistance of our Human Resources Director, considers several factors, such as the scope, complexity and degree of challenge of each executive’s responsibilities, as well as his or her performance, skills, experience and succession potential.  In the past, he has also considered in making decisions, among other information, an industry compensation and benefits studystudies prepared by aan independent compensation consultant sponsored by the Puerto Rico Bankers Association.consultant.

On a quarterly basis, our Finance Department assesses the progress of the goals set for the year and at the end of the year evaluate their results.  These assessments are reviewed by the CEO who together with our Director of Human Resources and such executive’s direct supervisor undertakes an evaluation of each executive’s performance based, in part, on objective measures set forth in the performance scorecard.  The CEO considers the financial performance of the Company, the performance of each department or division, and the individual performance of each executive relative to the goals set for the year and evaluates the compensatory recommendations provided by our Human Resources Director.  In the interest of fairness, he may also take into consideration subjective or non-formulaic factors.

The Role of the Compensation Consultant, Benchmarking and the Peer Group.  In 2018, ourOur Compensation Committee engaged Pearl Meyer, an independent compensation consultant, to review the Company’s compensation practices with respect to our NEOs relative to our peers and develop recommendations that align better with our shareholders’ expectations.expectations for our compensation program in 2020.  As part of this process, they also updated the peer group of financial institutions for the

Company and prepared a comparison of the compensation of our Mr. Fernández, Mr. Kumar and Ms. Arizmendi with persons in comparable positions at such peer financial institutions.  It wasOur consultant also engaged to developdeveloped recommendations for the Compensation Committee’s consideration based on their compensation considering the Company’s peer group evaluation.findings.

The peer group established for the Company by Pearl Meyer, and approved by our Compensation Committee, for our compensation decisions in 2018 consisted of the following companies:

Pearl Meyer reports directly to the Compensation Committee and does not provide any other services to the Company. The Compensation Committee has analyzed whether the work of Pearl Meyer has raised any conflicts of interest, taking into consideration the following factors, among others: (i) the provision of other services to the Company by Pearl Meyer; (ii) the amount of fees from the Company paid to Pearl Meyer as a percentage of their respective total revenues; (iii) Pearl Meyer’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of Pearl Meyer or the individual compensation advisors employed by Pearl Meyer with an executive officer of the Company; (v) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (vi) any stock of the Company owned by Pearl Meyer or the individual compensation advisors employed by Pearl Meyer. The Compensation Committee has determined, based on its analysis of the above factors, among others, that the work of Pearl Meyer and the individual compensation advisors employed by Pearl Meyer as compensation consultants to the Company has not created any conflicts of interest.

The Role of Peer Market Data

The peer group was proposed for the Company by Pearl Meyer and approved by our Compensation Committee.  Establishing a peer group for the Company is particularly challenging given that the Puerto Rico financial services market is significantly different from the United States and the economy does not generally move in tandem with the economy in the United States.  For over 10 years, Puerto Rico has been suffering through a prolonged recession and government fiscal crisis while the United States has seen economic growth and a fiscally stable government.  Moreover, during such period the financial services market in Puerto Rico has undergone a dramatic consolidation resulting in only three publicly traded financial services companies that operate in Puerto Rico, one of which is significantly larger than the Company and therefore not an appropriate peer.  Moreover, the significant exodus of people from the island of Puerto Rico during these crises has also significantly limited the pool of available talent.  Our peer group was selected considering the total asset size of the companies and the regional markets in which they operate relative to the asset size and regional markets of OFG Bancorp after the acquisition of Scotiabank’s Puerto Rico and USVI operations.  Given the increase in size from the acquisition, the Company

excluded banks with assets below $6 billion and increased the representation of banks with greater than $10 billion in assets.  The peer group for our compensation decisions in 2020 consisted of the following companies:

Analysis of Compensation Decisions

Base Salary.  After a review of our peer group with the assistance of Pearl Meyer, our Compensation Committee did not increaseincreased the base salary of Mr. Fernández.  Notwithstanding this increase, Mr. Fernández decided to forego the base salary increase in 2018.  This decision2020 given the significant uncertainties surrounding the Covid-19 pandemic.

Mr. Kumar’s base salary was adjusted to take into consideration his long track record of success with the Company, his unique role with the Company, and the significantly more challenging operating environment of the Company relative to its peers.  Given each of the foregoing, the Company determined that Mr. Kumar’s compensation should be above the 75^th percentile relative to peer COOs and also reflected the Compensation Committee’s focus on increasing performance-based long-term incentives.  second highest ranking officers at peer companies.  Mr. Kumar supervises our bank’s retail segment that represents 72% of the bank’s loan portfolio and 82% of the bank’s deposits.  He also serves as a technology strategist employing his extensive background in technology consulting to lead the development and implementation of our retail digital strategy.  Mr. Kumar has been an integral part of our executive team for more than 15 years playing leadership roles in the integration of the acquired Banco Bilbao Vizcaya Argentaria Puerto Rico and the acquisition and integration of Scotibank’s Puerto Rico and US Virgin Islands businesses.  Moreover, his retention is key to the Company’s succession plan.  After six years without a meaningful increase, Mr. Kumar’s was given a one-time base salary adjustment from $484,500 to $700,000.  His base salary adjustment also served to increase the minimum stock ownership required in the Company by more than $600,000 to $2.1 million.

The base salary for Ms. Arizmendi was increased based onreceived a review ofmarket adjustment to align her compensation to market-based levels, reflecting the shift in the Company’s peer group companiesdue to ensure that her compensation is competitive after her appointmentthe Scotiabank acquisition. Factors including current and future strategic contributions and individual performance was also considered.  Mr. Cabrera joined the Company as CFO in March 2017.  The base salariesa result of Mr. Kumar, Mr. Rosado, Mr. Cruz and Mr. Ortiz were increased between 2% and 3% reflecting the standard adjustments applied to our employees based on their individual evaluations.Scotiabank acquisition.

Annual Cash Bonus.  After evaluating our annual cash bonus targets andto those of our peer companies, upon the recommendation of our independent compensation consultant, the Compensation Committee decided to decreasemaintain the annual cash bonus target of Mr. Fernández from 100% to 75% of his base salary effective for the 2018 performance period.  Based on such review, Mr. Kumar’s target was also decreased from 100% to 75%, effective for the 2019 performance period and Mr. Arizmendi’s target was increased from 50% to 60% of her base salary effective for the 2018 performance period.  The annual cash bonus targets of our NEOs, with the exception of Mr. Kumar.  The cash bonus opportunity for Mr. Rosado,Kumar decreased from 90% to 80% to align with market practices.

In order to retain high quality talent from the Scotiabank acquisition, the Company agreed to pay Mr. CruzCabrera and Mr. Ortiz remainedother key Scotiabank executives a cash bonus for performance in 2020 of 75% of their 2019 cash bonus or the same, and increased in dollar amount because ofcash bonus under the corresponding increases to their base salaries.Company’s cash bonus program, whichever was greater. The table below shows the changes in the targets2020 bonus opportunities at target-level performance for our NEOs both as a percentage of their base salaries and in dollar amounts.2020.

The table below showspresents the weight givenweightings assigned to each executive of our Company-wide performance scorecard their respective department scorecard, and theiran individual performance evaluations.  Although no weight is givenevaluation.  The table also presents the adjustment to the individualcorporate scorecard based on the performance evaluations of Mr. Fernandez, Mr. Kumar and Ms. Arizmendi for purposes of calculating the amount of the annual cash bonus, they are still evaluated individually and must still achieve a satisfactory level of performance to receive any annual cash bonus.corresponding business unit.

Given the importance of the Scotiabank acquisition and the uncertainty of economic conditions during 2020 due to the Covid-19 pandemic, the Compensation Committee decided to change the existing scorecard metrics to financial criteria that address protecting and growing franchise value in a safe and sound manner.  The Compensation Committee established performance metrics based on four key business goals, growth, agility, resiliency, and operating leverage:

The table below presents our 20182020 Company-wide performance goals, including the weight of each goal, the results of each goal and the percent of achievement of the target amount.  In addition to the performance goals,For 2020, the Compensation Committee established a minimum diluted earnings per sharethat no credit would be assigned if the goal of $0.79, which mustwas not achieved 100%, and that there would be accomplished forno maximum payout with respect to any cash bonus to be paid in connection with any of the Company-wide performance goals.particular metric.

To determine each NEO’s performance bonus payout, the target cash bonus percentage is multiplied by the executive’s base salary, which thenopportunity is multiplied by the result of histhe corporate scorecard.  For Mr. Cabrera and Mr. Ortiz, it is also multiplied by the performance scorecard.goal adjustment to determine 90% of their cash bonus, with the remaining 10% of their cash bonus based on their individual performance evaluation.  The performance goal adjustment for Mr. Cabrera and Mr. Ortiz was calculated by dividing the Company’s target non-interest expense and provision by the actual non-interest expense and provision.  Our Internal Audit Department verifies the accuracy of suchthe results.

The table below shows the target cash bonus percentages forbonuses of the NEOs for their performance in 2018.2020.

Long-Term Incentive Compensation.  In 2018, our Compensation Committee approved a new framework for granting equity awards to increase our focus on performance-based compensation.  Under this new framework, the Compensation Committee will grant performance shares based on a three-year performance cycle and restricted units that vest in part annually over a three-year period.  We believe that this new framework reflects current trends at peer group companies and that it strengthens the link between executive performance and shareholder value.

As part of our new framework for granting equity awards under the Omnibus Plan, our Compensation Committee decided that the value of the equity awards granted to our NEOs will be based on a percentage of their base salaries. Half of such value will be granted in the form of performance shares with a three-year performance cycle, and the other half of such value will be granted in the form of restricted units with a third of the restricted units vesting annually on a three-year vesting schedule.  In making these awards, the Compensation Committee expects to continue to maintain our ability to retain key executives.  Each award is subject to service conditions that must be met by the executive for the award to vest.

In 2018, as part of the restructuring of their compensation towards performance-based long-term incentives, the Compensation Committee granted to Mr. Fernández and Mr. Kumar performance shares based on a three-year performance cycle ending on December 31, 2020.  The Compensation Committee selected a performance metric, the growth in the Company’s tangible book value, supported by the Company’s three-year strategic plan and considering an evaluation of our peer group by our compensation consultant.  The tangible book value of the Company as of December 31, 2017 was $15.67 and the target tangible book value for December 31, 2020 is $18.34. The Compensation Committee did not establish a performance goal based on peer comparisons given the difficulty in establishing a proper peer group for the Company which primarily operates and serves the island of Puerto Rico.  Financial performance comparisons to banks in the continental United States is problematic.  For over 10 years, Puerto Rico has been suffering through a prolonged recession and government fiscal crisis while the United States has seen economic growth and a fiscally stable government.  In addition, the entire island of Puerto Rico was severely impacted by hurricanes Irma and Maria in September 2017 further complicating benchmarking long-term incentives against United States based peer groups.

The amount of common stock that will be earned in connection with these performance shares will be based on the growth of the Company’s tangible book value over the performance cycle.  The table below describes these performance share awards.

Under the new framework, the Compensation Committee approved equity awards to the NEOs for their performance in 2018 as follows: