Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on May 20, 2020. This notice and proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2019 (the “ Form 10-K”) are available free of charge at https://www.navient.com/about/investors/stockholderinfo and http://materials.proxyvote.com. You may also obtain these materials at the Securities and Exchange Commission (“SEC”) website at www.sec.gov or by contacting the Office of the Corporate Secretary, 123 Justison Street, Wilmington, Delaware 19801. Navient will provide a copy of the 2019 Form 10-K without charge to any shareholder upon written request. Except to the extent specifically referenced herein, information contained or referenced on our website is not incorporated by reference into and does not form a part of this proxy statement.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Our shareholder letter and this proxy statement contain forward-looking statements, within the meaning of the Federal securities laws, about our business and prospects. These forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management based on information currently available. Use of words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “should,” “may,” “could,” “likely” or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Our future results may differ materially from our past results and from those projected in the forward-looking statements due to various uncertainties and risks, including, but not limited to, those described in Item 1A of Part I (Risk Factors) of our 2019 Form 10-K and our Form 10-Q for the quarter ending March 31, 2020. We disclaim any obligation to update any forward-looking statements contained herein after the date of this proxy statement.
Table of Contents
| PROXY SUMMARY | 1 | | Annual Meeting of Shareholders to be Held on May 25, 2017.This notice and proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”) are available free of charge athttps://www.navient.com/about/investors/stockholderinfo/ andhttp://materials.proxyvote.com.
You may also obtain these materials at the Securities and Exchange Commission website atwww.sec.gov or by contacting the Office of the Corporate Secretary, 123 Justison Street, Wilmington, Delaware 19801. Navient will provide a copy of the 2016 Form 10-K without charge to any shareholder upon written request.
Except to the extent specifically referenced herein, information contained or referenced on our website is not incorporated by reference into and does not form a part of this proxy statement.
| 1 | | | CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Our shareholder letter and this proxy statement contain forward-looking statements, within the meaning of the Federal securities laws, about our business and prospects. These forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management based on information currently available. Use of words such as “believes,” ���expects,” “anticipates,” “intends,” “plans,” “should,” “may,” “could,” “likely” or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Our future results may differ materially from our past results and from those projected in the forward-looking statements due to various uncertainties and risks, including, but not limited to, those described in Item 1A of Part I (Risk Factors) of our 2016 Form 10-K. We disclaim any obligation to update any forward-looking statements contained herein after the date of this proxy statement.
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Meeting Agenda Voting Matters Table of Contents
Proxy Summary | 1 | General Information | 5Board and Governance Practices | 2 | Overview | Board of ProposalsDirectors Composition | 113 | Proposal | Our Director Nominees | 4 | | GENERAL INFORMATION | 5 | QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | 6 | | OVERVIEW OF PROPOSALS | 11 | PROPOSAL 1 — Election of DirectorsELECTION OF DIRECTORS | 12 | Corporate GovernanceCORPORATE GOVERNANCE | 1920 | | Role and Responsibilities of the Board of Directors
| 20 | | Board Governance Guidelines | 20 | | Board Leadership Structure | 21 | | Board Succession Planning | 1921 | Board Governance Guidelines | 19 | Board Leadership Structure | 20 | Management Succession Planning
| 2021 | | Director Independence | 2122 | | Board of Directors Meetings and Attendance at Annual Meeting
| 2122 | | Committee Membership
| 2122 | | Compensation Consultant and Independence
| 2425 | | Compensation Committee Interlocks and Insider Participation
| 2425 | | The Board of Directors’ Role in Risk Oversight
| 2526 | | Risk Assessment of Compensation Policies | 2528 | | Nominations Process
| 2628 | | Proxy Access | 29 | | Director Orientation and Continuing Education | 2730 | | Shareholder Engagement and Communications with the Board | 2730 | | Policy on Political Contributions, Disclosure and Oversight
| 2831 | | Code of Business Conduct | 2831 | | Policy on Review and Approval of Transactions with Related Parties
| 2831 | | 2932 | | Director Compensation Elements | 2932 | | Share Ownership Guidelines | 2932
| | Anti-Hedging and Pledging Policy
| 3033 | | Policy on Rule 10b5-1 Trading Plans | 3033 | | Other Compensation | 3033 | | Deferred Compensation Plan for Directors
| 3033 |
This summary is intended as an overview of the information found elsewhere in this proxy statement. Because this is only a summary, you should read the entire proxy statement before voting. Annual Meeting of Shareholders
| | | | DATE AND TIME: | LOCATION: | RECORD DATE: | | Navient Corporation | March 30, 2017 | | 20, 2020 8:00 a.m. local time | 123 Justison StreetVirtual Meeting Only Live via the Internet Please Visit www.virtualshareholdermeeting.com/NAVI2020 | | | Wilmington, Delaware 19801 | |
Meeting Agenda Voting Matters
This year, there are four Company-sponsored proposals on the agenda. Election of a director nominee pursuant to Proposal 1 will require the vote of a majority of the votes cast with respect to that director nominee’s election, meaning that the number of votes cast for such director nominee’s election must exceed the number of votes cast against that nominee’s election (with abstentions and broker non-votes not counted as votes cast either for or against the nominee’s election). Approval of Proposals 2 3 and 43 at the Annual Meeting will require an affirmative vote of at least a majority of the votes present, represented and entitled to be voted on the matter, and voting affirmatively or negatively. | | Proposals | Board Voting Recommendations | Page | | | | | | | 1. | Election of each director nominee | FOR EACH NOMINEE | 12 | | | | | | | 2. | Ratification of the appointment of KPMG as Navient’s independent registered public accounting firm for 2017 | FOR | 33 | | | | | | | 3. | Non-binding advisory shareholder vote to approve the compensation paid to our named executive officers | FOR | 40 | | | | | | | 4. | Approve several amendments to the Navient Corporation 2014 Omnibus Incentive Plan | FOR | 62 |
| | Board Voting Recommendations | | 1.
| Election of each director nominee | | 12
| 2.
| Ratification of the appointment of KPMG as Navient’s independent registered public accounting firm for 2020 | FOR | 36
| 3.
| Non-binding advisory shareholder vote to approve the compensation paid to our named executive officers | | 43
| 4.
| Non-binding advisory shareholder vote on whether a non-binding advisory shareholder vote to approve the compensation paid to our named executive officers should occur every one, two or three years | | 44
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Board and Governance Practices We believe our corporate governance policies reflect best practices. In addition to executive compensation practices that strongly link pay and performance, Navient’s Code of Business Conduct and Board of Directors governance policies help to ensure that we meet high standards of ethical behavior, corporate governance and business conduct. The following chart highlights key Board information and governance practices in place on December 31, 2016.2019.
| Separate ChairmanChair and CEO | Yes | | Average Age of Directors
| 62.560
| | Number of Independent Directors | 109
| | Annual Elections of Directors | Yes | | Majority Voting for Directors (uncontested elections)
| Yes | | Board Meetings Held in 20162019 (average director attendance 94%94.8%) | 832
| | Annual Self-Evaluation of the Board and Each Committee | Yes | | Annual Equity Grant to Directors | Yes | | Director Stock Ownership Guidelines | Yes | | Independent Directors Meet without Management Present | Yes | | Mandatory Retirement Age for Directors | Yes | | Tenure Limit for Directors | Yes | Board Orientation and Continuing Education Program | Proxy Access | Yes | | Anti-Hedging and Anti-Pledging Policy | Yes | | Code of Business Conduct for Directors and Officers | Yes | | Enhanced Compensation Recovery/Clawback Policy | Yes | | Annual Advisory Approval of Executive Compensation | 97.7%94%
| | Independent Compensation Consultant | Yes | | Double-Trigger Change in Control | Yes | | Active Board and Management Succession and Planning | Yes | | Executive Stock Ownership Guidelines | Yes | | No Employment Agreements for Executives | Yes | | No Excessive Perquisites | Yes | | No Above-Market Earnings on Deferred Compensation | Yes |
For more information about our governance programs and our Board of Directors, see Proposal 1 beginning on page 12.
  | 20172020 Proxy Statement |   | 2
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Board of Directors Composition
The composition of our Board reflects a breadth and variety of skills, business experiences and backgrounds.
The composition of our Board reflects the great wealth of experience and skills of our directors. The following table highlights each director’s specific skills, knowledge and experiences that he or she brings to the Board. A particular director may possess additional skills, knowledge or experience even though they are not indicated below. The composition of our Board reflects a breadth and variety of skills, business experiences and backgrounds.
The composition of our Board reflects the great wealth of experience and skills of our directors. The following table highlights each director’s specific skills, knowledge and experiences that he or she brings to the Board. A particular director may possess additional skills, knowledge or experience even though they are not indicated below.
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| Frederick Arnold | Marjorie L. Bowen (1) | Anna Escobedo Cabral | Larry A. Klane (1) | Katherine A. Lehman | Linda A. Mills | John (Jack) F. Remondi | Jane J. Thompson | Laura S. Unger | David L. Yowan | | Skills and Experience | | | | | | | | | | | Name | Executive Leadership | IndustryBoard of Directors Experience | Business Operations | Finance and Accounting | Financially Literate(1) | Audit Financial Expert(2) | Banking and Capital Markets | Mergers and Acquisitions | Regulatory, Policy or Legal | Public Company Board or Corporate Governance | Academic and Research | John K. Adams, Jr. | X | | | X | X | X | X | X | X | X | | Anna Escobedo Cabral | X | | | X | X | | | | X | X | X | William M.Diefenderfer, III | X | X | | X | X | X | | | X | X | | Diane Suitt Gilleland | X | X | | | X | | | | X | X | X | Katherine A. Lehman | X | | X | X | X | X | X | X | | X | | Linda A. Mills | X | X | X | X | X | X | | X | X | X | X | Barry A. Munitz(3) | X | X | X | | X | | | X | X | X | X | John (Jack) F.Remondi | X | X | X | X | X | X | X | X | X | X | | | Jane J. ThompsonIndustry Experience (2) | X | X |
| X |
| X | X | X | | X | | | X | X | X
| X | Laura S. Unger | X | | | | X | | | X | X | X | | Barry L. Williams | X | X | X | X | X | X | | X | X | X | | David L. Yowan(4)Executive Leadership | X | X | X | X | X | X | X | X | X | X | | Business Operations | X |
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| X | X | X | X | X | X | X | | Finance/Capital Allocation | X | X | X | X | X | X | X | X |
| X | | Financially Literate (3) | X | X | X | X | X | X | X | X | X | X | | Audit Committee Financial Expert (4) | X |
|
| X | X | X | X |
|
| X | | Regulatory/Policy/Legal | X |
| X |
|
| X | X | X | X | X | | Mergers/Acquisitions | X | X | | X | X | X | X | X | X | X | | Higher Education |
|
| X |
|
| X | X | X |
|
| | Human Capital Management/Compensation | X |
| X | X | X | X | X | X |
| X | | Corporate Governance | X | X | X | X | X | X | X | X | X | X | | Technology/Systems | | | | | | X | X | | | X |
| Board Gender Diversity | Director Age Distribution | Director Tenure |  | | |
| (1) | Ms. Bowen and Mr. Klane joined the Board on May 1, 2019. Ms. Bowen is not being nominated by the Board for reelection, and her tenure as a director will end when her current term expires at our 2020 Annual Meeting. |
| (2) | Directors with professional experience in the financial services, consumer lending or business processing services industries. |
| (3) | Directors who are able to read and understand financial statements. |
| (2)(4) | Directors determined by the Board to be audit committee financial experts, as that term is defined under rules promulgated by the SEC. |
| (3) | Mr. Munitz is not eligible to stand for re-election because he has reached the mandatory retirement age under our Board’s Governance Guidelines. |
| (4) | Mr. Yowan was appointed to the Board on March 30, 2017. |
Our Board is diverse in terms of gender, age, and tenure. In fact, we were recently cited by a leading provider of board intelligence solutions as the board with the highest percentage of women directors among S&P 500 companies. Following our 2017 Annual Meeting, if each of the Board nominees is elected, our board will be comprised of 55% women directors. The average age of our directors is currently 62.5 years old. The following charts also reflect the gender and age diversity of our directors on the date of the 2017 Annual Meeting, as well as the tenure distribution. Our tenure distribution largely reflects the addition of seven new directors since 2014.
* | For purposes of this chart, we have counted each director’s service with SLM Corporation and its predecessors (other than the Student Loan Marketing Association). |
| 20172020 Proxy Statement | | 3
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| | | Director | | | Standing Committee Memberships(3) | | Other | | Name | Age(1) | Since(2) | Occupation and Experience | Independent | EC | AC | CC | NGC
| FOC | Boards | | Frederick Arnold | 66 | 2018 | Financial Executive | Yes |
| M |
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| M | 1 | | Anna Escobedo Cabral | 60 | 2014 | Partner, Cabral Group, LLC | Yes | M | C | | M | | 0 | Larry A. Klane
| 59 | 2019 | Co-Founding Principal, Pivot
Investment Partners LLC | Yes |
|
| M |
| M | 0 | | Katherine A. Lehman | 45 | 2014
| Managing Partner, Hilltop Private Capital, Private Equity Investor | Yes | M | | M | | C
| 1
| | Linda A. Mills | 70 | 2014
| President, Cadore Group LLC | Yes | C | | | | | 1
| | John (Jack) F. Remondi | 57
| 2013
| President and Chief Executive Officer, Navient | No
| M | | | | | 1
| | Jane J. Thompson | 68
| 2014
| CEO, Jane J. Thompson Financial Services | Yes | M | | C
| M | | 2
| | Laura S. Unger | 59
| 2014
| President, Unger, Inc. | Yes | M | M | | C
| | 2
| | David L Yowan | 63
| 2017
| EVP and Corporate Treasurer American Express Company | Yes | | | M | | M | 0
|
| | | | | | Committee Memberships | Other | | | | Director | | | | | | | | Public | | Name | Age(1) | Since(2) | Occupation and Experience | Independent | EC | AC | CC | NGC(3) | FOC | Boards | | John K. Adams, Jr. | 61 | 2014 | Retired – Investment Banking | Yes | M | M | | | C | 1 | | Anna Escobedo Cabral | 57 | 2014 | Senior Advisor, Inter-American Development Bank | Yes | | M | | M | | 0 | | William M. Diefenderfer, III | 71 | 1999 | Partner, Diefenderfer, Hoover, McKenna & Wood, LLP | Yes | C | | | | | 1 | | Diane Suitt Gilleland | 70 | 1997 | Retired – State Higher Education Executive | Yes | | M | | M | | 0 | | Katherine A. Lehman | 42 | 2014 | Private Equity Investor | Yes | | | M | | M | 1 | | Linda A. Mills | 67 | 2014 | Retired – Corporate Executive, Northrop Grumman | Yes | M | | C | | M | 1 | | John (Jack) F. Remondi | 54 | 2013 | President and Chief Executive Officer, Navient | No | M | | | | | 1 | | Jane J. Thompson | 65 | 2014 | CEO, Jane J. Thompson Financial Services | Yes | | | M | | M | 3 | | Laura S. Unger | 56 | 2014 | Financial Services Consultant | Yes | M | C | | M | | 2 | | Barry L. Williams | 72 | 2000 | Retired – Investment Consultant | Yes | | | M | | M | 1 | | David L Yowan | 60 | 2017 | EVP and Corporate Treasurer American Express Company | Yes | | M | | | M | 0 |
| (1) | Ages are as of April 13, 2017.9, 2020. |
| (2) | For these purposes of this chart and the director tenure chart on the immediately preceding page, we are considering a Director’s prior service with SLM Corporation and its publicly-heldpublicly held predecessors prior to our separation transaction.transaction in 2014. |
| (3) | Mr. Munitz, the current ChairMembership as of the Committee, is retiring from the Board effective May 25, 2017.December 31, 2019. |
| EC | Executive Committee | NGC | Nominations and Governance Committee | C | Chair | | AC | Audit Committee | FOC | Finance and Operations Committee | M | Member | | CC | Compensation and Personnel Committee | | | | |
Additional information about our director nominees, including summaries of their business and leadership experience, skills and qualifications, can be found in the director biographies that begin on page 13 of this proxy statement.
| 20172020 Proxy Statement | | 4
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Navient Corporation (“Navient,” the “Company,” “we,” “our” or “us”) is furnishing this proxy statement to solicit proxies on behalf of the Board of Directors (the “Board of Directors” or “Board”) for use at our 20172020 Annual Meeting of Shareholders (the “Annual Meeting”). Due to the ongoing public health impact of the novel coronavirus outbreak (COVID-19), this year’s Annual Meeting will be a virtual meeting conducted solely via live webcast. You will be able to attend the Annual Meeting, vote your shares electronically, and submit questions during the meeting by visiting a special website established for this purpose: www.virtualshareholdermeeting.com/NAVI2020. You will not be able to attend the Annual Meeting in person. A copy of the Notice of 20172020 Annual Meeting of Shareholders accompanies this proxy statement. This proxy statement is being sent or made available, as applicable, to our shareholders beginning on or about April 13, 2017.9, 2020.
Questions and Answers about the Annual Meeting and Voting Why is this year’s Annual Meeting being held as a virtual only meeting?
This year’s Annual Meeting is being held as a virtual only meeting due to the ongoing public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our stockholders, employees and community members. Holding the Annual Meeting as a virtual only meeting allows us to reach the broadest number of stockholders while maintaining our commitment to health and safety.
Who may vote?is entitled to attend and vote at the Annual Meeting?
Only shareholders who owned shares of Navient’s Common Stock, par value $0.01 per share (“Common Stock”), at the close of business on March 30, 2017,23, 2020, the record date for the Annual Meeting, are entitled to notice of, and to vote at, the Annual Meeting. Navient’s Common Stock is listed on the Nasdaq Stock Market (“Nasdaq”) under the symbol “NAVI.” On March 30, 2017, 285,155,35623, 2020, 193,814,038 shares of Common Stock were outstanding and eligible to be voted. Each share of Common Stock is entitled to one vote with respect to each matter on which holders of Common Stock are entitled to vote.
How do I attend the Annual Meeting?
This year’s Annual Meeting will be a virtual only meeting conducted solely via live webcast. To participate in the Annual Meeting, visit www.virtualshareholdermeeting.com/NAVI2020 and enter the sixteen-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card. The live webcast will begin at 8:00 a.m. EDT on Wednesday, May 20, 2020. We encourage you to access the virtual meeting platform at least 15 minutes prior to the start time. If you do not have a sixteen-digit control number, you will still be able to access the webcast as a guest, but will not be able to vote your shares or ask a question during the meeting. The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and mobile phones) running the most updated version of applicable software and plugins. Participants should ensure they have a strong WiFi connection wherever they intend to participate in the meeting. Further instructions on how to attend and participate in the Annual Meeting, including how to demonstrate proof of stock ownership, will be posted on the virtual meeting website. We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. Technical support will be available on the virtual meeting platform beginning at 7:00 a.m. EDT on the day of the meeting and will remain available until thirty minutes after the meeting has finished.
Why did I receive a “Notice Regarding the Availability of Proxy Materials”?
Navient furnishes proxy materials to its shareholders primarily via the Internet, instead of mailing printed copies of those materials to each shareholder. By doing so, we save money and reduce our environmental impact. On or about April 14, 2017,9, 2020, Navient will mail a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) to certain of the Company’s shareholders. The Notice of Internet Availability contains instructions on how to access Navient’s proxy materials and vote online or vote by telephone. The Notice of Internet Availability also contains a 15-digit16-digit control number that you will need to vote your shares. If you previously chose to receive Navient’s proxy materials electronically, you will continue to receive access to these materials via an e-mail that provides electronic links to these documents unless you elect otherwise.
How do I request paper copies of the proxy materials?
You may request paper copies of the proxy materials for the Annual Meeting by following the instructions included on your Notice of Internet Availability or listed at www.proxyvote.com, by telephoning 1-800-579-1639, or by sending an e-mail to sendmaterial@proxyvote.com.What is the difference between holding shares as a beneficial owner in street name and as a shareholder of record?
If your shares are held in street name through a broker, bank, trustee or other nominee, you are considered the beneficial owner of those shares. As the beneficial owner, you have the right to direct your broker, bank, trustee or other nominee how to vote your shares. Without your voting instructions, your broker, bank, trustee or other nominee may only vote your shares on proposals considered to be routine matters. The only routine matter being considered at the Annual Meeting is Proposal 2 (relating to the ratification of the independent registered public accounting firm). Proposals 1, 3 and 4 are considered non-routinenon- routine matters. For non-routine matters, your shares will not be voted without your specific voting instructions. We encourage you to vote your shares. If your shares are registered directly in your name with Navient’s transfer agent, Computershare, you are considered to be a shareholder of record with respect to those shares. As a shareholder of record, you have the right to grant your voting proxy directly to NavientNavient’s Board of Directors or to a third party, or to vote in person at the Annual Meeting. | 2017 Proxy Statement | | 6 |
How do I vote?
Navient encourages shareholders to vote in advance of the Annual Meeting, even if you plan to attend the Annual Meeting. You may vote in one of the following ways:
Vote in advance of the meeting |  | Vote your shares atwww.proxyvote.com. Votes submitted via the Internet must be received by 11:59 p.m., Eastern Daylight Time, on May 24, 2017. Please have your Notice of Internet Availability or proxy card available when you log on. | | Vote in person at the meeting | |  | If you hold shares directly in your name as a shareholder of record, you may either vote in person or be represented by another person at the Annual Meeting by executing a legal proxy designating that person as your proxy to vote your shares. If you hold your shares in street name, you must obtain a legal proxy from your broker, bank, trustee or other nominee and present it to the inspector of elections with your ballot to be able to vote at the Annual Meeting. To request a legal proxy, please follow the instructions atwww.proxyvote.com | | | | |  | Call the toll-free number (1-800-579-1639).You may call this toll-free telephone number, which is available 24-hours a day, and follow the pre-recorded instructions. Please have your Notice of Internet Availability or proxy card available when you call. If you hold your shares in street name, your broker, bank, trustee or other nominee may provide you additional instructions regarding voting your shares by telephone. Votes submitted telephonically must be received by 11:59 p.m., Eastern Daylight Time, on May 24, 2017. | | | | | | |  | If you hold your shares in street name through a broker, bank, trustee or other nominee and want to vote by mail, you must request paper copies of the proxy materials. Once you receive your paper copies, you will need to complete, sign and date the voting instruction form and return it in the prepaid return envelope provided. Your voting instruction form must be received no later than the close of business on May 24, 2017. | | |
What if I hold my shares in street name and I do not provide my broker, bank, trustee or other nominee with instructions about how to vote my shares?
You may instruct your broker, bank, trustee or other nominee on how to vote your shares using any of the methods described above. If you do not provide them with instructions on how to vote your shares prior to the Annual Meeting, they will have discretionary authority to vote your shares only with respect to routine matters. Only Proposal 2 (relating to the ratification of the independent registered public accounting firm) is considered to be a routine matter, and the firmyour broker, bank, trustee or other nominee will not have discretion to vote your shares with respect to Proposals 1, 3 or 4. If you do not give your instructions on how to vote your shares on Proposals 1, 3 or 4, your shares will then be referred to as “broker non-votes” and will not be counted in determining whether either Proposalany of Proposals 1, 3 or 4 is approved. Please participate in the election of directors and vote on all of the proposals by returning your voting instructions to your broker, bank, trustee or other nominee. | 2017 Proxy Statement | | 7 |
How do I vote shares of Common Stock held in my 401(k) Plan?
If you participate in the Navient 401(k) Savings Plan, you may vote the number of shares equivalent to your interest in the plan’s company stock fund, if any, as credited to your account on the record date. You will need to instruct the 401(k) Savings Plan Trusteetrustee by telephone, internet or by mail on how to vote your shares. Voting instructions must be received no later than 5:00 p.m., Eastern Daylight Time, on May 24, 2017.15, 2020. If you own shares through the Navient 401(k) Savings Plan and do not provide voting instructions with respect to your plan shares, the Trusteetrustee will vote your plan shares on each proposal in the same proportion as other plan shares are being voted.
How do I vote?
Navient encourages shareholders to vote in advance of the Annual Meeting, even if you plan to attend the Annual Meeting. You may vote in one of the following ways:
| VOTE BY INTERNET BEFORE THE MEETING | |  |
| Vote your shares at www.proxyvote.com. Votes submitted via the Internet must be received by 11:59 p.m., Eastern Daylight Time, on May 19, 2020. Please have your Notice of Internet Availability or proxy card available when you log on. | |  | If you hold shares directly in your name as a shareholder of record, you may either vote or be represented by another person at the Annual Meeting by executing a legal proxy designating that person as your proxy to vote your shares. If you hold your shares in street name, you must obtain a legal proxy from your broker, bank, trustee or other nominee and present it to the inspector of elections with your ballot to be able to vote at the Annual Meeting. To request a legal proxy, please follow the instructions at www.proxyvote.com | | | | | | | | | VOTE BY PHONE | |  | | Call the toll-free number (1-800-690-6903). You may call this toll-free telephone number, which is available 24-hours a day, and follow the pre-recorded instructions. Please have your Notice of Internet Availability or proxy card available when you call. If you hold your shares in street name, your broker, bank, trustee or other nominee may provide you additional instructions regarding voting your shares by telephone. Votes submitted telephonically must be received by 11:59 p.m., Eastern Daylight Time, on May 19, 2020. | | | | | | | | | | | | VOTE BY MAIL | |  | | If you hold your shares in a street name through a broker, bank, trustee or other nominee and want to vote by mail, you must request paper copies of the proxy materials. Once you receive your paper copies, you will need to complete, sign and date the voting instruction form and return it in the prepaid return envelope provided. Your voting instruction form must be received no later than the close of business on May 19, 2020. | | | | | | | | | | | | | VOTE BY INTERNET DURING THE MEETING | |  | | Go to www.virtualshareholdermeeting.com/NAVI2020. | | | | | | | | | | | | | | | | Vote must be submitted by the close of polls during the Annual Meeting. | | | | | | | | | | | |
How do proxies work?
Navient’s Board of Directors is requesting your proxy. Giving your proxy means that you authorize the persons named as proxies therein to vote your shares at the Annual Meeting in the manner you specify in your proxy (or to exercise their discretion as described herein). If you hold your shares as a record holder and sign and return a proxy card but do not specify how to vote on a proposal, the persons named as proxies will vote your shares in accordance with the Board of Directors’ recommendations. The Board of Directors has recommended that shareholders vote: | ● | “FOR”the election of each of the director nominees named in Proposal 1; |
| ● | “FOR”ratification of the appointment of Navient’s independent registered public accounting firm, as set forth in Proposal 2; |
| ● | “FOR”approval, on a non-binding advisory basis, of the compensation paid to our named executive officers as set forth in this proxy statement, as set forth in Proposal 3; and |
| ● | “FOR”approval of certain amendments to the Amended and Restated Navient Corporation 2014 Omnibus Incentive Plan. |
“FOR” the election of each of the director nominees named in Proposal 1; “FOR” ratification of the appointment of Navient’s independent registered public accounting firm, as set forth in Proposal 2; “FOR” approval, on a non-binding advisory basis, of the compensation paid to our named executive officers as set forth in this proxy statement as Proposal 3; and “ONE YEAR” on a non-binding advisory basis as to whether a non-binding advisory shareholder vote to approve the compensation paid to our named executive officers should occur every one, two or three years. Giving your proxy also means that you authorize the persons named as proxies to vote on any other matter properly presented at the Annual Meeting in the manner they determine is appropriate. Navient does not know of any other matters to be presented at the Annual Meeting as of the date of this proxy statement.
Can I change my vote?
Yes. If you hold your shares as a record holder, you may revoke your proxy or change your vote at any time prior to the final tallying of votes by: Delivering a written notice of revocation to Navient’s Corporate Secretary at the Office of the Corporate Secretary, 123 Justison Street, Wilmington, Delaware 19801; Submitting another timely vote via the Internet, by telephone or by mailing a new proxy (following the instructions listed under the “How do I vote?” section above); or
| ●• | Delivering a written notice of revocationIf you are eligible to Navient’s Corporate Secretary at the Office of the Corporate Secretary, 123 Justison Street, Wilmington, Delaware 19801; |
| ● | Submitting another timely vote via the Internet, by telephone or by mailing a new proxy (following the instructions listed under the “How do I vote?” section); or |
| ● | Attendingduring the Annual Meeting, you also can revoke your proxy or voting instructions and change your vote during the Annual Meeting by logging into the website at www.virtualshareholdermeeting.com/NAVI2020 and following the voting in person.instructions. |
If your shares are held in street name, you need to contact your broker, bank, trustee or nominee for instructions on how to revoke or change your voting instructions. Virtual attendance at the Annual Meeting constitutes presence in person for purposes of quorum at the Annual Meeting.
What constitutes a quorum?
A quorum of shareholders is necessary to transact business at the Annual Meeting. A quorum will exist when the holders of a majority of the shares of Common Stock entitled to vote are deemed present in person or represented by proxy, including proxies on which abstentions (withholding authority to vote) are indicated. Abstentions and broker non-votes will be counted in determining whether a quorum exists.
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What vote is necessary to approve each matter to be voted on at the Annual Meeting?
The following table provides a summary of the voting criteria for the Board’s voting recommendations for the matters on the agenda for the 20172020 Annual Meeting: VOTING MATTERS AND BOARD RECOMMENDATIONS
| | Proposal | Voting Options | Vote Required for
Approval | Abstentions | Broker
Non-Votes | Broker
Discretionary
Vote
Permitted | Board’sBoard's Voting
Recommendation | | 1. | | | | | | | | 1 | Election of Directors | “FOR”"FOR" or “AGAINST” "AGAINST" | Affirmative vote of the holders of a majority of the votes cast. | NOT COUNTED | NOT COUNTED | NO | FOR the election of each of the director nominees | | 2. | | | | | | | | 2 | Ratify the appointment of KPMG LLP as Navient’s independent registered public accounting firm for 2017 2020 | “FOR”"FOR" or “AGAINST” "AGAINST" or “ABSTAIN” "ABSTAIN" from voting | Affirmative vote of the holders of a majority of shares deemed present in person or represented by proxy and entitled to vote on the proposal. | COUNTED as votes Against | NOT COUNTED | YES | FOR | | 3. | | | | | | | | 3 | Approve, in a non- binding advisory vote, the compensation paid to Navient’s named executive officers | “FOR”"FOR" or “AGAINST” AGAINST" or “ABSTAIN” ABSTAIN" from voting | Affirmative vote of the " holders of a majority " of shares deemed present in person or represented by proxy and entitled to vote on the proposal. | COUNTED as votes Against | NOT COUNTED | NO | FOR | | 4. | Non-binding advisory vote as to whether a non-binding advisory vote to approve the compensation paid to our named executive officers should occur every one, two or three years | | | | | | | 4 | Approve the Amended and Restated Navient Corporation 2014 Omnibus Incentive Plan | “FOR” ONE YEAR” or “AGAINST”“TWO YEARS” or “ABSTAIN” “THREE YEARS” or “ABSTAIN” from voting | Affirmative vote of the holders of a majority plurality of shares deemed present in person or represented by proxy and entitled to vote on the proposal. | NOT COUNTED as votes Against | NOT COUNTED | NO | FORONE YEAR |
Who will count the vote?
Votes will be tabulated by an independent inspector of elections.
Who can attend the Annual Meeting?
Only shareholders as of the record date, March 30, 2017,23, 2020, or their duly appointed proxies, may attend. No guests will be allowed to attend the Annual Meeting.
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What do I need to do to attend the Annual Meeting and when should I arrive?
The Annual Meeting will be held at Navient’s headquarters located at 123 Justison Street, Wilmington, Delaware 19801 beginning at 8:00 a.m., Eastern Daylight Time. Admission to the Annual Meeting will begin at approximately 7:30 a.m., Eastern Daylight Time.
In order to be admitted to the Annual Meeting, you should:
| ● | arrive shortly after 7:00 a.m., Eastern Daylight Time, to ensure that you are seated by the start of the Annual Meeting at 8:00 a.m., Eastern Daylight Time; |
| ● | be prepared to comply with security requirements, which may include, among other security measures, security guards searching all bags and attendees passing through a metal detector; |
| ● | leave your camera at home because cameras, transmission, broadcasting and other recording devices, including smartphones, will not be permitted in the meeting room; and |
| ● | bring photo identification, such as a driver’s license, and proof of ownership of Common Stock on the record date, March 30, 2017. If you are a holder of record, the top half of your proxy card or your Notice of Internet Availability is your admission ticket. If you hold your shares in street name, a recent brokerage statement or a letter from your bank, broker, trustee or other nominee are examples of proof of ownership. If you want to vote your shares held in street name in person, you must obtain a legal proxy in your name from the broker, bank, trustee or other nominee that holds your shares of Common Stock. |
Any holder of a proxy from a shareholder must present a properly executed legal proxy and a copy of the proof of ownership.
If you do not provide photo identification and comply with the other procedures outlined above for attending the Annual Meeting in person, you will not be admitted to the Annual Meeting.
| 2017 Proxy Statement | | 10 |
Overview of Proposals
This proxy statement contains four proposals requiring shareholder action, each of which is discussed in more detail below. Proposal 1 requests the election of the director nominees named in this proxy statement to the Board of Directors. Proposal 2 requests ratification of the appointment of KPMG LLP as Navient’s independent registered public accounting firm for the fiscal year ending December 31, 2020. Proposal 3 requests the approval, in a non-binding advisory vote, of the compensation paid to our named executive officers as set forth in this proxy statement. Proposal 4 requests a recommendation, in a non-binding advisory vote, as to whether a non-binding advisory vote to approve the compensation paid to our named executive officers should occur every one, two or three years. | ● | Proposal 1 requests the election of the director nominees named in this proxy statement to the Board of Directors. |
| ● | Proposal 2 requests ratification of the appointment of KPMG LLP as Navient’s independent registered public accounting firm for the fiscal year ending December 31, 2017. |
| ● | Proposal 3 requests the approval, in a non-binding advisory vote, of the compensation paid to our named executive officers as set forth in this proxy statement. |
| ● | Proposal 4 requests approval of certain amendments to our Amended and Restated 2014 Incentive Compensation Plan. |
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Proposal 1 — Election of Directors Under Navient’sthe Navient Bylaws (the “Bylaws”), the Board of Directors has the authority to determine the size of the Board of Directors and to fill any vacancies that may arise prior to the next annual shareholder meeting. Although the Board has the authority to change theits size at any time, currently the Board has determined thatset the maximum numbersize of directors shall not exceed 13.our Board at 9 on April 6, 2020. On April 4, 2017,6, 2020, the Nominations and Governance Committee recommended and the Board of Directors nominated the following directors for election at the Annual Meeting: John K. Adams, Jr.
Frederick Arnold Anna Escobedo Cabral
William M. Diefenderfer, III
Diane Suitt Gilleland
Larry A. Klane Katherine A. Lehman
Linda A. Mills
John (Jack) F. Remondi
Jane J. Thompson
Laura S. Unger
Barry L. Williams
David L. Yowan Biographical information and qualifications and experience for each nominee appears beginning on the next page. In addition to fulfilling the general criteria for director nominees described in the section titled “Nominations Process,” each nominee possesses experience, skills, attributes and other qualifications that the Board of Directors has determined support its oversight of Navient’s business, operations and structure. These qualifications are discussed beginning on the next page along with biographical information regarding each member of the Board of Directors being nominated, including each individual’s age, principal occupation and business experience during the past five years. Information concerning each director is based in part on information received from him or her and in part from Navient’s records. All nominees listed above have consented to being named in this proxy statement and to serve if elected. Should any nominee subsequently decline or be unable to accept such nomination to serve as a director, an event that the Board of Directors does not now expect, the Board of Directors may designate a substitute nominee or the persons voting the shares represented by proxies solicited hereby may vote those shares for a reduced number of nominees. If the Board of Directors designates a substitute nominee, persons named as proxies will vote “FOR”that substitute nominee. Navient’s Bylaws generally provide that the election of a director nominee will be by a majority of the votes cast and voting affirmatively or negatively with respect to the nominee at a meeting for the election of directors at which a quorum is present. Accordingly, a director nominee will be elected to the Board of Directors if the number of shares voted “FOR”the nominee exceeds the number of votes cast “AGAINST”the nominee’s election, without regard to abstentions or broker non-votes. Shares that are not voted affirmatively or negatively in the election of directors, including abstentions and broker non-votes, therefore have no direct effect in the election of directors. Those shares, however, are taken into account in determining whether a sufficient number of shares are present to establish a quorum. If any director nominee fails to receive a majority of the votes cast “FOR”in an uncontested election, that nominee has agreed to automatically tender his or her resignation upon certification of the election results. If such an event were to occur, Navient’s Nominations and Governance Committee will make a recommendation to the Board of Directors on whether to accept or reject such nominee’s resignation. The Board of Directors will act on the recommendation of the Nominations and Governance Committee and publicly disclose its decision and the rationale behind it within 90 days from the date of certification of the election results. | 20172020 Proxy Statement | | 12
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NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Name and Age
Service as a Director | | Position, Principal Occupation, Business Experience and Directorships |
| | | 
Jack Remondi, 5457
Director since May 2013
| | President and Chief Executive Officer
Directorships of Other Public Companies: CubeSmart Real Estate Investment Trust (NYSE: CUBE) — 2009 to present
Former Directorships of Other Public Companies: SLM Corporation
Other Professional and Leadership Experience: Chairman, Reading is Fundamental Trustee, Nellie Mae Education Foundation | | | Directorships of Other Public Companies:
Cubesmart Real Estate Investment Trust — 2009 to present
| Director since
May 2013
| | SLM Corporation — former Board Member
Skills, Experience and Qualifications: Mr. Remondi has been the Company’s President and Chief Executive Officer since April 2014. He was SLM Corporation’s President and Chief Executive Officer from May 2013 to April 2014, President and Chief Operating Officer from January 2011 to May 2013 and its Vice Chairman and Chief Financial Officer from January 2008 to January 2011.
Mr. Remondi’sRemondi has a nearly 30-year history in the student loan and business services industry with Navient and its predecessors, in a variety of leadership roles, including as chief executive officer, chief operating officer and chief financial officer, enables himofficer. He has the in-depth knowledge of our industry, customers, investors and competitors, as well as the relationships, to bringlead our company. Mr. Remondi brings to our Board of Directors a unique historical perspective of Navient, its operations and the evolution of the student loan industry. Mr. Remondi also bringsindustry, and he provides valuable insights to theour Board of Directors in the areas of finance, accounting, portfolio management, business operations and student/consumer lending. He has the in-depth knowledge of our industry, customers, investors and competitors, as well as the relationships, to lead our company.
|
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| | | Name and Age
Service as a Director
| | Position, Principal Occupation, Business Experience and Directorships |
| | | 
William M. Diefenderfer, III, 71
Chairman
Linda Mills, 70
Chair of the Board since March 2014 June 2019
Director since
| | Partner
Diefenderfer, Hoover, McKenna & Wood, LLP
President Cadore Group LLC
Business Experience: Partner, Diefenderfer, Hoover, McKenna & Wood, LLP,
President, Cadore Group LLC, a law firm, Pittsburgh, PA — 1991 to presentChief Executive Officermanagement and President, Enumerate Solutions, Inc., a privately-owned technologyIT consulting company — 20002015 to 2002
Deputy Director, U.S. Officepresent
Corporate Vice President, Operations, Northrop Grumman — 2013 to 2015 Corporate Vice President & President, Information Systems and Information Technology Sectors, Northrop Grumman — 2008 to 2012
Directorships of Management and BudgetOther Public Companies: American International Group, Inc. (NYSE: AIG) — 19892015 to 1991present
Other Professional and Leadership Experience: Public Company Accounting Oversight
Board (PCAOB) StandingMember, Smithsonian National Air & Space Museum Senior Advisory Group — formerand Former Board Member, Directorships of Other Public Companies:
Cubesmart Real Estate Investment Trust — 2004 to present
Chairman of Northern Virginia Technology Council
Former Board Member, Wolf Trap Foundation for the BoardSLM Corporation — former Board Member
Performing Arts
Skills, Experience and Qualifications: Mr. Diefenderfer’s legal background, his involvement in the executive branch of the federal government, and his leadership roles in business and with the PCAOB, together with his service as a member of other public company boards, both as chairman and as chair of various committees, including audit committees, bring valuable
Ms. Mills’ extensive experience in the areas of finance, accounting, businessleading businesses and operations political/governmental affairs and law to our Board of Directors.
| | | | 
John K. Adams, Jr., 61
Director since
November 2014
| | Retired – Investment Banking
Business Experience:
Managing Director, UBS Investment Bank’s Financial Institutions Group — 2002 to 2013 Managing Director, Credit Suisse First Boston’s Financial Institutions Group — 1985 to 2002
Other Professional and Leadership Experience:
Board President, Good Shepherd Services
Directorships of Other Public Companies:
Charles Schwab Corporation — 2015 to present
Skills, Experience and Qualifications:
Mr. Adams’ significant experience in capital markets and corporate finance, specifically involving financial institutions, along with his knowledge of the U.S. financial services regulatory environment, enables him to bringfor large, complex multinational companies brings a valuable perspective to our Board of Directors experience in the areas of finance,operations, financial institutions, capital marketsmanagement, strategic re-positioning, risk management, technology, federal, state and mergerslocal government contracting, and acquisitions, which expertise iscybersecurity risk. Through insights gained as a director on the board of another large, publicly traded corporation in a highly regulated industry, as well as her service on many nonprofit boards, Ms. Mills brings a unique and wide range of valuable in evaluatingstrategic and operational perspectives to our business and growth plans and overseeing the operations and capital markets activities of our company.
Board. |
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| | | Name and Age
Service as a Director | | Position, Principal Occupation, Business Experience and Directorships |
Frederick Arnold, 66
Director since August 2018 | | Financial Executive
Business Experience: Chief Financial Officer, Convergex Group, LLC — July 2015 to May 2017 Executive Vice President and Chief Financial Officer, Capmark Financial Group, Inc. — September 2009 to January 2011 Executive Vice President of Finance, Masonite Corporation — February 2006 to September 2007 Executive Vice President, Strategy and Development, Willis North America — 2001 to 2003 Chief Administrative Officer, Willis Group Holdings Ltd. — 2000 to 2001 Chief Financial and Administrative Officer, Willis North America — 2000
Directorships of Other Public Companies: Valaris plc (NYSE: VAL) — 2019 to Present
Former Directorships of Other Public Companies: Syncora Holdings Ltd. FS KKR Capital Corp. Corporate Capital Trust CIFC Corp.
Other Professional and Leadership Experience: Current Chairman of the Board, Lehman Brothers Holdings Inc. Director, Lehman Commercial Paper Inc.
Skills, Experience and Qualifications: Mr. Arnold spent 20 years as an investment banker primarily at Lehman Brothers and Smith Barney, where he served as managing director and head of European corporate finance. His experience originating and executing mergers and acquisitions and equity financings across a wide variety of industries and geographies, as well as his other board experience, brings a valuable perspective to our Board of Directors. Subsequent to his employment at Lehman Brothers and Smith Barney, Mr. Arnold spent 15 years in various senior financial positions at a number of private equity-owned portfolio companies. |
Name and Age Service as a Director | | Position, Principal Occupation, Business Experience and Directorships |
 Anna Escobedo Cabral, 5760
Director since
| | Senior AdvisorPartner Cabral Group, LLC Inter-American Development BankPartner, Cabral Group — 2018 to present Senior Advisor, Inter-American Development Bank — 2009 to present2018 Treasurer of the United States, U.S. Department of the Treasury — 2004 to 2009 Director, Smithsonian Institution’s Center for Latino Initiatives — 2003 to 2004 CEO, Hispanic Association on Corporate Responsibility — 1999 to 2003 Staff Director & Chief Clerk, USU.S. Senate Committee on the Judiciary — 1993 to 1999 Executive Staff Director, USU.S. Senate Task Force on Hispanic Affairs — 1991 to 1999
| | | | | |
Other Professional and Leadership Experience: | | | Vice Chair, Hispanic Diversity Advisory Committee, Comcast NBCU Trustee, Jessie Ball duPont Fund Chair, BBVA Microfinance Foundation Board Former Member, NatureBridge Regional Advisory Committee | | | Former Member, NatureBridge Board of Directors — former member | | | Former Chair, Financial Services Roundtable Retirement Security Council — former chair | | | Former Member, Providence Hospital Foundation Board — former member | | | Former Member, American Red Cross Board of Directors — former member | | | Former Member, Sewall Belmont House Board of Directors — former member | | | Former Member, Martha’s Table Board of Directors — former member | | |
Skills, Experience and Qualifications: Ms. Cabral’s
Through her extensive experience in public policy, government, public affairs, corporate social responsibility, international development, and financial literacy, as well as her experience as a chief operating officer in the non-profitnonprofit sector, enables her to provide valuableMs. Cabral provides our Board with insights and judgment to our Board of Directors.regarding regulatory policy and the political and legislative process.
|
Diane Suitt Gilleland, 70
 Larry A. Klane, 59
May 2019
| | Adjunct Professor of Higher EducationCo-Founding Principal Pivot Investment Partners LLC University of Arkansas, Little RockBusiness Experience: Adjunct Professor of Higher Education, University of Arkansas, Little Rock
Global Financial Institutions Leader, Cerberus Capital Management — 2012 to 2013 Chair, Korea Exchange Bank — 2010 to presentAssociate Professor2012
CEO, Korea Exchange Bank — 2009 to 2012 President of Higher Education, UniversityGlobal Financial Services, Capital One — 2000 to 2008 Managing Director, Bankers Trust/Deutsche Bank — 1994 to 2000
Former Directorships of Arkansas, Little Rock — 2003 to 2010Deputy Director, Illinois Board of Higher Education — 1999 to 2003
Chief Executive Officer, Arkansas Board of Higher Education — 1990 to 1997
Chief Finance Officer, Arkansas Board of Higher Education — 1986 to 1990
| | | | Other Public Companies: VeriFone Systems, Inc. Aozora Bank Ltd.
Other Professional and Leadership Experience: | | | Member, University of Arkansas Foundation | | | Member, University of Arkansas at Pine Bluff Foundation Fund | | | Trustee, Arkansas Arts Center | | | | | | Directorships of Other Public Companies: | | | SLM Corporation — former Board Member | | | | | | Director, Goldman Sachs Bank USA Former Director, Nexi Group S.p.A. Former Director, Ethoca Limited
Skills, Experience and Qualifications: | | | Dr. Gilleland’s knowledge of higher education governance
Mr. Klane brings an important strategic and finance, from a university and governmentoperational perspective enables her to bring valuable awareness to our Board of Directors on a variety of matters relating to our industrygiven his extensive background in financial services and our customers,payment services, including his service in various leadership positions in the areas of academia, student/consumer lending, political/governmental affairs and finance.financial services industry. |
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| | | Name and Age
Service as a Director
| | Position, Principal Occupation, Business Experience and Directorships |
| | | 
Katherine A. Lehman, 4245
Director since
| |
Managing Partner, Hilltop Private Capital — 2016 to Present Managing Director and Deal Team Leader, Lincolnshire Management — 2009 to 2016 Other Investment Roles, Lincolnshire Management — 2001 to 2009
Directorships of Other Public Companies: Stella-Jones (TSX: SJ) — 2016 to present Chair of the Board
Other Professional and Leadership Experience: Director, American Track Services Director, Spiral Holding Former Board Member, The Robert Toigo Foundation Director, American Track Services
Director, New York Private Equity Network
Former Board Member, True Temper Sports — former Former Board Member, Gruppo Fabbri — former Former Board Member, PADI Holding Company — former Former Board Member, Bankruptcy Management Solutions — former Board Member Directorships of Other Public Companies:
Stella-Jones (TSX: SJ)
Skills, Experience and Qualifications: Ms. Lehman’s experience in private equity and financial services, along with her investment evaluation, portfolio oversight and board experience enablesenable her to provide strategic and operational expertise in the areas of finance, review and analysis of investments, mergers and acquisitions, integration and operations, accounting and business, which assist our Board of Directors in evaluating our business and growth plans.
|
| | | 
Linda Mills, 67
Director since
May 2014
| | Retired – Corporate Executive
Northrop Grumman
Business Experience:
Corporate Vice President, Operations, Northrop Grumman — 2013 to 2015
Corporate Vice President & President, Information Systems and Information Technology Sectors, Northrop Grumman — 2008 to 2012
Directorships of Other Public Companies:
American International Group, Inc. (AIG) — 2015 to present
Other Professional and Leadership Experience:
Board Member, Smithsonian National Air & Space Museum
Board of Visitors, University of Illinois, College of Engineering
Senior Advisory Group and Former Board Member, Northern Virginia Technology Council
Wolf Trap Foundation for the Performing Arts – former Board Member
Skills, Experience and Qualifications:
Ms. Mills’ extensive experience in leading businesses and operations for large, complex multinational companies brings a valuable perspective to the Board in the areas of operations, financial management, strategic re-positioning, risk management, technology, government contracting and cyber-risk. When combined with her service as a director on other large publicly traded corporate boards in highly-regulated industries, Ms. Mills brings a wide range of valuable strategic and operational perspectives to our Board of Directors.
|
| 20172020 Proxy Statement | | 1617
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| | | Name and Age
Service as a Director | | Position, Principal Occupation, Business Experience and Directorships |
| | | 
| | Jane J. Thompson Financial Services LLC
Chief Executive Officer, Jane J. Thompson Financial Services LLC, a management consulting firm — 2011 to present President, Financial Services, Walmart Stores, Inc. — 2002 to 2011 Executive Vice President, Credit, Home Services, Online and Corporate Planning, Sears, Roebuck and Co. — 1988 to 1999 Consultant/Partner, McKinsey & Company — 1978 to 1988
Directorship of Other Public Companies: OnDeck Capital, Inc. (NYSE: ONDK) — 2014 to present Chair of Nominating Committee Mitek Systems, Inc. (Nasdaq: MITK) — 2017 to present
Former Directorships of Other Public Companies: Blackhawk Network Holdings, Inc. VeriFone Systems, Inc. The Fresh Market
Other Professional and Leadership Experience: Chair, Pangea Universal Holdings, Inc. Member, Commercial Club of Chicago Former Member and Chair, The Chicago Network Former Member and Board Member, The Economic Club of Chicago Former Member, Center for Financial Services Innovation Board Former Member, CFPB Consumer Advisory Board Directorship
Former Member and Chair, Boys & Girls Clubs of Other Public Companies:Blackhawk Network Holdings, Inc. — 2014 to present
OnDeck Capital, Inc. — 2014 to present
VeriFone Systems, Inc. — 2014 to present
The Fresh Market — 2012 to 2016
Chicago Board Former Member, Lurie Children’s Hospital of Chicago Board of Trustees Former Trustee, Bucknell University Former Member, Corporate Advisory Board, Darden Graduate School of Business, University of Virginia Former Member, Corporate Advisory Board, Walton Graduate School of Business, University of Arkansas
Skills, Experience and Qualifications: Ms. Thompson brings a unique depth and breadth of expertise to our Board of Directors in the areas of consumer behavior, financial services, consumer lending, finance and financial services regulation. She has extensive experience in consumer lending, as well as management experience with large, publicly-traded retailpublicly traded businesses. Combined with other leadership roles in business—including service as a director of several public companies and as a member of various audit, compensation, and risk management and governance committees—Ms. Thompson’s business experience enables herThompson brings valuable insights to provide valuable insightsour Board in a variety of areas.
|
Name and Age Service as a Director | | Position, Principal Occupation, Business Experience and Directorships |
| | Financial Services Advisor
President Unger, Inc.
President, Unger, Inc., a financial services consulting firm — 2018 to present Special Advisor, Promontory Financial Group — 2010 to 2014 Independent Consultant to JPMorgan — 2003 to 2009 Former
Commissioner, U.S. Securities and Exchange Commission — 1997 to 2002 (including (including six months as Acting Chairman)
Counsel, U.S. Senate Committee on Banking, Housing & Urban Affairs — 1990 to 1997
Directorships of Other Public Companies: CIT Group (NYSE: CIT) — 2010 to present Nomura Holdings, Inc. (NYSE: NMR) — 2018 to present
Former Directorships of Other Public Companies: CA Technologies Ambac Financial Group, Inc.
Other Professional and Leadership Experience: Board Member, Children’s National Medical Center Director, Nomura Securities, Inc. Director, Nomura Global Financial Products Directorships of Other Public Companies:
CA, Inc. — 2004 to present
CIT Group — 2010 to present
Ambac Financial Group, Inc. — former Board Member
Skills, Experience and Qualifications: Ms. Unger’s government, public policy and legal and regulatory experience, together with her extensive leadership experience at government agencies, provides the Board with perspectives into regulatory policy and the political and legislative process. She alsoUnger has significant corporate governance expertise as a member or chair of boards and board committees of public companies and fromher service at the U.S. Securities and Exchange Commission.
|
| 2017 Proxy Statement | | 17 |
| | | Name Her government, public policy and Age
Service as a Director | | Position, Principal Occupation, Business Experiencelegal and Directorships | | | | 
Barry L. Williams, 72
Director since
July 2000
| | Retired – Investment Consultant
Business Experience:
President, Williams Pacific Ventures, Inc., a consulting and investment company — 1987 to 2014
Other Professional and Leadership Experience:
Director, CH2M Hill Companies
Director, Sutter Health
Trustee, Management Leadership for Tomorrow
Trustee Emeritus, American Conservatory Theater
Directorships of Other Public Companies:
PG&E Corporation — 1996 to present
Lead Director and Chairman of the Compensation Committee
Northwestern Mutual Life Insurance Company — former Board Member
Simpson Manufacturing Co., Inc. — former Board Member
SLM Corporation — former Board Member
Skills, Experience and Qualifications:
Mr. Williams’regulatory experience, leading an investment and consulting firm, combinedtogether with otherher extensive leadership roles in business, brings management, leadership, and business skills toexperience at government agencies, provides our Board of Directors. His experience in numerous areas, including financial, audit, operationsDirectors with perspectives into regulatory policy and real estate, when combined with his service as a director of a number of public companies, including service on several audit, governancethe political and compensation committees, enables him to provide relevant and actionable insights in the areas of finance, financial services, business operations, capital markets and corporate governance.
legislative process. |
| | | 
| | Consumer Financial Services Executive American Express Company
Executive Vice President and Treasurer, American Express Company — 2006 to present Senior Treasury Management, American Express Company — 1999 to 2006 Senior Vice President, North American Consumer Bank Treasury, Citigroup — 1987 to 1998
Skills, Experience and Qualifications: Mr. Yowan’s extensive experience in consumer financial services including his long tenure with the world’s foremostlargest payment card issuer makemakes him a valuable addition to Navient’s Board of Directors. As a recent addition to the Board, Mr. Yowan’s expertiseHis insight and experience in risk management, balance sheet management, asset securitization and strategy make him ideally suited to assist theour Board in overseeing financial, operational and credit risk management.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED ABOVE. | 20172020 Proxy Statement | | 1819
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Role and Responsibilities of the Board of Directors
The Board of Directors believes strong corporate governance is critical to achieving Navient’s performance goals, enhancing shareholder value and to maintaining the trust and confidence of investors, employees, regulatory agencies and other stakeholders. The primary responsibilities of the Board of Directors are to: | ● | Review Navient’s long-term strategies and set long-term performance metrics; |
| ● | Review and approve Navient’s annual business plan and multi-year strategic plan, periodically review performance against such plans and ensure alignment between the Company’s actions and its longer-term strategic objectives; |
| ● | Review risks affecting Navient and its processes for managing those risks, and oversee assignment and performance of various aspects of risk management, compliance and governance; |
| ● | Select, evaluate and compensate the Chief Executive Officer; |
| ● | Plan for succession of the Chief Executive Officer and members of the executive management team; |
| ● | Review and approve major transactions; |
| ● | Through its Audit Committee, select and oversee Navient’s independent registered public accounting firm; |
| ● | Oversee financial matters, including financial reporting and financial controls; |
| ● | Recommend director candidates for election by shareholders and plan for the succession of directors; and |
| ● | Evaluate the Board’s composition, succession and its own effectiveness. |
Review Navient’s long-term strategies and set long-term performance metrics; Review and approve Navient’s annual business plan and multi-year strategic plan, regularly review performance against such plans and ensure alignment between the Company’s actions and its longer- term strategic objectives; Review risks affecting Navient and its processes for managing those risks, and oversee management performance with regard to various aspects of risk management, compliance and governance; Select, evaluate and compensate the Chief Executive Officer; Plan for succession of the Chief Executive Officer and members of the executive management team; Review and approve major transactions; Through its Audit Committee, select and oversee Navient’s independent registered public accounting firm; Oversee financial matters, including financial reporting, financial controls and capital allocation; Recommend director candidates for election by shareholders and plan for the succession of directors; and Evaluate the Board’s composition, succession, and effectiveness.
Board Governance Guidelines
The Board of Directors’ Governance Guidelines (the “Guidelines”) are reviewed, at least annually, by the Nominations and Governance Committee. The Guidelines are publishedcan be found atwww.navient.com under “Investors, Corporate Governance” and a written copy may be obtained by contacting the Corporate Secretary atcorporatesecretary@navient.com. The Guidelines, along with Navient’s Bylaws, embody the following governance practices, among others: A majority of the members of the Board of Directors must be independent directors and all members of the Audit, Compensation and Personnel, and Nominations and Governance Committees must be independent. All directors stand for re-election each year and must be elected by a majority of the votes cast in uncontested elections.
No individual is eligible for nomination to the Board after the earlier of (i) their 75th birthday or (ii) after having served in the aggregate more than 20 years on the Board. The Board of Directors has separated the roles of Chair of the Board and CEO, and an independent, non-executive director serves as Chair.
| ● | A majority of the members of the Board of Directors must be independent directors and all members of the Audit, Compensation and Personnel, and Nominations and Governance Committees must be independent. Until May 1, 2016, for purposes of determining independence when evaluating a director’s relationship with Navient, “Navient” included SLM Corporation and its subsidiaries, as affiliates of the Company. |
| ● | All directors stand for re-election each year and must be elected by a majority of the votes cast in uncontested elections. |
| ● | No individual is eligible for nomination to the Board upon the earlier of (i) their 75thbirthday or (ii) effective in 2018, after having served more than 20 years on the Board or on the board of the Company’s predecessor companies. |
| ● | The Board of Directors has separated the roles of Chairman of the Board and CEO, and currently has an independent, non-executive director as Chairman. |
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| ● | Independent members of the Board of Directors and its committees meet in executive session, outside the presence of management or the CEO at the beginning of each regularly-scheduled Board meeting as well as the end of each regularly-scheduled Board and committee meeting. The Chairman of the Board (or the applicable committee chair) presides over these sessions. |
| ● | Navient maintains stock ownership and retention guidelines for directors and executive officers and has a policy to prohibit the hedging or pledging of its stock. |
| ● | The Board of Directors and its committees conduct performance reviews annually, and have routinely done so. |
| ● | The Board of Directors and its committees may engage their own advisors. |
Independent members of the Board of Directors and its committees meet in executive session, outside the presence of management or the CEO at several times during each Board meeting as well as at the end of each Board and committee meeting. The Chair of the Board (or the applicable committee chair) presides over these sessions. Navient maintains stock ownership and retention guidelines for directors and executive officers and has a policy prohibiting the hedging or pledging of its stock. The Board is preparing for anticipated director retirements that will result fromof Directors and each committee conduct performance reviews annually through a combination of the Board’s tenureonline questionnaires and age limits. As partindividual director interviews. The Board of this process, theDirectors and its committees may engage their own advisors. The Nominations and Governance Committee at the direction of the Board, has conductedroutinely conducts an assessment of director skillsets in light of the Company’s present and future businesses. Thebusinesses to ensure Board anticipates additional individuals will be recruited as directors in order to supplement the skills of our directors and to have the Board’s performance and experience be fully matrixed across all known and anticipated needs.effectiveness.
Board Leadership Structure
The Board of Directors has separated the roles of ChairmanChair of the Board of Directors and Chief Executive Officer, and the Board of Directors continues to believe that this structure properly balances the Board’s management and governance responsibilities. The Board of Directors also believes that its leadership structure has created an environment of open, efficienttransparent communication between the Board of Directors and management, enabling the Board of Directors to maintain an active, informed role in oversight by being able to monitor and manage those matters that may present significant risks to Navient. While it is the opinion of the Board of Directors that its leadership structure is appropriately balanced between promoting Navient’s strategic development with the Board’s management oversight function, asin the future, when the Board contemplates botheither CEO succession and Chairman of theor Board Chair succession, it may choose to change this separationgovernance structure at any time.
Board Succession Planning
Our Board Governance Guidelines provide that no individual is eligible for nomination to the Board after the earlier to occur of (i) their 75th birthday or, (ii) after they have served more than 20 years on the Board.1 During 2019, in connection with the approval of the Company’s slate of nominees for the 2019 Annual Meeting and the Canyon Agreement, William M. Diefenderfer, III notified the Board that he would not to stand for re-election at the 2019 Annual Meeting. Additionally, pursuant to the Canyon Agreement, Barry L. Williams retired from the Board effective August 9, 2019. For additional information pertaining to the Canyon Agreement, please refer to “Shareholder Engagement and Communications with the Board” below.
The Board continues to actively engage in succession planning and director recruiting to ensure that the size of the Board and the skills of the directors align with our business strategy and the environment in which we operate.
Management Succession Planning
We have succession plans and talent management processesprograms in place for our Chief Executive Officer and for our team of senior executives. Our senior management succession planning process is an organization-wide practice designed to proactively identify, develop and retain the leadership talent that is critical for future business success.
1 | Our Board Governance Guidelines state: “…individuals will not be nominated for election to the Board after the earlier to occur of (i) their 75th birthday or, (ii) after they have served more than 20 years on the Board.” |
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The succession plan for our Chief Executive Officer is reviewed regularly by the Compensation and Personnel Committee and the other independent directors. The plan identifies a “readiness” level and ranking for each internal candidate and also incorporates the flexibility to define an external hire as a succession option. Formal succession planning for the rest of our senior leaders is also a regularan ongoing process, which includes identifying a rank and readiness level for each potential internal candidate and strategically planning for external hires for positions where for example, gaps, if any, are identified. In 2016, our Board re-examined emergency CEO and senior management succession planning in extraordinary circumstances.
Our emergency CEO succession planningplan is intended to enable our company to respond to an immediate and unexpected position vacancies,vacancy, including those resulting from a major catastrophe, by continuing our company’scatastrophe. The plan allows the Company to continue safe and sound operation and minimizingminimizes potential disruption or loss of continuity to our company’s business and operations. | 2017 Proxy Statement | | 20 |
For a director to be considered independent, the Board of Directors must determine that the director does not have any direct or indirect material relationship with Navient (or, until May 1, 2016,that would interfere with SLM Corporation).the director’s exercise of independent judgment or that would render the director incapable of making a decision with only the best interests of the Company in mind. The Board of Directors has adopted the Guidelines, which include the standards for determining director independence whichindependence. In addition to Delaware law requirements, the Guidelines conform to the independence requirements of Rule 10A-3 of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Nasdaq listing standards. The Guidelines are publishedcan be found at www.navient.com under “Investors, Corporate Governance” and a written copy may be obtained by contacting the Corporate Secretary at corporatesecretary@navient.com.At the end of 2016,2019, the Board of Directors was comprised of 1110 members, 109 of whom were affirmatively determined to be independent. David L. Yowan was appointed to the Board on March 30, 2017 to fill a vacancy created by the resignation or retirement of certain directors. The independent members of the Board of Directors at the end of fiscal 20162019 were: John K. Adams Jr.;Frederick Arnold; Marjorie L. Bowen; Anna Escobedo Cabral; William M. Diefenderfer, III; Diane Suitt Gilleland;Larry A. Klane; Katherine A. Lehman; Linda A. Mills; Barry A. Munitz; Jane J. Thompson; Laura S. Unger; and BarryDavid L. Williams.Yowan. During 2016,2019, and again in 2020, the Board of Directors determined that each of these individuals met the Nasdaq listing standards and Navient’s own director independence standards. In addition, the Board of Directors considered transactions and relationships between each director and any member of his or her immediate family on one hand, and Navient, on the other, to confirm that there were no transactions or relationships that would impair such director’s independence. Only Mr. Remondi was determined not to be independent under the Guidelines or the Nasdaq listing standards. Upon the appointment of Mr. Yowan to the Board in March of 2017, the Board of Directors determined that he also was independent in accordance with all applicable independence standards.independent. Each member of the Board of Directors’ Audit, Compensation and Personnel, and Nominations and Governance Committees is independent within the meaning of the Nasdaq listing standards, Rule 10A-3 of the Exchange Act Rule 10A-3 and Navient’s own director independence standards.
Board of Directors Meetings and Attendance at Annual Meeting
The full Board of Directors met eight32 times in 2016.2019. Each of our directors attended at least 7579 percent of the total number of meetings of the Board of Directors and committeescommittee meetings during his or her tenure on that committee. Our directors on average attended 96 percent of all meetings of the Board of Directors and applicable committees, with the average attendance across all our directors being 94.8% in 2016. Other2019. All directors other than Mr. Williams, all of our directorsDiefenderfer, who notified the Board that he would not to stand for re-election, attended the Company’s 20162019 annual meeting of shareholders. All of our directors are expected to attend the 2017 Annual Meeting.
The Board of Directors has established the following standing committees to assist in its oversight responsibilities: an Audit Committee, a Compensation and Personnel Committee, a Nominations and Governance Committee, a Finance and Operations Committee, and an Executive Committee. The Board has directed the Nominations and Governance Committee to establish a Risk Committee in 2020 to replace the Finance and Operations Committee. The Risk Committee will focus primarily on oversight of the Company’s enterprise risk management infrastructure. In the coming months, the Nominations and Governance Committee will work with the Board’s other standing committees to shift certain risk oversight responsibilities to this new committee, with other oversight responsibilities moving to the full Board.
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Each standing committee is governed by a Board-approved written charter, which is evaluated annually, and which sets forth the respective committee’s functions and responsibilities. Membership of each of the committees is also changed as part of a regular rotation. Investors may find the current membership of the Board’s standing committees at http://www.navient.com/about/investors/corp_governance/.For 2016,2019, an 18-month work-plan was created from the charters of the Audit, Compensation and Personnel, Nominations and Governance, and Finance and Operations Committees so that the responsibilities of each committee would be addressed at appropriate times throughout the year. These work-plans will be reviewed and revised as appropriatea matter of course in 2017.2020. Agendas for committee meetings are developed based on each committee’s work-plan together with other current matters the Board chair, the committee chair or management believes should be addressed at the meeting. The chair of each committee provides regular reports to the Board of Directors regarding the subject of the committee’s meetings and any committee actions. In addition to the Board’s five standing committees, in 2019 the Board also formed a Special Committee of independent directors to facilitate communications and recommend strategic considerations to the Board in connection with the Company’s engagement with Canyon Capital Advisors LLC (“Canyon”). For additional information pertaining to Canyon, please refer to “Shareholder Engagement and Communications with the Board” below. The Special Committee is comprised of Katherine A. Lehman, David L. Yowan and Laura S. Unger. William M. Diefenderfer, III served as an ex officio member until he departed the Board, at which time Linda A. Mills joined the committee as an ex officio member. The following table sets forth the membership and number of meetings held for each committee of the Board of Directors during 2016.2019. This table reflects the membership of each committee as of December 31, 2016.1 Mr. Yowan joined the Board2019.2 1Steven L. Shapiro served as a member of the Board, Compensation and Personnel Committee and the Nominations and Governance Committee during 2016 until his retirement from the Board in May 2016. Ann Torre Bates was a member of the Board and Chair of the Audit Committee until May 25, 2016, at which time she became Chair of the Nominations and Governance Committee. She continued to serve on the Audit Committee until her resignation from the Board on August 16, 2016.
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in March 2017 and is a member of the Audit Committee and the Finance and Operations Committee. It is the practice of the Board to hold its regular committee meetings in conjunction with the regular meetings of the Board. Given the Audit Committee’s responsibilities relating to our financial statements and financial reporting, it is expected that the Audit Committee will meet more often than the other committees.
| | Audit
Committee | Compensation
and
Personnel Committee | Executive Committee | Finance
and
Operations Committee | Nominations
and
Governance Committee | | John K. Adams, Jr.(1) | X | | X | CHAIR | | | Anna Escobedo Cabral(2) | X | | | �� | X | | William M. Diefenderfer, III | | | CHAIR | | | | Diane Suitt Gilleland | X | | | | X | | Katherine A. Lehman | | X | | X | | | Linda A. Mills | | CHAIR | X | X | | | Barry A. Munitz(3) | | X | X | | CHAIR | | John F. Remondi | | | X | | | | Jane J. Thompson(4) | | X | | X | | | Laura S. Unger(5) | CHAIR | | X | | X | | Barry L. Williams | | X | | X | | | Number of Meetings in 2016 | 13 | 8 | 5 | 6 | 5 |
| | Audit Committee | Compensation and Personnel Committee | Executive Committee | Finance and | Nominations
and Governance Committee | Special Committee | | Frederick Arnold | X | | | X | | | Marjorie L. Bowen (1) | X | | | | X | | | Anna Escobedo Cabral | CHAIR | | X | | X | | Larry A. Klane (2) | | X | | X | | | | Katherine A. Lehman | | X | X | CHAIR | | X | Linda A. Mills (3) | | | CHAIR | | | X | | John F. Remondi | | | X | | | | Jane J. Thompson (4) | | CHAIR | X | | X | | | Laura S. Unger | X | | X | | CHAIR | X | David L. Yowan (5) | | X | | X | | X | | Number of Meetings in 2019 | 10 | 7 | 4 | 10 | 13 | 15 |
| (1) | Ms. Bowen was appointed to the Board on May 1, 2019. Ms. Bowen is not being nominated by the Board for reelection, and her tenure as a director will end when her current term expires at our 2020 Annual Meeting. |
| (2) | Mr. Adams succeeded Mr. WilliamsKlane was appointed to the Board on May 1, 2019. |
| (3) | Ms. Mills served as Chaira member of the Finance and Operations Committee effective May 25, 2016.and the Compensation and Personnel Committee until her appointment as Chair of the Board on June 6, 2019. For the remainder 2019, she served as Chair of the Executive Committee and as an ex officio member of the Special Committee. |
| (2)(4) | Ms. Escobedo Cabral alsoThompson served on the Finance and Operations Committee until May 25, 2016,June 6, 2019, when she became a member of the Nominations and Governance Committee. |
| (3)(5) | Mr. Munitz served on the Nominations and Governance Committee throughout 2016. Upon the departure of Ms. Bates in August 2016, the Board appointed Mr. Munitz as Chair of the committee. |
| (4) | Ms. Thompson alsoYowan served on the Audit Committee until May 25, 2016,June 6, 2019, when shehe became a member of the Compensation and Personnel Committee. |
2 | (5) | The board appointed Ms. UngerIn connection with the Canyon Agreement, the terms of which are discussed on page 30 of this proxy statement, William M. Diefenderfer, III elected not to bestand for re-election to the Board at the 2019 Annual Meeting. Before his departure, Mr. Diefenderfer served as Chairman of the Board and Chair of the AuditExecutive Committee. Barry L. Williams agreed to retire from the Board of Directors in connection with the Canyon Agreement. Mr. Williams served as a member of the Compensation and Personnel Committee, on May 25, 2016.the Nomination and Governance Committee, and the Finance and Operations Committee at various times during 2019 until his retirement from the Board effective August 9, 2019. |
The Chair of the Nominations and Governance Committee, Mr. Munitz, is not standing for re-election to the Board and will be retiring effective May 25, 2017. The Board has determined that, effective May 24, 2017, Ms. Unger will be the Chair of the Nominations and Governance Committee and Ms. Escobedo Cabral will be the Chair of the Audit Committee.
This chair succession is part of a deliberate succession and rotation plan begun by the Board of Directors in 2015. The Board reserves the right to assess each committee’s needs and the skills, expertise and other qualifications when naming a new chair, and may name another director as the chair of that committee.
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The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”).Act. During 2016,2019, the Audit Committee, as set forth in its charter, assisted the Board of Directors in fulfilling its responsibilities by providing oversight relating to: (1) the integrity of Navient’s financial statements; (2) the Company’s system of internal controls; (3) the qualifications, performance and independence of Navient’s independent registered accounting firm; (4) the performance of the Company’s internal audit function; (5) risks related to Navient’s compliance, legal and regulatory matters; and (6) the review of related party transactions. In addition, the Audit Committee reviews the Company’s procedures for the receipt, retention and handling of confidential, anonymous complaints pertaining to accounting, internal accounting controls and auditing matters, including procedures for the periodic review of violations or waivers of compliance with the Company’s Code of Business Conduct, and prepares the report of the Audit Committee for Navient’s annual proxy statement, as required by the SEC. The Board of Directors has determined that two membersone member of the Audit Committee— Mr. Yowan and Mr. Adams—are qualifiedFrederick Arnold— qualifies as audit committee financial experts, as that term is defined under the rules promulgated by the SEC. During 2016, none2019, no member of the Audit Committee members served on the audit committee of more than three public companies. | 2017 Proxy Statement | | 22 |
Compensation and Personnel Committee Pursuant to the provisions of its charter, which can be found on our website in full, the primary responsibilities of the Compensation and Personnel Committee (also referred to herein as the “Compensation Committee”) during 20162019 were to: (1) approve or recommend, as appropriate, compensation, benefits and employment arrangements for Navient’s Chief Executive Officer and other executive officers who report to the CEO (collectively “Executive Management”), and independent members of the Board of Directors; (2) review and approve benefit plans, compensation plans, incentive plans and incentivebenefit plans applicable to Executive Management; (3) review, approve and administer all equity-based plans of the Company; (4) supervise the administration of employee benefit plans of Navient as required by law or the plan terms or as otherwise appropriate; (5) receive periodic reports regarding the Company’s compensation programs as they relate to all employees; (6) review Navient’s management development and recommend to the Board of Directors succession plans applicable to Executive Management; (7) review and consider current and developing compensation and personnel related topics as appropriate;appropriate, including performance management, leadership development, turnover and retention, diversity, and employee engagement; and (8) prepare the report of the Compensation Committee for inclusion in this proxy statement, as required. The Compensation Committee, in coordination with the Audit Committee, also reviewedreviews the report of management on the potential risks arising from Navient’s compensation policies and practices to determine whether such policies and practices are reasonably likely to have a material adverse effect on the Company. The Compensation Committee considers executive officer and director compensation on an annual basis. In January or February of each year, after consultation with the independent chairmanchair and other independent directors, as well as its independent consultant, if one has been retained, the Compensation Committee setsapproves the compensation of the Chief Executive Officer and Executive Management. At that time, the Compensation Committee also makes a recommendation to the Board of Directors regarding director compensation. The Compensation Committee reviewedreviews executive compensation as described in the “Compensation Discussion and Analysis.”Analysis” section of this proxy statement. In addition, throughout the year, the Compensation Committee considers executive compensation consistent with its responsibilities, as warranted by any personnel changes.
Since its creation, membership of the Executive Committee has included the committee chairs, the Chief Executive Officer and the chairman.Board chair. Under its charter, the Executive Committee has authority to act on behalf of the Board of Directors when the full Board of Directors is not available, assists the Board of Directors in fulfilling its oversight responsibilities with regard to establishing risk tolerances and parameters for Navient, and oversees the allocation of risk oversight responsibilities among Board committees. In conjunction with the Audit Committee, it also reviews with management the Company’s quarterly earnings and press releases.
Finance and Operations Committee During 2016,2019, the Finance and Operations Committee assisted the Board of Directors, as required by its charter, by providing oversight with respect to: (1) material corporate finance matters, including investments, mergers and acquisitions, capital management, financing and funding strategy; (2) technology and operations; (3) marketing and product development; (4) the Company’s lending programs; and (5) the Company’s information security program and cyber-security.cybersecurity. The Finance and Operations Committee also reviewed the financial risk profile of Navient, including capital market access, credit, interest rate, currency and currencyprogrammatic/contractual risks and reviewed with management steps to manage those risks.
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Nominations and Governance Committee In accordance with its charter, the Nominations and Governance Committee assistedassists the Board of Directors in establishing appropriate standards for the governance of Navient, the operations of the Board of Directors generally and the qualifications of directors during 2016.directors. It has recommendedrecommends to the Board of Directors the director nominees for the annual meeting of shareholders. The Nominationsshareholders, oversees the orientation of new directors and Governance Committee also supervised the evaluationongoing education of the Board, of Directorsrecommends director assignments to the Board’s standing committees, oversees the Company’s reputational and reviewedpolitical risks, supervises the Board’s self-evaluation and recommendedsuccession process and reviews and recommends changes to the Guidelines to the Board of Directors. In 2016,Board’s Governance Guidelines. Additionally, the Nominations and Governance Committee in conjunction withroutinely benchmarks the Executive Committee, also oversaw a complete review of the committee chartersCompany’s governance practices against industry best practices and the responsibilities and oversight duties of each committee. Additionally, in May of 2016, the Nominations and Governance Committee assisted in amending our Board Governance Guidelines to provide that no individual is eligible for nomination to the Board after the earlier to occur of (i) their 75th birthday or, (ii) after they have served more than 20 years on the Board.2 In accordance with the director tenure policy, we expect one incumbent non-employee director to retire from the2Our Board Governance Guidelines state: “…individuals will not be nominated for election to the Board after the earlier to occur of (i) their 75th birthday or, (ii) beginning with nominations for election to the Board in 2018 and each year thereafter, after they have served more than 20 years on the Board or the boards of its predecessor companies (other than board service on the government sponsored enterprise, the Student Loan Marketing Association)”.
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makes appropriate changes when necessary. Board in each of 2017, and 2018 and two non-employee directors in 2020. As our longest-tenured directors retire from the Board, we will continue our director recruitment efforts to help ensure that the size of the Board and the skills of the directors may be maintained. Each of the Committees’ charters is available atwww.navient.com under “Investors, Corporate Governance.” Shareholders may obtain a written copy of a committee charter by contacting the Corporate Secretary atcorporatesecretary@navient.comor Navient Corporation, 123 Justison Street, Wilmington, Delaware 19801.
Compensation Consultant and Independence
During 2016,2019, the Compensation Committee retained Pearl Meyer as its independent compensation consultant (the “Compensation Consultant”). The Compensation Consultant reported directly to the Compensation Committee, and the Compensation Committee retained authority to replace the Compensation Consultant or hire additional consultants at any time. A representative from the Compensation Consultant participated in meetings of the Compensation Committee and met with the committee without the presence of management, as requested, and directly communicated with the Chair of the Compensation Committee between meetings. However, the Compensation Committee made all decisions regarding the compensation paid to Navient’s named executive officers. The Compensation Consultant provided various executive compensation services to the Compensation Committee pursuant to a written consulting agreement with the Compensation Committee. Generally, these services included advising the Compensation Committee on the principal aspects of Navient’s executive and director compensation programs, assisting in the selection of the compensation peer group, providing market information and analysis regarding the competitiveness of our compensation program design, reviewing Navient’s executive compensation disclosures, and informing the Committee about newemerging compensation-related regulatory and industry issues as they emerge.issues. During 2016,2019, and again in 2017,2020, the Compensation Committee considered the independence of the Compensation Consultant in light of SEC rules and Nasdaq listing standards. The Compensation Committee received a written statement of independence from the Compensation Consultant, which addressed the following factors: (1) other services provided to Navient by the Compensation Consultant; (2) fees paid by the Company as a percentage of the Compensation Consultant’s total revenues; (3) policies or procedures maintained by the Compensation Consultant that are designed to prevent a conflict of interest; (4) any business or personal relationships between the individual consultants involved in the engagement and any member of the Compensation Committee; (5) any Navient Common Stock owned by the individual consultants involved in the engagement; and (6) any business or personal relationships between our executive officers and the Compensation Consultant or the individual consultants involved in the engagement. The Compensation Committee discussed these considerations and concluded that the work of the Compensation Consultant did not raise any conflicts of interest. For more information on the Compensation Committee and the Compensation Consultant, please see the “Compensation Discussion and Analysis” section in this proxy statement.
Compensation Committee Interlocks and Insider Participation
Ms. Mills,Thompson, Mr. Klane, Ms. Lehman, Ms. Thompson3and Messrs. Munitz and WilliamsMr. Yowan were members of the Compensation and Personnel Committee at various times during fiscal year 2016. 2019.3 All members of the Compensation Committee were independent directors, and no member was an employee or
3 | Mr. Williams served on the Compensation Committee until his retirement in August 2019. Ms. Mills also served on the Compensation Committee until her appointment to Chair of the Board on June 6, 2019. |
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former employee of Navient or its affiliates. During fiscal year 2016,2019, none of Navient’s executive officers served on a compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on the Compensation Committee. 3Ms. Thompson was appointed to the Compensation Committee on May 25, 2016.
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The Board of Directors’ Role in Risk Oversight
The
Our Board of Directors has the ultimate responsibility for risk oversight for Navient’s Enterprise Risk Management (“ERM”) philosophy and framework. In carrying out this critical responsibility, the Board has designated the Audit Committee as having primary responsibility to assist the Board in the development, maintenance and governance of the company’s ERM policy, standards and program. Other standing committees of the Board are charged with overseeing specific enterprise risks, as described below. The Board and its standing committees oversee Navient’s overall strategic direction, including settingare responsible for ensuring we adhere to established risk management philosophy, tolerancetolerances and parameters that form a cornerstone of the company’s ERM framework. The Board has delegated day-to-day responsibility for risk oversight to our Chief Executive Officer and establishing procedures for assessingsenior management team, who in turn have established the risksfollowing management committees to implement this directive: Enterprise Risk and Compliance Committee, Credit and Loan Loss Committee, Asset and Liability Committee, and Incentive Compensation Plan Committee. These internal management committees, described in more detail below, provide regular reports to the Board and its standing committees—either directly or through one or more senior executives. The overall risk governance structure is illustrated below:
The Nominations and Governance Committee regularly reviews the composition and membership of each business line,standing committee of the Board and makes recommendations to the Board. Outside of the SEC and Nasdaq requirements for eligibility to serve on certain committees, such as the Audit Committee and the Compensation and Personnel Committee, the Nominations and Governance Committee actively considers each committee’s responsibilities, as outlined in its charter, as well as individual director skillsets when deciding which directors will serve on specific standing committees.
The Board has directed the risk management practicesNominations and Governance Committee to establish a Risk Committee in 2020 to replace the management team developsFinance and utilizes. This risk management framework is reviewed periodically in lightOperations Committee. The Risk Committee will focus primarily on oversight of the Company’s short-enterprise risk management infrastructure. In the coming months, the Nominations and long-term strategies andGovernance Committee will work with the major risks and issues facing the Company. Management escalatesBoard’s other standing committees to shift certain risk oversight responsibilities to this new committee, with other oversight responsibilities moving to the Board of Directors any significant departures from established tolerances and parameters and reviews new and emerging risks.full Board.
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Risk Appetite Framework Navient employs a Risk Appetite Framework which definesto identify the most significant risks impactingthat could impact our business and provides athe process for evaluating and quantifying suchthose risks. Our The Risk Appetite Framework defines the type and degree of risk Navient is able and willing to assume, given its business objectives, contractual and other legal requirements, and obligations to stakeholders. As noted below, our Risk Appetite Framework segments enterprise risk into nine enterprise risk domains.
Enterprise Risk Committee is a management-led committee that monitors approved risk limits and thresholds to ensure our businesses are operating within approved risk parameters. Through ongoing monitoring of risk exposures, management endeavors to identify potential risks and develop appropriate responses and mitigation strategies. Domains Our Risk Appetite Framework segments Navient’s enterprise risks across nine enterprise risk domains: (1) credit;Credit; (2) market;Market; (3) fundingFunding and liquidity;Liquidity; (4) compliance;Compliance; (5) legal;Legal; (6) operational;Operational; (7) reputational/political;Reputational and Political; (8) governance;Governance; and (9) strategy. Management escalates toStrategy. These risk domains are disclosed in our Form 10-K and proxy statements filed with the SEC. As noted above, our Board of Directors any significant departures from established tolerances and parameters and reviews new and emerging risks.has the ultimate responsibility for risk oversight for Navient’s ERM framework. The Board has assigned oversight responsibility for each risk domain to one or more of its standing committees. These risk oversight responsibilities are spelled out in each standing committee’s charter. Investors can find the charter of each committee on our website at https://www.navient.com/about/investors/corp_governance/board_charters/. Each of the enterprise risk domains is described below, along with the standing committee(s) responsible for risk oversight.
| Enterprise Risk Domain | Board Committee | | Risk Description | | Credit | Finance and Operations Committee | | Risk resulting from an obligor's failure to meet the terms of any contract with the Company or otherwise fail to perform as agreed. | | Market | Finance and Operations Committee | | Risk resulting from changes in market conditions, such as interest rates, spreads, commodity prices or volatilities. | | Funding and Liquidity | Finance and Operations Committee | | Risk arising from the Company's inability to meet its obligations when they come due without incurring unacceptable losses. | | Compliance | Audit Committee Finance and Operations Committee | | Risk arising from violations of, or non-conformance with, laws, rules, regulations, prescribed practices, internal policies, and procedures, or ethical standards. | | Legal | Audit Committee Finance and Operations Committee | | Risk manifested by claims made through the legal system, including litigation brought against the Company. Legal risk may arise from a product, a transaction, a business relationship, property (real, personal, or intellectual), employee conduct, or a change in law or regulation. | | Operational | Finance and Operations Committee Compensation and Personnel Committee | | Risk resulting from inadequate or failed internal processes, personnel and systems, inadequate product design and testing, or from external events. | | Reputational and Political | Nominations and Governance Committee | | Risk from stakeholder perceptions regarding actual or alleged violations of law, our internal code of conduct or other employee misconduct. | | Governance | Nominations and Governance Committee | | Risk of not establishing and maintaining a control environment that aligns with stakeholder and regulatory expectations, including tone at the top and board performance. | | Strategic | Executive Committee | | Risk from adverse business decisions or improper implementation of business strategies. |
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Cybersecurity Risk Oversight The Board of Directors’ Risk Oversight Structure
Cyber-Security
Directors, through the Finance and Operations Committee, plays an important role in overseeing the Company’s cybersecurity risk management. The Finance and Operations Committee as part of its oversight responsibilities for cyber-security, receives regular briefings from the Company’s Chief Information Security Officer. Officer relating to the most recent developments in cybersecurity prevention, detection, response and recovery as well as updates on breaches and exploitations, both successful and unsuccessful, at other companies.
Additional Risk Oversight Information Additional information about how we actively managing risk for our stakeholders, including our customers, clients, employees, and shareholders, can be found on our website at https://navient.com/assets/about/investors/corp-governance/Navient-Board-Risk-Oversight.pdf.
Risk Assessment of Compensation Policies
Navient maintains an internal Incentive Compensation Plan Committee (the “ICP Committee”) that conducts an annual risk review and assessment of all the various incentive compensation plans covering our employees—including plans that cover our NEOs—named executive officers—to ensure that our employees are not incented to take inappropriate risks which could impact our financial position and controls, reputation and operations. Our Chief Risk &and Compliance Officer, Chief Legal Officer, Chief | 2017 Proxy Statement | | 25 |
Audit Officer and Chief Human Resources Officer serve on the ICP Committee, along with other senior business leaders. The ICP Committee presented its annual findings to a joint session of the Compensation Committee and the Audit Committee in early 2017,2020, and the Compensation Committee determined that the Company’s incentive compensation programs do not encourage or create unnecessary risk-taking, and that the risks arising from the programs are not reasonably likely to have a material adverse effect on the Company. The ICP Committee will continue to monitor our incentive compensation plans, as well as the plan governance structure put in place to mitigate risks associated with the plans, to ensure that our incentive compensation practices properly incent our employees and reflect industry best practices.
The Nominations and Governance Committee considers director candidates recommended by shareholders and also receives suggestions for candidates from Board members or third parties. The Nominations and Governance Committee has, from time to time, engaged and may alsocontinue, in the future, to engage third-party search firms to assist in identifying director candidates. Candidates are evaluated based on the needs of the Board of Directors and Navient at that time, given the then-current mix of Board members, their individual skills and experiences relative to the Company’s business strategy, and the Nominations and Governance Committee’s desire to bring additional skills or experiences to the Board. While Navient does not have a formal Board diversity policy, the Board of Directors actively seeks representation that reflects gender, ethnic, age and geographic diversity as reflected in the Guidelines. The Nominations and Governance Committee, through its charter, is charged with reviewing the composition, skills and diversity of the Board of Directors, and as part of the process, the Nominations and Governance Committee incorporates into the Board of Directors’ annual evaluation process, the opportunity for each Board member to provide input regarding the current and desired composition of the Board of Directors and desired attributes of Board members. The minimum qualifications and attributes that the Nominations and Governance Committee believes a director nominee must possess include: Knowledge of Navient’s business; Proven record of accomplishment; Willingness to commit the time necessary for Board of Director service; Integrity and sound judgment;
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| ● | Proven record of accomplishment; |
| ● | Willingness to commit the time necessary for Board of Director service; |
| ● | Integrity and sound judgment in areas relevant to the business; |
| ● | Willingness to represent the best interests of all shareholders and objectively appraise management performance; |
| ● | Ability to challenge and stimulate management; and |
Willingness to represent the best interests of all shareholders and effectively oversee management performance; Ability to challenge and stimulate management; and In addition, the Nominations and Governance Committee believes the Board of Directors collectively should encompass a mix of skills and expertise in the following areas: | ● | Information security and cyber-security; |
| ● | Business services and operations; |
| ● | Marketing and product development; |
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Finance, including capital allocation; | ● | Government/Regulatory; and |
Information security and cybersecurity; Financial services, including financial technology and innovation; Business operations and operating efficiency; Mergers and acquisitions; Business processing solutions and outsourcing; Consumer marketing and product development, including customer experience; Government/Regulatory; and The Nominations and Governance Committee considers and evaluates candidates recommended by shareholders in the same manner that it considers and evaluates all other director candidates. In March of 2017, the Nominations and Governance Committee recommended the appointment of David L. Yowan to the Board of Directors to fill a vacancy. The Board of Directors approved the appointment of Mr. Yowan to the Board on March 30, 2017. To recommend a candidate, shareholders should send, in writing, the candidate’s name, credentials, contact information, and his or her consent to be considered as a candidate to the ChairmanChair of the Nominations and Governance Committee atcorporatesecretary@navient.com or c/o Corporate Secretary, Navient Corporation, 123 Justison Street, Wilmington, Delaware 19801. The shareholder should also include his or her contact information and a statement of his or her share ownership. A shareholder wishing to nominate a candidate must comply with the notice and other requirements described under “Shareholder Proposals for the 20182021 Annual Meeting” in this proxy statement.
The Company will include in its proxy statement and on its form of proxy card, the name of a director nominee submitted by an “Eligible Holder” who provides the information and satisfies the other provisions of the Company’s bylaws. To qualify as an “Eligible Holder,” a shareholder or a group of no more than 20 shareholders must have continuously owned at least three percent (3%) of the outstanding shares of the Company’s Common Stock entitled to vote in the election of directors for a period of at least three years and thereafter continue to own the shares through the Company’s annual meeting. There are no proxy access board nominees for the 2020 annual meeting. A complete version of the Company’s Second Amended and Restated Bylaws can be found on the Corporate Governance page of our website at the following location: https://navient.com/about/investors/corp_governance/. | 2020 Proxy Statement | | 29
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Director Orientation and Continuing Education
The Nominations and Governance Committee oversees the orientation of new directors and the ongoing education of the Board. As part of Navient’s director orientation program, new directors participate in one-on-one introductory meetings with Navient business and functional leaders and are given presentations by members of senior management on Navient’s strategic plans, financial statements and key issues, policies and practices. In addition, new directors receive education on their governance and director fiduciary duties.duties and expectations. Directors may enroll in director continuing education programs on corporate governance and critical issues associated with a director’s service on a public company board. Navient makes aan annual stipend available to each director to pay all or a portion oftowards the expenses of these programs. Our senior management meets regularly with the Board and meets annually to review with the Board the operating plan of the Company and each of our strategic business groups. The Board also periodicallyregularly participates in sitefull Board educational programs and visits to Navient facilities.operation centers.
Shareholder Engagement and Communications with the Board
Our CEO, Chief Financial Officer, and Vice President of Investor Relations, together with other members of management, meet periodically with investors to discuss Navient’s strategy and financial and business performance, and to update investors on key developments. During 2016,2019 and into 2020, Navient heldparticipated in at least 100 meetings with over 200 investors and potential investors. In addition, we routinely seek our shareholders’ views on governance and compensation matters. At various times prior to December of 2017, representatives of the Company met with representatives of Canyon Capital Advisors LLC (“Canyon”) as a part of the Company’s engagement strategy that focuses on regularly meeting with its shareholders, bond holders and investors in the asset-backed securities it sponsors. In May 2019, the Company became aware that Canyon had accumulated a beneficial interest in approximately 9.6% of the Company’s outstanding common stock.4 In August 2018, at the request of Canyon, the Board agreed to appoint Frederick Arnold to the Board. On May 2, 2019, we entered into a cooperation agreement with Canyon (the “Canyon Agreement”) whereby the Board agreed, among other things, to appoint Marjorie Bowen and Larry Klane as directors of the Company, subject to the satisfaction of certain customary conditions, and to nominate and recommend Ms. Bowen and Mr. Klane for election to the Board at the Company’s 2019 Annual Meeting of Shareholders. The appointments of Mr. Arnold, Ms. Bowen and Mr. Klane were approved by our shareholders in June 2019. On January 27, 2020, the Company entered into a Stock Repurchase Agreement with Canyon to repurchase its remaining interest in the Company’s common stock. During this time, various representatives of Canyon met or held discussions with various members of management, the Special Committee and other members of the Board. The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Canyon Agreement, included as Exhibit 10.01 to the Company’s Form 8-K that was filed with the SEC on May 3, 20195, the Company’s Definitive Proxy Statement filed with the SEC on Form DEF 14A on April 30, 20196, and its Amended Definitive Proxy Statement on Form DEF 14A filed with the SEC on May 8, 20197, all of which are furnished herewith. Shareholders and other interested parties may submit communications to the Board of Directors, the non-management directors as a group, the ChairmanChair or any other individual member of the Board of Directors by contacting the ChairmanChair of the Board in writing at corporatesecretary@navient.com or c/o Corporate Secretary, Navient Corporation, 123 Justison Street, Wilmington, Delaware 19801. In general,
Except as discussed below or otherwise directed, the Corporate Secretary forwards all such communications to the Chairman.Board Chair. The ChairmanChair in turn determines whether the communications should be forwarded to other members of the Board and, if so, forwards them accordingly. However, for communications addressed to a particular member of the Board, the Chair 4 | On May 4, 2019, Canyon reported on Form 13D/A filed with the SEC that it beneficially owned 25,435,480 or 9.6% of the Company’s outstanding shares. |
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of a particular Board committee or the non-employee directors as a group, the Corporate Secretary forwards those communications directly to those individuals. The directors have requested that communications that do not directly relate to their duties and responsibilities as our directors be excluded from distribution. Such excluded items include “spam,” advertisements, mass mailings, form letters and email campaigns that involve unduly large numbers of similar communications, solicitations for goods, services, employment or contributions, surveys and individual product inquiries or complaints. Additionally, communications that appear to be unduly hostile, intimidating, threatening, illegal or similarly inappropriate will be screened for omission. Any omitted or deleted communications will be made available to any director upon request. | 2017 Proxy Statement | | 27 |
Policy on Political Contributions, Disclosure and Oversight
We did not make any political contributions using corporate funds in 2016,2019, and we have no intention of making such political contributions in 2017.2020. The Company’sCompany's Government Relations Department ispersonnel are responsible for the development and implementation of policies pertaining to the Company’s political activities. It reportsThey report annually to the Nominations and Governance Committee of the Board on major lobbying priorities and principles. The DepartmentGovernment Relations also provides the Committee with a report on any payments made to trade associations, political expenditures, contributions made to other tax-exempt political organizations, as well as contributions by the Company’sCompany's Political Action Committee. In addition to the Government Relations Department, Navient also maintains numerous compliance processes structured to ensure that the Company and its employees conduct all their activities in accordance with our Code of Business Conduct and with all relevant laws governing political contributions and lobbying activities. In
Since 2016, we significantly expandedhave disclosed our disclosure of political activity and contributions through the publication of our Transparency in Policy Engagement and Political Participation Report. In 2018, the Company was recognized as a “Trendsetter” in the CPA-Zicklin Index for political transparency. The Report provides an overview of the Company’s legislative and political priorities and also provides details pertaining to Navient’s contributions to members of Congress, trade associations, 527 political organizations and other political organizations. The Nominations and Governance Committee has instructed the Company to update the report on a semi-annual basis. The current Report is available on the Company’s website at https://www.navient.com/about/who-we-are/transparency/.
The Company has a Code of Business Conduct that applies to Board members and all employees, including the chief executive officer, the principalchief financial officer and the principalchief accounting officer. The Code of Business Conduct is available on the Company’s corporate governance website (at www.navient.comhttps://navient.com/about/investors/corp_governance/ under “Investors, Corporate Governance”) and a written copy is available from the Corporate Secretary. The Company intends to post amendments to or waivers of the Code of Business Conduct (to the extent applicable to the Company’s chief executive officer, principalchief financial officer or principalchief accounting officer or any director) at this location on its website. There were no such amendments or waivers during 2016.2019.
Policy on Review and Approval of Transactions with Related Parties
The Company has adopted a Policy on Related Party Transactions to ensure that all Interested Transactions with Related Parties, as those terms are defined in the policy, will be at arm’s length and on terms generally available to an unaffiliated third-party under the same or similar circumstances. The policy states that, except for the limited exceptions specifically stated in the policy, Interested Transactions with Related Parties that will exceed $120,000 in any calendar year must be reviewed by the Audit Committee and receive approval of the Board of Directors prior to the Corporation entering into the Interested Transaction. A copy of the policy is availablecan be found on the Company’s Corporate Governance website at https://www.navient.com/about/investors/corp_governance/. For additional information pertaining to Related Party Transactions, please refer to “Certain Relationships and Related Transactions” below.
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Our director compensation program is designed to reasonably compensate our non-employee directors for work required for a company of our size, complexity and risk, exposure, and to align the interests of our directors with those of our shareholders. The Compensation Committee reviews the compensation of our non-employee directors on an annual basis and makes recommendations to the Board. In late 2015,2018, the Compensation Committee reviewed our director compensation with the assistance of the Compensation Consultant and concluded that the existing program should remain unchanged for 2016. That review utilized Navient’s 2016 Peer Group.2019. The Compensation Committee revisitedagain reviewed director compensation in 2019 and will keep the existing program unchanged for 2020, with the exception of changes to the form of annual equity awards described below. Our 2019 director compensation program in late 2016 based on the Company’s 2017 Peer Group and determined that the program should be revised for 2017. The 2016 director compensation program, as well as changes to the program for 2017, are describedis detailed below. Director Compensation Elements
| Director Compensation Elements | |
The following table highlights the material elements of our 20162019 director compensation program:
20162019 Compensation Elements | Compensation Value
| | Annual Cash Retainer | $100,000 | Additional Cash Retainer for Independent ChairmanBoard Chair | 50,000 | | Additional Cash Retainer for Audit Committee Chair | 30,000 | | Additional Cash Retainer for Compensation and Personnel Committee Chair | 25,000 | | Additional Cash Retainer for Other Committee Chairs | 20,000 | | Annual Equity Award | 100,000130,000 | Additional Equity Award for Independent ChairmanBoard Chair | 50,000 | Meeting Fees (per meeting) | 1,500 | Annual Maximum | 19,50065,000 |
Annual cash retainers are paid shortly after each annual meeting of shareholders.in quarterly installments in or around June, September, December and March. Annual equity awards typically are granted in February each year in the form of restricted stock. These awards Restricted stock granted to our non-employee directors in February 2019 was structured to vest only upon the recipient’s election to the Board at the Company’s next following annual meeting of shareholders (or, if earlier, upon death, disability, or a change in control). For 2016, each of Beginning in 2020, the Board modified the vesting provisions incorporated in these equity awards to address the potential for partial-year Board service. Restricted stock granted to our non-employee directors also was paid $1,500 for every Board or committee meeting that he or she attended, subject to an annual aggregate maximum amount of $19,500 (which equates to 13 Board or committee meetings per year). This annual maximum is measured by reference to the twelve-month periodin February 2020 will vest in quarterly increments beginning on the grant date ofand thereafter on May 1st, August 1st and November 1st, provided the Company’s annual meeting of shareholders, which typically is held in May.
For 2017,director remains on the Board revised our director compensation program at the recommendation of the Committee to eliminate the payment of meeting fees asthrough each vesting date (with immediate vesting, if earlier, upon death, disability, or a separate category of compensation. Concurrently, the Board approved an increasechange in the annual equity award for our non-employee directors from $100,000 to $130,000, with the Board Chairman receiving an annual equity award of $195,000, to partially offset the elimination of the meeting fees component and, consistent with best practices, increase the proportion of compensation payable in equity. This is the first compensation increase for our non-employee directors since the Board was formed in connection with the 2014 spin-off from SLM Corporation. The Board also directed that annual cash retainers be paid in four equal installments beginning in May 2017.
control). We also reimburse each non-employee director for any out-of-pocket expenses incurred in connection with their service as a director. As described below, our non-employee directors may elect to defer all or a portion of their annual compensation under the Navient Corporation Deferred Compensation Plan for Directors.
Share Ownership Guidelines
We maintain share ownership guidelines for our non-employee directors. Under ourthese share ownership guidelines, each director is expected, within five years of his or her initial election to the Board of Directors, to own Navient Common Stock with a value equivalent to at least four times his or her annual cash retainer (excluding any additional cash or equity retainer or meeting fees).retainer. Currently, that minimum ownership amount is $400,000. The following shares and share units count towards the ownership guidelines: shares held in brokerage | 2017 Proxy Statement | | 29 |
accounts; notional shares credited to deferred compensation accounts; restricted stock and restricted stock units (“RSUs”) that vest solely upon the passage of time; and vested stock options, to the extent that they are “in-the-money.” All non-employee directors are in compliance with the share ownership guidelines as of the date of this proxy statement due to their share ownership amount or because the five-year period from their initial election has not ended.
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Anti-Hedging and Pledging Policy
Navient’s Securities Trading Policy prohibits directors and officers (as defined by Rule 16a-1(f) of the Exchange Act and referred to as “Section 16 Officers”) from selling Navient stock short, holding Navient securities in a margin account, or pledging Navient securities as collateral for a loan or otherwise. Additionally, no director, Section 16 Officer or any other officer of the Company who is subject to the Company’s Stock Ownership Guidelines is permitted to enter into derivative or speculative transactions involving Navient securities (including prepaid variable forward contracts, equity swaps, collars, credit default swaps and exchange funds) that are designed to hedge or offset any decrease in the market value of Navient securities. All directors and named executive officers arewere in compliance with this policy throughout 2019 and remain in compliance as of the date of this proxy statement.
Policy on Rule 10b5-1 Trading Plans
The Company’s Securities Trading Policy governs the circumstances under which Navient directors and Section 16 Officers may enter into trading plans pursuant to SEC Rule 10b5-1 of the securities laws.10b5-1. Rule 10b5-1 trading plans are pre-established trading plans for sales of our Common Stock. We believe our Rule 10b5-1 policy is effective in ensuring compliance with legal requirements. Under the policy: | ● | All Rule 10b5-1 trading plans must be pre-cleared by the Company’s Securities Trading Compliance Officer. |
| ● | A trading plan may be entered into, modified or terminated only during an open trading window and while not in possession of material non-public information. |
| ● | Once adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. |
All Rule 10b5-1 trading plans must be pre-cleared by the Company’s Securities Trading Compliance Officer. A trading plan may be entered into, modified or terminated only during an open trading window and while not in possession of material non-public information. Once adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade.
We provide non-employee directors with company-paid group life insurance, accidental death and disability and business travel accident insurance. We also provide current non-employee directors the opportunity to participate in the Company’s medical and dental plans. If a director elects to participate in these plans, the director pays the full cost of medical and dental coverage (which for an employee is normally shared by the Company and the employee). After retirement from the Board, a former non-employee director may continue medical coverage for up to 18 months under the Consolidated Omnibus Budget Reconciliation Act (COBRA) at his/her own expense. The Independent Chairman is also entitled to reimbursement for office and transportation expenses commensurate with the amount of time he allocates to Board service.
Deferred Compensation Plan for Directors
Navient sponsors a deferred compensation plan for its non-employee directors. Under the Navient Corporation Deferred Compensation Plan for Directors (“Director Deferred Compensation Plan”), our non-employee directors may elect annually to defer receipt of all or a percentage of their annual cash retainer and/or meeting fees.retainer. In addition, directors may elect to forego all orreceive a portioncredit under the Director Deferred Compensation Plan in lieu of thetheir annual equity retainer that they would otherwise receive.retainer. Provided this election is made before the beginning of the year, the director’s plan account will be credited with ana dollar amount equivalent amountto the annual equity retainer and automatically invested in a notional Company stock fund. | 2017 Proxy Statement | | 30 |
Notional stock units remain subject to the same vesting schedule applicable to the annual equity retainer. Deferrals are credited with earnings based on the performance of certain investment funds selected by the participant. The plan does not pay above-market or preferential earnings on amounts deferred. Deferrals invested in the notional Company stock fund are payable in shares of Navient Common Stock. All other deferrals are payable in cash (in a single lump sum or in installments at the election of the director) upon termination of the director’s service on the Board or after a minimum
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number of years (except for hardship withdrawals in limited circumstances). As noted below, Ms. Escobedo Cabral,Bowen, Mr. Diefenderfer, Ms. Thompson and Mr. WilliamsMs. Unger each elected to defer all or a portion of his/her 20162019 compensation under the Director Deferred Compensation Plan.
Director Compensation Table
The tables below present information regarding the compensation and stock awards that we have paid or granted to the non-employee directors for the year ended December 31, 2016.| | Fees Earned | | | | | | or Paid | Stock | All Other | | | | in Cash(1) | Awards(2) | Compensation(3) | Total | | Name | ($) | ($) | ($) | ($) | | John K. Adams, Jr. | 139,500 | 99,997 | 48 | 239,545 | | Ann Torre Bates(4) | 129,000 | 99,997 | 32 | 229,029 | | Anna Escobedo Cabral(5) | 119,500 | 100,000 | 48 | 219,548 | | William M. Diefenderfer, III(6) | 163,500 | 150,000 | 48 | 313,548 | | Diane Suitt Gilleland | 119,500 | 99,997 | 48 | 219,545 | | Katherine A. Lehman | 116,500 | 99,997 | 48 | 216,545 | | Linda A. Mills | 144,500 | 99,997 | 48 | 244,545 | | Barry A. Munitz | 136,500 | 99,997 | 48 | 236,545 | | Steven L. Shapiro(7) | 0 | 99,997 | 0 | 99,997 | | Jane J. Thompson(8) | 116,500 | 100,000 | 48 | 216,548 | | Laura S. Unger | 146,500 | 99,997 | 48 | 246,545 | | Barry L. Williams(9) | 116,500 | 100,000 | 48 | 216,548 |
| | Fees Earned or Paid in Cash(1) | Stock Awards(2) | All Other Compensation(3) | Total | | Name | ($) | ($) | ($) | ($) | | Frederick Arnold | 100,000 | 129,992 | 58 | 230,050 | Marjorie L. Bowen(4) | 81,666 | 100,082 | 34 | 181,782 | | Anna Escobedo Cabral | 130,000 | 129,992 | 58 | 260,050 | William M. Diefenderfer, III(5) | 37,500 | 195,000 | 29 | 232,529 | Larry A. Klane(6) | 81,666 | 100,071 | 34 | 181,771 | | Katherine A. Lehman | 120,000 | 129,992 | 58 | 250,050 | Linda A. Mills(7) | 137,500 | 173,618 | 58 | 311,176 | Jane J. Thompson(8) | 125,000 | 130,000 | 58 | 255,058 | Laura S. Unger(9) | 120,000 | 130,000 | 58 | 250,058 | Barry L. Williams(10) | 50,000 | 129,992 | 39 | 180,031 | | David L. Yowan | 100,000 | 129,992 | 58 | 230,050 |
| (1) | This table includes all fees earned or paid in fiscal year 2016.2019. Unless timely deferred 2016under the Director Deferred Compensation Plan, annual cash retainers wereare paid in quarterly installments beginning shortly after the Company’s 2016 annual meeting of shareholders. The annual limitation on aggregate meeting fees noted in the text above is measured by reference to the twelve-month period beginning on the date of the Company’s annual meeting of shareholders rather thanin May each year. Thus, the Company’s fiscal year. Therefore, depending onamounts paid (or deferred) in 2019 include the particular date when a director joins our Board orfourth and final quarterly payment for the timing of our meetings duringperiod from May 2018 to May 2019, and three quarterly payments for the year, a director may receive more than $19,500 in meeting fees in a calendar year.period from May 2019 to May 2020. |
| (2) | The grant date fair market value for each share of restricted stock granted in 20162019 to directors is based on the closing market price of the Company’s Common Stock on the grant date. Additional details on accounting for stock-based compensation can be found in “Note 2–Significant Accounting Policies” and “Note 11–Stock-Based Compensation Plans and Arrangements” to the audited consolidated financial statements included in the Company’s2019 Annual Report on Form 10-K. Grant date fair valuesStock awards are rounded down to the nearest whole share to avoid the issuance of fractional shares. As noted in the footnotes below, certain directors timely elected to forego their 2016 annual equity retainer and instead received an equivalentreceive a credit under the Director Deferred Compensation Plan thatin lieu of their 2019 annual equity retainer. Plan credits are automatically invested in a notional Company stock fund and are not subject to rounding for fractional shares. |
| (3) | All Other Compensation is detailed in a table on the following page. |
| (4) | Ms. Bowen joined the Board on May 1, 2019, and her compensation for 2019 was pro-rated accordingly. Ms. Bowen timely elected to receive a credit under the Director Deferred Compensation Plan in lieu of her 2019 annual equity retainer, with the credit being automatically invested in a notional Company stock fund. |
| (5) | (3) | All OtherMr. Diefenderfer elected not to stand for reelection to the Board in June 2019, and his cash compensation for 2019 was pro-rated accordingly. Mr. Diefenderfer timely elected to receive a credit under the Director Deferred Compensation is set forthPlan in lieu of his 2019 annual equity retainer, with the table below:credit being automatically invested in a notional Company stock fund. Because Mr. Diefenderfer elected not to stand for reelection to the Board in June 2019, he forfeited this credit when he departed the Board. |
| | Life | | | | Insurance | | | | Premiums(A) | Total | | Name | ($) | ($) | | John K. Adams, Jr | 48 | 48 | | Ann Torre Bates | 32 | 32 | | Anna Escobedo Cabral | 48 | 48 | | William M. Diefenderfer III | 48 | 48 | | Diane Suitt Gilleland | 48 | 48 | | Katherine A. Lehman | 48 | 48 | | Linda A. Mills | 48 | 48 |
(6) | 2017Mr. Klane joined the Board on May 1, 2019, and his compensation for 2019 was pro-rated accordingly. |
| (7) | Ms. Mills was elected as Chair of the Board effective June 6, 2019, and her annual cash retainer was adjusted accordingly. She also received an additional stock award at the time she became Chair of the Board. |
| (8) | Ms. Thompson timely elected to receive a credit under the Director Deferred Compensation Plan in lieu of her 2019 annual equity retainer, with the credit being automatically invested in a notional Company stock fund. |
| (9) | Ms. Unger timely elected to receive a credit under the Director Deferred Compensation Plan in lieu of her 2019 annual equity retainer, with the credit being automatically invested in a notional Company stock fund. Ms. Unger also elected to defer her annual cash retainer under the Director Deferred Compensation Plan. |
| (10) | Mr. Williams retired from the Board effective August 9, 2019, and his cash compensation for 2019 was pro-rated accordingly. |
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| | Life | | | | Insurance | | | | Premiums(A) | Total | | Name | ($) | ($) | | Barry A. Munitz | 48 | 48 | | Steven L. Shapiro | 0 | 0 | | Jane J. Thompson | 48 | 48 | | Laura S. Unger | 48 | 48 | | Barry L. Williams | 48 | 48 |
All Other Director Compensation: | | Life Insurance Premiums(A) | Total | | Name | ($) | ($) | | Frederick Arnold | 58 | 58 | | Marjorie L. Bowen | 34 | 34 | | Anna Escobedo Cabral | 58 | 58 | | William M. Diefenderfer III | 29 | 29 | | Larry A. Klane | 34 | 34 | | Katherine A. Lehman | 58 | 58 | | Linda A. Mills | 58 | 58 | | Jane J. Thompson | 58 | 58 | | Laura S. Unger | 58 | 58 | | Barry L. Williams | 39 | 39 | | David L. Yowan | 58 | 58 |
| (A) | The amount reported is the annual premium paid by Navient to provide a life insurance benefit of up to $100,000. |
| (4) | Ms. Bates resigned from the Board effective August 16, 2016. |
| (5) | Ms. Escobedo Cabral timely elected to forego her 2016 annual equity retainer and instead received an equivalent credit under the Director Deferred Compensation Plan that was automatically invested in a notional Company stock fund. |
| (6) | Mr. Diefenderfer timely elected to forego his 2016 annual equity retainer and instead received an equivalent credit under the Director Deferred Compensation Plan that was automatically invested in a notional Company stock fund. |
| (7) | Mr. Shapiro retired from the Board on May 26, 2016, and he forfeited the stock award reflected in the table above which he had received earlier in the year. |
| (8) | Ms. Thompson timely elected to forego her 2016 annual equity retainer and instead received an equivalent credit under the Director Deferred Compensation Plan that was automatically invested in a notional Company stock fund. |
| (9) | Mr. Williams timely elected to forego his 2016 annual equity retainer and instead received an equivalent credit under the Director Deferred Compensation Plan that was automatically invested in a notional Company stock fund. He also elected to defer his annual meeting fees under the Director Deferred Compensation Plan. |
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Proposal 2 — Ratification of the Appointment of the Independent Registered Public Accounting Firm Navient’s independent registered public accounting firm, KPMG LLP (“KPMG”), is selected by the Audit Committee. On February 23, 2017,21, 2020, the Audit Committee engaged KPMG as Navient’s independent registered public accounting firm for the fiscal year ending December 31, 2017.2020. Representatives of KPMG are expected to be present at the Annual Meeting and they will have the opportunity to respond to appropriate questions from shareholders and to make a statement if they desire to do so. This proposal is put before the shareholders because the Board of Directors believes it is a good corporate governance practice to ask shareholders to ratify the selection of the independent registered public accounting firm. For ratification, this proposal requires the affirmative vote of the holders of a majority of the Common Stock present, represented and entitled to vote, and voting affirmatively or negatively at the Annual Meeting. Accordingly, shares that are not voted affirmatively or negatively with respect to this proposal, including abstentions and broker non-votes, will not be relevant to the outcome. If the appointment of KPMG is not ratified, the Audit Committee will evaluate the basis for the shareholders’ vote when determining whether to continue the firm’s engagement. Even if the selection of Navient’s independent registered public accounting firm is ratified, the Audit Committee may direct the appointment of a different independent registered public accounting firm at any time during 20172020 if, in its discretion, it determines that such a change would be in the Company’s best interests.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR” RATIFICATION OF THE APPOINTMENT OF KPMG AS NAVIENT’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017.2020.Independent Registered Public Accounting Firm
Fees Paid to Independent Registered Public Accounting Firms for 20162019 and 20152018
Aggregate fees billed for services performed for Navient by its independent accountant, KPMG, for the fiscal years ended December 31, 20162019, and 2015,2018, are set forth below. | | 2016 | 2015 | | Audit Fees | $3,451,165 | $3,043,614 | | Audit-Related Fees | 2,006,475 | 1,908,014 | | Tax Fees* | 738,358 | 796,252 | | All Other Fees | — | 45,823 | | Total | $6,195,998 | $5,793,702 |
| * |
| | 2019 | 2018 | | Audit Fees | $4,132,351 | $3,353,617 | | Audit-Related Fees | $1,021,909 | $1,017,232 | | Tax Fees | $378,881 | $822,374 | | All Other Fees | - | - | | Total | $5,533,141 | $5,193,223 |
Tax fees for 2016 do not include certain amounts paid by Navient to SLM Corporation (“SLM”) pursuant to a Tax Sharing Agreement dated April 28, 2014 between Navient and SLM, which required Navient to reimburse SLM for certain payments paid to KPMG on Navient’s behalf. In 2016, Navient reimbursed SLM $534,342 for such payments. Additional information concerning the Tax Sharing Agreement and other agreements between SLM and Navient can be found in this proxy statement under the heading “Certain Relationships and Transactions”.
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Audit Fees.Audit fees include fees for professional services rendered for the audits of the consolidated financial statements of Navient and statutory and subsidiary audits, issuance of comfort letters, consents, income tax provision procedures, and assistance with review of documents filed with the SEC. Audit-Related Fees.Audit-related fees include fees for assurance and other services related to service provider compliance reports, trust servicing and administration reports, internal control reviews, and attest services that are not required by statute or regulation. Tax Fees.Tax fees include fees for federal and state tax compliance, and tax consultation services.
Pre-approval Policies and Procedures
The Audit Committee has a policy that addresses the approval of audit and non-audit services to be provided by the independent registered public accounting firm to the Company. The policy requires that all services to be provided by the Company’s independent registered public accounting firm be pre-approved by the Audit Committee or its Chair. Each approval of the Audit Committee or the Chair of the Audit Committee must describe the services provided and set a dollar limit for the services. The Audit Committee, or its Chair, pre-approved all audit and non-audit services provided by KPMG during 2016.2019. Reporting is provided to the Audit Committee regarding services that the Chair of the Audit Committee pre-approvedpre- approved between committee meetings. The Audit Committee receives regular reports from management regarding the actual provision of all services by KPMG. No services provided by our independent registered public accounting firm were approved by the Audit Committee pursuant to the “de minimis” exception to the pre-approval requirement set forth in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
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Report of the Audit Committee
The following report shall not be deemed incorporated by reference in any filing under the federal securities laws by virtue of any general incorporation of this proxy statement by reference and shall not otherwise be treated as filed under the federal securities laws. The Audit Committee is responsible for monitoring our financial reporting processes and system of internal controls, supervising our internal auditors and overseeing the independence and performance of the independent auditors. In carrying out these responsibilities, the Audit Committee meets, on a regular basis, with our internal auditors and our independent auditors to review the overall scope and plans for their respective audits of our financial statements. The Audit Committee also meets privately (and in separate meetings) with members of management, our independent auditors and our internal auditors as may otherwise be needed. The Audit Committee meets with management and with the independent auditors each quarter to review and discuss our Annual Report on Form 10-K and ourthe Company’s quarterly reports on Form 10-Q prior to their being filed with the SEC. ItSEC and annually to review and discuss the Company’s Annual Report on Form 10-K. The Committee also meets with management and our independent auditors to review and discuss ourthe Company’s quarterly earnings prior to theirreview by the Executive Committee and public release. The Audit Committee’s responsibility is to monitor and oversee the audit and financial reporting processes. However, the members of the Audit Committee are not practicing certified public accountants or professional auditors and rely, without independent verification, on the information provided to them and on the representations made by management, and the report issued by the independent registered public accounting firm. While the Audit Committee and the Board monitor the Company’s financial record-keeping and controls, management is ultimately responsible for the Company’s financial reporting process, including its system of internal controls, disclosure control procedures and the preparation of the financial statements. The independent auditors support the financial reporting process by performing an audit of the Company’s financial statements and issuing a report thereon. The Audit Committee has reviewed and discussed with management and Navient’s independent registered accounting firm, KPMG LLP, the Company’s audited financial statements as of and for the year ended December 31, 2016.2019. The Audit Committee also discussed with KPMG LLP the matters under Public Company Accounting Oversight Board (“PCAOB”) standards, including among other things, matters relatedthose relating to the conduct of the audit of our financial statements. The Audit Committee received, reviewed and revieweddiscussed with KPMG LLP the written disclosures and the letter from KPMG LLP(as required by applicable requirements of the PCAOBPCAOB) regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with KPMG LLPabout the firm’s independence. Based on thethese reviews and discussions, referred to above, the Audit Committee recommended to the Board of Directors that the financial statements referred to above be included in the Company’s2019 Annual Report on Form 10-K for the year ended December 31, 2016,2019, for filing with the Securities and Exchange Commission.
Anna Escobedo Cabral, Chair Frederick Arnold Marjorie L. Bowen Laura S. Unger Chair John K. Adams, Jr.Anna Escobedo CabralDiane Suitt GillelandDavid L. Yowan | 20172020 Proxy Statement | | 3538
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Ownership of Common Stock The following table provides information, as of February 28, 2017,March 10, 2020, about each shareholder known to Navient to beneficially own more than five percent of the outstanding shares of our Common Stock, based solely on the information filed by each such shareholder on Schedules 13D or 13G with the SEC on the dates indicated in the footnotes to this table (percentages are calculated assuming continuous beneficial ownership at February 28, 2017)March 23, 2020). | Name and Address of Beneficial Owner | Shares | Percent | | | | | | The Vanguard Group, Inc.(1) | 37,688,033 | 12.95% | | 100 Vanguard Blvd. | | | | Malvern, PA 19355 | | | | | | | | | | | | Barrow, Hanley, Mewhinney & Strauss, LLC(2) | 32,007,568 | 11.00% | | 2200 Ross Avenue, 31st Floor | | | | Dallas, TX 75201-2761 | | | | | | | | | | | | Boston Partners(3) | 28,171,325 | 9.68% | | One Beacon Street 30th Floor | | | | Boston, MA 02108 | | | | | | | | | | | | BlackRock Inc.(4) | 21,449,552 | 7.37% | | 40 East 52nd Street | | | | New York, NY 10022 | | | | | | | | | | | | State Street Corporation(5) | 16,155,673 | 5.54% | | One Lincoln Street | | | | Boston, MA 02111 | | | | | | |
| Name and Address of Beneficial Owner | Shares | Percent | The Vanguard Group, Inc. (1) | 27,510,806 | 12.44% | | 100 Vanguard Blvd. | | | | Malvern, PA 19355 | | | | | | | BlackRock Inc. (2) | 19,358,945 | 10% | | 40 East 52nd Street | | | | New York, NY 10022 | | | | | | | Dimensional Fund Advisors LP (3) | 14,752,125 | 6.67% | | Building One | | | | 6300 Bee Cave Road | | | | Austin, Texas 78746 | | | | | | |
| (1) | This information is based on the Schedule 13G/A filed with the SEC by The Vanguard Group, Inc., on February 10, 2017.11, 2020. The Vanguard Group, Inc., directly and through its subsidiaries, has sole power to vote or direct the voting of 493,412101,258 shares of Common Stock, shared voting power of 71,93040,510 shares, sole power to dispose of or direct the disposition of 37,143,38827,396,166 shares of Common Stock, and shared power to dispose of or direct the disposition of 544,645114,640 shares of Common Stock. According to this Schedule 13G/A, Vanguard Fiduciary Trust Company, a wholly-ownedwholly owned subsidiary of The Vanguard Group, Inc., beneficially owns 397,31574,130 shares of Common Stock; and Vanguard Investments Australia, Ltd., a wholly-ownedwholly owned subsidiary of The Vanguard Group, Inc., beneficially owns 243,24767,638 shares of Common Stock. |
| (2) | This information is based on the Schedule 13G filed with the SEC by Barrow, Hanley, Mewhinney & Strauss, LLC on February 9, 2017. Barrow, Hanley, Mewhinney & Strauss, LLC has sole power to vote or direct the vote for 7,574,322 shares of Common Stock, shared power to vote or to direct the vote for 24,433,246 shares of Common Stock and sole power to dispose or to direct the disposition of 32,007,568 shares of Common Stock. |
| (3) | This information is based solely on the Schedule 13G filed with the SEC by Boston Partners on February 10, 2017. Boston Partners has sole power to vote or direct the vote for 28,185,474 shares of Common Stock, shared power to vote or to direct the vote for 77,983 shares of Common Stock and sole power to dispose or to direct the disposition of 28,171,325 shares of Common Stock. |
| (4) | This information is based on the Schedule 13G13G/A filed with the SEC by BlackRock, Inc. on January 27, 2016.March 9, 2020. BlackRock, Inc. has sole power to vote or direct the voting of 18,733,98418,451,823 shares of Common Stock and has sole power to dispose of or direct the disposition of for 21,449,55219,358,945 shares of Common Stock. |
| (5)(3) | This information is based on the Schedule 13G filed with the SEC by State Street CorporationDimensional Fund Advisors LP on February 7, 2017. State Street Corporation has shared12, 2020. Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). The Funds directly have sole power to vote or direct the vote for 16,155,673voting of 14,374,107 shares of Common Stock, and sharedsole power to dispose of or to direct the disposition of 16,155,67314,752,125 shares of Common Stock. |
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Ownership of Common Stock by Directors and Executive Officers The following table sets forth information concerning the beneficial ownership of Navient’s Common Stock by: (i) our current directors and director nominees; (ii) the named executive officers listed in the Summary Compensation Table; and (iii) all of the Company’s current directors and executive officers as a group. Under SEC rules, beneficial ownership for purposes of this table takes into account stock as to which the individual has or shares voting and/or investment power as well as stock that may be acquired within 60 days (such as by exercising vested stock options). Information is provided as of February 28, 2017.March 3, 2020. The beneficial owners listed have sole voting and investment power with respect to stock beneficially owned, except as to the interests of spouses or as otherwise indicated. As of February 28, 2017,March 3, 2020, there were 289,444,035194,143,990 shares of our Common Stock issued, outstanding and entitled to vote. | | | | Total | | | | | | Beneficial | Percent of | | Director Nominees(1) | Shares(2) | Vested Options(3) | Ownership(4) | Class | | John K. Adams, Jr. | 26,594 | — | 26,594 | * | | Anna Escobedo Cabral(5) | 26,531 | — | 26,531 | * | | William M. Diefenderfer III(6) | 154,531 | — | 154,531 | * | | Diane Suitt Gilleland(7) | 130,041 | 41,278 | 171,319 | * | | Katherine A. Lehman | 29,094 | — | 29,094 | * | | Linda A. Mills(8) | 30,741 | — | 30,741 | * | | Barry A. Munitz | 70,220 | 21,523 | 91,743 | * | | Jane J. Thompson(9) | 31,131 | — | 31,131 | * | | Laura S. Unger(10) | 26,991 | — | 26,991 | * | | Barry Lawson Williams(11) | 63,039 | 15,301 | 78,340 | * | | | | | | | | Named Executive Officers | | | | | | Jack Remondi(12) | 1,464,655 | 1,335,849 | 2,800,504 | * | | Somsak Chivavibul(13) | 328,628 | 53,191 | 381,819 | * | | John Kane(14) | 343,253 | 54,336 | 397,589 | * | | Jeff Whorley(15) | 200,162 | 35,224 | 235,386 | * | | Timothy Hynes(16) | 214,990 | 88,118 | 303,108 | * | | Directors and Officers(17) as a Group (16 Persons) | 3,285,581 | 1,644,820 | 4,930,401 | 1.68% |
Director Nominees | Shares (1) | Vested Options (2) | Total Beneficial Ownership (3) | Percent of Class | | Frederick Arnold | 28,551 | - | 28,551 | * | Marjorie L. Bowen(4) | 12,218 | - | 12,218 | * | Anna Escobedo Cabral(5) | 56,348 | - | 56,348 | * | Larry A. Klane(6) | 11,952 | - | 11,952 | * | | Katherine A. Lehman | 59,565 | - | 59,565 | * | | Linda A. Mills | 76,002 | - | 76,002 | * | Jane J. Thompson(7) | 62,162 | - | 62,162 | * | Laura S. Unger(8) | 58,909 | - | 58,909 | * | David L. Yowan(9) | 40,039 | - | 40,039 | * | | | | | | | | Named Executive Officers | | | | | Jack Remondi(10) | 2,590,375 | 111,358 | 2,701,733 | 1.38% | Christian Lown(11) | 316,849 | - | 316,849 | * | John Kane(12) | 464,527 | 36,553 | 501,080 | * | Mark Heleen(13) | 286,085 | - | 286,085 | * | Steve Hauber(14) | 144,510 | 19,529 | 164,039 | * | | | | | | | | Directors and Current Officers as a Group | 4,208,092 | 167,440 | 4,375,532 | 2.24% | | (14 Persons) | | | | | | | | | | |
| * | Less than one percent.percent |
| (1) | David L. Yowan was appointed to Board after February 28, 2017, and therefore is not included in this table. |
| (2) | Shares of Common Stock and stock units held directly or indirectly, including vested deferred stock units and unvested deferred stock units that may vest within 60 days of March 3, 2020, credited to Company-sponsored retirement and deferred compensation plans. Totals for named executive officers include (i) restricted stock units (“RSUs”) that vest and are converted into shares only upon the passage of time, (ii) performance stock units (“PSUs”) that vest and are converted into shares upon the satisfaction of pre-established performance conditions, and (iii) associated dividend equivalent units (“DEUs”) issued on outstanding RSUs and PSUs. The individuals holding such RSUs, PSUs and DEUs have no voting or investment power over these units. |
| (2) | (3) | Shares that may be acquired within 60 days of February 28, 2017,March 3, 2020, through the exercise of stock options. AllThe stock options held by our officers are net-settlednet- settled pursuant to their terms (i.e., shares are withheld upon exercise to cover the aggregate exercise price, and the net resulting shares are delivered to the option holder). StockNet-settled stock options therefore are shown on a “spread basis,” with out-of-the-money options shown as 0. |
| (4)(3) | Total of columns 1 and 2. Except as otherwise indicated and subject to community property laws, each owner has sole voting and sole investment power with respect to the shares listed. |
| (4) | For Ms. Bowen, 12,218 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. Ms. Bowen is not being nominated by the Board for reelection, and her tenure as a director will end when her current term expires at our 2020 Annual Meeting. |
| (5) | 19,819For Ms. Cabral, 38,122 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (6) | 53,804For Mr. Klane, 4,610 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (7) | 24,371For Ms. Thompson, 55,901 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (8) | 5,050For Ms. Unger, 18,011 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
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| (9) | 24,870For Mr. Yowan, 10,564 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
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| (10) | 5,050 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (11) | 24,870 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (12) | Mr. Remondi’s share ownership includes 250 shares held as custodian for his child. 627,692930,530 of the shares reported in this column are RSUs, PSUs or DEUs over which Mr. Remondi has no voting or dispositive control. |
| (11) | (13) | Mr. Chivavibul’s share ownership includes 2,098 shares held by his spouse. 160,405259,418 of the shares reported in this column are RSUs, PSUs, or DEUs over which Mr. ChivavibulLown has no voting or dispositive control. |
| (12) | (14) | 225,882207,265 of the shares reported in this column are RSUs, PSUs or DEUs over which Mr. Kane has no voting or dispositive control. 1,0801,250 shares are deferred stock units credited to a Company-sponsored deferred compensation plan account. |
| (13) | (15) | 186,521144,125 of the shares reported in this column are RSUs, PSUs or DEUs over which Mr. WhorleyHeleen has no voting or dispositive control. |
| (14) | (16) | 148,53596,724 of the shares reported in this column are RSUs, PSUs or DEUs over which Mr. HynesHauber has no voting or dispositive control. |
| (17) | Christian Lown joined the Company after February 28, 2017, and therefore is not included in this table. |
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Our executive officers are appointed annually by the Board of Directors. The following sets forth biographical information concerning Navient’s executive officers who are not directors. Biographical information for Mr. Remondi is included in Proposal 1 — Election of Directors.
| Name and Age | Position and Business Experience | | | | Christian Lown 50 | ●• Chief Financial Officer, Navient — March 2017 to present | 47 | ●• Managing Director and Co-Head, Global Financial Technology Group, North America Banks and Diversified Finance, Morgan Stanley — 2006 to FebruaryMarch 2017 | | ●• Vice President, Financial Institutions Group — UBS AG — 2003 to 2006 | | ●• Associate, Financial Institutions Group, Credit Suisse First Boston — 2001 to 2003 | | | | John Kane 51 | ●• Group President, Asset Recovery and Business Services,Processing Solutions, Navient — June 2015 to present | 48 | ●• Chief Operating Officer, Navient — April 2014 to June 2015 | | ●• Senior Vice President — Enterprise Project Management, SLM Corporation — March 2013 to April 2014 | | ●• Senior Vice President — Credit, SLM Corporation — August 2011 to March 2013 | | ●• Senior Vice President — Collections, SLM Corporation — 2008 to 2011 | | ●• Senior Vice President — Consumer Credit Operations, MBNA/Bank of America — 1990 to 2008 | | | | Jeff Whorley | ● Group President, Asset Management and Servicing, Navient — June 2015 to present | 55 | ● Founder & Chief Executive Officer, Core Principal, Inc. — 2013 to June 2015 | | ● President, Student Aid Services, Inc. — 2009 to 2012 | | ● Executive Vice President, Debt Management Services, SLM Corporation — 2003 to 2007 | | | Somsak Chivavibul | ● Chief Decision Management Officer, Navient — March 2017 to present | 50 | ● Chief Financial Officer, Navient — April 2014 to March 2017 | | ● Senior Vice President — Financial Planning & Analysis, SLM Corporation — May 2007 to April 2014 | | ● Vice President — Financial Planning & Analysis, SLM Corporation — 2003 to 2007 | | ● Managing Director — Financial Planning & Analysis, SLM Corporation — 1997 to 2003 | | ● Treasurer, Student Loan Marketing Association — 1997 to 2003 | | | Mark L. Heleen 57 | ●• Chief Legal Officer and Corporate Secretary, Navient — February 2015 to present | 54 | ●• Senior Vice President and Senior Deputy General Counsel, Navient — June 2014 to February 2015 | | ●• Senior Attorney, Cadwalader Wickersham & Taft LLP — August 2013 to June 2014 | | ●• Independent Consultant — January 2011 to August 2013 | | ●• Executive Vice President and General Counsel, SLM Corporation — February 2009 to December 2010 | | ●• Various roles within the Office of the General Counsel, SLM Corporation — July 19881998 to February 2009 | | | | Timothy HynesSteve Hauber 45 | ●• Chief Risk &and Compliance Officer, Navient — June 2017 to present • Chief Audit Officer, Navient — April 2014 to present | 47 | ● Senior Vice President — Collections,June 2017• Chief Audit Officer, SLM Corporation — OctoberJanuary 2011 to April 2014 | | ● Senior Vice President — Credit, SLM Corporation — May 2008 to October 2011 | | ● Senior Vice President — Consumer Lending, Bank of America Card Services — 1993 to 2008 |
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Proposal 3 — Advisory Vote on Executive Compensation Navient is asking shareholders to approve an advisory resolution (commonly referred to as a “say-on-pay” resolution) on the Company’s executive compensation as reported in this proxy statement. Navient urges shareholders to read the “Compensation Discussion and Analysis” section of this proxy statement, which describes how the Company’s executive compensation policies and procedures operate and are designed, as well as the Summary Compensation Table and other related compensation tables and narrative, which provide detailed information on the compensation paid to our named executive officers (“NEOs”). This proposal gives you, as a shareholder, the opportunity to express your views on our NEOs’ compensation. Your vote is not intended to address any specific item of our compensation program, but rather to address our overall approach to and objectives of the compensation paid to our NEOs as described in this proxy statement. In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Navient is asking shareholders to approve the following advisory resolution at the Annual Meeting: “Resolved, that Navient’s shareholders approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis and the related compensation tables and narrative disclosure in this proxy statement.” The Company conducted a similar advisory vote at our last annual meeting of shareholders. At that time, shareholders expressed support for the 20152018 compensation of our NEOs, with approximately 97.7%94% of the votes present in person or represented by proxy at the meeting and entitled to vote on the matter cast to approveapproving the 20152018 compensation of our NEOs. The Board of Directors believes that the Company’s 20162019 executive compensation program strongly alignsaligned pay to actual performance. Navient’s performance in 2016 improved significantly over 2015 on a number of difference fronts, and that performance is directly reflected in the compensation paid to our NEOs for 2016. The Company’s 2016 financial performance resulted in above-target incentive payments under our annual incentive plan. Specifically, each of our NEOs received 111.1% of the target annual incentive due to the Company’s financial performance during 2016. Additionally, the value of outstanding equity awards granted to our NEOs in early 2016 increased due to an increase in the value of our Common Stock. Stock options granted to our NEOs in February 2016 with an exercise price of $9.18 were in-the-money at the end of 2016, and Restricted Stock Units granted on the same date similarly increased in value. Shareholders are encouraged to read the “Compensation Discussion and Analysis” section, which describes Navient’s executive compensation program in detail, including how it is designed to achieve the Company’s compensation objectives and how the Company’s performance in 20162019 was reflected in the compensation of our NEOs. This proposal to approve the resolution regarding the compensation paid to Navient’s NEOs requires the affirmative vote of the holders of a majority of the Common Stock present, represented and entitled to vote, and voting affirmatively or negatively at the Annual Meeting. Accordingly, shares that are not voted affirmatively or negatively with respect to this proposal, including abstentions and broker non-votes, will not be relevant to the outcome. As an advisory vote, the “say-on-pay” resolution is not binding on Navient. The Board of Directors, however, values the opinions of our shareholders as expressed through their votes and other communications.votes. Accordingly, the Board of Directors as well as the Compensation Committee will review and consider the results of the “say-on-pay” vote, the opinions of our shareholders, and other relevant factors in making future decisions regarding our executive compensation program.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “ FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS AND THE RELATED COMPENSATION TABLES AND NARRATIVE DISCLOSURE IN THIS PROXY STATEMENT.
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Proposal 4 — Advisory Vote on Say-on-Pay Frequency Section 14A of the Exchange Act requires that we provide our shareholders with the opportunity to vote, on a non- binding advisory basis, regarding whether the non-binding advisory shareholder vote on compensation paid to our named executive officers should occur every one, two, or three years. This non-binding advisory vote is commonly referred to as “Say-on-Frequency.” In 2015, the Company conducted an advisory vote on Say-on-Frequency. At that time, our shareholders indicated their preference for future advisory votes to be held annually, and consistent with the shareholders’ vote, the Board adopted a policy providing for annual advisory votes to approve the Company’s executive compensation. This year, we are again conducting an advisory vote on Say-on-Frequency. After careful consideration of the various arguments supporting each frequency level, the Board of Directors has determined that holding a non-binding advisory vote on executive compensation annually remains the most appropriate frequency for Navient. Although our executive compensation programs are designed to promote a long-term correlation between pay and performance, the Board of Directors recognizes that executive compensation decisions are an ongoing process. We believe that holding an annual advisory vote on executive compensation will provide us with shareholder feedback on our compensation practices and policies on a regular, frequent basis and is consistent with our objective of further engaging with our shareholders on executive compensation and corporate governance matters. Accordingly, the Board recommends that you vote for ONE YEAR (i.e., once every year) as the frequency of future advisory votes on executive compensation. Because this proposal is advisory, it will not be binding on Navient. However, the Board of Directors values our shareholders’ opinions, and will consider the outcome of the result of the vote on this proposal when determining the frequency of future non-binding advisory votes on compensation paid to our named executive officers. With respect to this proposal, the frequency of the non-binding advisory vote on compensation paid to our named executive officers (namely, every one, two or three years) receiving the greatest number of votes will be considered the frequency recommended by our shareholders. Accordingly, shares that are not voted for a specific frequency with respect to this proposal, including abstentions and broker non-votes, will not be relevant to the outcome.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU SELECT ONE YEAR AS THE FREQUENCY OF NON- BINDING ADVISORY VOTES ON COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS
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Compensation and Personnel Committee Report
The following report shall not be deemed incorporated by reference in any filing under the federal securities laws by virtue of any general incorporation of this proxy statement by reference and shall not otherwise be treated as filed under the federal securities laws. The Compensation and Personnel Committee of the Board of Directors has reviewed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and discussed it with the Company’s management, and based on its review and discussions with management, the Compensation and Personnel Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20162019, and this proxy statement.
Compensation and Personnel Committee Linda
Jane J. Thompson, Chair Larry A. Mills, Chair
Klane Katherine A. Lehman
Barry A. Munitz
Jane J. Thompson
Barry
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Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) provides information regarding our executive compensation guiding principles, the elements of our executive compensation program, the factors that were considered in making compensation decisions for our “named executive officers” or “NEOs” in 2016,2019, and how we have modified our programs to meet Navient’s needs in the future. Navient’s Compensation and Personnel Committee (the “Compensation Committee” or simply the “Committee”) is responsible for establishing and overseeing our executive compensation program, including the program’s underlying philosophy, objectives and related policies. The Committee is composed of Ms. MillsThompson (Chair), Mr. Klane, Ms. Lehman Mr. Munitz, Ms. Thompson and Mr. Williams. Until his retirement in May 2016, Mr. Shapiro also served as a member of the Committee.Yowan. This CD&A presents information for the following Navient NEOs: | ● | Jack Remondi, President and Chief Executive Officer |
| ● | Somsak Chivavibul, Chief Financial Officer |
| ● | John Kane, Group President, Asset Recovery and Business Services |
| ● | Jeff Whorley, Group President, Asset Management and Servicing |
| ● | Tim Hynes, Chief Risk & Compliance Officer |
Mr. Chivavibul served as the Company’s
Jack Remondi, President and Chief Executive Officer Christian Lown, Chief Financial Officer throughout 2016. Effective March 27, 2017, Christian Lown became the Company’s John Kane, Group President, Business Processing Solutions Mark Heleen, Chief FinancialLegal Officer and Mr. Chivavibul assumedSecretary Steve Hauber, Chief Risk and Compliance Officer
Executive Summary Navient’s executive compensation program emphasizes the link between pay and performance, aligning the compensation of our executives with the interests of our shareholders. Our executive compensation program balances annual and long- term performance measures, including a new role overseeing the Company’s decisionmix of financial, operational and strategic goals that promote effective management center.Executive Summary
of our legacy loan portfolio, improvements and growth in our private education loan portfolio and non-education fee revenues, profitable growth in our business services segment and expense control. Individual performance goals also are established for each of our NEOs. This section summarizes Navient’s performance in 20162019 and the impact of that performance on the compensation paid to our NEOs.
Navient’s 2019 Performance Navient’s 2019 results reflect successful and disciplined management across our businesses. Our 2019 results included key successes such as strong EPS performance, continued growth in our consumer lending business, improved loan portfolio performance, continued financing actions to maximize the net interest margin for our loan portfolios and minimize interest expense and improved EBITDA in our business processing segment. Our strong performance in 2019 results from using our expertise, systems and data-driven strategies to create shareholder value by maximizing cash flows, originating high-quality loans at attractive risk-adjusted returns, growing our fee revenue, and improving operating efficiency. The chart on the following page illustrates our key achievements in 2019 and the link between those achievements and our executive compensation program:
Key Accomplishments in 2016: | 2020 Proxy Statement | | 46
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Improved Earnings | Diluted adjusted EPS on a “Core Earnings” basis improved from $1.82 in 2015 to $1.89 in 2016Navient’s 2019 Performance | | | Provide Consistent Return to Shareholders | Successfully Manage Our Liquidity Needs | Pursue Loan Portfolio Acquisitions | Successfully Managed Our Liquidity Needs2019 Performance Highlights | Issued $5.8 billion in FFELP loan asset-backed securities or “ABS”, $488
• Returned $587 million in private education loan ABS and $1.3 billion in unsecured debtRetired or repurchased $2.6 billion of senior unsecured debt
Successfully extended the legal final maturity dates for $9.8 billion in FFELP loan ABS bonds
| | | Private Education Loan Portfolio Performance Improved Year-Over-Year | Private education loan charge-offs decreased by $146 million from 2015 | | | Significant Loan Acquisitions | We acquired $3.7 billion in educational loans, which adds to our consistent and predictable cash flows | | | Shareholder Return Program | We returned $1 billion to our shareholders through dividends and share repurchases, representing a 97% payout ratio• Adjusted Diluted “Core Earnings” Per Share of $2.64, beating the target in our 2019 annual incentive plan by 36% | • Issued $2.7 billion in FFELP loan asset-backed securities (“ABS”) and $4.1 billion in private education loan ABS • Retired $2 billion of senior unsecured debt • Reduced the interest expense we otherwise would have incurred in 2019 by over $90 million
| • Acquired $20 billion in education loans during 2017-19, which added to our consistent and predictable cash flows | Annual Incentive Measures
| • Adjusted Diluted “Core Earnings” Per Share8 • Adjusted “Core Earnings” Operating Expenses9 | • Adjusted Diluted “Core Earnings” Per Share • Adjusted “Core Earnings” Operating Expenses | • Adjusted Diluted “Core Earnings” Per Share • Adjusted “Core Earnings” Operating Expenses | Long-term Incentive Measures
| • Grow Intrinsic Value of Company • Cumulative Net Student Loan Cash Flows10 | • Grow Intrinsic Value of Company • Cumulative Net Student Loan Cash Flows | • Pursue Opportunistic Loan Portfolio Acquisitions • Cumulative Net Student Loan Cash Flows |
| Increase Business Processing EBITDA | Grow Our Consumer Lending Business | Improve Performance of Our Private Eduation Loan Portfolio | 2019 Performance Highlights
| • Increased Business Processing EBITDA by 11% from 2018 but fell below the target in our 2019 annual incentive plan | • Originated $4.9 billion in private education refinance loans, significantly above the $3.65 billion target in our 2019 annual incentive plan | • Reduced private education loan delinquency rate 22% from 2018 • Due to improved laon performance, we were able to reduce our private education loan provision by $73 million from 2018 | Annual Incentive Measures
| • Business Processing EBITDA11 | • Consumer Lending New Loan Volume • Adjusted Diluted “Core Earnings” Per Share | • Private Education Loan Gross Defaults • Adjusted Diluted “Core Earnings” Per Share | Long-term Incentive Measures
| • Revenue from Growth Businesses • Improve Margins in Fee Businesses | • Grow Intrinsic Value of Company • Cumulative Net Student Loan Cash Flows | • Grow Intrinsic Value of Company |
8 | Adjusted Diluted “Core Earnings” Per Share excludes net restructuring and regulatory-related charges, as well as certain extraordinary items such as strategic corporate transactions or other unusual or unplanned events. Adjusted Diluted “Core Earnings” Per Share is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. For more information on the definition of Adjusted Diluted “Core Earnings” Per Share please refer to page 30 of our 2019 Annual Report filed on Form 10-K on February 27, 2020. For a reconciliation of our non-GAAP financial measures with GAAP results, please refer to the discussion on pages 37–52 of our 2019 Annual Report, or refer to the Investor Relations section of our website located at http://www.navient.com/about/investors/. |
9 | Adjusted “Core Earnings” Operating Expenses excludes net restructuring and regulatory-related charges, as well as certain extraordinary items such as strategic corporate transactions or other unusual or unplanned events. Adjusted “Core Earnings” Operating Expenses is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. For more information on the definition of Adjusted “Core Earnings” Operating Expenses and for a reconciliation of non-GAAP financial measures with GAAP results, please refer to our Investor Presentation for Fourth Quarter and Full Year 2019 on the Investor Relations section of our website located at http://www.navient.com/about/investors/. |
10 | “Cumulative Net Student Loan Cash Flows” is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. For more information on the definition of cumulative net student loan cash flows, please refer to the definition at footnote 16. |
11 | Earnings Before Interest, Taxes, Depreciation and Amortization Expense (“EBITDA”) is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. For more information on the definition of EBITDA and for a reconciliation of non-GAAP financial measures with GAAP results, please refer to the discussion on page 45 of our 2019 Annual Report filed on Form 10-K on February 27, 2020, or refer to the Investor Relations section of our website located at http://www.navient.com/about/investors/. |
| 2020 Proxy Statement | | 47
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Pay for Performance:Performance in 2019 Because our executive compensation program directly links pay to performance, the Company’s strong performance in 2019 is reflected in the 2019 incentive compensation earned by our executives, which is summarized in the sections below. Annual Incentives. Our annual incentive plan—known as the Management Incentive Plan—Plan (“MIP”)—is designed to drive the type ofshort-term performance we saw in 2016and shareholder value by focusing on key performance measures tied to our annual operating plan. The 2019 MIP incorporated the following performance metrics that aligndesigned to drive critical pieces of our 2019 operating plan:
| 2019 MIP Performance Metric | Weight | Rationale | Adjusted Diluted “Core Earnings” Per Share12
| 35% | • Measures overall management effectiveness | | | • Promotes shareholder value | | | • Key financial metric for investors | | Consumer Lending New Loan Volume | 20% | • Emphasizes growth in strategic businesses | | | • Offers refinance opportunities to our existing customers, which helps retain and grow our customer base | | | • Loan volume is a key focus in order to scale this growing business | | | • All loan volume is subject to the Company’s Board-approved risk and return guidelines (e.g., regarding consumer credit quality, cost-to-acquire, net interest margin) | Business Processing EBITDA13 | 20% | • Emphasizes profitable growth in strategic businesses | | | • Growth helps to offset company-wide expenses as our legacy loan portfolio amortizes | Adjusted “Core Earnings” Operating Expenses14
| 15% | • Focuses management attention on expense reduction as our legacy loan portfolio amortizes | | | • Key financial metric for investors, which is also critical to the achievement of our Adjusted Diluted “Core Earnings” Per Share goal | | Private Education Loan Gross Defaults | 10% | • Enhances the profitability of our private education loan portfolio | | | • Aids our private education student loan customers | | | • Key financial metric for investors |
Performance against three of the five MIP goals in 2019 was notably strong, with our business objectives. For 2016,each resulting in a payout factor at or near the maximum of 150%. Performance against the remaining two MIP goals was below target thereby reducing the overall performance score. The following chart summarizes Navient’s performance in 2019 relative to goals established for these performance metrics, included (i) EPS on a “Core Earnings” basis, (ii) strategic debt financing proceeds, and | 2017 Proxy Statement | | 42 |
(iii) private education loan defaults. As described in the CD&A, our 2016 performancewhich resulted in above-target payments under the 20162019 MIP.
| 2019 Management Incentive Plan | | 2019 Performance Metric | Performance Target | | 2019 Actual Performance | Payout Factor | Weighting | Performance Score | | Adjusted Diluted “Core Earnings” Per Share | $
| 1.94 | | $
| 2.64 | 150.0% | 35% | 52.5% | | Consumer Lending New Loan Volume (millions) | $
| 3,651 | | $
| 4,903 | 150.0% | 20% | 30.0% | | Business Processing EBITDA (millions) | $
| 60 | | $
| 49 | 55.0% | 20% | 11.0% | Adjusted “Core Earnings” Operating Expenses15 (millions) | $
| 949 | | $ | 965 | 82.7% | 15% | 12.4% | | Private Education Loan Gross Defaults (millions) | $
| 459 | | $
| 428 | 130.5% | 10% | 13.1% |
| Overall Performance Score: | 119.0% |
Our 2019 Management Incentive Plan. More specifically, each of our NEOs received 111.1% of their target annual incentive for 2016.Plan is described in greater detail beginning on page 57.
15 | Excludes $6 million in regulatory-related expenses, $6 million in restructuring expenses and $12.5 million in expenses relating to the Canyon Agreement. For additional information pertaining to the Canyon Agreement, please refer to “Shareholder Engagement and Communications with the Board” above. |
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Long-term Incentives. Our long-term incentive program is designed to drive longer-term performance and shareholder value by delivering a significant portion of NEO compensation through equity awards. As in prior years, 50% of the equity awards, granted to our NEOs in 2016 were delivered in the form ofincluding performance stock units (“PSUs”) that. Fiscal year 2019 marked the final year of a three-year performance period associated with PSUs granted to our executive team in early 2017 as part of our long-term incentive program.
These 2017-19 PSUs were designed to vest in early 2020 based on performance through the end of 2019, with a potential payout ranging from 0% to 150% of the target number of units, determined by cumulative performance over the 2017-19 performance period. The following performance metrics were selected in early 2017 to focus management on specific long- term business objectives:
| 2017-19 PSU Performance Metric | Weight | Rationale | | Cumulative Net Student Loan Cash Flows | 50% | • Promotes successful management of our loan portfolios | | | • Critical driver of shareholder value, supporting dividends, share repurchases and debt payments | | | • Supports growth of strategic businesses, including consumer lending | | Cumulative Revenue from Growth Businesses | 30% | • Emphasizes strategic growth as our legacy loan portfolio amortizes | | | • Offsets Company-wide expenses as our legacy loan portfolio amortizes | | Strategic Objectives | 20% | • Focuses management on critical, long-term strategic goals |
The following chart summarizes the Company’s cumulative performance over the 2017-19 performance period relative to the targets established for each of these metrics. Our continued strong performance during this three-year period resulted in the 2017-19 PSUs vesting at 109% of the target number of units.
| 2017-19 Performance Stock Units | | 2017-19 Performance Metric | Performance Target | | 2017-19 Actual Performance | Payout Factor | Weight | Performance Score | Cumulative Net Student Loan Cash Flows16 (millions) | $
| 7,850 | | $
| 8,818 | 135% | 50% | 67% | Cumulative Revenue from Growth Businesses17 (millions) | $
| 995 | | $
| 839 | 65% | 30% | 20% | | Strategic Objectives | | | | 110% | 20% | 22% | • Pursue Opportunistic Loan Portfolio Acquisitions • Capture Operating Efficiencies in Asset Servicing • Improve Margins in Fee Businesses • Build Strong Relationships with State and Federal Regulators • Grow Intrinsic Value of Company |
| Overall Performance Score: | 109% |
The Committee considered management’s key achievements during the 2017-19 performance period when assessing the Company’s performance relative to the strategic goals established at the beginning of that period. These key achievements are set forth in the table on the following page.
16 | Cumulative Net Student Loan Cash Flows is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. Cumulative Net Student Loan Cash Flows include aggregate cash flows net of secured borrowings from student loans realized for the fiscal years 2017, 2018 and 2019, including student loan cash flows realized from new acquisitions, but excluding the impact of cash flows for fiscal years beyond 2019 that are accelerated through securitizing or pledging unencumbered student loans or through loan sales. |
17 | Cumulative Revenue from Growth Businesses includes that portion of the Company’s aggregate revenue for fiscal years 2017-19 from non-federal-loan-related businesses. |
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| 2017-19 Performance Stock Units | | 2017-19 Strategic Objectives | Achievements | | Pursue Opportunistic Loan Portfolio Acquisitions | • Acquired $20 billion in student loans between 2017-19, significantly enhancing cash flows from our amortizing loan portfolio | | • Exceeded acquisition targets by 100% | | Capture Operating Efficiencies in Asset Servicing | • Reduced direct servicing unit cost between 2017-19 while improving customer satisfaction | | • Continued to implement automation and system enhancements, as well as program and procedural improvements, that have driven down expenses and improved efficiency | | Improve Margins in Fee Businesses | • Business Processing EBITDA margins significantly improved over three-year period. |
| • Implemented operational improvements to improve efficiency and increase revenue, including robotic process automations and call optimization efforts | | • Secured several large-scale healthcare revenue cycle management engagements | | Build Strong Relationships with State and Federal Regulators | • Established or reestablished dialogue with various regulatory bodies | | • Received positive examinations from key federal and state regulators |
| • Continued to execute on strategy to provide fact-based responses to ongoing litigation | | Grow Intrinsic Value of Company | • Private education loan delinquencies reached historic lows | | • Reduced the interest expense we otherwise would have incurred through a variety of financing initiatives | | • Value delivered to shareholders through dividends and share repurchases | | • Maintained stable ratings with all three credit rating agencies |
These strategic goals were established at the beginning of the three-year period to be challenging but achievable. In evaluating management’s performance over the entire performance period, the Committee considered the business environment during the performance period and its impact on the difficulty of achieving the strategic goals. Based on its evaluation of the strategic goal achievements individually and overall, the Committee determined that management’s accomplishments relative to these strategic goals warranted a three-yearpayout factor of 110% out of a maximum payout factor of 150%.
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CEO Realizable Pay Our pay-for-performance approach over the past five years is highlighted in the chart below, which shows the alignment between the Company’s performance period. In general,(as measured by cumulative total shareholder return (“TSR”)) and the annual Realizable Pay (as defined below) of our CEO over the past five fiscal years.
The Committee believes that analysis of Realizable Pay allows a more complete understanding of the pay-for-performance relationship than sole reliance on amounts shown in the Summary Compensation Table, which reflects the grant date value of various equity awards. The table below compares the components of Mr. Remondi’s Realizable Pay for 2019, 2018, 2017, 2016 and 2015.
| Year | Base Salary ($) | Annual Incentive Compensation ($) | | PSUs ($) | RSUs ($) | Stock Options ($) | Total ($) | | | 2019 | 1,000,000 | 1,785,000 | | 1,926,497 | 2,391,606 | 0 | 7,103,103 | | | 2018 | 1,000,000 | 1,896,000 | | 2,309,255 | 517,094 | 0 | 5,722,349 | | CEO Realizable Pay | 2017 | 1,000,000 | 1,444,500 | | 0 | 1,032,553 | 0 | 3,477,053 | | | 2016 | 1,000,000 | 1,666,500 | | - | 2,067,157 | 5,527,226 | 10,260,883 | | | 2015 | 1,000,000 | 735,000 | | - | 370,201 | 0 | 2,105,201 |
Realizable Pay for each of the applicable fiscal years is the sum of base salary paid, annual incentive award earned, the year-end value of RSUs and stock options granted under the Company’s long-term incentive program in that year, and the value of any PSUs with a performance period ending in that fiscal year. Stock awards are valued as of the end of each fiscal year and include the “in-the-money” value of stock options,18RSUs and PSUs (excluding accrued dividend equivalent units on RSUs and PSUs). Because the Company typically grants equity awards in February each year, the year-end value of these equity awards may be significantly greater or less than the grant-date value depending on whether the price of our common stock has increased or decreased by the end of the year. For example, the year-end value of stock options and RSUs granted in early
18 | For 2019, the Committee decided to discontinue the prior practice of granting stock options as part of the Company’s long-term incentive program. Our 2019 long-term incentive program is described in greater detail beginning on page 60. |
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2016 will vest based on a combination of (i) aggregate cash flows from student loans (net of secured borrowings); (ii) cumulative revenue from growth businesses; and (iii) certain strategic objectives intended to highlight a limited number of critical, non-formulaic goals that management is focusing on over the next three years.The remaining equity awards granted to our NEOs in 2016 were delivered in the form restricted stock units (“RSUs”) and stock options. Reflecting our strong pay-for-performance culture,was substantially greater than the value of these awards increased due to an increase inupon grant, as the valueprice of our Common Stock. Stock options granted to our NEOs incommon stock increased between the February 2016 with an exercise price of $9.18grant date and December 31, 2016, while the opposite was true for RSUs granted in early 2019.
PSUs typically vest based on cumulative performance over three fiscal years. For example, PSUs granted in early 2015 were in-the-moneydesigned to vest at the end of 2017 based on cumulative performance over the 2015-17 fiscal years. Due to the Company’s performance during that three-year period, the value at the end of the fiscal 2017 was zero as none of the PSUs were earned. PSUs granted in early 2016 and RSUs grantedvested at 125% of the target number of units based on the same date similarly increasedCompany’s performance over the applicable 2016-18 performance period, while PSUs granted in value.early 2017 vested at 109% of the target number of units based on the Company’s performance over the applicable 2017-19 performance period.
Cumulative TSR assumes a base investment of $100 at December 31, 2014 and reinvestment of dividends through December 31, 2019.
Navient’s Compensation Philosophy and Objectives We provide each of our NEOs with a compensation package that is tied to performance and aligned with the interests of our shareholders. The Compensation Committee utilizes the following guiding principles to design, implement, and monitor our executive compensation program: Align Compensation with Shareholder Interests. For 2019, 87% of the total direct compensation opportunity provided to our CEO was at-risk and aligned with shareholder value, including incentive awards that depend upon the attainment of specific performance objectives, the value of Navient’s Common Stock or both. This feature of our executive compensation program is highlighted in the charts below.
 | ● | Pay for Performance. A substantial portion of the total compensation paid to our NEOs is earned based on achievement of enterprise-wide goals that impact shareholder value. |
For 2019, the Compensation Committee decided to discontinue the prior practice of granting stock options as part of our long-term incentive program, which is described in greater detail beginning on page 60.
Pay for Performance. As illustrated above, more than 50% of the full-year total compensation at target for our NEOs is delivered through annual incentives and PSUs that are earned based on achievement of enterprise-wide goals that impact shareholder value. Reward Annual Performance. The annual incentive award component of our NEOs’ total compensation is designed to reward achievement of key annual goals that are aligned with the Company’s annual business plan, and conversely to be lower or zero in periods in which those key annual goals are only partially achieved or not achieved at all. Reward Long-term Growth. The total compensation paid to our NEOs is weighted toward long-term equity-based incentives. These awards align pay with sustained performance and shareholder value creation.
| ● | Align Compensation with Shareholder Interests. A significant portion of the total direct compensation provided to our NEOs is delivered in the form of equity awards, while other components of compensation are contingent on specific performance goals designed to drive shareholder value. For 2016, 86% of the total direct compensation provided to our CEO for 2016 was at-risk, including incentive awards that are dependent upon the attainment of specific performance objectives, the value of Navient’s Common Stock or both. | 52 |
| ● | Reward Annual Performance. The annual incentive award component of our NEOs’ total compensation is designed to reward achievement of key annual goals that are aligned with the Company’s annual business plan, and conversely to be lower or zero in periods in which those key annual goals are only partially achieved or not achieved at all. |
| ● | Reward Long-term Growth. The total compensation paid to our NEOs is heavily weighted toward long-term equity-based incentives. These awards link pay to sustained performance and shareholder value creation. |
| ● | Retention of Top Executives. Our NEOs have base salaries and benefits that are competitive, which permit Navient to attract, motivate and retain executives who can drive and lead its success. |
Retention of Top Executives. Our NEOs have base salaries and benefits that are competitive and not excessive, therefore permitting Navient to attract, motivate and retain executives who can drive and lead our success. The compensation packagepackages we provide to our NEOs isare designed to be competitive when compared to other companies that compete with whom we competeus for executive talent. In setting the compensation opportunity for our NEOs, we generally target the median total direct compensation provided to similarly-situatedsimilarly situated executives by our peer group companies. We also believe that strong governance practices and policies are aligned with shareholder interests. Our policies prohibit hedging, pledging or short-sales of any Company stock held by our NEOs and provide for the clawback of compensation in certain situations. See “Other Arrangements, Policies and Practices Related to Our Executive Compensation Programs” below.
How Compensation Decisions Are Made In establishing competitive total compensation packages for our NEOs, the Compensation Committee relies on an analysis of market data to analyzeon the executive compensation packages offered by Navient’s peer group companies, which are described below. While the Committee generally targets the median total compensation opportunity provided by our peer group companies to similarly-situated executives, market data is only one of several factors considered in establishing the compensation | 2017 Proxy Statement | | 43 |
opportunity levels of our NEOs. Navient’s annual strategic business plan also factors heavily in determining certain elements of total compensation, such as our Annual Incentive and Long-term Incentive Programs, which are described in more detail below. Past pay practices and internal employee pay equity, as well as the skills and experience that each NEO brings to Navient, are all important factors considered by the Committee. Navient’s annual strategicThe Committee also considers an assessment of each NEO’s success in achieving pre-determined business plan also factors heavily in determining certain elementsas well as individual objectives, an assessment that is prepared by the CEO and presented to the Committee at a minimum of total compensation, such as our Annual Incentive and Long-term Incentive Programs. These programs are described in more detail below. once each year.
Role of the Compensation Consultant.Consultant The Compensation Committee is advised by its Compensation Consultant. See “Compensation Consultant and Independence” earlier in this proxy statement for more information on the Compensation Consultant’s role as an independent advisor to the Compensation Committee.
Use of Peer Groups.Groups Navient seeks to provide its senior executivesNEOs with competitive compensation relative to a peer group of companies. Typically, the peer group includes companies that operate businesses similar to Navient—currently both data processing/outsourcing services companies and banking/consumer finance companies—with financial metrics roughly comparable to those of Navient. The Compensation Committee reviews the composition of the peer group annually with the assistance of the Compensation Consultant, making adjustments as needed to address changes in Navient’s business or changes in the peer group companies due to mergers or other transactions. The
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Based on its review, the Committee decided the 2019 peer group should remain unchanged from 2018. The Compensation Committee believes that asset size is the most relevant comparator when identifying other companies of similar size and complexity. Our 2019 peer group, which the Committee used to setas context when setting target pay levels at the start of 2016 was unchanged from the peer group previously used for 2015 and consisted2019, consists of the following companies: | 2016 Navient Peer Group | | | | | Total | Net | Net | Market | | Company | Assets(1) | Income(2) | Revenues(2),(3) | Cap(1) | | Alliance Data Systems Corp. | 25,514 | 516 | 7,138 | 13,198 | | Comerica, Inc. | 72,978 | 477 | 2,600 | 11,733 | | Commerce Bancshares, Inc. | 25,641 | 275 | 1,118 | 5,863 | | Discover Financial Services, Inc. | 92,308 | 2,393 | 7,240 | 28,432 | | Euronet Worldwide Inc. | 2,713 | 174 | 1,959 | 3,781 | | Fifth Third Bancorp | 142,177 | 1,564 | 5,810 | 20,343 | | Fiserv Inc. | 9,743 | 930 | 5,505 | 23,069 | | Global Payments, Inc.(4) | 10,664 | 214 | 3,776 | 10,668 | | KeyCorp | 136,453 | 791 | 4,727 | 19,745 | | M&T Bank Corp | 123,449 | 1,315 | 5,106 | 24,254 | | Nationstar Mortgage Holdings, Inc. | 19,593 | 19 | 1,250 | 1,761 | | Paychex, Inc.(4) | 6,441 | 757 | 2,952 | 21,846 | | Santander Consumer USA Holdings Inc. | 38,539 | 766 | 3,300 | 4,838 | | Total Systems Services Inc. | 6,366 | 320 | 4,170 | 9,013 | | Vantiv, Inc. | 7,044 | 213 | 3,579 | 9,604 | | Western Union Co. | 9,420 | 253 | 5,423 | 10,531 | | | | | | | | 25thPercentile | 8,826 | 243 | 2,864 | 8,225 | | Median | 22,554 | 496 | 3,973 | 11,200 | | 75thPercentile | 77,811 | 826 | 5,443 | 20,719 | | | | | | | | Navient Corporation | 121,136 | 681 | 2,094 | 4,980 | | Rank | 4 of 17 | 8 of 17 | 14 of 17 | 14 of 17 | | Percentile | 86 | 57 | 14 | 14 |
| 2019 Navient Peer Group | | Company | Total Assets(1) | | Net Income(2) | | Market Cap(1) | | Customer Account Management | | | | | | | Alliance Data Systems Corporation | $26,495 | | $278 | | $5,168 | Automatic Data Processing, Inc. (3) | 49,059 | | 2,463 | | 73,775 | DST Systems, Inc. (4) | 3,079 | | 267 | | 4,982 | Total System Services, Inc. (5) | 7,707 | | 617 | | 23,586 | | The Western Union Company | 8,759 | | 1,058 | | 11,228 | | | | | | | | | Asset and Risk Management | | | | | | | The Charles Schwab Corporation | 294,005 | | 3,704 | | 61,095 | | Comerica Incorporated | 73,402 | | 1,198 | | 10,343 | | Fifth Third Bancorp | 169,369 | | 2,512 | | 21,815 | | Lincoln National Corporation | 334,761 | | 886 | | 11,703 | | Voya Financial, Inc. | 169,051 | | -351 | | 8,220 | | | | | | | | | High Volume Operations | | | | | | | Discover Financial Services | 113,996 | | 2,957 | | 26,588 | | Fiserv, Inc. | 77,539 | | 893 | | 78,616 | | Global Payments Inc. | 44,480 | | 431 | | 54,868 | Paychex, Inc. (6) | 8,702 | | 1,078 | | 30,484 | Worldpay, Inc. (7) | 27,097 | | 293 | | 41,981 | | | | | | | | 25th Percentile | $17,627 | | $362 | | $10,785 | | Median | 49,059 | | 893 | | 23,586 | 75th Percentile | 141,524 | | 1m831 | | 48,425 | | | | | | | | | Navient Corporation | $94,903 | | $597 | | $3,024 | | Rank | 6 of 16 | | 11 of 16 | | 16 of 16 | | Percentile | 67 | | 34 | | 0 |
| (1) | Total assets and market capitalization as ofreflect each company’s most-recentmost recent fiscal year end.end except for Automatic Data Processing, Inc., DST Systems, Inc., Total System Services, Inc., Paychex, Inc. and Worldpay, Inc. Please see footnotes (3), (4), (5), (6) and (7) for more information. |
| (2) | Financial resultsNet income (in millions in accordance with GAAP) for each company’s most-recently-ended fiscal year, as reflected in each company’s Annual Report on Form 10-K filed with the SEC. Except as otherwise noted below, each company’s most-recentmost recent fiscal year ended December 31, 2016.2019. |
| (3) | Reflects gross revenues for the following data processing/outsourced services companies: AllianceAutomatic Data Systems Corp.; Euronet Worldwide Inc.; Fiserv Inc.; Global Payments, Inc.; Paychex, Inc.; Total Systems Services Inc.; Vantiv, Inc.; and Western Union Co. Net revenues for Navient and the following banking/consumer finance companies includes net interest income plus non-interest income, excluding provision for loan losses: Comerica, Inc.; Commerce Bancshares, Inc.; Discover Financial Services, Inc.; Fifth Third Bancorp; KeyCorp; M&T Bank Corp; Nationstar Mortgage Holdings, Inc.; and Santander Consumer USA Holdings Inc. |
| (4) | TheProcessing's most recent fiscal year for Global Payments, Inc.end is June 30, 2019. Total assets reflect the most-recent fiscal quarter end and Paychex, Inc. ended Maynet income reflects 12-month trailing as of December 31, 2016.2019. Market capitalization for each of these companies reflects common shares outstanding at November 30, 2016,December 31, 2019, multiplied by the per share closing price of the company’s Common Stockcommon stock on December 31, 2016.2019, the last trading date of the year. |
| (4) | DST Systems, Inc. was acquired by SS&C Technologies Holdings, Inc. on April 16, 2018. Market capitalization reflects common shares outstanding at April 16, 2018, multiplied by the per share closing price of the company’s common stock on April 16, 2018, the company's last day of trading. All other metrics are as of March 31, 2018, the most recent quarter end with publicly disclosed financial data. |
| (5) | Total System Services, Inc. was acquired by Global Payments Inc. on September 17, 2019. Market capitalization reflects common shares outstanding at September 17, 2019, multiplied by the per share closing price of the company’s common stock on September 17, 2019, the company's last day of trading. All other metrics are as of June 30, 2019, the most recent quarter end with publicly disclosed financial data. |
| (6) | Paychex's most recent fiscal year end is May 31, 2019. Total assets reflect the most-recent fiscal quarter end and net income reflects 12-month trailing as of November 30, 2019. Market capitalization reflects common shares outstanding at December 31, 2019, multiplied by the per share closing price of the company’s common stock on December 31, 2019, the last trading date of the year. |
| (7) | Worldpay, Inc. was acquired by Fidelity National Information Services, Inc. on July 31, 2019. Market capitalization reflects common shares outstanding at July 31, 2019, multiplied by the per share closing price of the company’s common stock on July 31, 2019, the company's last day of trading. All other metrics are as of June 30, 2019, the most recent quarter end with publicly disclosed financial data. |
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In May 2016, based onAugust 2019, the Compensation Committee’s review, theCommittee adopted a new peer group was changedfor 2020 to better highlight Navient’s three “best fit” core competency categories: customerreflect the Company’s current mix of businesses, including the continued growth and evolution of the Company’s business processing and consumer lending businesses. The Committee continues to believe that asset size is the most relevant comparator when identifying other companies of similar size and complexity, although it also took into account management, asset and risk management, and high volume operations. Peer companies were selected in each of these categories, with asset sizes similar to Navient. The currentfactors such as market capitalization when selecting the 2020 peer group. Our 2020 peer group, which the Committee used to set target pay levels at the start of 2017,2020, consists of the following companies:
| 2020 Navient Peer Group | | Company | Total Assets(1) | | Net Income(2) | | Market Cap(1) | | Alliance Data Systems Corporation | $26.495 | | $278 | | $5,168 | | Ally Financial Inc. | 180,644 | | 1,715 | | 11,615 | | Comerica Incorporated | 73,402 | | 1,198 | | 10,343 | | Conduent Incorporated | 4,514 | | -1,934 | | 1,311 | | Discover Financial Services, Inc. | 113,996 | | 2,957 | | 26,588 | | Fifth Third Bancorp | 169,369 | | 2,512 | | 21,815 | | KeyCorp | 144,988 | | 1,717 | | 19,936 | MAXIMUS, Inc. (3) | 1,990 | | 244 | | 4,759 | Paychex, Inc. (4) | 8,702 | | 1,078 | | 30,484 | | Regions Financial Corporation | 126,240 | | 1,582 | | 16,553 | | Santander Consumer USA Holdings, Inc. | 48,934 | | 994 | | 7,944 | | SLM Corporation | 32,686 | | 578 | | 3,762 | | Synchrony Financial | 104,826 | | 3,747 | | 23,269 | | The Western Union Company | 8,759 | | 1,058 | | 11,228 | 25th Percentile | $13,193 | | $682 | | $5,862 | | Median | 61,168 | | 1,138 | | 11,421 | 75th Percentile | 123,179 | | 1,717 | | 21,345 | | | | | | | | | Navient Corporation | $94,9903 | | $597 | | $3,024 | | Rank | 7 of 15 | | 11 of 15 | | 14 of 15 | | Percentile | 59 | | 23 | | 5 |
| 2017 Proxy Statement | | 44 |
| 2017 Navient Peer Group | | | | | Total | Net | Net | Market | | Company | Assets(1) | Income(2) | Revenues(2),(3) | Cap(1) | | Customer Account Management | | | | | | Alliance Data Systems Corp. | 25,514 | 516 | 7,138 | 13,198 | | Automatic Data Processing, Inc. | 43,670 | 1,493 | 11,668 | 46,372 | | DST Systems Inc. | 2,772 | 427 | 1,557 | 3,428 | | Total System Services, Inc. | 6,366 | 320 | 4,170 | 9,013 | | The Western Union Company | 9,420 | 253 | 5,423 | 10,531 | | | | | | | | Asset and Risk Management | | | | | | The Charles Schwab Corporation | 223,383 | 1,889 | 7,462 | 52,324 | | Comerica Incorporated | 72,978 | 477 | 2,600 | 11,733 | | Fifth Third Bancorp | 142,177 | 1,564 | 5,810 | 20,343 | | Lincoln National Corporation | 261,627 | 1,192 | 13,330 | 15,147 | | Voya Financial, Inc. | 214,235 | (428) | 10,782 | 7,633 | | | | | | | | High Volume Operations | | | | | | Discover Financial Services | 92,308 | 2,393 | 7,240 | 28,432 | | Fiserv, Inc. | 9,743 | 930 | 5,505 | 23,069 | | Global Payments Inc. | 10,664 | 214 | 3,776 | 10,668 | | Paychex, Inc.(4) | 6,441 | 757 | 2,952 | 21,846 | | Vantiv, Inc. | 7,044 | 213 | 3,579 | 9,604 | | | | | | | | 25thPercentile | 8,232 | 286 | 3,678 | 10,068 | | Median | 25,514 | 516 | 5,505 | 13,198 | | 75thPercentile | 117,243 | 1,342 | 7,351 | 22,458 | | | | | | | | Navient Corporation | 121,136 | 681 | 2,094 | 121,136 | | Rank | 5 of 16 | 8 of 16 | 15 of 16 | 5 of 16 | | Percentile | 75 | 54 | 3 | 2 |
| (1) | Total assets and market capitalization as ofreflect each company’s most-recentmost recent fiscal year end except for Automatic Data Processing,MAXIMUS, Inc. and Paychex Inc. Please see footnotefootnotes (3) and (4) for more information. |
| (2) | Financial resultsNet income (in millions in accordance with GAAP) for each company’s most-recently-ended fiscal year, as reflected in each company’s Annual Report on Form 10-K filed with the SEC. Except as otherwise noted below, each company’s most-recentmost recent fiscal year ended December 31, 2016.2019. |
| (3) | Reflects gross revenues for the following companies: Alliance Data Systems Corporation; Automatic Data Processing, Inc.; DST Systems, Inc.; Total System Services, Inc.; The Western Union Company; Lincoln National Corporation; Voya Financial, Inc.; Fiserv, Inc.; Global Payments Inc.; Paychex, Inc.; and Vantiv, Inc. Reflects net revenues including net interest income plus non-interest income, excluding provision for loan losses for Navient and the following banking/consumer finance companies: The Charles Schwab Corporation; Comerica, Incorporated; Fifth Third Bancorp; and Discover Financial Services. |
| (4) | TheMAXIMUS' most recent fiscal year ended Juneend is September 30, 2016 for Automatic Data Processing, Inc.2019. Total assets reflect the most-recent fiscal quarter end and ended Maynet income reflects 12-month trailing as of December 31, 2016 for Paychex Inc.2019. Market capitalization for these companies reflects common shares outstanding at November 30, 2016,December 31, 2019, multiplied by the per share closing price of the company’s Common Stockcommon stock on December 31, 2016.2019, the last trading date of the year. |
The new peer group consists of 15 companies, 10 of which were also in the former peer group as indicated above. The following companies were removed from the 2016 peer group: Euronet Worldwide, Inc.; Commerce Bancshares, Inc.; KeyCorp.; M&T Bank Corporation; Nationstar Mortgage Holdings, Inc.; and Santander Consumer USA Holdings Inc.
| (4) | Paychex's most recent fiscal year end is May 31, 2019. Total assets reflect the most-recent fiscal quarter end and net income reflects 12- month trailing as of November 30, 2019. Market capitalization reflects common shares outstanding at December 31, 2019, multiplied by the per share closing price of the company’s common stock on December 31, 2019, the last trading date of the year. |
Consideration of Say-on-Pay Vote Results.Results At our most recent annual meeting of shareholders, held on May 26, 2016,June 6, 2019, the Company conducted an advisory vote to approve its executive compensation for the fiscal year ended December 31, 2015. Shareholders2018. As in prior years, shareholders expressed overwhelming support for the compensation of our NEOs, with approximately 97.7%94.1% of the votes present in person or(or represented by proxy at the meetingmeeting) and entitled to vote on the matter cast to approve our 20152018 executive compensation. The Committee took into account the results of this advisory vote when making compensation decisions for 2016.2019. In 2015, the Company conducted an advisory vote on the frequency of future advisory votes to approve its executive compensation.compensation, commonly known as “Say-on-Frequency.” Our shareholders indicated their preference for future advisory votes to be held annually. Consistent with the shareholders’ vote on this matter, the Board adopted a policy providing for annual advisory votes to approve the Company’s executive compensation. This year we are again conducting an advisory vote on Say-on-Frequency. See “Proposal 4 — Advisory Vote on Say-on-Pay Frequency” in this proxy statement.2019 Executive Compensation Program
Primary Elements of Compensation.Compensation The compensation program for our NEOs consists of three primary elements:
| Compensation Element | Objective | | Type of Compensation | | Base Salary | To provide a base level of cash compensation consistent with the executive’s level of responsibility. | | Fixed cash compensation. Reviewed annually and adjusted as appropriate. | | | | | | Annual Incentives | To encourage and reward our NEOs for achieving annual corporate and individual performance goals. | | Variable compensation. Performance-based. Payable in cash. | | | | | | Long-term Incentives | To motivate and retain senior executives by aligning their interests with those of shareholders through sustained performance and growth. | | Multi-year variable compensation. Generally payable in performance stock units (“PSUs”) and/or restricted stock units (“RSUs”), in addition to stock options.. PSUs are subject to performance vesting based on cumulative performance over a three-year performance, period, with each award being settled in stock at the end of the performance period to the extentdegree that goals are met. RSUs and stock options are subject to time-based vesting, with each award vesting in 1/3 increments over a three-year period. For 2016,2019, total long-term incentive value was provided 50%60% in PSUs 30%and 40% in RSUs for our CEO and 20% in stock options.split equally between PSUs and RSUs for our other NEOs. |
The Compensation Committee makes decisions regarding each primary element of compensation described above. Because our focus is on performance, the Committee does not consider aggregate amounts earned or benefits accumulated by an executive from prior service with the Company as a significant factor in making compensation decisions.In addition to the three primary compensation elements discussed above, our NEOs have an opportunity to participate in the Navient Deferred Compensation Plan for retirement planning purposes.Plan. The Deferred Compensation Plan offers a variety of investment choices, none of which represents an “above-market return.” We also provide our NEOs with the same standard health, welfare and retirement benefits provided to our employees, as well as limited perquisites. Each of our NEOs also participates in severance plans for our senior executives. Total Direct Compensation Mix.Mix These primary compensation elements—Base Salary, Annual Incentives and Long-term Incentives—together form Total Direct Compensation for each of our NEOs. Consistent with Navient’s pay-for-performance culture, a substantial portion87% of the 20162019 Total Direct Compensation of our NEOsCEO was at-risk and dependent upon the attainment of specific performance objectives, as well as the value of Navient’s Common Stock. The charts below provide the at-risk percentages of the 20162019 Total Direct Compensation of our NEOs and the percentage of their compensation that is at-risk, with Annual Incentives and PSUs shown at target levels of performance. 
performance for the full year. Base Salary.Salary The Compensation Committee reviews base salary levels for the NEOs on an annual basis but may make changes less frequently. Based on its review of Mr. Remondi’s performance in 2015, as well as a market analysis of the 20162019 Navient peer group, the Compensation Committee (in consultation with the other independent members of the Board) determined that Mr. Remondi’s 2019 base salary should remain unchanged at $1,000,000.$1,000,000, consistent with peer group benchmarking. The 20162019 base salaries of Messrs. Chivavibul,Lown, Kane, WhorleyHeleen and HynesHauber were established by the Compensation Committee, taking into account recommendations made by Mr. Remondi, as well as a review of benchmarking data from the 20162019 Navient peer group. The Committee concluded that the base salary for each of our NEOs should remain unchanged for 2019, with the exception of Mr. Hauber, who received a market-based adjustment for 2019. In the case of each case,NEO, including the CEO, the Committee reached its final determinations in consultation with the Compensation Consultant. Although we generally target In 2020, the median total direct compensation providedCommittee again determined to similarly-situated executives by our peer group of companies, the Compensation Committee determined in 2014 that the base salaries of Messrs. Chivavibul, Kane, and Hynes should be established conservatively and lower than median to reflect each executive’s relative newness to his role. The Committee made this determination in 2014 with the expectation thatkeep the base salary of each executive would be adjusted in future years commensurate with market conditions and the executive’s performance and experience. Based on their performance, the Committee determined that an increase in base salary was warranted for Messrs. Chivavibul, Kane, and Hynes in 2015. Even with this increase, the 2015 base salaries for Messrs. Chivavibul, Kane, and Hynes remained below the median base salaries provided to similarly-situated executives by our peer group companies. The base salaries for Messrs. Chivavibul, Kane and Hynes remained unchanged for 2016.
each NEO. The following chart lists the base salary for each of our NEOs as of December 31, 2014;2019, December 31, 2015;2018, and December 31, 2016,2017 respectively. | | | 2014 Base | | 2015 Base | | 2016 Base | | Navient NEOs | | Salary | | Salary | | Salary | | Mr. Remondi | | $ | 1,000,000 | | | $ | 1,000,000 | | | $ | 1,000,000 | | Mr. Chivavibul | | | 350,000 | | | | 380,000 | | | | 380,000 | | Mr. Kane | | | 400,000 | | | | 450,000 | | | | 450,000 | | Mr. Whorley* | | | — | | | | — | | | | 450,000 | | Mr. Hynes | | | 325,000 | | | | 370,000 | | | | 370,000 |
* Mr. Whorley joined the Company in June 2015 and was not a Named Executive Officer of the Company during 2015.
Navient NEOs | 2019 Base Salary | | 2018 Base Salary | | 2017 Base Salary | | Mr. Remondi | $ | 1,000,000 | | $
| 1,000,000 | | $
| 1,000,000 | | Mr. Lown | $ | 400,000 | | $
| 400,000 | | $
| 400,000 | | Mr. Kane | $
| 460,000 | | $ | 460,000 | | $
| 460,000 | | Mr. Heleen | $ | 385,000 | | $
| 385,000 | | $
| 385,000 | | Mr. Hauber* | $ | 350,000 | | $ | 310,000 | | $ | - |
| 2017 Proxy Statement | | 47Mr. Hauber was not a named executive officer of the Company in 2017. |
Annual Incentive Awards: The 20162019 Management Incentive Plan.Plan As part of Navient’s annual strategic planning process, management developed an operating plan for the Company’s 20162019 fiscal year. The Compensation Committee and management then discussed specific corporate performance metrics and goals for Navient to be set forth in a 20162019 annual incentive program—known as the Management Incentive Plan (“MIP”)—with the express purpose of focusing executives on achieving the operating plan. As detailed below,
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For the 20162019 MIP, approved by the Committee incorporates a number of important design changes relative to Navient’s 2015 MIP in order to drive strategic growth and maximize shareholder return.For 2016, the Committee decided tocontinued its focus on Adjusted Diluted “Core Earnings” per share4Per Share as athe plan’s key financial metric, which incorporates performance relative to capital management and is aligned with the focus of investors. The Committee also introduced a new metric in 2016 for strategic debt financing proceeds in line with the Company’s 2016 operating plan. This new metric, which was specific to 2016, was intended to focus management on new financing needed to meet the Company’s liquidity requirements, including various growth initiatives. To stress the importance of strategic growth, the Committee replaced the “strategic grow modifier” in the 2015 MIP with specific revenue goals for those businesses that the Company has targeted for growth.
Twometric. Three other financial metrics were carried forward from the 2015 MIP—gross defaults2018 plan—Consumer Lending New Loan Volume, Private Education Loan Gross Defaults, and fee income. Gross loan defaultsAdjusted “Core Earnings” Operating Expenses—although the weight placed on operating expenses was increased because of the importance of aggressively managing expenses. As in prior years, all Consumer Lending New Loan Volume is a key metric used by our investorssubject to the Company’s Board-approved risk and others to measurereturn guidelines (e.g., regarding consumer credit quality, cost-to-acquire, net interest margin). The Committee also substituted EBITDA for revenue in measuring the performance of our loan portfolios. Incorporating this metric intobusiness processing solutions group to focus management on ensuring profitable growth as those business lines continue to scale up.
The following table details the specific performance metrics utilized in our annual incentive plan helps drive our efforts to minimize loan defaults, which helps our investors2019 Management Incentive Plan, as well as our student loan customers. Fee income emphasizes the continuing importance of our fee-based businesses, which generate income through loan servicing, asset recovery and other business processing activities.In addition to establishing a performance target for each of the performance metrics referenced above, the Committeeweight assigned a weight to each metric:
| 2019 MIP Performance Metric | Weight | Rationale | Adjusted Diluted “Core Earnings” Per Share19
| 35% | • Measures overall management effectiveness | | | • Promotes shareholder value | | | • Key financial metric for investors | | | | | Consumer Lending New Loan Volume | 20% | • Emphasizes growth in strategic businesses | | | • Offers refinance opportunities to our existing customers, which helps retain and grow our customer base | | | • Loan volume is a key focus in order to scale this growing business | | | • All loan volume is subject to the Company’s Board-approved risk and return guidelines (e.g., regarding consumer credit quality, cost-to-acquire, net interest margin) | | | | Business Processing EBITDA20
| 20% | • Emphasizes profitable growth in strategic businesses | | | • Growth helps to offset company-wide expenses as our legacy loan portfolio amortizes | | | | Adjusted “Core Earnings” Operating Expenses21 | 15% | • Focuses management attention on expense reduction as our legacy loan portfolio amortizes | | | • Key financial metric for investors, which is also critical to the achievement of our Core Earnings Per Share goal | | | | | Private Education Loan Gross Defaults | 10% | • Enhances the profitability of our private education loan portfolio | | | • Aids our private education student loan customers | | | • Key financial metric for investors |
The Committee established a scale of “payout factors” to assess the Company’s performance relative to target. As noted in the chart below,target established for each of these performance metrics. These payout factors range from 50% based on a threshold level of performance, to 150% based on a maximum level of performance, with performance below threshold resulting in a payout factor of 0%. The chart below sets forth these payout factors:| | | Below Performance | Performance | Performance | Performance | | 2016 | | Threshold | Threshold | Target | Maximum | | Performance Metric | Weight | (Payout Factor = 0%) | (Payout Factor = 50%) | (Payout Factor = 100%) | (Payout Factor = 150%) | | Earnings Per Share on a “Core Earnings” Basis(1) | 40% | <$1.45 | $1.45 | $1.85 | >= $2.08 | | Strategic Debt Financing Proceeds (millions)(2) | 20% | <$500 | $500 | $750 | >= $1,000 | | Fee Income (millions) | 10% | <$650 | $650 | $710 | >= $760 | | Private Education Loan Gross Defaults (millions) | 15% | >$725 | $725 | $687 | <= $650 | | Revenue from Growth Business(3) | 15% | <$150 | $150 | $170 | >= $195 |
| (1) | Excludes any regulatory remediation charges. |
| (2) | Reflects incremental cash raised from unsecured debt issuances, financing of unencumbered private education loans, financing of trust overcollateralization and other new sources of liquidity. Excludes financing of unencumbered FFELP loans and other readily-available sources of liquidity. |
| (3) | Revenue from non-federal-loan-related businesses. |
For each metric, the Committee also established a payout curve for performance between threshold-target and target-maximum.
| Adjusted “Core Earnings” Operating Expenses excludes net restructuring and regulatory-related charges, as well as certain extraordinary items such as strategic corporate transactions or other unusual or unplanned events. Adjusted “Core Earnings” Operating Expenses is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. For more information on the definition of Adjusted “Core Earnings” Operating Expenses and for a reconciliation of non-GAAP financial measures with GAAP results, please refer to our Investor Presentation for Fourth Quarter and Full Year 2019 on the Investor Relations section of our website located at http://www.navient.com/about/investors/. |
4“Core Earnings” per Share is
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The chart below sets forth the performance threshold, target, and maximum, and the payout factors for each performance metric:
2019 MIP Payout Factors
| 2019 Performance Metric | Below Performance Threshold (Payout Factor = 0%) | | (Payout Factor = 100%) | (Payout Factor= 150%) | | Adjusted Diluted “Core Earnings” Per Share | <$1.73 | $1.73 | $1.94 | >= $2.14 | | Consumer Lending New Loan Volume (millions) | <$2,860 | $2,860 | $3,651 | >=$4,650 | | Business Processing EBITDA (millions) | <$48 | $48 | $60 | >= $71 | | Adjusted “Core Earnings” Operating Expenses (millions) | >$994 | $994 | $949 | <=$915 | | Private Education Loan Gross Defaults (millions) | >$508 | $508 | $459 | <= $408 |
Performance against three of the five MIP goals in 2019 was notably strong. The Executive Summary of this Compensation Discussion and Analysis, beginning on page 46, details a non-GAAP financial measure that does not represent a comprehensive basis of accounting. For more information on the definition of Core Earnings and for a reconciliation of non-GAAP financial measures with GAAP results, please refer to the discussion included in Item 7number of our 2016 Annual Report filed on Form 10-K on February 24, 2017, or refer to the Investor Relations section of our website located at http://www.navient.com/about/investors/. | 2017 Proxy Statement | | 48 |
key achievements in 2019. The chart below sets forth (i) each performance metric, (ii) the performance target approved by the Compensation Committee for each metric, (iii) the 20162019 actual performance of the Company for each metric, (iv) the payout factor for each metric based on the Company’s level of achievement relative to target, (v) the relative weighting of each performance metric, and (vi) the performance score attributable to each metric, as well as the overall performance score. | 2016 Performance Metric | | Performance
Target | | | 2016 Actual
Performance | | | Payout
Factor | | | Weighting | | | Performance
Score | | | (i) | | (ii) | | | (iii) | | | (iv) | | | (v) | | | (vi) | | | Earnings Per Share on a “Core Earnings” Basis | | $ | 1.85 | | | $ | 1.86 | | | | 102.2 | % | | | 40 | % | | | 40.9 | % | | Strategic Debt Financing Proceeds (millions) | | $ | 750 | | | $ | 1,306 | | | | 150.0 | % | | | 20 | % | | | 30.0 | % | | Fee Income (millions) | | $ | 710 | | | $ | 708 | | | | 98.3 | % | | | 10 | % | | | 9.8 | % | | Private Education Loan Gross Defaults (millions) | | $ | 687 | | | $ | 635 | | | | 150.0 | % | | | 15 | % | | | 22.5 | % | | Revenue from Growth Business | | $ | 170 | | | $ | 151 | | | | 52.5 | % | | | 15 | % | | | 7.9 | % | | Overall Performance Score | | | | | | | | | | | | | | | | | | | 111.1 | % |
2019 MIP Performance Results
| 2019 Performance Metric (i) | | Performance Target (ii) | | 2019 Actual Performance (iii) | Payout Factor (iv) | Weighting (v) | Performance Score (vi) | Adjusted Diluted “Core Earnings” Per Share22 | $
| 1.94 | $
| 2.64 | 150.0% | 35% | 52.5% | | Consumer Lending New Loan Volume (millions) | $ | 3,651 | $
| 4,903 | 150.0% | 20% | 30.0% | Business Processing EBITDA23 (millions) | $ | 60 | $
| 49 | 55.0% | 20% | 11.0% | Adjusted “Core Earnings” Operating Expenses24 (millions) | $ | 949 | $
| 965 | 82.7% | 15% | 12.4% | | Private Education Loan Gross Defaults (millions) | $ | 459 | $
| 428 | 130.5% | 10% | 13.1% | | | | | | Overall Performance Score: | 119.0% |
These performance results were reviewed and certified by the Compensation Committee in January 2017. Annual2020. In determining the incentive awardsaward amounts to be paid to each of our NEOs under the 2019 MIP, the Committee also considered the individual performance of each NEO, as reflected in an annual performance assessment prepared by our CEO and presented to the Committee. The incentive award amounts for 2016our NEOs under the 2019 MIP, which were based solely on the overall performance score and paid in cash in February 2017. The 2016 incentive award amount for each of the NEOs under the 2016 MIP is2020, are set forth in the following table. | Navient NEOs | | Target % of
Base Salary | | 2016 Target Incentive
Amount ($) | | | Overall
Performance
Score | | 2016 MIP Incentive Award
Amount ($) | | | Mr. Remondi | | | 150 | % | | | 1,500,000 | | | | 111.1 | % | | | 1,666,500 | | | Mr. Chivavibul | | | 150 | % | | | 570,000 | | | | 111.1 | % | | | 633,270 | | | Mr. Kane | | | 150 | % | | | 675,000 | | | | 111.1 | % | | | 749,925 | | | Mr. Whorley | | | 150 | % | | | 675,000 | | | | 111.1 | % | | | 749,925 | | | Mr. Hynes | | | 150 | % | | | 555,000 | | | | 111.1 | % | | | 616,605 | |
| 2019 MIP Payouts | | Navient NEOs | Target % of Base Salary | 2019 Target Incentive Amount ($) | 2019 MIP Incentive Award Amount ($) | | Mr. Remondi | 150% | 1,500,000 | 1,785,000 | | M. Lown | 150% | 600,000 | 714,000 | | Mr. Kane | 150% | 690,000 | 821,100 | | Mr. Heleen | 150% | 577,500 | 687,225 | | Mr. Hauber | 150% | 525,000 | 624,750 |
22 | See footnote 19 above for additional information regarding Adjusted Diluted “Core Earnings” Per Share. |
23 | See footnote 20 above for additional information regarding EBITDA. |
24 | See footnote 21 above for additional information regarding Adjusted “Core Earnings” Operating Expenses, which for 2019 excludes $6 million in regulatory-related expenses, $6 million in restructuring expenses and $12.5 million in expenses relating to the Canyon Agreement. For additional information pertaining to the Canyon Agreement, please refer to “Shareholder Engagement and Communications with the Board” above. |
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2019 Long-term Incentive Program.Program Our long-term incentive program is designed to drive long-term performance and shareholder value by delivering a significant portion of NEO compensation through a mix of equity awards. For 2019, the Committee decided to discontinue the prior practice of granting stock options as part of the Company’s long-term incentive program. The Committee made this determination to update the mix of equity awards based on its review of equity grant practices among peer companies, general industry market trends and the Company’s historical grant practices. Each of our NEOs (other than Mr. Remondi) received long-term incentive awards split equally between restricted stock units (“RSUs”) and performance stock units (“PSUs”) in terms of grant date value. Recognizing Mr. Remondi’s significant contributions to the Company, the Committee increased the grant date value of his 2019 long-term incentive award by 25% from the prior year, with this increase being delivered entirely in PSUs. Sixty percent of the grant date value of Mr. Remondi’s 2019 long-term incentive awards were delivered in the form of PSUs, with the remaining forty percent delivered in the form of RSUs. This increase brings Mr. Remondi’s 2019 long-term incentive award value in line with peer group median levels. Based upon the recommendation of the Chief Executive Officerour CEO and on a market analysis of the 20162019 Navient peer group performed by the Committee’s independent consultant, the Compensation Committee approved 20162019 long-term incentive awards for our other NEOs in early 20162019 in the following amounts: Mr. RemondiLown ($ 3,850,000); Mr. Chivavibul ($990,000)1,200,000); Mr. Kane ($ 1,320,000)1,000,000); Mr. WhorleyHeleen ($ 1,320,000)750,000); and Mr. HynesHauber ($ 880,000)500,000). These long-term incentive amounts reflect increases over 2015. With
The chart below details the FFELP portfolio in decline, the Committee sought to further emphasize the important long-term objectives of achieving profitable growth from other sources and stabilizing liquidity and debt, objectives that were highlighted in newly-designed PSUs. The Committee also determined that increases in long-term incentives were consistent with peer group levels and warranted by the executive team’s continued strong performance in the face of an increasingly challenging regulatory, rating agency and financial environment. Finally, in the case of Mr. Hynes, the Committee decided that a larger increase was needed to bring the value of his long-term incentives closer to the peer group median.The 20162019 long-term incentive awards were delivered as 50% in PSUs, 30% in RSUs, and 20% in stock options as follows:
| Navient NEOs | | Performance Stock Units(1)
(#) | | | Restricted Stock Units(2)
(#) | | | Stock Options(3)
(#) | | | Total Award
Value(4)
($) | | | Mr. Remondi | | | 209,694 | | | | 125,816 | | | | 762,376 | | | | 3,850,000 | | | Mr. Chivavibul | | | 53,921 | | | | 32,352 | | | | 196,039 | | | | 990,000 | | | Mr. Kane | | | 71,895 | | | | 43,137 | | | | 261,386 | | | | 1,320,000 | | | Mr. Whorley | | | 71,895 | | | | 43,137 | | | | 261,386 | | | | 1,320,000 | | | Mr. Hynes | | | 47,930 | | | | 28,758 | | | | 174,257 | | | | 880,000 | |
| Navient NEOs | Performance Stock Units(1) (#) | Restricted Stock Units(2) (#) | Total Award
Value(3) ($) | | Mr. Remondi | 262,237 | 174,825 | 5,000,000 | | Mr. Lown | 52,447 | 52,447 | 1,200,000 | | Mr. Kane | 43,706 | 43,706 | 1,000,000 | | Mr. Heleen | 32,779 | 32,779 | 750,000 | | Mr. Hauber | 21,853 | 21,853 | 500,000 |
| (1) | This column represents the target PSUs granted to each of the NEOs on February 3, 2016,5, 2019, with the target number of PSUs equal to 50% (60% for Mr. Remondi) of the 20162019 long-term incentive award amount approved by the Compensation Committee divided by the closing price of Navient Common Stock on the grant date. Each PSU is subject to performance-based vesting over a three-year performance period beginning on January 1, 2016,2019 and ending on December 31, 2018.2021. The vesting provisions of these PSUs are described below. |
| (2) | This column represents the RSUs granted to each of the NEOs on February 3, 2016,5, 2019, with the number of RSUs equal to 30%50% (40% for Mr. Remondi) of the 20162019 long-term incentive award amount approved by the Compensation Committee divided by the closing price of Navient Common Stock on the grant date. These RSUs are scheduled to vest in one-third increments on each of the first, second and third anniversaries of the grant date, subject to certain terms and conditions. |
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| (3) | This column represents the stock options granted to each of the NEOs on February 3, 2016, with the number of stock options determined using 20% of the 2016 long-term incentive award amount approved by the Compensation Committee and the Black-Scholes option value (which incorporates the closing price of Navient Common Stock on the grant date). These stock options are scheduled to vest in one-third increments on each of the first, second and third anniversaries of the grant date, subject to certain terms and conditions. |
| (4) | Total award value differs slightly from the grant date fair value, as reflected in the “Summary Compensation Table” and “Grants of Plan-Based Awards” table, as the number of units/options is rounded down to the nearest whole unit or option to avoid the issuance of fractional units or shares. |
The Compensation Committee determined that
2019-21 Performance Stock Units PSUs should continue to have the most weight (50%)granted in the mix2019 as part of our 2019 long-term incentive vehiclesprogram are designed to strongly align executive payvest at the end of 2021, with a potential payout ranging from 0% to 150% of the Company’s long-term performance. The mixtarget number of RSUs and stock options was similar tounits, based on cumulative performance over the 2015 long-term incentives, but RSUs were given slightly more weight (30%, compared to 20% in 2015) consistent with peer group practices.2019- 21 performance period. The Committee modified the PSU structuresapproved newly designed PSUs for each of our NEOs in 2016 to better align with2019. Recognizing net student loan cash flows as a primary driver of the Company’s objectivesvalue, the Committee increased the weight assigned to this three-year cumulative performance measure from 50% to 70%. Additionally, the Committee added return on equity (“ROE”) as a new measure of company-wide success with a weight of 30%. Maintaining (or improving) ROE requires a disciplined approach to managing, allocating and investing capital to achieve the best return for shareholders. As a “standard” financial metric, it also permits comparability across peer groups and industry- wide benchmarks. Given the impact of accounting rules on certain businesses—as well as general uncertainty regarding the impact of the new accounting standard governing current expected credit losses (“CECL”)—separate annual ROE targets will be established by the Committee for each year in 2016the 2019-21 PSU performance cycle, with targets set at the beginning of each year. Each annual ROE target will have 10% weight and beyond for cash flow, revenue growth and achievementearned awards will not be paid until after the end of strategic objectives. These PSUs vest based onthe 2019-21 performance over the three-year period from 2016 to 2018. Theperiod.
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These performance metrics weightingsfor the 2019-21 PSUs are summarized below: | 2019-21 Performance Stock Units |
| 2019-21 PSU Performance Metric | Weight | Rationale | Cumulative Net Student Loan Cash Flows25 | 70% | • Promotes successful management of our loan portfolios | | | • Critical driver of shareholder value, supporting dividends, share repurchases and debt payments | | | • Supports growth of strategic businesses, including consumer lending | Core Earnings” Return on Equity26 | 10% / 10% / 10% | • Requires focus on managing, allocating and investing capital to achieve the best return for shareholders | | | • Standard financial metric that permits comparability across peer groups and industry-wide benchmarks. |
The chart below shows the potential for PSU vesting as a percentage of the target number of PSUs are shown inPSUs:
| | 2019-21 Performance Stock Units | | | Performance Metric | Weight | Percentage of 2019-21 PSUs Vesting* | | 0% | 50% | 100% | 150% | | | Cumulative Net Student Loan Cash Flows | 70% | Less than $8.20 billion | $8.20 billion | $9.10 billion | $9.90 billion or greater | | | 2019 “Core Earnings” Return on Equity | 10% | Less than 11.2% | 11.2% | 12.7% | 14.2% | | | 2020 “Core Earnings” Return on Equity | 10% | Less than 18.6% | 18.6% | 20.6% | 22.6% | | | 2021 “Core Earnings” Return on Equity27 | 10% | - | - | - | - |
*For points between each performance level, the chart below:| Performance Metric | Weight | | Percentage of PSUs Vesting(1) | | | 0% | 50% | 100% | 150% | | Net Student Loan Cash Flows(2) | 50% | | Less than $7.5 billion | $7.5 billion | $7.8 billion | $8.6 billion or greater | | Cumulative Revenue from Growth Businesses(3) | 30% | | Less than $520 million | $520 million | $665 million | $775 million or greater | | Strategic Objectives | 20% | ● | Build strong relationships with state and federal regulators | | ● | Pursue opportunistic loan portfolio acquisitions | | ● | Significantly reduce expenses | | ● | Improve profitability of key business lines |
| (1) | For points between each performance level, the vesting percentages will be interpolated. |
| (2) | Aggregate cash flows net of secured borrowings from student loans realized for the fiscal years 2016, 2017 and 2018, including student loan cash flows realized from new acquisitions, but excluding the impact of cash flows for fiscal years beyond 2018 that are accelerated through securitizing or pledging unencumbered student loans, or through loan sales. |
| (3) | That portion of the Company’s aggregate revenue for fiscal years 2016-18 from non-federal-loan-related businesses. |
The Compensation Committee selected each of thesevesting percentages will be interpolated. That is, vesting will be interpolated between threshold performance metrics with specific business objectives in mind. Aggregate cash flows from student loans (net of secured borrowings) realized for the fiscal years 2016, 2017(50% vesting) and 2018 represent a critical driver of shareholder value,target performance (100% vesting), as well as between target performance and thus are given the most weight. Strong cash flowmaximum performance supports our shareholder dividends, share repurchases, debt repayments and strategic investments in future growth areas. Cumulative revenue from growth businesses is a measure of our success in realizing our long-range business plans and our ability to incorporate new growth businesses to balance our maturing portfolio of FFELP loans. Finally, strategic objectives are intended to highlight a limited number of critical, non-formulaic goals that management is focusing on over the next three years.
With regard to(150% vesting).
Regarding the performance targets established for each metric, the Compensation Committee believes that these targets are set at challenging but achievable levels in light of the uncertain regulatory, rating agency and financial environment the Company faces. The Committee believes thatconsiders these headwinds increaseenvironmental factors and the resulting degree of difficulty that management faces in achieving the Company’s long-term growth and performance goals of the Company.when establishing appropriate levels for threshold, target and maximum performance levels and payout curves.
Deferred Compensation.Compensation We provide our NEOs with the opportunity to defer a portion of their compensation on a tax-deferred basis under the Navient Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan is designed to provide all of our senior employees, including our NEOs, with the opportunity to save for retirement and other personal expenses on a tax-favoredtax-
25 | Cumulative Net Student Loan Cash Flows is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. Cumulative Net Student Loan Cash Flows are the aggregate cash flows net of secured borrowings from all student loans (including private credit refinance loans) realized for the fiscal years 2019, 2020 and 2021, including student loan cash flows realized from new acquisitions, but excluding the impact of cash flows for fiscal years beyond 2021 that are accelerated through securitizing or pledging unencumbered student loans or through loan sales. |
26 | Annual “Core Earnings” Return on Equity targets and range are established by the Committee at the beginning of each respective year, with each year’s performance counting 1/3 towards the total 30% weight. “Core Earnings” Return on Equity is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. “Core Earnings” Return on Equity is a percentage equal to the Company’s “core earnings” net income for each of fiscal years 2019, 2020 and 2021, divided by average stockholder’s equity for each such year (determined using the average balance of stockholder’s equity on a “core earnings” basis for each quarter in a given year), using yearly “core earnings” net income as shown in the segment reporting footnote in the Company’s audited financial statements as published in the Company’s annual report on Form 10-K, excluding the impact of any regulatory and restructuring costs. |
27 | “Core Earnings” Return on Equity targets and range for 2021 will be established by the Committee at the beginning of calendar year 2021. |
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advantaged basis. Each participating employee may elect to defer a portion of his or her eligible compensation under the Deferred Compensation Plan, and amounts deferred are credited to bookkeeping accounts along withaccounts. The Company matchingamended the Deferred Compensation Plan in 2018 to eliminate Company contributions designed to encourage employee participation.effective January 1, 2019. Amounts in each participant’s account are indexed to one or more investment alternatives chosen by each participant from | 2017 Proxy Statement | | 50 |
a range of market-basedmarket- based alternatives. The Deferred Compensation Plan does not pay above-market or preferential earnings on compensation deferred under or contributed to the plan. Additional details for our NEOs who participate can be found below under the “Non-Qualified Deferred Compensation” table.
Health, Welfare and Retirement Benefits.Benefits Our NEOs are eligible to participate in the same broad-based employee benefit programs that we offer to our other employees, such as group health benefits and tax-qualified retirement benefits. Perquisites.
Perquisites Perquisites are limited and are not a significant portion of our compensation program. Our policy is to allow limited personal use of the company’s aircraft by our NEOs. To the extent an NEO uses Navient’s private aircraft for personal travel, the NEO must reimburse Navient for the variable flight costs of such personal use. These reimbursements exceed the requirements of the Internal Revenue Code. In 2016,2019, we did not provide relocation allowances to our NEOs.any NEO. We provided transportation allowances to our CEO as described in the Summary Compensation Table.The Compensation Committee has approved annual physicals for our senior executives, including our NEOs. We believe that executive physicals align with our wellness initiative as well as assist in mitigating risk linked to unplanned succession events. Executive physicals are intended to identify any health risks and medical conditions as early as possible in an effort to achieve more effective treatment and outcomes.
Table below.
Severance Benefits.Benefits Navient has adopted an executive severance plan and a change in control severance plan, which are described in greater detail under the heading “Arrangements with Named Executive Officers” below. We generally utilize plans (as opposed to individual agreements) to provide severance and change in control payments and benefits for several reasons. First, a “plan” approach provides us with the flexibility to change the terms of severance benefits from time to time. In addition, this approach is more transparent, both internally and externally, which eliminates the need to negotiate severance or other employment separation benefits on a case-by-case basis and assures each of the executives that his or her severance benefits are comparable to those of other executives with similar levels of responsibility and tenure. Under the executive severance plan, our NEOs are eligible for severance payments in the event of an involuntary termination of employment without “cause.” In addition, they are eligible for “double trigger” severance payments under the change in control severance plan in the event of an involuntary termination of employment without “cause” or a termination of employment with “good reason” in connection with a change in control of Navient. All plan participants, including our NEOs, are entitled to certain limited “single trigger” benefits upon a change in control, including equity acceleration, only when equity awards are not honored, assumed, or replaced by a successor employer of Navient. Such equity acceleration provides NEOs with the benefit of these outstanding awards granted in prior years. They also may be able to exercise the awards and possibly participate in the change in control transaction for the consideration received.
Other Arrangements, Policies and Practices Related to Our Executive Compensation ProgramsProgram
Share Ownership Guidelines.Guidelines Navient has adopted share ownership guidelines applicable to its senior executives, including our NEOs. These ownership guidelines, which are expectedrequired to be achieved over a five-year period, are as follows: | ● | Chief Executive Officer — Lesser of 1 million shares or $5 million in value |
| ● | Executive Vice President — Lesser of 200,000 shares or $1 million in value |
| ● | Senior Vice President — Lesser of 70,000 shares or $350,000 in value |
Chief Executive Officer — Lesser of 1 million shares or $5 million in value Executive Vice President — Lesser of 200,000 shares or $1 million in value Senior Vice President — Lesser of 70,000 shares or $350,000 in value
Each of our NEOs other than Mr. Remondi holds the title of Executive Vice President. The guidelines encourage continued ownership of a significant amount of Navient’s Common stock acquired through equity awards and help align the interests of our senior executives with the interests of our shareholders. A senior executive must hold Navient Common Stock acquired through equity grants until the applicable thresholds are met, and a senior executive will not be eligible to receive equity grants during the following year if he or she sells this stock (whether before or after such guidelines are met), if such sale would resultresulted in a decrease below the thresholds established by the guidelines. The following shares and share units count towards the ownership guidelines: shares held in brokerage accounts; vested shares credited to deferred compensation accounts; shares credited to qualified retirement plan accounts; vested
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performance stock and PSUs;stock; restricted stock and RSUs that vest solely upon the passage of time, on an after-tax basis, and vested stock options, to the extent that they are “in-the-money” on an after-tax basis. All of Navient’s NEOs are in compliance with the share ownership guidelines as of the date of this proxy statement either through their stock ownership levels or due to the five-year initial period not being finished. | 2017 Proxy Statement | | 51 |
Hedging/Pledging Prohibition.Prohibition Navient policy prohibits directors and senior management from engaging in hedging, pledging and certain other transactions involving Navient Common Stock. See “Director Compensation” above for additional details.
Policy on Rule 10b5-1 Trading Plans.Plans The Company has a policy governing the use by directors and executive officers of pre-established trading plans for sales of our Common Stock. See “Director Compensation” above for additional details. Clawback.
Clawback Awards made to senior officers, including our NEOs, under the Navient Corporation 2014 Omnibus Incentive Plan (as amended and restated) are subject to clawback in the event of a material misstatement of Navient’s financial results and other qualifying events. Navient enhanced its clawback policy in 2017 following an extensive review and consideration of the Company’s then-existing clawback policy by the Compensation Committee. The enhanced clawback policy grants the Board discretion to recoup incentive compensation both in the event of a financial restatement and in the case of the executive’s misconduct involving a material violation of Navient policy or commission of fraud or other misconduct involving Navient. Following engagement with its shareholders, the Board further enhanced the clawback policy in March 2018 to add a clawback trigger in the event of misconduct committed by persons under a senior officer’s supervision.
Navient Compensation Committee Process for Approving Long-term Awards.Awards The Compensation Committee approves long-term awards on an annual basis at a regularly scheduled committee meeting. The Committee has delegated authority to a sub-committee consisting of the Compensation Committee Chair and the CEO (the “Sub-Committee”) to approve long-term awards for new employees and promotions below the executive officer level. These awards generally are effective on the day on which the Sub-Committee approves the awards. The Compensation Committee approves any awards to newly-hirednewly hired or promoted executive officers. The grant date for these awards generally is the applicable meeting date of the Committee at which the awards are approved. Under the terms of the Navient Corporation 2014 Omnibus Incentive Plan, as amended and restated, stock options are required to be priced at the closing market price of Navient’s Common Stock on the Nasdaq on the date of grant.
Tax Deductibility of Compensation Over $1 Million.Million Section 162(m) of the Internal Revenue Code (“Section 162(m)”) can potentially disallowgenerally disallows a federal income tax deduction for annual compensation over $1 million paid to our chief executive officer, chief financial officer, three other most highly compensated officers and anyone who has served as one of our covered officers after 2016, other than pursuant to certain grandfathered compensation arrangements described below. The Compensation Committee retains the flexibility to award compensation to the NEOs that is not deductible for U.S. federal income tax purposes. Prior to 2018, the Section 162(m) limitations applied to the chief executive officer and the three other highest-paid NEOs (excluding the chief financial officer) who were serving as of the last day of Navient’s fiscal year (“covered employees”) . One, subject to a “performance-based compensation” exception to Section 162(m)’s disallowance of a U.S. federal income tax deduction for compensation over $1 million applies to “performance-based compensation” paid pursuant to shareholder-approved plans. Although muchCertain plans and arrangements in effect as of the compensation opportunity in our executive compensation program is performance-based and generally deductible for U.S. federal income tax purposes, the Compensation Committee retains the flexibility to award compensation to the NEOs that is not deductible for U.S. federal income tax purposes.With regard to our 2016 annual incentive program—known as the Management Incentive PlanNovember 2, 2017 (“MIP”Grandfathered Plans”)—special rules apply for executives subject to Section 162(m). The Committee established a separate performance target applicable only to these executives. This “162(m) performance target” for 2016 required that the Company achieve positive Core Net Income remain eligible for the year. If this target is achieved, each executive subject to Section 162(m) becomes eligible to receive an incentive payment based on the maximum applicable award (i.e., 150%). However, the Committee retained “negative discretion” to reduce the executive’s incentive payment using the same criteria established for all other MIP participants whoperformance-based compensation exception, provided that those plans are not subjectmaterially modified. For PSUs granted in connection with our 2017 long-term incentive program, which cover the three-year performance period from 2017 to Section 162(m). This approach allows2019, the MIP to operate in the same manner for all participants, regardless of whether they are subject to Section 162(m).
The Committee also established a separate 162(m) performance target for PSUs granted in connection with our 2016 long-term incentive program. This 162(m) performance targetwhich requires that the Company achieve positive Cumulative Core Net Income for the applicable three-year performance period. If this target is achieved, each executive subject to Section 162(m) becomes eligible for the maximum level of vesting available (i.e., 150%). However, the Committee retained (and exercised, with respect to the 2017 PSUs) “negative discretion” to reduce the level of vesting using the same criteria established for all other PSU recipients who are not subject to Section 162(m).
Under guidance from the U.S. Department of the Treasury regarding the scope of these rules, our ability to deduct executive compensation payments made under Grandfathered Plans to certain of our NEOs in 2019 and beyond may be limited under Section 162(m).
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Certain Executive Compensation Payments in 2019
Deferred Signing Bonus In March 2017, the Company agreed to pay Mr. Lown a deferred signing bonus of $1,400,000, less applicable withholding taxes (“Deferred Signing Bonus”), to compensate him for a portion of the long-term equity and deferred compensation with his former employer that he forfeited by joining Navient. This Deferred Signing Bonus was paid in cash in two equal installments on March 17, 2018 and March 17, 2019.
2017-19 Performance Stock Units Fiscal year 2019 marked the final year of a three-year performance period associated with PSUs granted to our executive team in early 2017. These long-term equity awards were designed to vest at the end of 2019, with a potential payout ranging from 0% to 150% of the target number of units. The following chart summarizes the performance results under these PSUs: | 2017-19 Performance Metric | Performance Target | 2017-19 Actual Performance | Payout Factor | Weight | Performance Score | Cumulative Net Student Loan Cash Flows28 (millions) | $ 7,850 | $ 8,818 | 135% | 50% | 67% | Cumulative Revenue from Growth Businesses29 (millions) | $ 995 | $ 839 | 65% | 30% | 20% | Strategic Objectives | | | 110% | 20% | 22% | • Pursue Opportunistic Loan Portfolio Acquisitions • Capture Operating Efficiencies in Asset Servicing • Improve Margins in Fee Businesses • Build Strong Relationships with State and Federal Regulators • Grow Intrinsic Value of Company | | Overall Performance Score: | 109%
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The Executive Summary of this Compensation Discussion and Analysis, beginning on page 46, provides additional details regarding our key achievements during the 2017-19 performance period, which the Committee considered when assessing the Company’s performance relative to the strategic goals established at the beginning that period.
28 | Cumulative Net Student Loan Cash Flows is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. Cumulative Net Student Loan Cash Flows include aggregate cash flows net of secured borrowings from student loans realized for the fiscal years 2017, 2018 and 2019, including student loan cash flows realized from new acquisitions, but excluding the impact of cash flows for fiscal years beyond 2019 that are accelerated through securitizing or pledging unencumbered student loans or through loan sales. |
29 | Cumulative Revenue from Growth Businesses includes that portion of the Company’s aggregate revenue for fiscal years 2017-19 from non-federal-loan-related businesses. |
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Changes to Our Executive Compensation Program for 2020 The Compensation Committee made changes to our annual Management Incentive Program (“MIP”) for 2020. The resulting refinements are structured to drive the growth and profitability in 2020. These changes are described below. The target salaries and bonuses of our NEOs will remain unchanged for 2020, as will the structure of our long-term incentive program.
2020 Annual Incentive Program The Committee continued its focus on Adjusted Diluted “Core Earnings” Per Share as the key financial metric in the annual Management Incentive Plan (“MIP”) for 2020. Three other financial metrics are carried forward from the 2019 MIP— Adjusted “Core Earnings” Operating Expenses, Business Processing EBITDA, and Private Education Loan Gross Defaults. Based on feedback from our shareholders, the Committee decided to eliminate the financial metric for Consumer Lending New Volume. Although all Consumer Lending New Loan Volume is subject to the Company’s Board-approved risk and return guidelines (e.g., regarding consumer credit quality, cost-to-acquire, net interest margin), some shareholders expressed the view that this financial metric was not sufficiently tied to profitability. The Committee reallocated the weighting assigned to each of the remaining financial metrics for 2020 as follows: Adjusted Diluted “Core Earnings” Per Share (50%); Adjusted “Core Earnings” Operating Expenses (20%); Business Processing EBITDA (15%); and Private Education Loan Gross Defaults (15%). The Company’s performance in the Consumer Lending market will continue to be included as part of the calculation for three of these measures (Business Processing EBITDA does not include performance in this market as part of its calculation).
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Summary Compensation Table The table below summarizes compensation paid, awarded to or earned by each of our named executive officers (“NEOs”) for the fiscal years ended December 31, 2016,2019, December 31, 2015,2018, and December 31, 2014.NAME AND PRINCIPAL
POSITION(1) | | YEAR(2) | | | SALARY
($) | | | BONUS(3)
($) | | | STOCK
AWARDS(4)
($) | | | OPTION
AWARDS(4)
($) | | | NON-EQUITY
INCENTIVE PLAN
COMPENSATION(5)
($) | | | CHANGE IN
PENSION
VALUE
AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS(6)
($) | | | ALL OTHER
COMPENSATION(7)
($) | | | TOTAL
($) | | Jack Remondi | | | 2016 | | | | 1,000,000 | | | | 0 | | | | 3,079,980 | | | | 769,999 | | | | 1,666,500 | | | | — | | | | 43,431 | | | | 6,559,910 | | President and Chief | | | 2015 | | | | 1,000,000 | | | | 0 | | | | 2,449,978 | | | | 1,050,000 | | | | 735,000 | | | | — | | | | 39,930 | | | | 5,274,908 | | Executive Officer | | | 2014 | | | | 1,000,000 | | | | 200,000 | | | | 3,141,077 | | | | 1,174,311 | | | | 807,750 | | | | — | | | | 290,586 | | | | 6,613,724 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Somsak Chivavibul | | | 2016 | | | | 379,999 | | | | 0 | | | | 791,985 | | | | 197,999 | | | | 633,270 | | | | — | | | | 33,249 | | | | 2,036,502 | | Chief Financial | | | 2015 | | | | 378,846 | | | | 0 | | | | 629,993 | | | | 269,998 | | | | 242,820 | | | | — | | | | 33,077 | | | | 1,554,734 | | Officer | | | 2014 | | | | 330,769 | | | | 60,000 | | | | 782,691 | | | | 253,821 | | | | 282,712 | | | | — | | | | 79,720 | | | | 1,789,713 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John Kane | | | 2016 | | | | 449,999 | | | | 0 | | | | 1,055,993 | | | | 263,999 | | | | 749,925 | | | | — | | | | 38,249 | | | | 2,558,165 | | Group President, | | | 2015 | | | | 448,076 | | | | 0 | | | | 822,483 | | | | 352,499 | | | | 330,750 | | | | — | | | | 38,249 | | | | 1,992,057 | | Asset Recovery and | | | 2014 | | | | 382,692 | | | | 70,000 | | | | 989,762 | | | | 334,606 | | | | 323,100 | | | | — | | | | 82,105 | | | | 2,182,265 | | Business Services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jeff Whorley | | | 2016 | | | | 449,999 | | | | 0 | | | | 1,055,993 | | | | 263,999 | | | | 749,925 | | | | — | | | | 13,249 | | | | 2,533,165 | | Group President, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Asset Management and Servicing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tim Hynes | | | 2016 | | | | 370,000 | | | | 0 | | | | 703,995 | | | | 175,999 | | | | 616,605 | | | | — | | | | 13,249 | | | | 1,879,848 | | Chief Risk & | | | 2015 | | | | 368,269 | | | | 0 | | | | 507,476 | | | | 217,499 | | | | 271,950 | | | | — | | | | 13,249 | | | | 1,378,443 | | Compliance Officer | | | 2014 | | | | 316,346 | | | | 30,000 | | | | 618,750 | | | | 203,821 | | | | 218,765 | | | | — | | | | 58,315 | | | | 1,445,997 |
NAME AND PRINCIPAL POSITION(1) | YEAR | | | | | | NONQUALIFIED DEFERRED COMPENSATION EARNINGS(5) ($) | | TOTAL ($) | | Jack Remondi | 2019 | 1,000,000 | 0 | 4,999,989 | 0 | 1,785,000 | - | 8,332 | 7,793,321 | | President and Chief | 2018 | 1,000,000 | 0 | 2,799,997 | 1,199,998 | 1,896,000 | - | 8,110 | 6,904,105 | | Executive Officer | 2017 | 1,000,000 | 0 | 3,199,979 | 799,997 | 1,444,500 | - | 12,260 | 6,456,736 | | | | | | | | | | | | | Christian Lown | 2019 | 400,004 | 700,000 | 1,199,987 | 0 | 714,000 | - | 14,000 | 3,027,991 | | Chief Financial | 2018 | 400,004 | 700,000 | 839,989 | 359,999 | 758,400 | - | 38,750 | 3,097,142 | | Officer | 2017 | 292,310 | 0 | 999,992 | 0 | 577,800 | - | 3,000 | 1,873,102 | | | | | | | | | | | | | John Kane | 2019 | 460,000 | 0 | 999,993 | 0 | 821,100 | - | 14,000 | 2,295,093 | | Group President, Business | 2018 | 460,000 | 0 | 909,979 | 389,999 | 690,000 | - | 38,750 | 2,488,728 | | Processing Solutions | 2017 | 458,461 | 0 | 1,159,978 | 289,998 | 664,470 | - | 40,327 | 2,613,234 | | | | | | | | | | | | | Mark Heleen | 2019 | 384,999 | 0 | 749,983 | 0 | 687,225 | - | 14,000 | 1,836,207 | | Chief Legal Officer | 2018 | 384,999 | 0 | 524,986 | 224,998 | 729,960 | - | 13,750 | 1,878,693 | | and Secretary | 2017 | 382,692 | 0 | 599,973 | 149,999 | 556,133 | - | 19,498 | 1,708,295 | | | | | | | | | | | | | Steve Hauber | 2019 | 345,384 | 0 | 499,996 | 0 | 624,750 | - | 14,000 | 1,484,130 | | Chief Risk and | 2018 | 310,000 | 0 | 349,977 | 149,999 | 489,800 | - | 34,158 | 1,333,934 | | Compliance Officer | | | | | | | | | |
| (1) | Reflects the position held by each NEO as of December 31, 2016.2019. Mr. Remondi served as President and Chief Executive Officer of the company previously known as SLM Corporation (“Former SLM”) in 2014 until the spin-off of Navient (“Spin-Off”). He became President and Chief Executive Officer of Navient in connection with the Spin-Off. Mr. Chivavibul served as Senior Vice President, Financial Planning & Analysis of Former SLM during 2014 until the Spin-Off, when he became Chief Financial Officer of Navient. Mr. Kane served as Senior Vice President, Enterprise Project Management of Former SLM in 2014. Mr. Kane became Chief Operating Officer of Navient in connection with the Spin-Off, and he assumed his current role as Group President, Asset Recovery and Business Services in June 2015. Mr. Whorley joined Navient in June 2015 as Group President, Asset Management and Servicing. HeHauber was not a NEO in either 2014 or 2015. Mr. Hynes served as Senior Vice President, Credit of Former SLM during 2014 until the Spin-Off, when he became Chief Risk & Compliance Officer of Navient.2017. |
| (2) | Navient was spun-off from the company now known as SLM Corporation (“SLM”) andMr. Lown became an independent public company effective April 30, 2014. Prioreligible to the Spin-Off, eachreceive a one-time deferred signing bonus of our NEOs (other than Mr. Whorley) was employed by Former SLM; therefore, the information provided$1,400,000, less applicable withholding taxes, to compensate him for thea portion of 2014 preceding the Spin-Off reflectslong-term equity and deferred compensation earned at Former SLMwith his former employer that he forfeited by joining Navient in March 2017. This Deferred Signing Bonus was payable in cash in two equal installments on March 17, 2018 and Former SLM’s executive compensation programs, as well as the position each NEO held during that period. Accordingly, compensation decisions regarding our NEOs during that period were made by the Former SLM Compensation and Personnel Committee or its delegates.March 17, 2019. |
| (3) | Our NEOs did not receive any bonus payments in 2016 or 2015. The Former SLM Compensation and Personnel Committee approved a one-time cash bonus payment in 2014 for Mr. Remondi in recognition of his significant contributions toward the successful completion of the Spin-Off. Other senior executives of Former SLM, including Messrs. Chivavibul, Kane and Hynes, received similar one-time cash bonus payments. |
| (4) | Amounts shown are the grant date fair values of the various stock-based awards granted during 2014, 20152017, 2018 and 20162019 computed in accordance with the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 718. Additional details on accounting for stock-based compensation can be found in “Note 2—Significant Accounting Policies” and “Note 11—Stock-Based Compensation Plans and Arrangements” to the audited consolidated financial statements included in the Company’s2019 Annual Report on Form 10-K. The “Stock Awards” column also includes the value of annual incentive awards delivered in the form of fully-vested stock or fully-vested restricted stock units (“RSUs”), as described in Note 5 of this Summary Compensation Table. Performance stock units (“PSUs”) granted in 20152017, 2018 and 20162019 are shown at their grant date fair values for each of these years. |
The grant-date fair value of PSUs awarded during each fiscal year is shown based on the probable performance (target) value of the awards. The maximum grant-date fair value of the PSU awards for 2019 assuming all performance goals were achieved at their maximum levels would be as follows: for Mr. Remondi, $4,499,981; for Mr. Lown, $899,984; for Mr. Kane, $749,994; for Mr. Heleen, $562,481; and for Mr. Hauber, $374,991. | | Equity awards granted after the April 30, 2014 effective date of the Spin-Off were delivered in shares or units of Navient Common Stock. Equity awards granted prior to April 30, 2014 were delivered in shares or units of Former SLM Common Stock. These awards were adjusted and converted into Navient and/or SLM equity awards in connection with the Spin-Off, which is described in greater detail in the table of “Outstanding Equity Awards at Fiscal Year-End” below, as well as in our Registration Statement filed on Form 10 with the SEC on April 10, 2014. Amounts shown for 2014 include the incremental fair value of these adjusted and converted awards, computed as of the adjustment/conversion date in accordance with FASB ASC Topic 718, for each of our NEOs ($7,645 for Mr. Remondi; $3,823 for Mr. Chivavibul; $1,274 for Mr. Kane; and $3,823 for Mr. Hynes). |
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| (5)(4) | Annual incentive awards for 2016 and 2015 were paid to NEOs under the Navient 2016 and 2015 Management Incentive Plan in cash. Annual incentive awards for 2014 were paid to Messrs. Remondi, Chivavibul, Kane and Hynes under the Navient 2014 Management Incentive Plan, with 50 percent of each award delivered in cash and 50 percent delivered in fully-vested RSUs with transfer restrictions that lapse in one-third increments on each of the first, second and third anniversaries of the grant date. Only the cash portion of each annual incentive award is shown in this column; the portion of each annual incentive award delivered in Common Stock or RSUs is shown in the “Stock Awards” column. |
| (6)(5) | Navient’s non-qualified deferred compensation plan does not provide for above-market or preferential earnings on compensation deferred under the plan. |
| (7)(6) | For 2016,2019, the components of “All Other Compensation” were as follows: |
| NAME | | | EMPLOYER
CONTRIBUTIONS
TO DEFINED
CONTRIBUTION
PLANS(A)
($) | | | TRANSPORTATION
ALLOWANCE(B)
($) | | | ANNUAL PHYSICAL
EXAMINATION(C)
($) | | | TOTAL
($) | | | Remondi | | | | 38,250 | | | | 731 | | | | 4,450 | | | | 43,431 | | | Chivavibul | | | | 33,249 | | | | — | | | | — | | | | 33,249 | | | Kane | | | | 38,249 | | | | — | | | | — | | | | 38,249 | | | Whorley | | | | 13,249 | | | | — | | | | — | | | | 13,249 | | | Hynes | | | | 13,249 | | | | — | | | | — | | | | 13,249 | |
| NAME | | TRANSPORTATION ALLOWANCE (B)($) | TOTAL ($) | | Remondi | 7,692 | 640 | 8,332 | | Lown | 14,000 | 0 | 14,000 | | Kane | 14,000 | 0 | 14,000 | | Heleen | 14,000 | 0 | 14,000 | | Hauber | 14,000 | 0 | 14,000 |
| (A) | Amounts credited to Navient’s tax-qualified defined contribution plan and non-qualified deferred compensation plan. |
| (B) | Automobile allowance benefit calculated based on the annual lease method. |
| (C) | Senior executives, including our NEOs, are eligible to receive an annual executive physical examination. Messrs. Chivavibul, Kane, Whorley and Hynes did not utilize this allowance in 2016. |
For 2014, “All Other Compensation” includes the value of unvested dividend equivalent units (“DEUs”) accrued on units of unvested RSUs during 2014 for the following executives: Messrs. Remondi ($243,570), Chivavibul ($31,849), Kane ($45,111), and Hynes ($29,748).
| 20172020 Proxy Statement | | 5466
|
Grants of Plan-Based Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ALL OTHER
STOCK
AWARDS:
NUMBER OF
SHARES OF
STOCK OR
UNITS(3)
(#) | | ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS(4)
(#) | | EXERCISE
OR BASE
PRICE OF
OPTION
AWARDS
($/SHARE) | | GRANT DATE
FAIR VALUE
OF STOCK
AND OPTION
AWARDS(5)
($) | | | | | | | | | | | | | | | | | | | | | | | | | | ESTIMATED FUTURE PAYOUTS
UNDER
NON-EQUITY INCENTIVE PLAN
AWARDS(1) | | ESTIMATED FUTURE PAYOUTS
UNDER
EQUITY INCENTIVE PLAN
AWARDS(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME | | GRANT DATE | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | | | | Remondi | | Management | | — | | 1,500,000 | | 2,250,500 | | | | | | | | | | | | | | | | | | Incentive Plan | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2016 | | | | | | | | 104,847 | | 209,694 | | 314,541 | | | | | | | | 1,924,990 | | | | 2/3/2016 | | | | | | | | | | | | | | 125,816 | | | | | | 1,154,990 | | | | 2/3/2016 | | | | | | | | | | | | | | | | 762,376 | | 9.18 | | 769,999 | | Chivavibul | | Management | | — | | 570,000 | | 855,000 | | | | | | | | | | | | | | | | | | Incentive Plan | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2016 | | | | | | | | 26,960 | | 53,921 | | 80,881 | | | | | | | | 494,994 | | | | 2/3/2016 | | | | | | | | | | | | | | 32,352 | | | | | | 296,991 | | | | 2/3/2016 | | | | | | | | | | | | | | | | 196,039 | | 9.18 | | 197,999 | | Kane | | Management | | — | | 675,000 | | 1,012,500 | | | | | | | | | | | | | | | | | | Incentive Plan | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2016 | | | | | | | | 35,947 | | 71,895 | | 107,842 | | | | | | | | 659,996 | | | | 2/3/2016 | | | | | | | | | | | | | | 43,137 | | | | | | 395,997 | | | | 2/3/2016 | | | | | | | | | | | | | | | | 261,386 | | 9.18 | | 263,999 | | Whorley | | Management | | — | | 675,000 | | 1,012,500 | | | | | | | | | | | | | | | | | | Incentive Plan | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2016 | | | | | | | | 35,947 | | 71,895 | | 107,842 | | | | | | | | 659,996 | | | | 2/3/2016 | | | | | | | | | | | | | | 43,137 | | | | | | 395,997 | | | | 2/3/2016 | | | | | | | | | | | | | | | | 261,386 | | 9.18 | | 263,999 | | Hynes | | Management | | — | | 555,000 | | 832,500 | | | | | | | | | | | | | | | | | | Incentive Plan | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2016 | | | | | | | | 23,965 | | 47,930 | | 71,895 | | | | | | | | 439,997 | | | | 2/3/2016 | | | | | | | | | | | | | | 28,758 | | | | | | 263,998 | | | | 2/3/2016 | | | | | | | | | | | | | | | | 174,257 | | 9.18 | | 175,999 |
NAME | GRANT DATE | ESTIMATED POSSIBLE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(1) | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(2) | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS(3) (#) | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS(4) (#) | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SHARE) | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS(5) ($) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | Remondi | Management Incentive Plan | - | 1,500,000 | 2,250,000 |
|
|
|
| | | | | | 2/5/2019 | | | | 131,118 | | |
| | | 2,999,991 | | | 2/5/2019 | | | | | | | 174,825 |
| | 1,999,998 | | Lown | Management Incentive Plan | - | 600,000 | 900,000 |
| | | | | | | | | 2/5/2019 | | | | 26,223 | | |
| | | 599,993 | | | 2/5/2019 | | | | | | | 52,447 |
| | 599,993 | | Kane | Management Incentive Plan | - | 690,000 | 1,035,000 | | | | | | |
| | | 2/5/2019 | | | | 21,853 | | |
| | | 499,996 |
| 2/5/2019 |
| | |
|
| | 43,706 |
|
| 499,996 | | Heleen | Management Incentive Plan | - | 577,500 | 866,250 | | | | | | | | | | 2/5/2019 | | | | 16,389 | | 49,168 |
| | | 374,991 | | | 2/5/2019 |
|
|
|
|
|
| 32,779 |
|
| 374,991 | | Hauber | Management Incentive Plan | - | 525,000 | 787,500 |
|
|
|
|
|
|
| | | 2/5/2019 | | | | 10,926 | | |
| | | 249,998 | | | 2/5/2019 |
|
|
|
|
|
| 21,853 |
|
| 249,998 |
| (1) | Represents the possible total payouts for each Navient Named Executive Officer (“NEO”) under the Navient 20162019 Management Incentive Plan (“MIP”). The actual amounts earned under the 20162019 MIP and paid in February 20172020 are set forth below.below: |
| | | | | | | | | Target
2016 MIP Payout ($) | | Actual 2016
MIP Payout ($) | | Mr. Remondi | | 1,500,000 | | 1,666,500 | | Mr. Chivavibul | | 570,000 | | 633,270 | | Mr. Kane | | 675,000 | | 749,925 | | Mr. Whorley | | 675,000 | | 749,925 | | Mr. Hynes | | 555,000 | | 616,605 |
| | Target 2019 MIP Payout ($) | Actual 2019 MIP Payout ($) | | Mr. Remondi | 1,500,000 | 1,785,000 | | Mr. Lown | 600,000 | 714,000 | | Mr. Kane | 690,000 | 821,100 | | Mr. Heleen | 577,500 | 687,225 | | Mr. Hauber | 525,000 | 624,750 |
| (2) | Represents the range of performance stock units (“PSUs”), granted on February 3, 2016,5, 2019, that may vest based on various performance metrics for the three-year performance period from January 1, 2016,2019, through December 31, 2018.2021. See “Long-term Incentive Program” in the Compensation Discussion and Analysis above for additional details regarding the performance metrics associated with these PSUs. |
| (3) | Stock awards granted on February 3, 20165, 2019, to Messrs. Remondi, Lown, Kane, Heleen and Hauber represent restricted stock units (“RSUs”) that have vested or will vest and convert into shares of Common Stock in one-third increments on February 3, 2017,5, 2020, February 3, 20185, 2021 and February 3, 2019.5, 2022. |
| (4) | Navient discontinued the practice of granting stock options grantedas part of the Company’s long-term incentive program in 2016 to NEOs have vested or will vest in one-third increments on February 3, 2017, February 3, 2018 and February 3, 2019. |
| (5) | Amounts disclosed for awards granted in 20162019 represent the grant date fair value computed in accordance with FASB ASC Topic 718. Additional details on accounting for stock-based compensation can found in “Note 2—Significant Accounting Policies” and “Note 11—Stock-Based Compensation Plans and Arrangements” to the audited consolidated financial statements included in the Company’s2019 Annual Report on Form 10-K. |
Outstanding Equity Awards at Fiscal Year End
The table below sets forth information regarding Navient equity awards that were outstanding as of December 31, 2016. | OPTION AWARDS | | STOCK AWARDS | | NAME | | GRANT
DATE(1) | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
EXERCISABLE
(#) | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
UNEXERCISABLE(2)
(#) | | OPTION
EXERCISE
PRICE
($) | | OPTION
EXPIRATION
DATE | | NUMBER
OF
SHARES
OR UNITS
OF
STOCK
THAT
HAVE
NOT
VESTED(3)
(#) | | MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT
VESTED(4)
($) | | EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT
HAVE NOT
VESTED(5)
(#) | | EQUITY
INCENTIVE
PLAN
AWARDS:
MARKET OR
PAYOUT
VALUE OF
UNEARNED
SHARES,
UNITS, OR
OTHER
RIGHTS
THAT HAVE
NOT
VESTED(4)(5)
($) | | Remondi | | 1/8/2008 | | 2,000,000 | | — | | 11.0960 | | 1/8/2018 | | — | | — | | — | | — | | | | 1/8/2009 | | 1,000,000 | | — | | 6.5230 | | 1/8/2019 | | — | | — | | — | | — | | | | 1/27/2011 | | 80,000 | | — | | 9.3771 | | 1/27/2021 | | — | | — | | — | | — | | | | 2/3/2012 | | 173,210 | | — | | 10.2558 | | 2/3/2017 | | — | | — | | — | | — | | | | 2/7/2013 | | 256,107 | | — | | 11.4873 | | 2/7/2018 | | — | | — | | — | | — | | | | 5/1/2014 | | 339,641 | | 169,820 | | 17.0000 | | 5/1/2019 | | — | | — | | — | | — | | | | 2/18/2015 | | 156,250 | | 312,500 | | 21.6500 | | 2/18/2020 | | — | | — | | — | | — | | | | 2/3/2016 | | 0 | | 762,376 | | 9.1800 | | 2/3/2021 | | — | | — | | — | | — | | | | 2/4/2014 | | — | | — | | — | | — | | 62,334 | | $1,024,147 | | — | | — | | | | 2/18/2015 | | — | | — | | — | | — | | 23,570 | | 387,255 | | — | | — | | | | 2/18/2015 | | — | | — | | — | | — | | — | | — | | 44,193 | | $726,090 | | | | 2/3/2016 | | — | | — | | — | | — | | 131,917 | | 2,167,396 | | — | | — | | | | 2/3/2016 | | — | | — | | — | | — | | — | | — | | 219,862 | | 3,612,332 | | Chivavibul | | 1/27/2011 | | 40,000 | | — | | 9.3771 | | 1/27/2021 | | — | | — | | — | | — | | | | 2/7/2013 | | 43,663 | | — | | 11.4873 | | 2/7/2018 | | — | | — | | — | | — | | | | 5/1/2014 | | 72,780 | | 36,390 | | 17.0000 | | 5/1/2019 | | — | | — | | — | | — | | | | 2/18/2015 | | 40,178 | | 80,357 | | 21.6500 | | 2/18/2020 | | — | | — | | — | | — | | | | 2/3/2016 | | 0 | | 196,039 | | 9.1800 | | 2/3/2021 | | — | | — | | — | | — | | | | 2/4/2014 | | — | | — | | — | | — | | 8,015 | | 131,686 | | — | | — | | | | 5/1/2014 | | — | | — | | — | | — | | 4,390 | | 72,127 | | — | | — | | | | 2/18/2015 | | — | | — | | — | | — | | 6,062 | | 99,598 | | — | | — | | | | 2/18/2015 | | — | | — | | — | | — | | — | | — | | 11,363 | | 186,694 | | | | 2/3/2016 | | — | | — | | — | | — | | 33,920 | | 557,305 | | — | | — | | | | 2/3/2016 | | — | | — | | — | | — | | — | | — | | 56,535 | | 928,870 | | Kane | | 1/27/2011 | | 13,333 | | — | | 9.3771 | | 1/27/2021 | | — | | — | | — | | — | | | | 2/7/2013 | | 54,579 | | — | | 11.4873 | | 2/7/2018 | | — | | — | | — | | — | | | | 5/1/2014 | | 97,040 | | 48,520 | | 17.0000 | | 5/1/2019 | | — | | — | | — | | — | | | | 2/18/2015 | | 52,455 | | 104,911 | | 21.6500 | | 2/18/2020 | | — | | — | | — | | — | | | | 2/3/2016 | | 0 | | 261,386 | | 9.1800 | | 2/3/2021 | | — | | — | | — | | — | | | | 2/4/2014 | | — | | — | | — | | — | | 9,797 | | 160,964 | | — | | — | | | | 5/1/2014 | | — | | — | | — | | — | | 6,587 | | 108,224 | | — | | — | | | | 2/18/2015 | | — | | — | | — | | — | | 7,912 | | 129,994 | | — | | — | | | | 2/18/2015 | | — | | — | | — | | — | | — | | — | | 14,836 | | 243,755 | | | | 2/3/2016 | | — | | — | | — | | — | | 45,228 | | 743,096 | | — | | — | | | | 2/3/2016 | | — | | — | | — | | — | | — | | — | | 75,381 | | 1,238,509 | | Whorley | | 6/1/2015 | | 50,761 | | 101,523 | | 19.3400 | | 6/1/2020 | | — | | — | | — | | — | | | | 2/3/2016 | | 0 | | 261,386 | | 9.1800 | | 2/3/2021 | | — | | — | | — | | — | | | | 6/1/2015 | | — | | — | | — | | — | | 11,221 | | 184,361 | | — | | — | | | | 2/3/2016 | | — | | — | | — | | — | | 45,228 | | 743,096 | | — | | — | | | | 2/3/2016 | | — | | — | | — | | — | | — | | — | | 75,381 | | 1,238,509 | | Hynes | | 5/13/2008 | | 100,000 | | — | | 13.9310 | | 5/13/2018 | | — | | — | | — | | — | | | | 1/28/2010 | | 50,000 | | — | | 6.6127 | | 1/28/2020 | | — | | — | | — | | — | | | | 1/27/2011 | | 40,000 | | — | | 9.3771 | | 1/27/2021 | | — | | — | | — | | — | | | | 2/7/2013 | | 42,572 | | — | | 11.4873 | | 2/7/2018 | | — | | — | | — | | — | | | | 5/1/2014 | | 58,224 | | 29,112 | | 17.0000 | | 5/1/2019 | | — | | — | | — | | — | | | | 2/18/2015 | | 32,366 | | 64,732 | | 21.6500 | | 2/18/2020 | | — | | — | | — | | — | | | | 2/3/2016 | | 0 | | 174,257 | | 9.1800 | | 2/3/2021 | | — | | — | | — | | — | | | | 2/4/2014 | | — | | — | | — | | — | | 8,015 | | 131,686 | | — | | — | | | | 5/1/2014 | | — | | — | | — | | — | | 2,196 | | 36,080 | | — | | — | | | | 2/18/2015 | | — | | — | | — | | — | | 4,883 | | 80,227 | | — | | — | | | | 2/18/2015 | | — | | — | | — | | — | | — | | — | | 9,154 | | 150,400 | | | | 2/3/2016 | | — | | — | | — | | — | | 30,152 | | 495,397 | | — | | — | | | | 2/3/2016 | | — | | — | | — | | — | | — | | — | | 50,254 | | 825,673 | | | | | | | | | | | | | | | | | | | | |
| | OPTION AWARDS
| STOCK AWARDS
| | | | | | | | |
| |
|
| | | NAME | | | | | | | | | | | | | | | | | | | | | | | | Remondi | 1/27/2011 | 80,000 | - | 9.3771 | 1/27/2021 | - | - | - | - | | | | 2/18/2015 | 468,750 | - | 21.6500 | 2/18/2020 | - | - | - | - | | | | 2/3/2016 | 762,376 | - | 9.1800 | 2/3/2021 | - | - | - | - | | | | 2/6/2017 | 198,265 | 99,132 | 15.4800 | 2/6/2022 | - | - | - | - | | | | 2/5/2018 | 154,440 | 308,880 | 13.6300 | 2/5/2023 | - | - | - | - | | | | 2/6/2017 | - | - | - | - | 28,660 | 392,068 | - | - | | | | 2/6/2017 | - | - | - | - | 163,057 | 2,230,619 | | | | | | 2/5/2018 | - | - | - | - | 41,518 | 567,966 | - | - | | | | 2/5/2018 | - | - | - | - | - | - | 162,531 | 2,223,424 | | | | 2/5/2019 | - | - | - | - | 175,920 | 2,406,585 | - | - | | | | 2/5/2019 | - | - | - | - | - | - | 275,324 | 3,766,432 | | | Lown | 2/5/2018 | 46,332 | 92,664 | 13.6300 | 2/5/2023 | - | - | - | - | | | | 3/27/2017 | - | - | - | - | 27,277 | 373,149 | - | - | | | | 2/5/2018 | - | - | - | - | 13,003 | 177,881 | - | - | | | | 2/5/2018 | - | - | - | - | - | - | 48,759 | 667,023 | | | | 2/5/2019 | - | - | - | - | 55,064 | 753,275 | - | - | | | | 2/5/2019 | - | - | - | - | - | - | 55,064 | 753,275 | | | Kane | 1/27/2011 | 13,333 | - | 9.3771 | 1/27/2021 | - | - | - | - | | | | 2/18/2015 | 157,366 | - | 21.6500 | 2/18/2020 | - | - | - | - | | | | 2/3/2016 | 261,386 | - | 9.1800 | 2/3/2021 | - | - | - | - | | | | 2/6/2017 | 71,871 | 35,935 | 15.4800 | 2/6/2022 | - | - | - | - | | | | 2/5/2018 | 50,193 | 100,386 | 13.6300 | 2/5/2023 | - | - | - | - | | | | 2/6/2017 | - | - | - | - | 10,846 | 148,373 | - | - | | | | 2/6/2017 | - | - | - | - | 59,107 | 808,583 | | | | | | 2/5/2018 | - | - | - | - | 14,086 | 192,696 | - | - | | | | 2/5/2018 | - | - | - | - | - | - | 52,821 | 722,591 | | | | 2/5/2019 | - | - | - | - | 45,887 | 627,734 | - | - | | | | 2/5/2019 | - | - | - | - | - | - | 45,887 | 627,734 | | | Heleen | 2/18/2015 | 73,660 | - | 21.6500 | 2/18/2020 | - | - | - | - | | | | 2/3/2016 | 79,868 | - | 9.1800 | 2/3/2021 | - | - | - | - | | | | 2/6/2017 | 37,175 | 18,587 | 15.4800 | 2/6/2022 | - | - | - | - | | | | 2/5/2018 | 28,957 | 57,915 | 13.6300 | 2/5/2023 | - | - | - | - | | | | 2/6/2017 | - | - | - | - | 5,610 | 76,744 | - | - | | | | 2/6/2017 | - | - | - | - | 30,572 | 418,224 | | | | | | 2/5/2018 | - | - | - | - | 8,127 | 111,177 | - | - | | | | 2/5/2018 | - | - | - | - | - | - | 30,473 | 416,870 | | | | 2/5/2019 | - | - | - | - | 32,972 | 451,056 | - | - | | | | 2/5/2019 | - | - | - | - | - | - | 34,414 | 470,783 | |
| 20172020 Proxy Statement | | 5668
|
| | | OPTION AWARDS
| | | STOCK AWARDS | | | | NAME | GRANT DATE(1) | | | | OPTION EXPIRATION DATE
| | | | | | | | | | | | | | | | | | | Hauber | 1/27/2011 | 8,333 | | - | | 9.3771 | 1/27/2021 | - | - | - | - | | | | 2/18/2015 | 46,666 | | - | | 21.6500 | 2/18/2020 | - | - | - | - | | | | 2/3/2016 | 138,613 | | - | | 9.1800 | 2/3/2021 | - | - | - | - | | | | 2/6/2017 | 26,022 | | 13,011 | | 15.4800 | 2/6/2022 | - | - | - | - | | | | 2/5/2018 | 19,305 | | 38,610 | | 13.6300 | 2/5/2023 | - | - | - | - | | | | 2/6/2017 | - | | - | | - | - | 1,745 | 23,871 | - | - | | | | 2/6/2017 | - | | - | | - | - | 14,266 | 195,158 | | | | | | 2/5/2018 | - | | - | | - | - | 5,418 | 74,118 | - | - | | | | 2/5/2018 | - | | - | | - | - | - | - | 20,315 | 277,909 | | | | 2/5/2019 | - | | - | | - | - | 22,943 | 313,860 | - | - | | | | 2/5/2019 | - | | - | | - | - | - | - | 22,943 | 313,860 | |
| (1) | Navient was spun-off from the company now known as SLM Corporation (“SLM”) and became an independent public company effective April 30, 2014. PriorImmediately prior to the Spin-Off, each of our NEOs (other than Messrs. Lown and Heleen) was employed by the company previously known as SLM Corporation (“Former SLM”). Former SLM equity awards outstanding on April 30, 2014, were adjusted and converted into Navient awards and SLM awards. In general, the adjusted and converted equity awards are subject to substantially the same terms and conditions as the original Former SLM equity awards, including the original vesting schedule. The continuous service of each NEO with Former SLM (pre-Spin-Off) and Navient (post-Spin-Off) will behas been taken into account for vesting purposes. Additional details regarding the adjustment and conversion of Former SLM equity awards can be found in Navient’s Registration Statement filed on Form 10 with the SEC on April 10, 2014. This table reflects only Navient equity awards that were outstanding as of December 31, 2016.2019. |
| (2) | Stock options granted in 20132017 vested in one-third increments on each of February 7, 2014,6, 2018, February 7, 2015,6, 2019, and February 7, 2016. Certain vesting price targets associated with stock options granted in 2013 were met prior to the April 30, 2014 effective date of the Spin-Off, and are no longer applicable.6, 2020. Stock options granted in 2014 to Messrs. Remondi, Chivavibul, Kane and Hynes have vested or will vest in one-third increments on each of May 1, 2015, May 1, 2016, and May 1, 2017. Stock options granted in 2015 to Mr. Whorley have vested or will vest in one-third increments on each of June 1, 2016, June 1, 2017, and June 1, 2018. Stock options granted in 2015 to other NEOs have vested or will vest in one-third increments on each of February 18, 2016, February 18, 2017, and February 18, 2018. Stock options granted in 20162018 have vested or will vest in one-third increments on February 3, 2017,5, 2019, February 3, 20185, 2020, and February 3, 2019.5, 2021. |
| (3) | Restricted stock units (“RSUs”) granted in 20132017 to Messrs. Chivavibul, Kane and HynesNEOs other than Mr. Lown vested and were converted into shares of Common Stock in one-third increments on each of February 7, 2014,6, 2018, February 7, 20156, 2019 and February 7, 2016.6, 2020. RSUs granted in 20142017 to Messrs. Remondi, Chivavibul, Kane and HynesMr. Lown vested and were converted into shares of Common Stock in one-third increments on each of February 4, 2015, February 4, 2016March 27, 2018, March 27, 2019 and February 4, 2017.March 27, 2020. RSUs granted in 2015 to Mr. Whorley have vested or will vest and be converted into shares of Common Stock in one-third increments on each of June 1, 2016, June 1, 2017 and June 1, 2018. RSUs granted in 2015 to other NEOs have vested or will vest and be converted into shares of Common Stock in one-third increments on each of February 18, 2016, February 18, 2017, and February 18, 2018. RSUs granted in 20162018 have vested or will vest in one-third increments on February 3, 2017,5, 2019, February 3, 20185, 2020 and February 3, 2019.5, 2021. RSUs granted in 2019 have vested or will vest in one-third increments on February 5, 2020, February 5, 2021 and February 5, 2022. |
PSUs granted in 2017 vest after a three-year performance period (2017-19), with the potential payout ranging from 0% to 150% of the target number of units. Based on the Company’s actual performance during the three-year performance period relative to pre-established performance goals, these PSUs vested at 109% of the target number of units and were settled in shares of the Company’s common stock on March 2, 2020. These 2017 PSUs are shown above as outstanding on December 31, 2019 based on the final vested amount (i.e., 109% of the target number of units). See “2017-19 Performance Stock Units” in the Compensation Discussion and Analysis above for additional details regarding these PSUs.
Amounts include all accrued and unvested whole share dividend equivalent units (“DEUs”) that vest only to the extent and at the same time the underlying award on which they are issued vest.
| | Amounts include all accrued and unvested whole share dividend equivalent units (“DEUs”) that vest only to the extent and at the same time that the underlying award on which they are issued vest. |
| (4) | Market value of shares or units is calculated based on the closing market price of $16.43$13.68 for Navient Common Stock on December 30, 2016.31, 2019. |
| (5) | Performance stock units (“PSUs”)PSUs granted in 20152018 will vest after a three-year performance period (2015-2017)(2018-2020), with the potential payout ranging from 0% to 130%150% of the target awardnumber of units based on a combination of (i) aggregate cash flows net of secured borrowings from all student loans (including private credit finance loans) over the Company’s “cumulative core net income” for such performance period combined with an additional vesting modifier basedperiod; (ii) cumulative revenue derived from business processing products and services over the performance period; and (iii) the attainment of certain strategic objectives intended to highlight a limited number of critical, non-formulaic goals that management is focusing on “strategic growth cumulative core net income” that can increase or decreaseover the payout by an additional 20%. Overall payout as a percentage of target cannot exceed 156% of the target award.three-year period. Assuming the Company meets or exceeds these performance levels, the PSUs will vest on the second business day after the Company files with the SEC its annual report on Form 10-K for the fiscal year 2017 with the SEC,2020, and in no event later than March 15, 2018.2021. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time that the underlying award on which they are issued vest. The number of units and payout value reported is based on achieving thresholdtarget performance goals. Due to the impact of 2015 performance on these PSUs, it is uncertain to what extent they will vest, if at all.
PSUs granted in 2016 will vest after a three-year performance period (2016-2018), with the potential payout ranging from 0% to 150% of the target award based on a combination of (i) aggregate cash flows from student loans (net of secured borrowings) over the performance period; (ii) cumulative revenue from growth businesses over the performance period; and (iii) the attainment of certain strategic objectives intended to highlight a limited number of critical, non-formulaic goals that management is focusing on over the next three years. Assuming the Company meets or exceeds these performance levels, the PSUs will vest on the second business day after the Company files its annual report on Form 10-K for the fiscal year 2018 with the SEC, and in no event later than March 15, 2019. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time that the underlying award on which they are issued vest. See “Long-term Incentive Program” in the Compensation Discussion and Analysis above for additional details regarding the performance metrics associated with these PSUs.
|
PSUs granted in 2019 will vest after a three-year performance period (2019-21), with the potential payout ranging from 0% to 150% of the target number of units based on a combination of (i) aggregate cash flows net of secured borrowings from all student loans (including private credit finance loans) over the performance period; and (ii) annual “Core Earnings” Return on Equity for each year in the performance period. “Core Earnings” Return on Equity is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. “Core Earnings” Return on Equity is a
| 2020 Proxy Statement | | 69
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percentage equal to the Company’s “core earnings” net income for each of fiscal years 2019, 2020 and 2021, divided by average stockholder’s equity for each such year (determined using the average balance of stockholder’s equity on a “core earnings” basis for each quarter in a given year), using yearly “core earnings” net income as shown in the segment reporting footnote in the Company’s audited financial statements as published in the Company’s annual report on Form 10-K, excluding the impact of any regulatory and restructuring costs. Assuming the Company meets or exceeds these performance levels, the PSUs will vest on the second business day after the Company files with the SEC its annual report on Form 10-K for the fiscal year 2021, and in no event later than March 15, 2022. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time that the underlying award on which they are issued vest. The number of units and payout value reported is based on achieving target performance goals. See “2019 Long-term Incentive Program” in the Compensation Discussion and Analysis above for additional details regarding the performance metrics associated with these PSUs.
Option Exercises and Stock Vested
| | Option Awards | Stock Awards
| | NAME | NUMBER OF SHARES ACQUIRED ON EXERCISE (1) (#) | VALUE REALIZED ON EXERCISE (2) ($) | NUMBER OF SHARES ACQUIRED ON VESTING (3) (#) | VALUE REALIZED ON VESTING (4) ($) | | Remondi | 1,000,000 | | 2,677,000 | | 406,284 | | 4,901,690 | | | Lown | 0 | | 0 | | 32,517 | | 375,153 | | | Kane | 0 | | 0 | | 137,580 | | 1,654,769 | | | Heleen | 0 | | 0 | | 65,902 | | 794,361 | | | Hauber | 0 | | 0 | | 34,734 | | 418,815 | |
| | Option Awards | | Stock Awards | | NAME | | NUMBER OF SHARES
ACQUIRED
ON EXERCISE(1)
(#) | | VALUE REALIZED
ON EXERCISE(2)
($) | | NUMBER OF SHARES
ACQUIRED ON VESTING(3)
(#) | | VALUE REALIZED ON
VESTING(4)
($) | | Remondi | | 0 | | 0 | | 174,339 | | 1,829,956 | | Chivavibul | | 37,636 | | 159,734 | | 20,245 | | 212,198 | | Kane | | 13,636 | | 57,873 | | 26,317 | | 279,368 | | Whorley | | 0 | | 0 | | 5,419 | | 73,644 | | Hynes | | 0 | | 0 | | 17,426 | | 176,217 |
| (1) | Mr. ChivavibulRemondi exercised 37,6361,000,000 net-settled stock options on November 9, 2016,January 3, 2019, with a strike price of $10.2558$6.5230 and a market price of $14.50, and received 7,175$9.20, receiving 171,422 net shares. Mr. Kane exercised 13,636 net-settled stockThese options were set to expire on November 9, 2016, with a strike price of $10.2558 and a market price of $14.50, and received 2,586 net shares.January 8, 2019. |
| (2) | The value realized upon exercise is the number of net-settled stock options exercised multiplied by the difference between the market price of Navient Common Stock at exercise and the strike price on the net-settled options. |
| 2017 Proxy Statement | | 57 |
| (3) | Represents shares acquired upon the vesting of restricted stock units (“RSUs”), the associated dividend equivalent units (“DEUs”) and any fractional share settlement. (4) The value realized on vesting is the number of shares vested multiplied by the closing market price of Navient Common Stock on the vesting date. |
| (4) | The value realized on vesting is the number of shares vested multiplied by the closing market price of Navient Common Stock on the vesting date. |
Pension Benefits
The Company has no tax-qualified pension plans and no non-qualified supplemental pension plans.
Non-Qualified Deferred Compensation
Under the Navient Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), eligible employees, including our NEOs, may elect to defer up to 80 percent of their annual cash-based compensation. Each year, an employee who has completed one year of service generally is eligibleThe Company amended the Deferred Compensation Plan in 2018 to receive aeliminate Company contribution in an amount equal to the greater of: (i) five percent (5%) of the participant’s annual “eligible compensation,” or (ii) five percent (5%) of the participant’s annual deferral amount; provided, however, that the Company contribution for a given year will not exceed the participant’s annual deferral amount. For this purpose, “eligible compensation” is the employee’s annual cash-based compensation in excess of the annual compensation limit applicable to tax-qualified retirement plans, up to a maximum of $500,000. contributions effective January 1, 2019. All participant deferrals and Company contributions are credited to bookkeeping accounts. Amounts in each participant’s account are indexed to one or more investment alternatives chosen by the participant from a range of market-based alternatives. The Deferred Compensation Plan does not pay above-market or preferential earnings. Participants elect the time and form of payment of their accounts. Accounts generally are paid no sooner than the first day of the seventh month following the participant’s termination of employment, although certain in-service distributions are permitted. Immediate distributions upon the death or disability of the participant also are permitted. Accounts generally may be distributed either in a single lump sum or in up to ten (10) annual installments.
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The following table provides information regarding contributions and earnings under the Deferred Compensation Plan in 2016,2019, as well as year-end account balances, for each of our NEOs. | Name | | EXECUTIVE
CONTRIBUTIONS IN
2016
($) | | REGISTRANT
CONTRIBUTIONS IN
2016(1)
($) | | AGGREGATE
EARNINGS IN
2016
($) | | AGGREGATE
WITHDRAWALS /
DISTRIBUTIONS IN
2016
($) | | AGGREGATE
BALANCE AT
12/31/2016
($) | | Remondi | | 25,000 | | 25,000 | | 30,518 | | 0 | | 768,991 | | Chivavibul | | 19,999 | | 19,999 | | 16,206 | | 0 | | 278,778 | | Kane | | 25,000 | | 25,000 | | 25,840 | | 0 | | 247,102 | | Whorley | | 0 | | 0 | | 0 | | 0 | | 0 | | Hynes | | 0 | | 0 | | 15,628 | | 0 | | 205,517 |
| | EXECUTIVE CONTRIBUTIONS IN 2019 (1) | REGISTRANT CONTRIBUTIONS IN 2019 (2) | AGGREGATE EARNINGS IN 2019 | AGGREGATE WITHDRAWALS / DISTRIBUTIONS IN 2019 | AGGREGATE BALANCE AT 12/31/2019 (3) | | NAME | ($) | ($) | ($) | ($) | ($) | | Remondi | 0 | | 0 | | 295,793 | | 0 | | 1,277,674 | | | Lown | 0 | | 0 | | 12,349 | | 0 | | 60,804 | | | Kane | 57,500 | | 0 | | 90,224 | | 0 | | 501,970 | | | Heleen | 0 | | 0 | | 0 | | 0 | | 0 | | | Hauber | 0 | | 0 | | 60,247 | | 0 | | 257,937 | |
| (1) | Registrant Contributions listed hereExecutive contributions are included underwithheld from the heading “Employer Contributions to Defined Contribution Plans”executive’s salary and/or non-equity incentive compensation for the relevant fiscal year and are reflected in Footnote 7 tothe relevant column in the Summary Compensation Table.Table for that year. |
| 2017 Proxy Statement | | 58The Company amended the Deferred Compensation Plan in 2018 to eliminate Company contributions effective January 1, 2019. |
| (3) | The aggregate balance at fiscal year-end reflects current and prior fiscal year executive and registrant contributions previously reported in the Summary Compensation Table for those years for executives who were named executive officers in those years. |
Arrangements with Named Executive Officers
Navient has not entered into an employment agreement with any of its NEOs. However, our NEOs participate in the company’sCompany’s severance plans for senior officers, and each of our NEOs is entitled to certain severance payments pursuant to the terms and conditions of those plans, which are described below.
Under Navient’s Executive Severance Plan for Senior Officers, eligible officers will receive a lump sum cash payment equal to (i) a multiple of base salary and an average annual incentive award (determined over the last 24 months), plus (ii) pro-ratedpro- rated target annual incentive award for the year of termination, upon the following events: (a) resignation from employment for good reason (as defined in the plan); (b) the Company’s decision to terminate an eligible officer’s employment for any reason other than for cause (as defined in the plan), death or disability; or (c) upon mutual agreement of the Company and the eligible officer. The multiplier for each eligible officer position is as follows: CEO-2;CEO-2x; Executive Vice President-1.President-1x. Each of our NEOs other than Mr. Remondi holds the title of Executive Vice President. Under the plan, in no event will a severance payment exceed a multiple of three times an officer’s base salary and annual incentive award. In addition to the cash severance payment, eligible officers will receive subsidized medical benefits and outplacement services for 18 months (24 months for the CEO). Treatment of outstanding equity awards upon severance is governed by the terms of the applicable equity award agreement and not the severance plan.
Change in Control Severance Plan Under Navient’s Change in Control Severance Plan for Senior Officers, if a termination of employment for reasons defined in the plan occurs within 24 months following a change in control of the Company, the participant is entitled to receive a lump sum cash payment equal to two times the sum of his or her base salary and average annual incentive award (based on the prior two years). A participant will also be entitled to receive a pro-rated portion of his or her target annual incentive award for the year in which the termination occurs, as well as continuation of medical benefits for a two-year period. Treatment of outstanding equity awards upon a change in control is governed by the terms of the applicable equity award agreement and not the severance plan. Under the plan,equity award agreements, outstanding equity awards become vested and non-forfeitable in connection with a change in control only if (i) the participant’s employment is terminated, or (ii) the acquiring or surviving entity does not assume the equity awards. The plan does not allow for tax gross-ups.
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Potential Payments upon Termination or Change in Control
The tables below reflect the amount of compensation that would have been payable to each of our NEOs who were employed as executive officers of Navient on December 31, 2016,2019, under various scenarios including if such individual’s employment had terminated and/or a change in control had occurred on December 31, 2016,2019, given the individual’s compensation and service levels as of December 31, 2016,2019, and based on Navient’s closing stock price of $13.68 per share on December 30, 201631, 2019, the last trading date of $16.43 per share.the year. The amounts disclosed in the tables below are in addition to: (i) compensation and benefits available prior to the occurrence of a termination of employment, such as vested stock options, and (ii) compensation and benefits available generally to all employees, such as distributions under Navient’s defined contribution retirement program, disability plans and accrued vacation pay. The following severance arrangements were effective for our NEOs who were employed as executive officers of Navient on December 31, 2016:2019: (i) the Navient Corporation Executive Severance Plan for Senior Officers, (ii) the Navient Corporation Change in Control Severance Plan for Senior Officers, as amended and restated, and (iii) the Navient Corporation 2014 Omnibus Incentive Plan. | 2017 Proxy Statement | | 59 |
Plan, as amended and restated. Change in Control Without Termination | Name | Equity EquityVesting
Vesting(1)
($) | | Medical
Insurance / Outplacement
($) | Total
($) | | Remondi | —- | —- | —- | —- | ChivavibulLown | —- | —- | —- | —- | | Kane | —- | —- | —- | —- | WhorleyHeleen | —- | —- | —- | —- | HynesHauber | —- | —- | —- | —- |
| (1) | Under the Change in Control Severance Plan for Senior Officers,equity award agreements, outstanding equity awards become vested and non-forfeitable in connection with a change in control only if (i) the participant’s employment is terminated, or (ii) the acquiring or surviving entity does not assume the equity awards. For purposes of this table, we have assumed that neither of these conditions is satisfied. |
Change in Control and (i) Termination without Cause, or (ii) Termination for Good Reason | Name | Equity
Vesting(2)
($) | Cash
Severance
($) | Medical
Insurance /
Outplacement(3)
($) | Total
($) | | Remondi | 14,170,539 | 5,901,500 | 25,270 | 20,097,309 | | Chivavibul | 3,584,275 | 2,206,090 | 22,865 | 5,813,230 | | Kane | 4,763,348 | 2,655,675 | 22,120 | 7,441,143 | | Whorley | 4,061,015 | 2,612,475 | 15,727 | 6,689,217 | | Hynes | 3,133,228 | 2,183,555 | 25,270 | 5,342,053 |
| Name | | | Medical Insurance / Outplacement(3) ($) | | | Remondi | 8,607,605 | | 7,181,000 | | 26,374 | | 15,814,979 | | | Lown | 2,019,081 | | 2,872,400 | | 26,374 | | 4,917,855 | | | Kane | 2,457,556 | | 3,121,100 | | 14,797 | | 5,593,453 | | | Heleen | 1,503,920 | | 2,764,685 | | 26,374 | | 4,294,979 | | | Hauber | 904,810 | | 2,339,550 | | 26,505 | | 3,270,865 | |
| (2) | For stock and stock unit awards, the amounts shown reflect the closing market price of Navient Common Stock on December 30, 201631, 2019 ($16.43)13.68). For stock options where the December 30, 201631, 2019 closing market price of Navient Common Stock was higher than the option exercise price, the amounts reflect the intrinsic value of the options as if they had been exercised on December 30, 2016.31, 2019. PSUs granted in 2017 vested at 109% of the target number of units based on Company Performance over a three-year performance period (2017-19) and were settled on March 2, 2020. See “2017-19 Performance Stock Units” in the Compensation Discussion and Analysis above for additional details. These 2017 PSUs are valued based on the number of PSUs actually earned for the three-year performance period ending on December 31, 2019. |
| (3) | Includes Navient’s estimated portion of the cost of health care benefits for 24 months. |
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Termination without Cause or Termination for Good Reason | Name | Equity
Vesting(4)
($) | Cash
Severance
($) | Medical
Insurance /
Outplacement(5)
($) | Total
($) | | Remondi | — | 5,901,500 | 40,270 | 5,941,770 | | Chivavibul | — | 1,388,045 | 32,148 | 1,420,193 | | Kane | — | 1,665,337 | 31,590 | 1,696,927 | | Whorley | — | 1,523,737 | 26,795 | 1,550,532 | | Hynes | — | 1,369,277 | 33,952 | 1,403,229 |
| Name | | | Medical Insurance / Outplacement(6) ($) | | | | Remondi | - | 7,181,000 | 41,374 | 7,222,374 | | | Lown | - | 1,736,200 | 34,780 | 1,770,980 | | | Kane | - | 1,905,550 | 26,097 | 1,931,647 | | | Heleen | - | 1,671,092 | 34,780 | 1,705,872 | | | Hauber | - | 1,432,275 | 34,879 | 1,467,154 | |
| (4)(5) | By their terms, in the event of a termination without cause or a termination for good reason, outstanding Navient equity awards generally continue to vest pursuant to the vesting schedule set forth in each applicable award agreement as if the NEO remains employed by Navient through the pre-establishedpre- established vesting date. |
| (5)(6) | As President and Chief Executive Officer of Navient, Mr. Remondi is entitled to Navient’s estimated portion of the cost of health care benefits for a period of 24 months plus $15,000 of outplacement services. Amounts for Messrs. Chivavibul,Lown, Kane, Whorley,Heleen, and HynesHauber include Navient’s estimated portion of the cost of health care benefits for 18 months, plus $15,000 of outplacement services. |
| 2017 Proxy Statement | | 60 |
| Name | Equity EquityVesting
Vesting(6)(7)
($) | Cash
| Medical
Insurance / Outplacement
($) | | | Remondi | —- | —- | —- | —- | ChivavibulLown | —- | —- | —- | —- | | Kane | —- | —- | —- | —- | WhorleyHeleen | —- | —- | —- | —- | HynesHauber | —- | —- | —- | —- |
| (6)(7) | Vested and unvested equity awards are forfeited upon Termination for Cause (as defined in the Navient Corporation 2014 Omnibus Incentive Plan)Plan, as amended and restated). |
Termination upon Retirement | Name | Equity EquityVesting
Vesting(7)(8)
($) | | Medical
Insurance / Outplacement
($) | | | Remondi | —- | —- | —- | —- | ChivavibulLown | —- | —- | —- | —- | | Kane | —- | —- | —- | —- | WhorleyHeleen | —- | —- | —- | —- | HynesHauber | —- | —- | —- | —- |
| (8) | (7) | As of December 31, 2016, Messrs.Mr. Remondi and Chivavibul wereis eligible for retirement vesting of his outstanding equity awards pursuant to their terms and the Company’s retirement policy. Similarly, Mr. Heleen is eligible for retirement vesting of a portion of his outstanding equity awards. Outstanding equity awards generally continue to vest pursuant to the vesting schedule set forth in each applicable award agreement as if the NEO remains employed by Navient through the pre-establishedpre- established vesting date, provided that the NEO satisfies certain age and/or service conditions set forth in each company’sthe Company’s retirement policy. For equity awards originally granted by Former SLM prior to 2013, the award recipient must be age 60 or older upon retirement, or the award recipient must have attained a combination of age and years of service totaling at least 70 years, to be eligible for retirement vesting. For equity awards originally granted by Former SLM in 2013 or 2014, and for all Navient equity awards, the award recipient must be age 65 or older upon retirement, or the award recipient must have attained a combination of age and years of service totaling at least 75 years, to be eligible for retirement vesting. Service with both Former SLM and Navient is counted for these purposes. |
| 2020 Proxy Statement | | 73
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Termination by Death or Disability | Name | Equity
Vesting(8)
($) | Cash
Severance
($) | Medical
Insurance / Outplacement
($) | Total
($) | | Remondi | 14,170,539 | — | — | 14,170,539 | | Chivavibul | 3,584,275 | — | — | 3,584,275 | | Kane | 4,763,348 | — | — | 4,763,348 | | Whorley | 4,061,015 | — | — | 4,061,015 | | Hynes | 3,133,228 | — | — | 3,133,228 |
| Name | | | Medical Insurance / Outplacement ($) | ($) | | | Remondi | 8,607,605 | | - | - | 8,607,605 | | | Lown | 2,019,081 | | - | - | 2,019,081 | | | Kane | 2,457,556 | | - | - | 2,457,556 | | | Heleen | 1,503,920 | | - | - | 1,503,920 | | | Hauber | 904,810 | | - | - | 904,810 | |
| (8)(9) | The vesting of all outstanding equity awards will accelerate upon termination of employment due to death or disability. For stock and stock unit awards, the amounts shown reflect the closing market price of Navient Common Stock on December 30, 201631, 2019 ($16.43)13.68). For stock options where the December 30, 201631, 2019, closing market price of Navient Common Stock was higher than the option exercise price, the amounts reflect the intrinsic value of the options as if they had been exercised on December 30, 2016.31, 2019. PSUs granted in 2019 vested at 109% of the target number of units based on Company Performance over a three-year performance period (2017-19) and were settled on March 2, 2020. See “2017-19 Performance Stock Units” in the Compensation Discussion and Analysis above for additional details. These 2017 PSUs are valued based on the number of PSUs actually earned for the three-year performance period ending on December 31, 2019. |
Actual Payments uponUpon Termination
Each of our NEOs remained employed by Navient as an executive officer on December 31, 2016. | 2017 Proxy Statement | | 61 |
Proposal 4 — Approval
CEO Pay Ratio
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the SEC adopted a rule requiring Navient to disclose annually: (i) the annual total compensation of the Amended and Restatedmedian employee identified by Navient Corporation 2014 Omnibus Incentive PlanIn April 2014, we established(as described below), (ii) the Navient Corporation 2014 Omnibus Incentive Plan (the “Incentive Plan”annual total compensation of Navient’s principal or chief executive officer (“CEO”), which authorized the issuance of up to 45,000,000 shares of Common Stock pursuant to equity incentives granted to employees and non-employee directors. Our sole shareholder at the time, the company now known as SLM Corporation, approved the Incentive Plan on April 8, 2014. We amended the Incentive Plan in early April 2015 to impose a minimum vesting requirement on stock options and stock appreciation rights (“SARs”) granted under the Incentive Plan, and to clarify the plan’s restrictions on share recycling. Our shareholders subsequently approved the material terms of the Incentive Plan on May 21, 2015.
On April 4, 2017, the Board approved, on recommendation of the Compensation Committee, an amendment to the Incentive Plan increasing the number of shares authorized for issuance under the plan from 45,000,000 to 55,000,000, and making certain other changes to the Incentive Plan. The Board believes that the new share reserve should be sufficient for a period of five years, taking into account the potential addition of new board members and grant increases over at least that period.
We have also redesigned the Incentive Plan to conform to current corporate governance best practices. Key changes we have made in the design of the Incentive Plan include:
| ● | We have eliminated discretionary vesting of awards other than upon death, disability or change in control; |
| ● | We have added a minimum one-year vesting requirement to all equity award types, subject to a five percent carve-out; and |
| ● | We have specified that performance-based equity awards not assumed or converted upon a change in control will vest based on actual performance achieved to the date of the change in control. |
Consistent with best practices, the Incentive Plan continues to prohibit:
| ● | automatic single-trigger vesting of time-based awards upon a change in control, except for awards that are not assumed by or converted into awards of the acquirer; |
| ● | the payment of dividends or dividend equivalents on unvested awards of all award types until the awards vest; |
| ● | the repricing or cash buyout of option and SAR awards other than in connection with a stock split or other recapitalization event; |
| ● | “reload” options or SARs; and |
| ● | liberal share recycling. |
In addition, awards under the Incentive Plan continue to be subject to clawback in the event of a material misstatement of the Company’s financial statements or performance resulting from a senior officer’s conduct, or in the event a senior officer commits fraud or other misconduct or materially violates corporate policy. The Company does not provide for tax gross-ups on any awards under the Incentive Plan.
This proposal to approve the amended and restated Incentive Plan requires the affirmative vote of the holders of a majority of the Common Stock present, represented and entitled to vote, and voting affirmatively or negatively at the Annual Meeting. Accordingly, shares that are not voted affirmatively or negatively with respect to this proposal, including abstentions and broker non-votes, will not be relevant to the outcome.
The following summary is qualified in its entirety by reference to the Incentive Plan, which is attached to this proxy statement asAppendix A.
Summary of the Incentive Plan
In General.The Incentive Plan is administered by the Compensation and Personnel Committee (the “Compensation Committee”) of our Board, except that the non-employee members of the Board administer awards for non-employee directors. The Incentive Plan provides for various types of awards to be granted to participants, including awards both in cash and in or with respect to Common Stock and both short-term and long-term awards. Under the Incentive Plan, options
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to purchase shares of Common Stock and stock appreciation rights, or SARs, may be granted, but the per share exercise price cannot be less than the fair market value per share of the Common Stock on the date of grant. Options and SARs must have fixed terms no longer than ten years. No dividend equivalent rights or units are permitted to be granted on options or SARs. In addition, repricing of options and SARs is prohibited under the Incentive Plan without approval of our shareholders, and options and SARs may not be cancelled in exchange for cash or other awards. Any stock awards (including options, SARs, restricted stock, restricted stock units and performance units) generally are subject to a minimum vesting period of one year from the date of grant, except that earlier vesting of such awards may occur in the events of death, disability or change in control. However, 5% of the total number of shares of Common Stock available for issuance under the Incentive Plan will not be subject to this minimum vesting period. The Incentive Plan also provides for cash awards.
Shares Reserved. The Incentive Plan provides that the maximum number of shares of our Common Stock as to which awards, under the plan, may be granted is 55,000,000 shares, which is referred to as the maximum share limit, all of which may be issued as incentive stock options under Code Section 422. If an award expires or is terminated, cancelled or forfeited, the shares of Common Stock associated with the expired, terminated, cancelled or forfeited award will again be available for awards under the Incentive Plan. However, shares of Common Stock subject to awards that have been retained or withheld by the Company in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an award and shares of Common Stock that have been delivered to the Company in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an award are not again available for awards under the Incentive Plan. This prohibition against share recycling includes (i) shares of Common Stock that have been tendered or withheld in payment of an option, (ii) shares of Common Stock repurchased by the Company with option proceeds, and (iii) sharesthe estimated ratio of Common Stock covered by a SAR, tothese two amounts.
To identify our median employee, we reviewed the extent the SAR is exercisedannual compensation of all full-time, part-time, seasonal and settled in sharestemporary employees of Common Stock,Navient and whether or not shares of Common Stock are actually issued to a participant upon exercise of the SAR.Of the original 45,000,000 shares available for awards under the Incentive Plan, 23,072,624 shares were utilized in May 2014 to adjust and convert outstanding SLM Corporation (“SLM”) equity awards in connection with our separation from SLM. Additional details regarding the adjustment and conversion of SLM equity awards can be found in Navient’s Information Statement filed on Form 10 with the SEC on April 10, 2014 (our “Form 10”). As of March 30, 2017, the number of shares subject to outstanding stock option awards was 14,799,240, with a weighted average strike price of $12.36 and weighted average remaining life of 2.56 years, and the number of shares subject to outstanding full value awards was 4,657,313, for a total of 19,456,553 outstanding equity awards. The number of shares available for future awards under the Incentive Plan was 10,009,153its affiliated companies as of March 30, 2017.
Award Limits. Under the Incentive Plan, no employee may be granted, in any calendar year period: (i) awards exercisable, covering or relating to more than 2,500,000 shares of Common Stock; or (ii) cash awards, restricted stock unit awards or performance unit awards that may be settled solely in cash having a value greater than $5,000,000. In addition, the aggregate grant-date value of all awards granted to any non-employee director during any single calendar year may not exceed $650,000.
Adjustments.The Incentive Plan providesDecember 31, 2019. As permitted under SEC rules, we treated an employee’s 2019 “annual compensation” for appropriate adjustments in the number of shares of Common Stock subject to awards and available for future awards, the exercise price of outstanding awards,this purpose as well as the maximum award limits under the Incentive Plan, in the event of changes in the outstanding Common Stock by reason of a merger, stock split or certain other events.
Eligibility.Employees and directors of the Company and its subsidiaries, and prospective employees and directors selected by the Compensation Committee or, in the case of directors, the non-employee members of the Board, are eligible to participate in the Incentive Plan. As of March 30, 2017, there were approximately 880 employees (including 6 executive officers) and 11 non-employee directors who were eligible to receive awards under the Incentive Plan.
Stock Options.The Compensation Committee determines, in connection with each option granted to employees, and the non-employee members of the Board, in the case of grants to non-employee directors, the exercise price, whether that price is payable in cash (and whether that may include proceeds of a sale assisted by a third party) or shares of Common Stock or both, the terms and conditions of exercise, the expiration date, whether the option will qualify as an incentive stock option under Code Section 422 or a nonqualified stock option, restrictions on transfer of the option, and other provisions not inconsistent with the Incentive Plan. The term of an option will not exceed ten years from the date of grant. Options may not include provisions that “reload” the option upon exercise.
Stock Appreciation Rights. Every SAR entitles the participant, on exercise of the SAR, to receive in cash or shares of Common Stock a value equal to the excess of the fair market value of a specified number of shares of Common Stock at the time of exercise, over the exercise price established by the Compensation Committee or the non-employee members of the
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Board, as applicable. A SAR may be granted in tandem with an option, and a holder of a tandem SAR may elect to exercise either the option or the SAR, but not both. The Compensation Committee or the non-employee members of the Board, as applicable, will determine the terms, conditions and limitations applicable to any SARs, including the term of any SARs, which may not be longer than ten years, and the date or dates upon which they become vested and exercisable. SARs may not include provisions that “reload” the SAR upon exercise.
Restricted Stock. The terms, conditions and limitations applicable to a restricted stock award, including any restriction period, will be determined by the Compensation Committee or the non-employee members of the Board, as applicable.
Restricted Stock Units. Restricted stock unit awards may be granted and/or settled in the form of cash or in shares of Common Stock (or in a combination thereof) equal to the value of the vested restricted stock unit award. The terms, conditions and limitations applicable to a restricted stock unit award, including any restriction period and the right to dividend equivalents, will be determined by the Compensation Committee or the non-employee members of the Board, as applicable.
Performance Units. Each performance unit has an initial value that is established by the Compensation Committee on the date of grant. After the applicable performance period has ended, the value of the performance unit is determined as a function of the extent to which the corresponding performance goals were achieved. The Compensation Committee may settle earned performance units in the form of cash or in shares of Common Stock (or in a combination thereof) equal to the value of the earned performance units as soon as practicable after the end of the performance period and following the Compensation Committee’s determination of actual performance against the performance measures and related goals established by the Compensation Committee.
Minimum Vesting Period for Stock Awards. Any options, SARs, restricted stock, restricted stock units, or performance units granted under the Incentive Plan, as amended and restated, are subject to a minimum vesting period of one year from the date of grant, except that earlier vesting of such awards may occur in the events of death, disability or change in control. However, 5% of the total number of shares of Common Stock available for issuance under the Incentive Plan will not be subject to this minimum vesting period.
Performance Awards. Any award available under the Incentive Plan may be structured as a performance award. Performance awards not intended to qualify as qualified performance-based compensation under Code Section 162(m) will be based on achievement of such goals and will be subject to such terms, conditions and restrictions as the Compensation Committee may determine.
Performance awards granted under the Incentive Plan that are intended to qualify as qualified performance-based compensation under Code Section 162(m) will be paid, vested or otherwise deliverable solely on account of the attainment of one or more pre-established, objective performance goals established by the Compensation Committee. One or more of such goals may apply to the employee, one or more business units, divisions or sectors of Navient, or Navient as a whole, and if so desired by the Compensation Committee, by comparison with a peer group of companies. Performance awards may be based on any one or more of the following measures: (a) cash flow (including operating cash flow, free cash flow, cash flow return on capital, or cash flow per share), (b) core earnings per share (including earnings before interest, taxes, depreciation and amortization), (c) return measures (including return on assets, capital, equity, or sales), (d) total shareholder return, (e) productivity ratios, (f) expense targets or ratios, (g) revenue, (h) core income or net income, (i) core operating income or net operating income, (j) operating profit or net operating profit, (k) gross or operating margin, (l) return on operating revenue, (m) market share, (n) loan volume, (o) loan delinquencies, (p) loan defaults, (q) loan credit indicators (including FICO, co-borrower, payments made, GPA and graduation), (r) overhead or other expense reduction, (s) charge-off levels, (t) deposit growth, (u) margins, (v) operating efficiency, (w) economic value added, (x) customer or employee satisfaction, (y) debt reduction, (z) capital targets, (aa) consummation of acquisitions, dispositions, projects or other specific events or transactions, (bb) liquidity, (cc) capital adequacy, (dd) ratio of nonperforming to performing assets, (ee) ratio of common equity to total assets, or (ff) regulatory compliance metrics.
The performance measures described above are included in the Incentive Plan to enable the Compensation Committee, if it chooses to do so, to make stock awards or cash awards that qualify as qualified performance-based compensation under Code Section 162(m). The Compensation Committee can satisfy such requirements by, among other things, including provisions in awards that will make them payable solely on account of the attainment of one or more pre-established, objective performance goals based on performance measures that have been approved by our shareholders. Although the Compensation Committee is not required to include such provisions in awards, the inclusion of such provisions and compliance with certain other requirements of Code Section 162(m) would enable the Company to deduct from its taxable income the related compensation that it might not otherwise be able to deduct.
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The Compensation Committee may provide in any particular performance award agreement that any evaluation of performance may include or exclude certain events that occur during a performance period, including but not limited to: (a) amortization, depreciation or impairment of tangible or intangible assets, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax law, accounting principles or other laws or provisions affecting reported results, (d) accruals for reorganization and restructuring programs or reductions in force or early retirement programs, (e) any unusual or infrequently occurring items that may be defined in an objective and non-discretionary manner under or by reference to U.S. Generally Accepted Accounting Principles, accounting standards or other applicable accounting standards in effect from time to time and/or in management’s discussion and analysis of financial condition and results of operations appearing in the our annual report to shareholders for the applicable year, (f) the sale of investments or non-core assets; (g) discontinued operations, categories or segments; (h) investments, acquisitions or dispositions; (i) political, legal and other business interruptions (such as due to war, insurrection, riot, terrorism, confiscation, expropriation, nationalization, deprivation, seizure, and regulatory requirements); (j) natural catastrophes; (k) currency fluctuations; (l) stock-based compensation expense; (m) early retirement of debt; (n) conversion of convertible debt securities; and (o) termination of real estate leases. Awards that are intended to qualify as qualified performance-based awards may not be adjusted upward but the Compensation Committee may retain the discretion to adjust upward awards not intended as qualified performance-based awards. The Compensation Committee may retain the discretion to adjust any performance awards downward, either on a formulaic or discretionary basis or any combination, as the Compensation Committee determines.
Vesting Upon Change in Control. As amended and restated, the Incentive Plan requires “double-trigger” vesting provisions for all equity awards upon a change in control. Each award will become vested and non-forfeitable in connection with a change in control only if (i) the participant’s employment is terminated, or (ii) the acquiring or surviving entity does not assume the award. Performance-based equity awards will vest based on the performance terms of the award and based on actual performance achieved to the date of the change in control.
Duration; Plan Amendments. The Incentive Plan will expire by its terms on April 7, 2024. The Board may at any time amend, modify, suspend or terminate the Incentive Plan (and the Compensation Committee may amend or modify an award agreement) but in doing so cannot adversely affect any outstanding award without the participant’s written consent or make any amendment without shareholder approval, to the extent such shareholder approval is otherwise required by applicable legal requirements.
Unfunded Plan.The Incentive Plan is unfunded. Although we may establish bookkeeping accounts with respect to participants who are entitled to cash, Common Stock or rights thereto under the Incentive Plan, we will use any such accounts merely as a bookkeeping convenience. We are not required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto, nor will the Incentive Plan be construed as providing for such segregation, nor will Navient, our Board or our Compensation Committee be deemed to be a trustee of any cash, Common Stock or rights thereto to be granted under the Incentive Plan. Any liability or obligation of Navient to any participant with respect to an award of cash, Common Stock or rights thereto under the Incentive Plan will be based solely on any contractual obligations that the Incentive Plan and any award agreement create, and no such liability or obligation of Navient will be deemed to be secured by any pledge or other encumbrance on any property of Navient. None of Navient, our Board or our Compensation Committee will be required to give any security or bond for the performance of any obligation that the Incentive Plan creates.
New Plan Benefits. Future awards under the Incentive Pan, as amended and restated, will be determined in the discretion of the Compensation Committee or the non-employee members of the Board and, as a result, it is not possible to determine the awards that will be granted to eligible employees or non-employee directors under the Incentive Plan at this time. During the Company’s 2016 fiscal year, the Company granted awards under the Incentive Plan to the Company’s Named Executive Officers as reported in the “Grants of Plan Based Awards Table” and to its non-employee directors as reported in the “Non-Employee Director Compensation Table,” in each case as described elsewhere in this proxy statement. During fiscal year 2016, the Company also granted awards with respect to 2,556,503 shares of the Company’s Common Stock (with an aggregate grant-date value of $8.965 million) to its executive officers as a group and awards with respect to 4,110,815 shares of the Company’s Common Stock (with an aggregate grant-date value of $20.892 million) to its non-executive employees as a group.
As of April 7, 2017, the latest practicable date before the filing of this proxy statement, the closing price per share of the Company’s Common Stock was $14.68.
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Material Federal Income Tax Consequences of Awards under the Incentive Plan
The following summary is based on current interpretations of existing federal income tax laws. The discussion below is not purported to be complete, and it does not discuss the tax consequences arising in the context of the participant’s death or the income tax laws of any locality, state or foreign country in which a participant’s grants, income or gain may be taxable.
Stock Options.Some of the options issuable under the Incentive Plan may constitute incentive stock options, while other options granted under the Incentive Plan may be nonqualified stock options. The Code provides for special tax treatment of stock options qualifying as incentive stock options, which may be more favorable to employees than the tax treatment accorded nonqualified stock options. On grant of either form of option, the optionee will not recognize income for tax purposes and we will not receive any deduction. Generally, on the exercise of an incentive stock option, the optionee will recognize no income for U.S. federal income tax purposes. However, the difference between the exercise price of the incentive stock option and the fair market value of the shares at the time of exercise is an adjustment in computing alternative minimum taxable income that may require payment of an alternative minimum tax. On the sale of shares of Common Stock acquired by exercise of an incentive stock option (assuming that the sale does not occur within two years of the date of grant of the option or within one year of the date of exercise), any gain will be taxed to the optionee as long-term capital gain. In contrast, on the exercise of a nonqualified option, the optionee generally recognizes taxable income (subject to withholding) in an amount equal to the difference between the fair market value of the shares of Common Stock acquired on the date of exercise and the exercise price. On any sale of those shares by the optionee, any difference between the sale price and the fair market value of the shares on the date of exercise of the nonqualified option will be treated generally as capital gain or loss. No deduction is available to the Company on the exercise of an incentive stock option (although a deduction may be available if the employee sells the shares acquired on exercise before the applicable holding periods expire); however, on exercise of a nonqualified stock option, we generally are entitled to a deduction in an amount equal to the income recognized by the employee. Except in the case of the death or disability of an optionee, an optionee has three months after termination of employment in which to exercise an incentive stock option and retain favorable tax treatment on exercise. An incentive stock option exercised more than three months after an optionee’s termination of employment other than on death or disability of an optionee cannot qualify for the tax treatment accorded incentive stock options. Any such option would be treated as a nonqualified stock option for tax purposes.
Stock Appreciation Rights.The amount of any cash or the fair market value of any shares of Common Stock received by the holder on the exercise of SARs in excess of the exercise price will be subject to ordinary income tax in the year of receipt, and we will be entitled to a deduction for that amount.
Restricted Stock.Generally, a grant of shares of Common Stock under the Incentive Plan subject to vesting and transfer restrictions will not result in taxable income to the participant for federal income tax purposes or a tax deduction to the Company at the time of grant. The value of the shares will generally be taxable to the participant as compensation income in the year in which the restrictions on the shares lapse. Such value will be the fair market value of the shares as to which the restrictions lapse on the date those restrictions lapse. Any participant, however, may elect pursuant to Code Section 83(b) to treat the fair market value of the restricted shares on the date of grant as compensation income in the year of grant, provided the Compensation Committee or Board, as applicable, permits the election and the participant makes the election pursuant to Code Section 83(b) within 30 days after the date of grant. In any case, we will receive a deduction for federal income tax purposes equal to the amount of compensation included in the participant’s income in the year in which that amount is so included.
Restricted Stock Units.A grant of a right to receive shares of Common Stock or cash in lieu of the shares will result in taxable income for federal income tax purposes to the participant at the time the award is settled in an amount equal to the fair market value of the shares or the amount of cash awarded. We will be entitled to a corresponding deduction at such times for the amount included in the participant’s income.
Performance Units. The amount of any cash or the fair market value of any shares of Common Stock received by the holder on the settlement of performance units under the Incentive Plan will be subject to ordinary income tax in the year of receipt, and we will be entitled to a deduction for that amount in the year in which that amount is included.
Cash Awards. Cash awards under the Incentive Plan are taxable income to the participant for federal income tax purposes at the time of payment. The participant will have compensation income equal to the amount of cash paid, and we will have a corresponding deduction for federal income tax purposes.
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Basis; Gain. A participant’s tax basis in vested shares of Common Stock acquired under the Incentive Plan is equal to the sum of the price paid for the shares, if any, and the amount of ordinaryhis or her gross income, recognized by the participantas reported on payroll records, plus all employer contributions to Navient’s qualified retirement plan made on the transfer of vested shares. The participant’s holding period foremployee’s behalf. In identifying the shares begins onmedian employee, we excluded the transfer to the participant of vested shares. If a participant sells shares, any difference between the amount realized in the sale and the participant’s tax basis in the shares is taxed as long-term or short-term capital gain or loss (provided the shares are held as a capital asset on the date of sale), depending on the participant’s holding period for the shares.
Certain Tax Code Limitations on Deductibility. In order for the Company to deduct the amounts described above, such amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary and necessary business expenses. The ability to obtain a deduction for awards under the Incentive Plan could also be limited by Code Section 280G, which provides that certain excess parachute payments made in connection with a change in control of an employer are not deductible. The ability to obtain a deduction for amounts paid under the Incentive Plan could also be affected by Code Section 162(m), which limits the deductibility, for U.S. federal income tax purposes, of compensation paid to certain employees to $1 million during any taxable year. However, certain exceptions apply to this limitation in the case of qualified performance-based compensation. It is intended that the approval of the Incentive Plan by our shareholders will satisfy the shareholder approval requirement for the qualified performance-based exception and we will be able to comply with the requirements of the Code and Treasury Regulation Section 1.162-27 as they relate to the grant and payment of certain qualified performance-based awards (including Options and SARs) under the Incentive Plan so as to be eligible for the qualified performance-based exception. In certain cases, we may determine it is in our interests to not satisfy the requirements for the qualified performance-based exception.
Code Section 409A. Code Section 409A generally provides that deferred compensation subject to Code Section 409A that does not meet the requirements for an exemption from Code Section 409A must satisfy specific requirements, both in operation and in form, regarding: (i) the timing of payment; (ii) the election of deferrals; and (iii) restrictions on the acceleration of payment. Failure to comply with Code Section 409A may result in the early taxation (and in some cases, plus interest) to the participant of deferred compensation and the imposition of a 20% additional tax imposed on the participant with respect to the deferred amounts included in the participant’s income.
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Equity Compensation Plan Information
The following table summarizes information asCEO. As of December 31, 2016, relating2019, Navient and its affiliated companies had approximately 5,800 employees, all of whom reside in the United States or a U.S. territory.
Navient’s CEO is Mr. Remondi. His annual total compensation for 2019 was $7,793,321, as reflected in the Summary Compensation Table. The 2019 annual total compensation of the median employee identified by Navient, calculated in accordance with SEC rules regarding the Summary Compensation Table, was $46,126. Accordingly, Navient’s estimated 2019 pay ratio was 1 to our equity168.
SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation plansallow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the Navient pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. In addition, the median employee’s annual total compensation is unique to that individual and therefore is not an indicator of the annual total compensation of any other individual or arrangements pursuant to which grantsgroup of options, restricted stock, restricted stock units, stock units or other rights to acquire shares may be granted from time to time.| PLAN CATEGORY | | NUMBER OF
SECURITIES TO
BE ISSUED UPON
EXERCISE OF
OUTSTANDING
OPTIONS AND
RIGHTS(1) | | WEIGHTED
AVERAGE
EXERCISE
PRICE OF
OUTSTANDING
OPTIONS AND
RIGHTS
($) | | AVERAGE
REMAINING
LIFE (YEARS)
OF OPTIONS
OUTSTANDING | | NUMBER OF
SECURITIES
REMAINING
AVAILABLE
FOR FUTURE
ISSUANCE
UNDER EQUITY
COMPENSATION
PLANS | | Equity compensation plans approved by | | | | | | | | | | security holders: | | | | | | | | | | | | | | | | | | | | Navient Corporation 2014 Omnibus | | | | | | | | | | Incentive Plan | | | | | | | | | | Traditional options | | 151,100 | | 25.24 | | 0.4 | | | | Net-settled options | | 4,596,742 | | 12.32 | | 3.0 | | | | RSUs | | 3,803,139 | | — | | — | | | | PSUs | | 871,944 | | — | | — | | | | Total | | 9,422,925 | | 12.73 | | 3.0 | | 12,740,947 | | | | | | | | | | | | Employee Stock Purchase Plan(2) | | — | | — | | 0.0 | | 616,462 | | Total approved by security holders | | 9,422,925 | | 12.73 | | 3.0 | | 13,357,409 | | Total not approved by security holders | | — | | — | | — | | — |
| (1) | Upon exercise of a net-settled option, optionees are entitled to receive the after-tax spread shares only. The spread shares equal the gross number of options granted less shares for the option cost. Accordingly, this column reflects the net-settled option spread shares issuable at December 31, 2016, where provided. |
| (2) | Number of shares available for issuance under the Navient Corporation Employee Stock Purchase Plan (ESPP) as of December 31, 2016. The ESPP was approved on April 8, 2014 by the company now known as SLM Corporation, then our sole shareholder. The ESPP became effective May 1, 2014. |
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED AND RESTATED NAVIENT CORPORATION 2014 OMNIBUS INCENTIVE PLAN.
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Certain Relationships and Related Transactions
Navient maintains a written policy regarding review and approval of transactions with related parties. Transactions covered by the policy include any transaction involving Navient and an amount in excess of $120,000 in any year in which any director, nominee, executive officer, greater-than-five percent beneficial owner of the Company, or any of their respective immediate family members, has or had a direct or indirect material interest, other than as a director or less-than-ten percent owner of an entity involved in the transaction (a “Related Party Transaction”). Certain loans made in the ordinary course of Navient’s business to executive officers, directors and their family members are considered Related Party Transactions and may be required to be disclosed in the proxy statement but are pre-approved under the policy if they meet specified requirements. As of the date of this proxy statement, no such loans are outstanding. As previously reported, the separation of Navient from SLM Corporation (the “Spin-Off”) was completed on April 30, 2014 (the “Distribution Date”). The separation was effected through the distribution by then SLM Corporation (“SLM”), on a one-to-one basis, of all of the shares of Common Stock of Navient (the “Distribution”) to the holders of shares of SLM Common Stock as of the close of business on April 22, 2014, the record date for the Distribution. As a result of the Distribution, Navient became an independent, publicly-traded company. To ensure a timely separation and migration of the customer data and information technology functions between Navient Solutions, Inc. (“NSI”) and SLM during the 24-month transition period subsequent to the Spin-Off, SLM acquired all of the issued and outstanding shares of a class of preferred stock (the “Special Preferred”) issued by NSI, the principal operating subsidiary of Navient at the time. The Special Preferred afforded SLM certain approval rights that terminated upon the redemption of the Special Preferred on the two-year anniversary of the Spin-Off on April 30, 2016. In addition to the Special Preferred, Navient and SLM entered into various other agreements designed to enable cooperation during the 24-month transition period. During 2016 Navient made payments to SLM in the amount of $566,249 and received payments from SLM in the amount of $11,996,843. For additional information relating to the Special Preferred or the Spin-Off transaction generally, see our Form 10 and the section captioned “Certain Relationships and Related Party Transactions” in the information statement filed as Exhibit 99.1 to our Form 10 which was filed with the SEC on April 10, 2014.
From the beginning of 20162019 until the present, there have been no (and there are no currently proposed) transactions involving an amount in excess of $120,000 in which Navient was (or is to be) a participant and any executive officer, director, five percent beneficial owner of our Common Stock or member of the immediate family of any of the foregoing persons had (or will have) a direct or indirect material interest, except the compensation arrangements described in this proxy statement for our named executive officers and directors.Section 16(a) Beneficial Ownership Reporting Compliance
directors and the following transaction:Section 16(a)On January 27, 2020, the Board of Directors, upon the recommendation of the Exchange Act requires Navient’s executive officersAudit Committee, approved the repurchase of 20,346,464 shares of our common stock from certain subsidiaries and directors, as well as persons who beneficially own more than 10 percentaffiliates of the Common Stock, to file reports with the SEC on their ownershipCanyon Capital Advisors LLC and changes in ownershipcertain of Navient Common Stock. Based solely on a reviewits subsidiaries for an aggregate purchase price of the copies$300,517,273.28 and per-share purchase price of such forms in our possession and on written representations from reporting persons, we believe that during the period from January 1, 2016 to December 31, 2016 all required reports were filed in a timely manner, with the exception of the following: (1) Three Form 4 filings with respect to John M. Kane, Timothy J. Hynes and Somsak Chivavibul, which were filed to report the disposition of 2,162, 727 and 1,427 shares respectively on May 4, 2016, should have been filed no later than May 3, 2016, and (ii) one Form 4 filing for Diane Suitt Gilleland, a non-employee director, which was filed to report the disposition of 10,000 shares filed on November 17, 2016, should have been filed on no later than November 16, 2017.
$14.77.
Other Matters for the 20172020 Annual Meeting
As of the date of this proxy statement, there are no matters that the Board of Directors intends to present for a vote at the Annual Meeting other than the business items discussed in this proxy statement. In addition, Navient has not been notified of any other business that is proposed to be presented at the Annual Meeting that has not been withdrawn.Meeting. If other matters now unknown to the Board of Directors come before the Annual Meeting, the proxy given by a shareholder electronically, | 2017 Proxy Statement | | 69 |
telephonically or on a proxy card gives discretionary authority to the persons named by Navient to serve as proxies to vote such shareholder’s shares on any such matters in accordance with their best judgment.
Shareholder Proposals for the 20182021 Annual Meeting
A shareholder who intends to introduce a proposal for consideration at Navient’s 20182021 Annual Meeting may seek to have that proposal and a statement in support of the proposal included in the Company’s 20182021 proxy statement if the proposal relates to a subject that is permitted under SEC Rule 14a-8. To be considered for inclusion, the proposal and supporting statement must be received by the Company no later than December 15, 2017,10, 2020, and must satisfy the other requirements of Rule 14a-8. The submission of a shareholder proposal does not guarantee that it will be included in Navient’s proxy statement. Navient’s Bylaws provide that a shareholder may otherwise propose business for consideration or nominate persons for election to the Board of Directors, in compliance with federal proxy rules, applicable state law and other legal requirements and without seeking to have the proposal included in the Company’s proxy statement pursuant to Rule 14a-8. Navient’s Bylaws provide that any such proposals or nominations for the Company’s 20182021 Annual Meeting must be received by it on or after January 25, 2018,20, 2021, and on or before February 26, 2018.19, 2021. Any such notice must satisfy the other requirements in Navient’s Bylaws applicable to such proposals and nominations. If a shareholder fails to meet these deadlines or fails to comply with the requirements of SEC Rule 14a-4(c), Navient may exercise discretionary voting authority under proxies it solicits to vote on any such proposal.
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Proxy Access Procedures
The Company's Second Amended and Restated Bylaws generally permit a shareholder, or group of up to 20 shareholders, owning at least 3% of our outstanding shares for at least three years to nominate, and include in the Company's proxy materials, director nominees constituting up to the greater of two or 20% of the Company's Board, provided that the shareholder(s) and nominee(s) satisfy the requirements in our bylaws. Written notice of proxy access director nominees must be received no later than the close of business on the 120th day, nor earlier than the close of business on the 150th day, prior to the first anniversary of the date our definitive proxy statement was first sent to stockholders in connection with the preceding year's annual meeting. With respect to the 2021 annual meeting, this notice must be received between November 10, 2020 and December 10, 2020, assuming the date of the 2021 annual meeting is not changed by more than 30 days before or after the first anniversary of the 2020 annual meeting. Any notices should be addressed to Chief Legal Officer and Secretary, Navient Corporation, 123 Justison Street, Wilmington, Delaware 19801.
Solicitation Costs
All expenses in connection with the solicitation of proxies for the Annual Meeting will be paid by Navient. We have engaged MacKenzie Partners, Inc. to solicit proxies for an estimated fee of $15,000$17,500 plus reimbursement for out-of-pocket costs. In addition, officers, directors, regularcertain employees or other agents of Navient may solicit proxies in person, by telephone, telefax, personal calls, or other electronic means. Navient will request banks, brokers, custodians and other nominees in whose names shares are registered to furnish to the beneficial owners of Navient’s Common Stock Notices of Availability of the materials related to the Annual Meeting, and including, if so requested by the beneficial owners, paper copies of our 2019 Annual Report on Form 10-K, this proxy statement and the proxy card and, upon request, the Company will reimburse such registered holders for their out-of-pocket and reasonable expenses in connection therewith.
Householding
To reduce the expense and reduce environmental effects of printing and delivering duplicate proxy materials to shareholders who may have more than one account holding Navient stock but share the same address, Navient has adopted a procedure approved by the SEC called “householding.” Under this procedure, certain registered shareholders who have the same address and last name, and who do not participate in electronic delivery of proxy materials, will receive one copy of the Notice of Internet Availability and, as applicable, any additional proxy materials that are delivered until such time as one or more of these shareholders notifies us that they want to receive separate copies. Shareholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
If you are a registered shareholder and would like to have separate copies of the Notice of Internet Availability or proxy materials mailed to you in the future, or you would like to have a single copy of the Notice of Internet Availability or proxy materials mailed to you in the future, you must submit a request in writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717 or call at 1-800-542-1061. If you are a beneficial shareholder, please contact your bank or broker to opt in or out of householding. However, please note that if you are a registered shareholder and wish to receive a separate proxy card or vote instruction form or other proxy materials for purposes of this year’s Annual Meeting, you should follow the instructions included in the Notice of Internet Availability that was sent to you and we will deliver promptly upon written or oral request, separate copies of the proxy materials for this year’s Annual Meeting.
| 20172020 Proxy Statement | | 70 |
APPENDIX A
NAVIENT CORPORATION
2014 OMNIBUS INCENTIVE PLAN
Amended and Restated as of April 4, 2017
NAVIENT CORPORATION
2014 OMNIBUS INCENTIVE PLAN
Table of Contents
NAVIENT CORPORATION
2014 OMNIBUS INCENTIVE PLAN
Navient Corporation, a Delaware corporation (the “Company”), established this Navient Corporation 2014 Omnibus Incentive Plan (this “Plan”), effective as of April 7, 2014 (the “Effective Date”). The Company amended and restated the Plan effective April 6, 2015, to impose a minimum vesting requirement on stock options and stock appreciation rights granted under the Plan, and to clarify the Plan’s restrictions on share recycling, and again on April 4, 2017 to add shares to the Plan and make certain other changes. This Plan shall continue in effect for a term of 10 years after the Effective Date unless sooner terminated by action of the Board of Directors of the Company.
This Plan is designed to attract and retain employees of the Company and its Subsidiaries (as defined herein), to attract and retain qualified non-employee directors of the Company, to encourage the sense of proprietorship of such employees and directors and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries. These objectives are to be accomplished by making Awards under this Plan and thereby providing Participants (as defined herein) with a proprietary interest in the growth and performance of the Company and its Subsidiaries.
| 3. | Definitions.As used herein, the terms set forth below shall have the following respective meanings: |
“Authorized Officer” means the Chairman of the Board, the Chief Executive Officer of the Company or the senior human resources officer of the Company (or any other senior officer of the Company to whom any of such individuals shall delegate the authority to execute any Award Agreement).
“Award” means the grant of any Option, Stock Appreciation Right, Stock Award, or Cash Award, any of which may be structured as a Performance Award, whether granted singly, in combination or in tandem, to a Participant pursuant to such applicable terms, conditions, and limitations as the Committee may establish in accordance with the objectives of this Plan.
“Award Agreement” means the document (in written or electronic form) communicating the terms, conditions and limitations applicable to an Award. The Committee may, in its discretion, require that the Participant execute such Award Agreement, or may provide for procedures through which Award Agreements are made available but not executed. Any Participant who is granted an Award and who does not affirmatively reject the applicable Award Agreement shall be deemed to have accepted the terms of Award as embodied in the Award Agreement.
“Board” means the Board of Directors of the Company.
“Cash Award” means an Award denominated in cash.
“Cause” means, unless otherwise defined in an award agreement, either (i) a willful and continuing failure of a Participant to perform substantially his duties and responsibilities (other than as a result of the Participant’s death or Disability) and, if in the judgment of the Committee such willful and continuing failure may be cured by a Participant, that such failure has not been cured by the Participant within ten (10) business days after written notice of such was given to the Participant by the Committee, or (ii) that the Participant has committed an act of Misconduct (as defined below).
“Change in Control” means an occurrence of any of the following events: (a) an acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “person or group” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than an employee benefit plan of the Company, immediately after which such person or group has “Beneficial Ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of more than fifty percent (50%) of the combined voting power of the Company’s then outstanding Voting Securities; or (b) the consummation of (i) a merger, consolidation or reorganization involving the Company, unless either (A) the shareholders of the Company immediately before such merger, consolidation or reorganization own, directly or indirectly immediately following such merger, consolidation or reorganization, at least seventy-five percent (75%) of the combined voting power of the company resulting from such merger, consolidation or reorganization (the “Surviving Company”) in substantially the same proportion as their ownership immediately before such merger, consolidation or reorganization, or (B) at least a majority of the members of the Board of Directors of the Surviving Company were directors of the Company immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization, or (ii) a complete liquidation
76
or dissolution of the Company. Notwithstanding the foregoing, if an Award is subject to Code Section 409A, the definition of Change in Control shall conform to the requirements of Treasury Regulation § 1.409A-3(i)(5)(i).
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” means the Compensation and Personnel Committee of the Board, and any successor committee thereto or such other committee of the Board as may be designated by the Board to administer this Plan in whole or in part including any subcommittee of the Board as designated by the Board.
“Common Stock” means the Common Stock, par value $0.01 per share, of the Company.
“Company” means Navient Corporation, a Delaware corporation, or any successor thereto.
“Covered Employee” means any Employee who is or may be a “covered employee,” as defined in Code Section 162(m).
“Director” means an individual serving as a member of the Board who is not an Employee and an individual who has agreed to become a director of the Company or any of its Subsidiaries and actually becomes such a director following such date of agreement.
“Director Award” means the grant of any Award (other than an Incentive Stock Option), whether granted singly, in combination, or in tandem, to a Participant who is a Director pursuant to such applicable terms, conditions, and limitations established by the Outside Board.
“Disability” means (1) if the Participant is an Employee, a disability that entitles the Employee to benefits under the Company’s long-term disability plan, as may be in effect from time to time, as determined by the plan administrator of the long-term disability plan or (2) if the Participant is a Director, a disability whereby the Director is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. Notwithstanding the foregoing, if an Award is subject to Code Section 409A, the definition of Disability shall conform to the requirements of Treasury Regulation § 1.409A-3(i)(4)(i).
“Dividend Equivalents” means, in the case of Restricted Stock Units or Performance Units, an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable to shareholders of record during the Restriction Period or performance period, as applicable, on a like number of shares of Common Stock that are subject to the Award.
“Employee” means (i) an employee of the Company or any of its Subsidiaries, and (ii) an individual who has agreed to become an employee of the Company or any of its Subsidiaries and actually becomes such an employee following such date of agreement.
“Employee Award” means the grant of any Award, whether granted singly, in combination, or in tandem, to an Employee pursuant to such applicable terms, conditions, and limitations established by the Committee.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Exercise Price” means the price at which a Participant may exercise his right to receive cash or Common Stock, as applicable, under the terms of an Award.
“Fair Market Value” of a share of Common Stock means, as of a particular date, (1) if shares of Common Stock are listed on a national securities exchange, the closing sales price per share of Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (2) if the Common Stock is not so listed, the average of the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by an inter-dealer quotation system, (3) if shares of Common Stock are not publicly traded, the most recent value determined by an independent appraiser appointed by the Committee for such purpose, or (4) if none of the above are applicable, the fair market value of a share of Common Stock as determined in good faith by the Committee.
“Good Reason” means, unless otherwise defined in an award agreement, a Participant’s resignation from his or her employment due to (a) a material reduction in the position or responsibilities of the Participant; (b) a reduction in the Participant’s annual base salary or a material reduction in the Participant’s compensation arrangements or benefits (provided that variability in the value of stock-based compensation or in the compensation provided under the Plan (or any similar incentive plan adopted by the Company from time to time) shall not be deemed to cause a material reduction in compensation); or (c) a relocation of the Participant’s primary work location to a distance of more than seventy-five (75) miles from its location as of the date of this amendment and restatement of the Plan without the consent of the Participant, unless such relocation results in the Participant’s primary work location being closer to the Participant’s then primary residence or does not substantially increase the average commuting time of the Participant.
“Grant Date” means the date an Award is granted to a Participant pursuant to this Plan.
“Incentive Stock Option” means an Option that is intended to comply with the requirements set forth in Code Section 422.
“Misconduct” means (a) an act of embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Company (or a Subsidiary), breach of fiduciary duty or deliberate disregard of Company (or Subsidiary) rules; an unauthorized disclosure of any Company (or Subsidiary) trade secret or confidential information; any conduct constituting unfair competition; inducing any customer of the Company (or a Subsidiary) to breach a contract with the Company (or a Subsidiary) or any principal for whom the Company (or a Subsidiary) acts as agent to terminate such agency relationship; or engaging in any other act or conduct proscribed by the senior human resources officer as Misconduct.
“Nonqualified Stock Option” means an Option that is not intended to comply with the requirements set forth in Code Section 422.
“Option” means a right to purchase a specified number of shares of Common Stock at a specified Exercise Price, which is either an Incentive Stock Option or a Nonqualified Stock Option.
“Outside Board” means the Board, excluding any member of the Board who is also an Employee, or any authorized delegate thereof consisting solely of one or more nonemployee Directors.
“Participant” means an Employee or Director to whom an Award has been made under this Plan.
“Performance Award” means an Award made pursuant to this Plan to a Participant which is subject to the attainment of one or more Performance Goals.
“Performance-Based Equity Award” means a Performance Award other than a Cash Award.
“Performance Goal” means one or more standards established by the Committee to determine in whole or in part whether a Performance Award shall be earned.
“Performance Unit” means a unit evidencing the right to receive in specified circumstances an amount of cash or one share of Common Stock or equivalent value in cash, the value of which at the time it is settled is determined as a function of the extent to which established performance criteria have been satisfied.
“Performance Unit Award” means an Award in the form of Performance Units.
“Qualified Performance Awards” has the meaning set forth in Paragraph 8(a)(vii)(B).
“Restricted Stock” means a share of Common Stock that is restricted or subject to forfeiture provisions.
“Restricted Stock Award” means an Award in the form of Restricted Stock.
“Restricted Stock Unit” means a unit evidencing the right to receive in specified circumstances one share of Common Stock or equivalent value in cash that is restricted or subject to forfeiture provisions.
“Restricted Stock Unit Award” means an Award in the form of Restricted Stock Units.
“Restriction Period” means a period of time beginning as of the date upon which a Restricted Stock Award or Restricted Stock Unit Award is made pursuant to this Plan and ending as of the date upon which such Award is no longer restricted or subject to forfeiture provisions.
“Retirement” means a Participant’s termination of employment with the Company (or a Subsidiary) in which the Participant meets the Company’s retirement eligibility requirements under the Company’s retirement eligibility policy in effect as of the Grant Date, which shall be determined by the Company in its sole discretion.
“Stock Appreciation Right” or “SAR” means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value of a specified number of shares of Common Stock on the date the right is exercised over a specified Exercise Price.
“Stock Award” means an Award in the form of shares of Common Stock, including a Restricted Stock Award, and a Restricted Stock Unit Award or Performance Unit Award that may be settled in shares of Common Stock, and excluding Options and SARs.
“Stock-Based Award Limitations” has the meaning set forth in Paragraph 5.
“Subsidiary” means (1) in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing 50% or more of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the shareholders of such corporation, and (2) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns 50% or more of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise).
“Time-Based Equity Award” means any Stock Award, Option or SAR, other than a Performance Award.
(a) Employees. All Employees are eligible for Employee Awards under this Plan,provided, however, that if the Committee makes an Employee Award to an individual whom it expects to become an Employee following the Grant Date of such Award, such Award shall be subject to (among other terms and conditions) the individual actually becoming an Employee.
(b) Directors. All Directors are eligible for Director Awards under this Plan,provided, however, that if the Outside Board makes a Director Award to an individual whom it expects to become a Director following the Grant Date of such Award, such Award shall be subject to (among other terms and conditions) the individual actually becoming a Director.
The Committee (or the Outside Board, in the case of Director Awards) shall determine the type or types of Awards to be made under this Plan and shall designate from time to time the Employees or Directors who are to be granted Awards under this Plan.
| 5. | Common Stock Available for Awards |
Subject to the provisions of Paragraph 15 hereof, there shall be available for Awards under this Plan granted wholly or partly in Common Stock (including rights or Options that may be exercised for or settled in Common Stock) an aggregate of 55,000,000 shares (the “Maximum Share Limit”), consisting of (i) 10,000,000 shares of Common Stock newly authorized for issuance and subject to approval of the Company’s shareholders at the Company’s 2017 annual meeting, and (ii) 45,000,000 shares of Common Stock previously authorized for issuance. All of the shares of Common Stock authorized for issuance under the Plan shall be available for Incentive Stock Options. Each Stock Award granted under this Plan shall be counted against the Maximum Share Limit as one share of Common Stock; each Option and SAR shall be counted against the Maximum Share Limit as one share of Common Stock.
Awards settled in cash shall not reduce the Maximum Share Limit under the Plan. If an Award expires or is terminated, cancelled or forfeited, the shares of Common Stock associated with the expired, terminated, cancelled or forfeited Awards shall again be available for Awards under the Plan, and the Maximum Share Limit shall be increased by the same amount as such shares were counted against the Maximum Share Limit (i.e., increased by one share of Common Stock, if a Stock Award, and one share of Common Stock, if an Option or SAR). The following shares of Common Stock shall not become available again for issuance under the Plan:
(a) Shares of Common Stock that have been retained or withheld by the Company in payment or satisfaction of the Exercise Price, purchase price or tax withholding obligation of an Award;
(b) Shares of Common Stock that have been delivered (either actually or by attestation) to the Company in payment or satisfaction of the Exercise Price, purchase price or tax withholding obligation of an Award;
(c) Shares of Common Stock tendered or withheld in payment of an Option; and;
(d) Shares repurchased by the Company with Option proceeds.
In addition, shares of Common Stock covered by a SAR, to the extent the SAR is exercised and settled in shares of Common Stock, and whether or not shares of Common Stock are actually issued to the Participant upon exercise of the SAR, shall be considered issued or transferred pursuant to the Plan.
The Board and the appropriate officers of the Company shall from time to time take whatever actions are necessary to file any required documents with governmental authorities, stock exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards.
Notwithstanding anything to the contrary contained in this Plan, the following limitations shall apply to any Awards made hereunder:
(a) No Employee may be granted during any calendar year Awards exercisable, covering or relating to more than 2,500,000 shares of Common Stock (the “Stock-Based Award Limitation”); and
(b) No Employee may be granted during any calendar year (1) Cash Awards or (2) Restricted Stock Unit Awards or Performance Unit Awards that may be settled solely in cash, having a value determined on the Grant Date in excess of $5,000,000.
(a) Authority of the Committee. Except as otherwise provided in this Plan with respect to actions or determinations by the Board, this Plan shall be administered by the Committee;provided, however, that (i) any and all members of the Committee shall satisfy any independence requirements prescribed by any stock exchange on which the Company lists its Common Stock; (ii) Awards may be granted to individuals who are subject to Section 16(b) of the Exchange Act only if the Committee is comprised solely of two or more “Non-Employee Directors” as defined in Securities and Exchange Commission Rule 16b-3 (as amended from time to time, and any successor rule, regulation or statute fulfilling the same or similar function); and (iii) any Award intended to qualify for the “performance-based compensation” exception under Code Section 162(m) shall be granted only if the Committee is comprised solely of two or more “outside directors” within the meaning of Code Section 162(m) and regulations pursuant thereto. Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of this Plan. Subject to Paragraph 6(c) hereof, the Committee may, in its discretion, (x) provide for the extension of the exercisability of an Award;provided, however, that no such action shall permit the term of any Option to be greater than 10 years from its Grant Date; (y) in the event of death or Disability, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions contained in an Award, waive any restriction or other provision of this Plan or an Award or otherwise amend or modify an Award in any manner that is, in either case, (1) not adverse to the Participant to whom such Award was granted, or (2) consented to by such Participant; or (z) in the event of a Change in Control, take any action authorized by Paragraph 16 hereof. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award Agreement in the manner and to the extent the Committee deems necessary or desirable to further this Plan’s purposes. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. The Outside Board shall have the same powers as the Committee with respect to Director Awards.
(b) Indemnity. No member of the Board or the Committee or officer of the Company to whom the Committee has delegated authority in accordance with the provisions of Paragraph 7 of this Plan shall be liable for anything done or omitted to be done by him, by any member of the Board or the Committee or by any officer of the Company in connection with the performance of any duties under this Plan, except for his own willful misconduct or as expressly provided by statute.
(c) Prohibition on Repricing of Awards. Subject to the provisions of Paragraph 15 hereof, the terms of outstanding Award Agreements may not be amended without the approval of the Company’s shareholders so as to (i) reduce the Exercise Price of any outstanding Options or SARs or (ii) cancel any outstanding Options or SARs in exchange for cash or other Awards, or Options or SARs with an Exercise Price that is less than the Exercise Price of the original Options or SARs.
(d) Minimum Vesting Period.Each Stock Award, Option and SAR shall have a minimum vesting period of one year from the date of grant. The foregoing notwithstanding, 5% of the total number of shares of Common Stock available for issuance under this Plan shall not be subject to the minimum vesting requirement described in the preceding sentence.
| 7. | Delegation of Authority |
The Committee may delegate any of its authority to grant Awards to Employees who are not subject to Section 16(b) of the Exchange Act, subject to Paragraph 6(a) above, to the Board or to any other committee of the Board, provided such delegation is made in writing and specifically sets forth such delegated authority. The Committee may also delegate to an Authorized Officer authority to execute on behalf of the Company any Award Agreement. The Committee and the Board, as applicable, may engage or authorize the engagement of a third party administrator to carry out administrative functions under this Plan. Any such delegation hereunder shall only be made to the extent permitted by applicable law.
(a) The Committee shall determine the type or types of Employee Awards to be made under this Plan and shall designate from time to time the Employees who are to be the recipients of such Awards. Each Award shall be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee, in its sole discretion, and, if required by the Committee, shall be signed by the Participant to whom the Award is granted and by an Authorized Officer for and on behalf of the Company. Awards may consist of those listed in this Paragraph 8(a) hereof and may be granted singly, in combination or in tandem. Awards may also be made in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under this Plan or any other plan of the Company or any of its Subsidiaries, including the plan of any acquired entity;provided, however, that, except as contemplated in Paragraph 15 hereof, no Option or SAR may be issued in exchange for the cancellation of an Option or SAR with a higher Exercise Price nor may the Exercise Price of any Option or SAR be reduced. All or part of an Award may be subject to conditions established by the Committee. Upon the termination of employment by a Participant who is an Employee, any unexercised, unvested or unpaid Awards shall be treated as set forth in the applicable Award Agreement or in any other written agreement the Company has entered into with the Participant.
(i) Options. An Employee Award may be in the form of an Option. An Option awarded pursuant to this Plan may consist of either an Incentive Stock Option or a Nonqualified Stock Option. The price at which shares of Common Stock may be purchased upon the exercise of an Option shall be not less than the Fair Market Value of the Common Stock on the Grant Date. The term of an Option shall not exceed 10 years from the Grant Date. Options may not include provisions that “reload” the Option upon exercise. Subject to the foregoing provisions, including the minimum vesting requirement described in this Paragraph 8(a), the terms, conditions and limitations applicable to any Option, including, but not limited to, the term of any Option and the date or dates upon which the Option becomes vested and exercisable, shall be determined by the Committee.
(ii) Stock Appreciation Rights. An Employee Award may be in the form of an SAR. The Exercise Price for an SAR shall not be less than the Fair Market Value of the Common Stock on the Grant Date. The holder of a tandem SAR may elect to exercise either the Option or the SAR, but not both. The exercise period for an SAR shall extend no more than 10 years after the Grant Date. SARs may not include provisions that “reload” the SAR upon exercise. Subject to the foregoing provisions, including the minimum vesting requirement described in this Paragraph 8(a), the terms, conditions, and limitations applicable to any SAR, including, but not limited to, the term of any SAR and the date or dates upon which the SAR becomes vested and exercisable, shall be determined by the Committee.
(iii) Stock Awards. An Employee Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Award, including, but not limited to, vesting or other restrictions, shall be determined by the Committee, and subject to the minimum Restriction Period and performance period requirements and any other applicable requirements described in this Paragraph 8(a).
(iv) Restricted Stock Unit Awards. An Employee Award may be in the form of a Restricted Stock Unit Award. The terms, conditions and limitations applicable to a Restricted Stock Unit Award, including, but not limited to, the Restriction Period and the right to receive Dividend Equivalents, if any, shall be determined by the Committee. Subject to the terms of this Plan, the Committee, in its sole discretion, may settle Restricted Stock Units in the form of cash or in shares of Common Stock (or in a combination thereof) equal to the value of the vested Restricted Stock Units.
(v) Performance Unit Awards. An Employee Award may be in the form of a Performance Unit Award. Each Performance Unit shall have an initial value that is established by the Committee on the Grant Date. Subject to the terms of this Plan, after the applicable performance period has ended, the Participant shall be entitled to receive settlement of the value and number of Performance Units earned by the Participant over the performance period, to be determined as a function of the extent to which the corresponding performance goals have been achieved. Settlement of earned Performance Units shall be as determined by the Committee and as evidenced in an Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may settle earned Performance Units in the form of cash or in shares of Common Stock (or in a combination thereof) equal to the value of the earned Performance Units as soon as practicable after the end of the performance period and following the Committee’s determination of actual performance against the performance measures and related goals established by the Committee. The terms, conditions and limitations applicable to a Performance Unit Award, including, but not limited to, the Restriction Period and the right to Dividend Equivalents, if any, shall be determined by the Committee.
(vi) Cash Awards. An Employee Award may be in the form of a Cash Award. The terms, conditions and limitations applicable to a Cash Award, including, but not limited to, vesting or other restrictions, shall be determined by the Committee.
(b) Performance Awards. Without limiting the type or number of Awards that may be made under the other provisions of this Plan, any Employee Award granted under this Plan may be structured as a Performance Award. The terms, conditions and limitations applicable to an Award that is a Performance Award shall be determined by the Committee. The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Participant and/or the portion of an Award that may be exercised.
(i) Nonqualified Performance Awards. Performance Awards granted to Employees that are not intended to qualify as qualified performance-based compensation under Code Section 162(m) shall be based on achievement of such Performance Goals and be subject to such terms, conditions and restrictions as the Committee or its delegate shall determine.
(ii) Qualified Performance Awards. Performance Awards granted to Employees under this Plan that are intended to qualify as qualified performance-based compensation under Code Section 162(m) shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more pre-established, objective Performance Goals established by the Committee prior to the earlier to occur of (1) 90 days after the commencement of the period of service to which the Performance Goal relates and (2) the lapse of 25% of the period of service (as scheduled in good faith at the time the goal is established), and in any event while the outcome is substantially uncertain. A Performance Goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. One or more of such goals may apply to the Employee, one or more business units, divisions or sectors of the Company, or the Company as a whole, and if so desired by the Committee, by comparison with a peer group of companies. A Performance Goal shall include one or more of the following: (a) cash flow (including operating cash flow, free cash flow, cash flow return on capital, or cash flow per share), (b) core earnings per share (including earnings before interest, taxes, depreciation and amortization), (c) return measures (including return on assets, capital, equity, or sales), (d) total shareholder return, (e) productivity ratios, (f) expense targets or ratios, (g) revenue, (h) core income or net income, (i) core operating income or net operating income, (j) operating profit or net operating profit, (k) gross or operating margin, (l) return on operating revenue, (m)
market share, (n) loan volume, (o) loan delinquencies, (p) loan defaults, (q) loan credit indicators (including FICO, co-borrower, payments made, GPA and graduation), (r) overhead or other expense reduction, (s) charge-off levels, (t) deposit growth, (u) margins, (v) operating efficiency, (w) economic value added, (x) customer or employee satisfaction, (y) debt reduction, (z) capital targets, (aa) consummation of acquisitions, dispositions, projects or other specific events or transactions, (bb) liquidity, (cc) capital adequacy, (dd) ratio of nonperforming to performing assets, (ee) ratio of common equity to total assets, or (ff) regulatory compliance metrics.
Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to Qualified Performance Awards, it is the intent of this Plan to conform with the standards of Code Section 162(m) and Treasury Regulation § 1.162-27(e)(2)(i), as to grants to Covered Employees and the Committee in establishing such goals and interpreting this Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals applicable to Qualified Performance Awards, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. For this purpose, approved minutes of the Committee meeting in which the certification is made shall be treated as such written certification. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Qualified Performance Awards made pursuant to this Plan shall be determined by the Committee. The Committee may provide in any such Performance Award that any evaluation of performance may include or exclude certain events that occur during a Performance Period including but not limited to: (i) amortization, depreciation or impairment of tangible or intangible assets, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs or reductions in force or early retirement programs, (v) any unusual or infrequently occurring items that may be defined in an objective and non-discretionary manner under or by reference to U.S. Generally Accepted Accounting Principles, accounting standards or other applicable accounting standards in effect from time to time and/ or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year, (vi) the sale of investments or non-core assets; (vii) discontinued operations, categories or segments; (viii) investments, acquisitions or dispositions; (ix) political, legal and other business interruptions (such as due to war, insurrection, riot, terrorism, confiscation, expropriation, nationalization, deprivation, seizure, and regulatory requirements); (x) natural catastrophes; (xi) currency fluctuations; (xii) stock based compensation expense; (xiii) early retirement of debt; (xiv) conversion of convertible debt securities; and (xv) termination of real estate leases.
(iii) Adjustment of Performance Awards. Awards that are intended to qualify as Performance Awards may not be adjusted upward. The Committee may retain the discretion to adjust such Performance Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.
The Outside Board has the sole authority to grant Director Awards from time to time in accordance with this Paragraph 9. Director Awards may consist of the forms of Award described in Paragraph 8, with the exception of Incentive Stock Options, may be granted singly, in combination, or in tandem and shall be granted subject to such terms and conditions as specified in Paragraph 8. Each Director Award may, in the discretion of the Outside Board, be embodied in an Award Agreement, which shall contain such terms, conditions, and limitations as shall be determined by the Outside Board, in its sole discretion. The maximum aggregate grant-date value of all Director Awards granted to any single Director during any single calendar year shall be $650,000.
| 10. | Award Payment; Dividends and Dividend Equivalents |
(a) General. Payment of Awards may be made in the form of cash or Common Stock, or a combination thereof, and may include such restrictions as the Committee (or the Outside Board, in the case of Director Awards) shall determine, including, but not limited to, in the case of Common Stock, restrictions on transfer and forfeiture provisions. For a Restricted Stock Award, the certificates evidencing the shares of such Restricted Stock (to the extent that such shares are so evidenced) shall contain appropriate legends and restrictions that describe the terms
and conditions of the restrictions applicable thereto. For a Restricted Stock Unit Award that may be settled in shares of Common Stock, the shares of Common Stock that may be issued at the end of the Restriction Period shall be evidenced by book entry registration or in such other manner as the Committee may determine.
(b) Dividends and Dividend Equivalents. Dividends and/or Dividend Equivalents shall not be made part of any Options or SARs. Rights to (1) dividends will be extended to and made part of any Restricted Stock Award and (2) Dividend Equivalents may be extended to and made part of any Restricted Stock Unit Award and Performance Unit Award, subject in each case to such terms, conditions and restrictions as the Committee may establish;provided, however, that any such dividends or Dividend Equivalents paid with respect to unvested Stock Awards, including Stock Awards subject to Performance Goals shall be subject to the same restrictions and/or Performance Goals as applicable, as the underlying Stock Award.
The Exercise Price shall be paid in full at the time of exercise in cash or, if permitted by the Committee and elected by the Participant, the Participant may purchase such shares by means of the Company withholding shares of Common Stock otherwise deliverable on exercise of the Award or tendering Common Stock valued at Fair Market Value on the date of exercise, or any combination thereof. The Committee, in its sole discretion, shall determine acceptable methods for Participants to tender Common Stock or other Awards. The Committee may provide for procedures to permit the exercise or purchase of such Awards by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award (including cashless exercise procedures approved by the Committee involving a broker or dealer approved by the Committee). The Committee may adopt additional rules and procedures regarding the exercise of Options from time to time, provided that such rules and procedures are not inconsistent with the provisions of this Paragraph 11.
The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of required withholding taxes or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes;provided, however,that the number of shares of Common Stock withheld for payment of required withholding taxes must equal no more than the maximum individual statutory rate in the applicable jurisdiction, as determined in accordance with generally accepted accounting principles. The Committee may also permit withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Award with respect to which withholding is required. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made.
| 13. | Amendment, Modification, Suspension or Termination |
The Board may amend, modify, suspend or terminate this Plan (and the Committee may amend an Award Agreement) for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (1) no amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant and (2) no amendment or alteration shall be effective prior to its approval by the shareholders of the Company to the extent shareholder approval is otherwise required by applicable legal requirements or the requirements of the securities exchange on which the Company’s stock is listed, including any amendment that expands the types of Awards available under this Plan, materially increases the number of shares of Common Stock available for Awards under this Plan, materially expands the classes of persons eligible for Awards under this Plan, materially extends the term of this Plan, materially changes the method of determining the Exercise Price of Options, deletes or limits any provisions of this Plan that prohibit the repricing of Options or SARs, or decreases any minimum vesting requirements for any Stock Award.
Unless otherwise determined by the Committee (or the Outside Board in the case of Director Awards) and expressly provided for in an Award Agreement, no Award or any other benefit under this Plan shall be assignable or otherwise transferable except (1) by will or the laws of descent and distribution or (2) pursuant to a domestic relations order issued by a court of competent jurisdiction that is not contrary to the terms and conditions of this Plan or applicable Award and in a form acceptable to the Committee. The Committee may prescribe and include in applicable Award Agreements other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Paragraph 14 shall be null and void. Notwithstanding the foregoing, no Award may be transferred for value or consideration.
(a) The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, then (1) the number of shares of Common Stock reserved under this Plan, (2) the number of shares of Common Stock covered by outstanding Awards in the form of Common Stock or units denominated in Common Stock, (3) the Exercise Price or other price in respect of such Awards, (4) the Stock-Based Award Limitations, and (5) the appropriate Fair Market Value and other price determinations for such Awards shall each be proportionately adjusted by the Committee as appropriate to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Committee shall make appropriate adjustments to (i) the number and kind of shares of Common Stock covered by Awards in the form of Common Stock or units denominated in Common Stock, (ii) the Exercise Price or other price in respect of such Awards, (iii) the appropriate Fair Market Value and other price determinations for such Awards, and (iv) the Stock-Based Award Limitations to reflect such transaction; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without increasing, the value of such Awards.
(c) In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee may make such adjustments to Awards or other provisions for the disposition of Awards as it deems equitable, and shall be authorized, in its discretion, (1) to provide for the substitution of a new Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Committee determines) for an Award or the assumption of the Award, regardless of whether in a transaction to which Code Section 424(a) applies, (2) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction, or (3) to cancel any such Awards and to deliver to the Participants cash in an amount that the Committee shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of Options or Stock Appreciation Rights shall be the excess of the Fair Market Value of Common Stock on such date over the Exercise Price of such Award.
(d) Notwithstanding anything to the contrary in Paragraph 15(c), the vesting of any Stock Awards, Options or SARs shall be accelerated upon an event described in Paragraph 15(c) only if the awards are not assumed by or substituted for awards of the surviving or acquiring entity, and the acceleration of vesting of any Performance-Based Equity Awards upon such event shall be adjusted for actual performance and/or the fractional performance period through the date of the event.
(e) No adjustment or acceleration pursuant to this Paragraph 15 shall be made in a manner that results in noncompliance with the requirements of Code Section 409A, to the extent applicable. For purposes of Code Section 409A, the immediate settlement of Awards whose vesting has been accelerated pursuant to the provisions hereof or of Paragraph 16 below shall, to the extent required in order to comply with Code Section 409A, conform to the requirements for a termination and liquidation of the Plan and all outstanding Awards under the Plan that are subject to Code Section 409A in accordance with Treasury Regulation § 1.409A-3(j)(4)(ix)(B).
16. Change of Control.Notwithstanding anything in Paragraph 15 to the contrary, the provisions of this Paragraph 16 shall apply to an outstanding Award if a Change in Control occurs.
(a) If a Change in Control triggered by clause (b) of the definition thereof occurs and outstanding Awards are not assumed or continued by the acquiring or surviving entity in the transaction, then upon consummation of the Change in Control: (1) if an Award is a Time-Based Equity Award, it shall vest fully and completely, any and all restrictions shall lapse, and (if an Option or SAR) it shall be fully exercisable; or (2) if an Award is a Performance-Based Equity Award, it shall vest based on the performance terms of the Award and based on actual performance achieved to the date of the Change in Control. The Committee may adjust the performance goals of a Performance Award in its good faith discretion to account for the shortened performance period.
(b) If a Change in Control triggered by clause (a) of the definition thereof occurs, or if the acquiring or surviving entity in a Change in Control triggered by clause (b) of the definition thereof assumes or continues the Award, then no acceleration of vesting, exercisability and/or payment of an outstanding Award shall occur in connection with the Change in Control; provided, however, that individual Awards may provide for acceleration if the Participant’s employment with the Company (or any Subsidiary), or with any acquiring or surviving entity in the transaction (as the case may be), terminates in connection with the Change in Control due to a qualifying termination of employment under the circumstances provided in the Award, including (by way of example and not of limitation) any termination of employment other than either (x) involuntary termination by the Company, Subsidiary, or acquiring or surviving entity for Cause, or (y) voluntary termination by the Participant other than due to Retirement or Good Reason.
No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions.
This Plan is unfunded. Although bookkeeping accounts may be established with respect to Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto, nor shall this Plan be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to an Award of cash, Common Stock or rights thereto under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. None of the Company, the Board or the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan. With respect to this Plan and any Awards granted hereunder, Participants are general and unsecured creditors of the Company and have no rights or claims except as otherwise provided in this Plan or any applicable Award Agreement.
(a) Awards made under this Plan are intended to comply with or be exempt from Code Section 409A, and ambiguous provisions hereof, if any, shall be construed and interpreted in a manner consistent with such intent. No payment, benefit or consideration shall be substituted for an Award if such action would result in the imposition of taxes under Code Section 409A. Notwithstanding anything in this Plan to the contrary, if any Plan provision or Award under this Plan would result in the imposition of an additional tax under Code Section 409A, that Plan provision or Award shall be reformed, to the extent permissible under Code Section 409A, to avoid imposition of the additional tax, and no such action shall be deemed to adversely affect the Participant’s rights to an Award.
(b) Unless the Committee provides otherwise in an Award Agreement, each Restricted Stock Unit Award, Performance Unit Award or Cash Award (or portion thereof if the Award is subject to a vesting schedule) shall be settled no later than the 15th day of the third month after the end of the first calendar year in which the Award (or such portion thereof) is no longer subject to a “substantial risk of forfeiture” within the meaning of Code Section 409A. If the Committee determines that a Restricted Stock Unit Award, Performance Unit Award or Cash Award is intended to be subject to Code Section 409A, the applicable Award Agreement shall include terms that are designed to satisfy the requirements of Code Section 409A.
(c) If the Participant is identified by the Company as a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) on the date on which the Participant has a “separation from service” (other than due to death) within the meaning of Treasury Regulation § 1.409A-1(h), any Award payable or settled on account of a separation from service that is deferred compensation subject to Code Section 409A shall be paid or settled on the earliest of (1) the first business day following the expiration of six months from the Participant’s separation from service, (2) the date of the Participant’s death, or (3) such earlier date as complies with the requirements of Code Section 409A.
| 20. | Awards to Foreign Nationals and Employees Outside the United States |
The Committee may, without amending this Plan, (1) establish special rules applicable to Awards granted to Participants who are foreign nationals, are employed or otherwise providing services outside the United States, or both, including rules that differ from those set forth in this Plan, and (2) grant Awards to such Participants in accordance with those rules.
This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Delaware.
| 22. | Right to Continued Service or Employment |
Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or any of its Subsidiaries to terminate any Participant’s employment or other service relationship with the Company or its Subsidiaries at any time, nor confer upon any Participant any right to continue in the capacity in which he is employed or otherwise serves the Company or its Subsidiaries.
Words used in this Plan in the singular shall include the plural and in the plural the singular, and the gender of words used shall be construed to include whichever may be appropriate under any particular circumstances of the masculine, feminine or neuter genders.
The headings in this Plan are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Plan.
This Plan, as approved by the Board on April 7, 2014, became effective as of the Effective Date. This Plan shall continue in effect for a term of 10 years commencing on the Effective Date, unless earlier terminated by action of the Board.
The then sole shareholder of the Company approved this Plan on April 8, 2014. The Company amended and restated the Plan on April 6, 2015, and again on April 4, 2017.
IN WITNESS WHEREOF, Navient Corporation has caused this Plan to be executed by its duly authorized officer, effective as provided herein.
| NAVIENT CORPORATION | | | | | By: | | | Name: Mark L. Heleen | | Title: Secretary |
| | 
NAVIENT CORPORATION
ATTN: CORPORATE SECRETARY
123 JUSTISON STREET
WILMINGTON, DE 19801
| VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
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Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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| | | TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | | | | | E17962-P86726
| KEEP THIS PORTION FOR YOUR RECORDS | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY | |
| | | | | | NAVIENT CORPORATION
| | | | | | | | | The Board of Directors recommends you vote FOR the following proposals: | | | | | | | | | | 1. | Election of Directors | | | | | | | | | | | Nominees: | For | Against | Abstain | | | | | | | | 1a. | John K. Adams, Jr. | ☐ | ☐ | ☐ | | | | | | | | 1b. | Anna Escobedo Cabral | ☐ | ☐ | ☐ | | | | | | | | 1c. | William M. Diefenderfer, III | ☐ | ☐ | ☐ | | | | | | | | 1d. | Diane Suitt Gilleland | ☐ | ☐ | ☐ | | | | | | | | 1e. | Katherine A. Lehman | ☐ | ☐ | ☐ | | | | | | | | 1f. | Linda A. Mills | ☐ | ☐ | ☐ | | | | | | | | 1g. | John F. Remondi | ☐ | ☐ | ☐ | | | | | | | | 1h. | Jane J. Thompson | ☐ | ☐ | ☐ | | | | | | | | 1i. | Laura S. Unger | ☐ | ☐ | ☐ | | | | | | | | 1j. | Barry L. Williams | ☐ | ☐ | ☐ | | | | | | | | 1k. | David L. Yowan | ☐ | ☐ | ☐ | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For | Against | Abstain | | | | | 2. | Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2017. | ☐ | ☐ | ☐ | | | | | | 3. | Non-binding advisory vote to approve named executive officer compensation. | ☐ | ☐ | ☐ | | | | | | 4. | Approval of the Amended and Restated Navient Corporation 2014 Omnibus Incentive Plan.
| ☐ | ☐ | ☐ |
NOTE: The shares represented by this proxy when properly executed will be voted in the manner directed herein. If any other matters properly come before the meeting, the person named in this proxy will vote in their discretion.
| | | | For address changes and/or comments, please check this box and write them on the back where indicated.
| ☐ | | | | | Please indicate if you plan to attend this meeting.
| ☐ | ☐ | | | Yes | No | |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
| | | | Signature [PLEASE SIGN WITHIN BOX] | Date |
| | | | Signature (Joint Owners)
| Date |
V.1.1
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
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ADMISSION TICKET
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▼ DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
E17963-P86726
| | | | | | | | | NAVIENT CORPORATION
Annual Meeting of Shareholders
May 25, 2017 8:00 AM
Navient Corporation
123 Justison Street
Wilmington, DE 19801
| | | | | | THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
| | | | | | | | | | The undersigned hereby appoints Mark Heleen and Kurt Slawson, or each of them, each with full power of substitution, as the lawful attorneys and proxies of the undersigned to attend the Annual Meeting of Shareholders of Navient Corporation to be held on May 25, 2017, and any adjournments or postponements thereof, to vote the number of shares the undersigned would be entitled to vote if personally present, and to vote in their discretion upon any other business that may properly come before the meeting.
| | | | | | | | | | THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED SHAREHOLDER. IF NO CHOICE IS SPECIFIED BY THE SHAREHOLDER, THIS PROXY WILL BE VOTED “FOR” ALL PORTIONS OF PROPOSALS 1, 2, 3 AND 4, AND IN THE PROXY’S DISCRETION ON ANY OTHER MATTERS PROPERLY COMING BEFORE THE MEETING.
| | | | | | THIS CARD WILL ALSO BE USED TO PROVIDE VOTING INSTRUCTIONS TO THE TRUSTEE FOR ANY SHARES HELD FOR THE ACCOUNT OF THE UNDERSIGNED IN THE NAVIENT 401(K) SAVINGS PLAN.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Address Changes/Comments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) | | | | | | | | |
V.1.1
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