UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒ | ||||||||
| Filed by a Party other than the Registrant ☐ | ||||||||
| Check the appropriate box: | ||||||||
| ☐ Preliminary Proxy Statement | ☐ | Confidential, for Use of the Commission Only (as permittedby Rule 14a-6(e)(2)) | ||||||
| ☐ Definitive Additional Materials | ||||||||
| ☐ Soliciting Material Pursuant to Rule 14a-12 | ||||||||
Eastern Bankshares, Inc.
(Name of the Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| No fee required. | |||||
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | ||||
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
| ☐ | Fee paid previously with preliminary materials. | ||||
| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||||
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
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(4)Date Filed:
April 3, 2023
Dear Shareholder:
I am pleased to invite you to attend the 20212023 Annual Meeting of Shareholders of Eastern Bankshares, Inc. The meeting will be held on Monday, May 1715, 2023, at 12:00 p.m. Eastern Time both online via the Internet at https://agm.issuerdirect.com/ebc and at our corporate offices located at 265 Franklin Street, Boston, Massachusetts 02110. Details regarding the business to be conducted at the meeting are described in the enclosed notice of the meeting and proxy statement.
Shareholders will receive a notice describing how to access our proxy materials over the Internet, how to register to attend the meeting virtually, and how to request to receive a paper copy of the proxy materials by mail.materials. Our proxy materials, includeincluding this proxy statement and our 20202022 annual report to shareholders, containingcontain our audited financial statements and information about our business.
Your vote is very important. You can ensure your shares of our common stock are represented and are voted at the meeting by submitting your instructions by telephone, the Internet, or in writing by returning your proxy card or voting form. We encourage you to consider registering for and attending our 20212023 Annual Meeting of Shareholders virtually through the Internet.virtually.
Thank you for your support and continued interest in Eastern Bankshares, Inc.
Sincerely,
ROBERT F. RIVERS
Chair of the Board of Directors and
Chief Executive Officer
April 1, 20213, 2023
To Shareholders of
Eastern Bankshares, Inc.
NOTICE OF ANNUAL MEETING
The 20212023 Annual Meeting of Shareholders of Eastern Bankshares, Inc. will be held on Monday, May 17, 2021,15, 2023, at 12:00 p.m. Eastern Time online via the Internet at https://agm.issuerdirect.com/ebc and at our corporate office located at 265 Franklin Street, Boston, Massachusetts 02110. The purpose of the meeting is to consider and take action upon the following matters:
2.to hold an advisory vote on executive compensation;
3.to ratify the appointment of Ernst & Young LLP by the Audit Committee of our Board of Directors as our company’s independent registered public accounting firm for the 2023 fiscal year; and
4.to vote on such other business as may properly be brought before the meeting and any adjournment of the meeting.
The record date for the determination of the shareholders entitled to receive notice of and to vote at the meetingAnnual Meeting is Friday, March 12, 2021.10, 2023. Our stock transfer books will remain open.
Our Bylaws require that the holders of a majority of the shares of our common stock, issued and outstanding and entitled to vote at the meeting, be present online or in person, or represented by proxy at the meeting in order to constitute a quorum for the transaction of business. Accordingly, it is important that your shares be represented at the meeting regardless of the number of shares you may hold. Please ensure that your shares of our common stock are present and voted at the meeting by submitting your instructions by telephone, the Internet, or in writing by completing, signing, dating and returning your proxy card or voting form. If you choose to attend the 2021 annual meeting2023 Annual Meeting virtually, you may also vote your shares through the Internet during the meeting. DueIf you choose to state laws and our corporate safety protocols related toattend the COVID-19 pandemic, shareholders will not be able to be present2023 Annual Meeting in person, you may obtain directions by contacting us at our corporate office for the meeting.annualmeeting@easternbank.com.
You are entitled to participate in the 20212023 Annual Meeting if you were a shareholder at the close of business on Friday, March 12, 2021,10, 2023, the record date, or hold a legal proxy for the meeting provided by your bank, broker or nominee as of such record date.
•To access,register to attend the 2023 Annual Meeting online via the Internet or in person, visit www.proxydocs.com/EBC and enter your control number. Registrants who choose to participate in, andvirtually will be provided a link to the virtual meeting on the day of the meeting.
•To vote your shares virtually in advance of or at the 20212023 Annual Meeting, visit https://agm.issuerdirect.com/ebcwww.proxypush.com/EBC and enter your control number:number.
If you join the meeting2023 Annual Meeting virtually, you can submit questions in writing during the meeting through the Q&A tab on the virtual platform. We intend to answer as many questions that pertain to company matters as time allows during the meeting. Questions that are substantially similar may be grouped or not answered to ensure we are able to answer every question in this virtual format.
A complete list of registered shareholders will be made available to shareholders of record at the meeting and in accordance with our Bylaws by emailing annualmeeting@easternbank.com.
This notice, the proxy and proxy statement are sent to you by order of our Board of Directors on behalf of the company.
 | |||||
| KATHLEEN C. HENRY | |||||
| Executive Vice President, General Counsel and | |||||
| Corporate Secretary | |||||
TABLE OF CONTENTS
| Page | |||||
PROXY STATEMENT
We are furnishing this proxy statement (the "Proxy Statement"“Proxy Statement”) in connection with the solicitation of proxies by the Board of Directors (which we sometimes refer to as the “Board”) of Eastern Bankshares, Inc. (which we may also refer to as “we,” “us,” or the “Company” throughout this Proxy Statement)Statement; Eastern Bank is sometimes referred to herein as the “Bank,” and Eastern Bankshares, Inc. and Eastern Bank are sometimes collectively referred to herein as “Eastern”) for use at our 20212023 annual meeting of shareholders ("(“Annual Meeting"Meeting” or the “Meeting”) to be held on Monday, May 17, 202115, 2023 at 12:00 p.m. Eastern Time online via the Internet at https://agm.issuerdirect.com/ebc and at our corporate office located at 265 Franklin Street, Boston, MA 02110, and at any adjournment of that meeting. The mailing address of our principal executive office is 265 Franklin Street, Boston, MA 02110. The noticeNotice of annual meeting,Annual Meeting, this Proxy Statement, and the enclosed proxy are being first furnished to our shareholders on or about April 1, 2021.3, 2023.
INTERNET AVAILABILITY OF PROXY MATERIALS
Our proxy materials are available over the Internet. YouShareholders will receive a Notice of Internet Availability of Proxy Materials (the “Notice”) on or about April 5, 20213, 2023, to comply with the 40-day requirement pursuant to Rule 14a-16(a) of the the Securities and Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”). The Notice contains instructions on how to access our proxy materials, including our Proxy Statement, in connection with the Annual Meeting and our 2020 annual report to shareholders ("Annual Report"), and submit your proxy or vote authorization form. The Notice also provides information on how to request paper copies of our proxy materials if you prefer.materials. If you have previously requested a paper copy of the proxy materials, you will receive a paper copy of our proxy materials by mail. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials electronically unless you elect otherwise. If you receive more than one Notice, it means that your shares are registered in more than one name or are registered in different accounts. In order to vote the shares you own, you must vote pursuant to the instructions on each Notice.
VOTING PROCEDURES
Purpose of Annual Meeting
Shareholders entitled to vote at the Annual Meeting will consider and act upon the matters outlined in the notice of meeting accompanying this Proxy Statement, including the election of four individuals to our Board of Directors, each to be elected for a three-year term expiring in 20242026 (Proposal 1); approval, by non-binding advisory vote, of the compensation of our named executive officers ("NEOs"(“NEOs”) (Proposal 2); to recommend, by non-binding advisory vote, the frequency of future executive compensation advisory votes (Proposal 3); and ratification of the appointment by the Audit Committee of our Board of Directors of Ernst & Young LLP as our independent registered public accounting firm for the 20212023 fiscal year (Proposal 4)3).
Voting Securities and Record Date
Only shareholders of record at the close of business on Friday, March 12, 2021 ("10, 2023 (“Record Date"Date”), are entitled to vote at the meeting or any adjournment of the meeting. Each share is entitled to one vote.Meeting. Our outstanding capital stock entitled to vote at the meeting as of Friday, March 12, 2021,10, 2023, consisted of 186,758,154176,328,426 shares of our common stock, $0.01 par value per share. Each holder of record of our common stock on the Record Date is entitled to one vote per share of common stock held, except that, as provided in our Articles of Organization, as amended, and under applicable law, if anyone owns more than 10% of our common stock without prior approval of the Federal Reserve Board and the Massachusetts Commissioner of Banks, shares in excess of 10% will not be counted as shares entitled to vote.
In accordance with our amended and restated bylaws ("Bylaws"(“Bylaws”) a list of shareholders of record as of the Record Date ("(“Shareholder List"List”) will be available for inspection by any shareholder, beginning two (2) business days after notice is given of the meetingMeeting and continuing through the Annual Meeting. The Shareholder List may be accessed during the Annual Meeting by contactingthrough the Corporate Secretary or by submitting an email to annualmeeting@easternbank.com and requesting access to the Shareholder List.virtual meeting platform. In addition, you may contact our Corporate Secretary by submitting an email to annualmeeting@easternbank.com and requesting a time to view the Shareholder List virtually, for any purpose germane to the Annual Meeting, between the hours of 9:00 a.m. and 5:00 p.m., local time, on any business day from Wednesday, April 7, 2021 up5, 2023, to the time of the Annual Meeting.
Quorum
The holders of a majority of the shares of our common stock that are issued and outstanding and entitled to vote at the meetingAnnual Meeting constitute a quorum for the transaction of business at the meeting.Annual Meeting. If a quorum is not present, the meetingAnnual Meeting will be adjourned until a quorum is obtained. For purposes of determining the presence or absence of a quorum, abstentions and broker non-votes will be counted as present. A “broker non-vote” is a proxy from a broker or other nominee indicating that such person has not received instructions from the beneficial owner on a particular matter with respect to which the broker or other
nominee does not have discretionary voting power. Brokers have the discretion to vote their clients’ proxies only on routine matters. At our Annual Meeting, only the ratification of our auditors is a routine matter.
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Attending the Annual Meeting
We encourage ourinvite all shareholders as of the Record Date to attend the 2021 Annual Meeting, virtually. Please note the process required to access the meeting, which vary depending on the nature of your individual ownership interest:will be held both online and at our corporate headquarters located at 265 Franklin Street, Boston, Massachusetts 02110.
| Virtual Meeting Registration and Attendance Process | ||||||||
•To attend the Annual Meeting | ||||||||
•On this registration website, you will be asked to enter your | •A link to the Annual Meeting will be emailed to | |||||||
If you choose to state laws and our corporate safety protocols related to the COVID-19 pandemic, shareholders will not be able to be present at our corporate office for the meeting. We encourage you to participate inattend the Annual Meeting virtually. in person, we ask that you register for the meeting at www.proxydocs.com/EBC or mark your attendance preference on the proxy card that you return by mail.
If you are a record holder of our common stock, which means that your shares are represented by ledger entries in your own name, directly registered with our transfer agent Continental Stock Transfer & Trust Company, please bring valid picture identification to the Annual Meeting to allow us to verify your ownership as of the Record Date. If your shares are held in “street name,” which means that the shares are held for your benefit in the name of a broker, bank or other intermediary, please also bring a brokerage account statement or letter from your broker, bank or other intermediary reflecting stock ownership as of the Record Date in order to be admitted to the Annual Meeting. Please note that if you hold your common stock in street name, you may not vote your shares in person at the Annual Meeting unless you obtain a legal proxy from your broker giving you the right to vote the shares at the Annual Meeting. If you own an interest in our common stock through the Company's Employee Stock Ownership Plan ("ESOP") or 401(k) Plan, you may register to attend, but may not vote at, the Annual Meeting.
Even if you plan to attend the Annual Meeting virtually or in person, we encourage you to vote in advance by Internet, telephone, or mail so that your vote will be counted in the event that you later decide not to attend the Annual Meeting.
Manner of Voting
Each share of common stock you hold is entitled to one vote for or against a proposal. Shares entitled to be voted at the Annual Meeting can only be voted if the shareholder of record of such shares is present at the meetingAnnual Meeting (either in-person or virtually), returns a signed proxy card, or authorizes proxies to vote his or her shares by telephone or over the Internet. Shares represented by valid proxy will be voted in accordance with your instructions. If you choose to vote your shares by telephone or over the Internet, you may do so until the dates and times set forth below, by following the instructions on the proxy card or the Notice.
Shareholders of Record
If you are a shareholder of record of our common stock as of the Record Date, you may vote in one of the following ways:
| By Internet | by following the Internet | ||||
| By Telephone | by following the telephone voting instructions included in the proxy card and Notice at any time | ||||
| By Mail | by marking, dating and signing your printed proxy card (if requested and received by mail) in accordance with the instructions on it and returning it by mail in the pre-addressed reply envelope provided with the proxy materials for receipt prior to the Annual Meeting. | ||||
the Annual Meeting | by | ||||
You may revoke your proxy at any time before the shares are voted at the Annual Meeting by entering new voting instructions by telephone or over the Internet before 11:59 p.m. Eastern Time on Sunday, May 16, 2021,until the close of polls at the Annual Meeting, by written notice received by our Corporate Secretary before the Annual Meeting, by executing and returning a new proxy bearing a later date, or by voting at the meeting.Meeting. Attendance at the Annual Meeting without voting by ballot will not revoke a previously submitted proxy.
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You may specify your choices by marking the appropriate box on the proxy card. If your proxy card is signed and returned without specifying choices, your shares will be voted in accordance with the recommendationsrecommendation of our Board of Directors and as the individuals named as proxy holders on the proxy card deem advisable on all other matters that may properly come before the meeting.Annual Meeting. The Board of Directors recommends that you vote for the listed nominees for director; for the approval of an advisory vote on compensation paid to our NEOs, for the approval of every one year as the frequency for shareholder advisory votes on executive compensation,NEOs; and for ratification of the appointment by the Audit Committee of our Board of Directors of our independent registered public accounting firm.firm for the 2023 fiscal year.
Shareholders in "Street Name"“Street Name”
| If your shares are held in “street name” through a broker, bank or other intermediary, your broker, bank or other intermediary should give you instructions for voting your shares. In these cases, you may vote by internet, telephone or mail, as instructed by your broker, bank or other intermediary. | ||||||||||||||
If you hold your shares in “street name” through a broker, bank or other representative,name,” generally the broker or other representative may only vote the shares that it holds for you in accordance with your instructions. However, if the broker or other representative has not timely received your instructions, it may vote on certain matters for which it has discretionary voting authority. Brokers have the discretion to vote their clients’ proxies only on routine matters.
At our Annual Meeting, only the ratification of the appointment of our auditors is a routine matter. The vote on election of directors and the advisory vote on executive compensation and the advisory vote on the frequency of future executive compensation advisory votes are non-discretionary voting matters, and therefore your broker will not be able to vote on any of these matters without receiving your instructions. The vote to ratify the appointment of our independent registered public accounting firm is a discretionary matter and your broker has discretionary authority to vote on that proposal. Your broker or other representative will generally provide detailed voting instructions with your proxy materials. These instructions may include information on whether your shares can be voted by telephone or over the Internet and the manner in which you may revoke your votes. You should reach out to your broker, bank or other intermediary if you have not received such instructions or have questions.
Participants in the Company's 401(k) Plan or ESOP
If you are a participant in the Company's ESOP or 401(k) Plan, you will receive a Notice by e-mail, unless you otherwise requested to receive the Notice by mail. Under the terms of these plans, the trustee or administrator votes all shares held by the plan, but each participant may direct the trustee or administrator how to vote the shares of our common stock allocated to his or her plan account. Using the control numberControl Number received inon your Notice, follow the instructions above (for "Shareholders“Shareholders of Record"Record”) to provide your voting instructions to the applicable plan trustee or administrator by Internet or telephone. If you own shares through any of these plans and you do not provide your voting instructions by 11:59 p.m., Eastern Time, on Sunday,Wednesday, May 9, 2021,10, 2023, the respective plan trustees or administrators will vote your shares in accordance with the terms of the respective plans. Please note that the deadline for plan participants tomust provide voting instructions by the specified deadline (May 9, 2021)10), which is one week earlier than the voting deadline for shareholders of record (May 16, 2021)(who may vote through the closing of the polls at the Annual Meeting). In addition, due to the earlier voting deadline for plan participants, you cannot provide your voting instructions at the Annual Meeting (either virtually or in-person). However, you may still register for and attend the Annual Meeting and ask questions.
Even if you plan to attend the Annual Meeting virtually or in-person, we encourage you to vote in advance by Internet, telephone, or mail so that your vote will be counted in the event that you later decide not to attend the Annual Meeting. | ||||||||||||||
Vote Required
Assuming a quorum is present at the Annual Meeting, the vote required to adopt each of the proposals is as follows:
•Election of Directors (Proposal 1). The election of directors is determined by a majority of the votes cast in person or by proxy by the shareholders entitled to vote on the election of directors in an uncontested election. Under our Bylaws, a nominee will be elected to the Board of Directors if the votes cast “for” the nominee’s election exceed the votes cast “against” the nominee’s election. Abstentions and broker non-votes are not counted as votes “for” or “against” a nominee and will have no effect upon the outcome of the vote on the election of directors.
•All Other Matters: Advisory Vote on Executive Compensation (Proposal 2); Advisory Vote on Frequency of Future Executive Compensation Advisory Votes (Proposal 3); and Ratification of the Appointment by the Audit Committee of our Board of Directors of Our Independent Registered Public Accounting Firm (Proposal 4)3). All other matters are determined by a majority of the votes cast by the holders of the shares present or represented by proxy at the Annual Meeting and voting on each matter. Under our Bylaws, abstentionsAbstentions and broker non-votes will have no effect on the determination of whether shareholders have approved these proposals.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of shares of our common stock as of Friday, March 12, 2021,10, 2023, with respect to:
•those persons we know to beneficially own more than 5% of the outstanding shares of our common stock based on our review of filings made with the Securities and Exchange Commission ("SEC"(“SEC”);
•each of our NEOs directors, and director nominees;directors; and
•all of our directors and executive officers as a group.
Unless otherwise indicated, the address of any person or entity listed is c/o Eastern Bankshares, Inc., 265 Franklin Street, Boston, MA 02110Massachusetts 02110. The applicable percentage of beneficial ownership is based on 186,758,154176,328,426 shares of our common stock outstanding as of March 12, 2021.10, 2023.
Beneficial ownership is determined in accordance with the rules of the SEC. Unless otherwise indicated, we believe, based on information furnished by such persons, that each person listed below has sole voting and investment power with respect to the shares of Company common stock shown as beneficially owned. Securities that may be beneficially acquired within 60 days of Friday, March 12, 202110, 2023 are deemed to be beneficially owned by the person holding such securities for the purpose of computing ownership of such person but are not treated as outstanding for the purpose of computing the ownership of any other person.
| Name of Beneficial Owner | Director or Indirectly Held (#)(1)(2) | Right to Acquire (#)(3) | Total Amount and Nature of Beneficial Ownership of Common Stock (#) | Percentage of Common Stock (%) | ||||||||||
| The Vanguard Group (4) | 15,889,055 | 8.51% | ||||||||||||
| Principal Trust Company (5) | 14,940,652 | 8.00% | ||||||||||||
| BlackRock, Inc. (6) | 11,466,094 | 6.14% | ||||||||||||
| Richard C. Bane | 120,000 | - | 120,000 | * | ||||||||||
| Luis A. Borgen (7) | 100,000 | - | 100,000 | * | ||||||||||
| Joseph T. Chung | 50,000 | - | 50,000 | * | ||||||||||
| Paul M. Connolly | 12,500 | - | 12,500 | * | ||||||||||
| Bari A. Harlam (8) | 30,000 | - | 30,000 | * | ||||||||||
| Diane S. Hessan (9) | 42,000 | - | 42,000 | * | ||||||||||
| Richard E. Holbrook (8) | 196,500 | - | 196,500 | * | ||||||||||
| Deborah C. Jackson (10) | 32,500 | - | 32,500 | * | ||||||||||
| Peter K. Markell | 100,000 | - | 100,000 | * | ||||||||||
| Robert F. Rivers (11) | 200,104 | - | 200,104 | * | ||||||||||
| Greg A. Shell | 200,000 | - | 200,000 | * | ||||||||||
| Paul D. Spiess (12) | 100,000 | - | 100,000 | * | ||||||||||
| Quincy L. Miller (13) | 84,624 | - | 84,624 | * | ||||||||||
| James B. Fitzgerald (14) | 150,104 | - | 150,104 | * | ||||||||||
| All Directors and Executive Officers as a group (23 persons)(15) | 1,917,932 | - | 1,917,032 | 1.03% | ||||||||||
| Name of Beneficial Owner | Directly or Indirectly Held (#)(1)(2) | Right to Acquire (#)(3) | Total Amount and Nature of Beneficial Ownership of Common Stock (#) | Percentage of Common Stock (%) | ||||||||||
| The Vanguard Group (4) | 15,603,193 | 15,603,193 | 8.83% | |||||||||||
| Principal Trust Company (5) | 14,921,646 | 14,921,646 | 8.45% | |||||||||||
| BlackRock, Inc. (6) | 11,277,394 | 11,277,394 | 6.40% | |||||||||||
| Richard C. Bane (7) | 184,965 | - | 184,965 | * | ||||||||||
| Luis A. Borgen (8) | 77,546 | - | 77,546 | * | ||||||||||
| Joseph T. Chung (9)(12) | 114,965 | - | 114,965 | * | ||||||||||
| Paul M. Connolly (10) | 77,465 | - | 77,465 | * | ||||||||||
| Bari A. Harlam (11)(12) | 72,465 | - | 72,465 | * | ||||||||||
| Diane S. Hessan (13) | 106,965 | - | 106,965 | * | ||||||||||
| Richard E. Holbrook (14) | 261,465 | - | 261,465 | * | ||||||||||
| Deborah C. Jackson (12)(15) | 91,752 | - | 91,752 | * | ||||||||||
| Peter K. Markell (16) | 164,965 | - | 164,965 | * | ||||||||||
| Robert F. Rivers (12)(17) | 216,926 | - | 216,926 | * | ||||||||||
| Paul D. Spiess (18) | 164,965 | - | 164,965 | * | ||||||||||
| Quincy L. Miller (19) | 96,410 | - | 96,410 | * | ||||||||||
| James B. Fitzgerald (20) | 162,531 | - | 162,531 | * | ||||||||||
| Donald M. Westermann (21) | 29,139 | - | 29,139 | * | ||||||||||
| Kathleen C. Henry (22) | 29,140 | - | 29,140 | * | ||||||||||
| All Directors and Executive Officers as a group (24 persons) (23) | 2,307,333 | - | 2,307,333 | 1.31% | ||||||||||
* Less than 1%
(1)The number of shares beneficially owned by each shareholder is determined under the rules of the SEC, and the information provided is not necessarily indicative of beneficial ownership for any other purpose. Unless otherwise indicated, as determined under such rules, each shareholder has sole investment and voting power (or
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shares such power with his or her spouse) with respect to the shares reported in this table. The inclusion of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of such shares.
(2)For executive officers, shares directly or indirectly held includes shares held by the Company's ESOP, including in the amounts of 1041,845 shares for each of Mr. Rivers, Mr. Miller and Mr. Fitzgerald, respectively.our NEOs. Fractional shares have been rounded down.
(3)Consists of shares of the Company's common stock which the named individual or group has the right to acquire within 60 days of Friday, March 12, 2021.10, 2023.
(4)The addressBased upon information regarding Company holdings reported by way of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. The Vanguard Group filed as the parent holding company of Vanguard Asset Management, Limited; Vanguard Fiduciary Trust Company; Vanguard Global Advisors, LLC; Vanguard Group (Ireland) Limited; Vanguard Investments Australia Ltd; Vanguard Investments Canada Inc.; Vanguard Investments Hong Kong Limited; and Vanguard Investments UK, Limited. The information about The Vanguard Group is based on itsAmendment No. 2 to a Schedule 13G filed with the SEC on February 10, 2021, and is9, 2023, by The Vanguard Group ("Vanguard"). Vanguard reported that, as of December 31, 2020.2022, it had shared voting power over 150,702 shares; sole dispositive power over 15,295,853 shares; and shared dispositive power over 307,340 shares. Vanguard beneficially owns the Company holdings disclosed in the table above in its capacity as an investment advisor.
(5)Based upon information regarding Company holdings reported by way of Amendment No. 2 to a Schedule 13G filed with the SEC on February 6, 2023, by Delaware Charter Guarantee & Trust Company dba Principal Trust Company as Directed Trustee ("Trustee") of the ESOP. The Trustee reported that, as of December 31, 2022, it held 14,921,646 shares of the Company's common stock, as to which it had both shared voting power and shared dispositive power and as to which it disclaims beneficial ownership. The address of Principal Trust Companythe Trustee is 1013 Centre Road Ste 300, Wilmington DE 19805-1265. The ESOP is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). Delaware Charter Guarantee & Trust Company dba Principal Trust Company acts as the Directed Trustee of the ESOP (“Trust”). As of December 31, 2020, the Trust held 14,940,652 shares of the Company's common stock. The securities reported include all shares held of record by the Trustee. The Trustee follows the directions of the investment fiduciary named in the ESOP or other parties designated in the ESOP’s trust agreement with respect to voting and disposition of shares. The Trustee, however,shares and is subject to certain fiduciary duties under ERISA as limited in the trust agreement. The Trustee disclaims beneficial ownershipERISA.
(6)Based upon information regarding Company holdings reported by way of the shares of common stock that are the subject of theAmendment No. 2 to a Schedule 13G filed with the SEC by Principal Trust Company on February 11, 2021, which is as of December 31, 2020.
(7)Consists of (i) 53,730132,419 shares held directly and (ii) 46,27052,546 shares of restricted stock that are subject to applicable vesting requirements.
(8)Consists of (i) 25,000 shares held in an individual retirement account ("IRA").directly and (ii) 52,546 shares of restricted stock that are subject to applicable vesting requirements.
(10)Consists of (i) 24,919 shares held directly and (ii) 52,546 shares of restricted stock that are subject to applicable vesting requirements.
(11)Consists of (i) 7,419 shares held directly; (ii) 12,500 shares held in joint tenancy with spouse.spouse; and (ii) 52,546 shares of restricted stock that are subject to applicable vesting requirements.
(13)Consists ofof (i) 40,000052,419 shares held directly; (ii) 52,546 shares of restricted stock that are subject to applicable vesting requirements; and (ii)(iii) 2,000 shares held by Crimson Seed Capital, LLC, which is controlled by Ms. Hessan's spouse and ofas to which Ms. Hessan disclaims beneficial ownership except to the extent of any pecuniary interest therein.
(15)Consists of (i) 20,206 shares held directly; (ii) 19,000 shares held in an IRA.IRA; and (ii) 52,546 shares of restricted stock that are subject to applicable vesting requirements.
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(17)Consists of (i) 15,081 shares held directly; (ii) 200,000 shares held in joint tenancy with spousespouse; and (ii) 104(iii) 1,845 shares held by the Company's ESOP.
(22)Consists of (i) 6,575 shares held directly; (ii) 20,720 shares held in 401(k) Plan account; and (iii) 1,845 shares held by the Company's ESOP.
(23)Includes (i) 1,361,2411,818,806 shares held directly or indirectly with spouse or spouse's entity;as custodian for the benefit of a family member; (ii) 227,510142,240 shares held in IRAs, (iii) 327,033320,457 shares held in 401(k) planPlan accounts, and (iv) 1,24825,830 shares held by the Company's ESOP. Dividends paid on shares held by participants in 401(k) Plan and ESOP accounts are automatically reinvested to acquire additional shares of Company stock. Shares forfeited by ESOP participants are reallocated to remaining participants based on eligible compensation, in the same manner that shares are allocated for such year.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers and beneficial owners of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our securities. Based solely upon a review of these filings, all Section 16(a) filing requirements applicable to such persons were complied with during 20202022 on a timely basis.basis, with the following exception: a Form 4 for executive officer Martha A. Dean in connection with an equity award granted on March 1, 2022, was untimely filed on March 9, 2022, due to a delay in receiving EDGAR filing codes.
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PROPOSAL 1
ELECTION OF DIRECTORS
Based on the recommendation of ourits Nominating and Governance Committee, our Board of Directors has nominated Richard C. Bane, Joseph T. Chung,Luis A. Borgen, Diane S. Hessan, Robert F. Rivers, and Paul M. Connolly and Bari A. HarlamD. Spiess for election as directors for the three-year term expiring at the 20242026 annual meeting of shareholders. Messrs. Bane, ChungMessrs. Borgen, Rivers, and ConnollySpiess and Ms. HarlamHessan are each currently a member of our Board of Directors. If any nominee becomes unable to serve as a director, the proxy holders may vote the proxy for the election of a substitute nominee to be designated by our Board of Directors. We do not expect that any nominee will be unable to serve. Directors serve until the expiration of their terms and until their successors have been elected and qualified or until their earlier retirement or their resignation, death or removal in accordance with our Bylaws.
In accordance with an amendment approved by our shareholders in 2022, our Articles of Organization have been modified such that for our annual meetings of shareholders in 2025 and 2026, the classes of directors whose terms expire at those meetings will be nominated for re-election for two- and one-year terms, respectively, and our Board of Directors will be fully declassified, with all directors standing for annual election, beginning with the Company's 2027 annual meeting of shareholders.
Recommendation
Information regarding the names, ages, principal occupationsexperience and employment during the past five yearsqualifications of each of our directors, including our director nominees, is provided below. We have also included information about each director’s specific experience, qualifications, attributes or skills that led the Board of Directors to conclude that he or she should serve as a director. Unless we have specifically noted below, no corporation or organization referred to below is a subsidiary or affiliate of the Company. There are no family relationships among any of our directors and executive officers. Information on the stock ownership of our directors is provided in this Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management”. Information regarding the compensation of our directors is provided in this Proxy Statement under the heading “Director Compensation.”
Nominees for Class I DirectorIII Directors for the Three-Year Term That Will Expire in 20242026
| Experience | ||||||||
| Age | Luis Borgen has | |||||||
| Qualifications | ||||||||
| We believe Mr. | ||||||||
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| Diane S. Hessan | Experience | |||||||
| Qualifications | ||||||||
| We believe | ||||||||
| Robert F. Rivers | Experience | ||||
| Age 58 | Robert F. Rivers is the Chief Executive Officer and Chair of the Board of Directors of Eastern Bankshares, Inc. and has served as the Chief Executive Officer and Chair of the Board of Directors of Eastern Bank since January 1, 2017. Mr. Rivers joined Eastern Bank in 2006 as its Vice Chair and Chief Banking Officer, becoming President in 2007, Chief Operating Officer in 2012 and an Eastern Bank director in 2015. He has also served as a trustee of Eastern Bank's predecessor holding company, Eastern Bank Corporation, since 2007. Prior to joining Eastern, from 1991 to 2005, Mr. Rivers held a number of staff and line leadership positions at M&T Bank in Buffalo, NY. Immediately prior to joining Eastern, he was an Executive Vice President for Retail Banking at the former Commercial Federal Bank in Omaha, Nebraska, following 14 years at M&T Bank. Mr. Rivers serves as Foundation Board Chair of the Dimock Center, is a member of the executive committee of the Greater Boston Chamber of Commerce, and is a trustee of Stonehill College. He also serves on the Board of the Lowell Plan, the Advisory Boards of the Lawrence Partnership and the JFK Library Foundation, and the Boston Women’s Workforce Council. A leader in Boston’s business community, Mr. Rivers has been recognized as a champion for social justice issues, having led the “Yes on 3” campaign to protect the rights of members of the LGBTQ+ community. He received his undergraduate degree from Stonehill College and holds an MBA from the University of Rochester. | ||||
| Qualifications | |||||
| We believe that Mr. Rivers is qualified to serve as a director based upon his experience as our Chief Executive Officer beginning in January 2017, his prior service as one of our senior executive officers, his prior senior management positions at other banks, and his familiarity with the communities that Eastern serves, including through his involvement with numerous non-profit organizations in the greater Boston area. | |||||
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| Experience | ||||||||
| Age | ||||||||
| Qualifications | ||||||||
| We believe | ||||||||
Our directors listed below are not up for election this year, and each will continue in office for the remainder of his or her specified term of office or until his or her earlier resignation, death, or removal in accordance with our Bylaws.
Class II Directors Continuing in Office (Term Will Expire in 2022)2025)
| Richard E. Holbrook | Experience | |||||||
| Age | Richard E. Holbrook currently serves as director and Chair Emeritus of Eastern Bank. Mr. Holbrook retired as Chair and Chief Executive Officer of Eastern Bank in 2016, having served in those roles since 2007. He also served as a trustee of its predecessor holding company, Eastern Bank Corporation, since 2001. Mr. Holbrook joined Eastern Bank in 1996 as Chief Financial Officer and Executive Vice President and was named President and Chief Operating Officer of Eastern Bank and Eastern Bank Corporation in 2001. He has more than | |||||||
| Qualifications | ||||||||
| We believe Mr. Holbrook’s experience working in the banking industry, particularly his decades of past experience | ||||||||
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| Deborah C. Jackson | Experience | |||||||
| Age | Deborah C. Jackson, the Lead Director of Eastern Bank, has served as a director of Eastern Bank since 2000 and as a trustee of its predecessor holding company, Eastern Bank Corporation, since 2001. She serves as the President of Cambridge College in Cambridge Massachusetts, a position she has held since 2011. Prior to that, Ms. Jackson served for nearly a decade as | |||||||
| Qualifications | ||||||||
| We believe Ms. Jackson's extensive executive, civic, community and board leadership experience qualifies her to serve on our Board of Directors. | ||||||||
| Peter K. Markell | Experience | |||||||
| Age | Peter K. Markell has served as a director of Eastern Bank and a trustee of its predecessor holding company, Eastern Bank Corporation, since 2006. He | |||||||
| Qualifications | ||||||||
| We believe Mr. Markell’s extensive executive, accounting, and board leadership experience qualify him to serve on our Board of Directors. | ||||||||
Class I Directors Continuing in Office (Term Will Expire in 2024)
| Richard C. Bane | Experience | ||||
| Age 67 | Richard C. Bane has served as a director of Eastern Bank since 2001 and as a trustee of its predecessor holding company, Eastern Bank Corporation, since 1996. He is the Executive Chairman of Bane Care Management LLC, which operates skilled nursing facilities and assisted living facilities in Massachusetts, where he was employed since 1984. Mr. Bane formerly served as Chairman of the Massachusetts Senior Care Association, the state’s largest professional provider group. He lectures frequently on many aspects of senior care services and post-acute care and is considered one of New England’s senior care industry leaders. Mr. Bane is also involved in a wide range of corporate and community service activities, and he is a board member of Steward Carney Hospital in Dorchester, MA. Mr. Bane holds an A.B. in Economics from Dartmouth College, and an MBA from Harvard Business School. He was also awarded an Honorary Doctorate from Salem State University. | ||||
| Qualifications | |||||
| We believe Mr. Bane’s extensive executive management experience and civic leadership qualify him to serve on our Board of Directors. | |||||
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| Joseph T. Chung | Experience | ||||
| Age 58 | Joseph T. Chung has served as a director of Eastern Bank and trustee of its predecessor holding company, Eastern Bank Corporation, since 2014. He is co-founder and Chief Executive Officer of Kinto, a care coaching platform for family caregivers looking after loved ones with Alzheimer’s Disease and related dementias, where he has served since 2019. He is also co-founder and Managing Director of Redstar Ventures, an innovative venture foundry developing a series of new companies through a topdown, market driven process, positions he has held since 2010. Prior to Kinto and Redstar, Mr. Chung was Chairman and Chief Executive Officer of Allurent and co-founder, Chairman and Chief Technology Officer of Art Technology Group, a publicly traded, global enterprise software company. Mr. Chung also serves on the Board of Trustees of the Eastern Bank Foundation. Mr. Chung holds B.S. and M.S. degrees in Computer Science from the Massachusetts Institute of Technology, and he conducted his graduate work at MIT’s Media Lab. He is a Venture Partner at the Media Lab’s E14 Fund. | ||||
| Qualifications | |||||
| We believe Mr. Chung’s extensive expertise in innovation and technology qualifies him to serve on our Board of Directors. | |||||
| Experience | ||||||||
| Age | company, Eastern Bank Corporation, since | |||||||
| Qualifications | ||||||||
| We believe Mr. | ||||||||
| Bari A. Harlam | Experience | |||||||
| Qualifications | ||||||||
| We believe | ||||||||
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CORPORATE GOVERNANCE
Our Board of Directors believes that good corporate governance is important to ensure that ourthe Company is managed for the long-term benefit of its shareholders. Current copies of our Corporate Governance Guidelines, Code of Conduct, and charters for our Audit, Compensation and Human Capital Management, Nominating and Governance, and Risk Management Committees are available on our website, investor.easternbank.com, in the Governance section under the caption “Governance Documents.” We may also use our website in the future to make certain disclosures required by the rules of Thethe Nasdaq Global Select Market ("Nasdaq"(“Nasdaq”), on which our common stock is listed.
Corporate Governance Highlights | |||||
We have implemented several important measures that are designed to promote long-term stakeholder value: | |||||
☑ | To facilitate board refreshment, we | ||||
☑ | We | ||||
☑ | We have established a compensation clawback policy that will enable the Company to recoup cash and incentive compensation from executive officers in the event of certain financial restatements. | ||||
☑ | We have adopted equity ownership guidelines for directors and executive officers, which set minimum ownership requirements based on a multiple of the cash portion of the annual base retainer or base salary, as applicable, then in effect. | ||||
☑ | Our Insider Trading Policy prohibits our executives and directors from pledging and hedging our common stock, in order to further the alignment between shareholders and our executives and directors. | ||||
Director Independence
Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, family and other relationships, including those relationships described under the section of this Proxy Statement entitled “Certain Relationships and Related Party Transactions,” our Board of Directors has determined that each of the following directors qualifies as an “independent director,” as defined in the listing requirements of Nasdaq: Mses. Jackson, Harlam and Hessan and Messrs. Bane, Borgen, Chung, Connolly, Markell, Shell and Spiess. Neither Mr. Rivers nor Mr. Holbrook qualify as an “independent director” under the Nasdaq rules. Mr. Rivers is not considered independent because he currently serves as our chief executive officer.Chief Executive Officer ("CEO"). Mr. Holbrook served as chief executive officerCEO from January 1, 2007 through December 31, 2016.2016, and he has continued to receive compensation in connection with his retirement through 2022. In makingmaking these determinations on the independence of our directors, our Board of Directors considered the relationships that each such non-employee director has with ourthe Company and all other facts and circumstances our Board of Directors deemed relevant in determining independence. Our Board of Directors also determined that each member of the Audit, Compensation and Human Capital Management, and Nominating and Governance Committees satisfies the independence standards for such committees established by the SEC and the Nasdaq listing rules, as applicable.
The Company has also adopted a Director Independence Policy that incorporates the requirements for independence set forth in the SEC and Nasdaq independence rules, as well as an Audit Committee Independence Policy that establishes separate and higher standards of independence for members of the Audit Committee, consistent the SEC and Nasdaq rules, as well as guidelines of the Federal Deposit Insurance Corporation.Corporation (“FDIC”). Our Board of Directors has determined that each of Mses. Jackson, Harlam and Hessan and Messrs. Bane, Borgen, Chung, Connolly, Markell, Shell and Spiess is an "independent director"“independent director” under the Director Independence Policy and that each of Messrs. Bane, Borgen, Connolly, Markell, and Spiess meets the enhanced independence standards for Audit Committee members set forth in the Company's Audit Committee Independence Policy.
Board Composition and Leadership Structure of the Board of Directors
Our Board of Directors oversees and advises our chief executive officerCEO and management team, exercising their business judgment in good faith to ensure the long-term interests of our shareholders are being served. As of April 1, 2021,March 20, 2023, our Board of Directors was composed of 1211 directors.
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The Board does not have a fixed policy regarding the separation of the offices of the chair of the Board of Directors and the chief executive officer and believes that it should maintain the flexibility to select the chair of the Board of Directors and its
board leadership structure, from time to time, based on the criteria that it deems to be in the best interests of the Company and its shareholders. At this time, the offices of the chair of the Board of Directors and the chief executive officer are combined, with Mr. Rivers serving as chairChair and chief executive officer.CEO. He has served in this role since January 2017. With over 30 years of experience in the financial services industry, including over 1416 years with us, Mr. Rivers has the knowledge, expertise, and experience to understand the opportunities and challenges facing our Company, as well as the leadership and management skills to promote and execute our values and strategy.
In accordance with what we believe are governance best practices, the Board of Directors has established the position of Lead Director. As further set forth in the Corporate Governance Guidelines, the Lead Director is independent and is recommended by our Nominating and Governance Committee and elected by the Board of Directors. Since January 2018, Ms. Jackson has served in that role, performing many of the functions that an independent chair would perform for the Company. Those functions include serving as a key source of communication between the independent directors and the chief executive officer,CEO, consulting with the chair of the Board of Directors in establishing the agenda for each meeting of the Board, presiding in executive sessions of meetings of the Board of Directors, and coordinating the agenda for and leading meetings of the independent directors, as needed.
The Company believes that having the same person serve as chief executive officerCEO and chairChair focuses leadership, responsibility, and accountability in a single person and that having a Lead Director provides for effective checks and balances and the ability of the independent directors to work effectively in the board setting. The Board of Directors reviews its leadership structure periodically in light of the composition of the Board of Directors and the needs of the Company and its shareholders.
Committees of our Board of Directors
Our Board of Directors has established four standing committees: an Audit Committee, a Compensation and Human Capital Management Committee, a Nominating and Governance Committee, and a Risk Management Committee, each with the composition and responsibilities described below. Each committee operates under a charter that has been approved by our Board of Directors. Current copies of the committee charters are posted on our website, investor.easternbank.com, in the Governance section under the caption “Governance Documents.”
The table below reflects the composition of the Board’s four standing committees as of April 1, 2021:March 20, 2023:
| Audit Committee | Compensation and Human Capital Management Committee | Nominating and Governance Committee | Risk Management Committee | |||||||||||
| Richard C. Bane | µ | £ | £ | £ | ||||||||||
| Luis A. Borgen | £ | £ | ||||||||||||
| Joseph T. Chung | £ | £ | ||||||||||||
| Paul M. Connolly | £ | µ | £ | |||||||||||
| Bari A. Harlam | £ | |||||||||||||
| Diane S. Hessan | £ | £ | ||||||||||||
| Richard E. Holbrook | £ | |||||||||||||
| Deborah C. Jackson (1) | £ | £ | ||||||||||||
| Peter K. Markell | £ | µ | £ | £ | ||||||||||
| Robert F. Rivers (2) | £ | |||||||||||||
| Paul D. Spiess | £ | £ | µ | |||||||||||
µ Committee Chair£ Committee Member | ||||||||||||||
(1)Lead independent directorDirector
(2)Chair of the Board of the Directors
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Attendance at Meetings
In 2020,2022, our Board of Directors met 21nine times, the Audit Committee met nineeight times, the Compensation and Human Capital Management Committee met six times, the Nominating and Governance Committee met sixnine times, and the Risk Management Committee met four times. Each director attendedattended over 75% of all meetings of our Board of Directors and committees on which he or she served that were held during 2020.2022. Our directors are encouraged to attend the Annual Meeting, to the extent practicable.practicable. All of our directors attended the 2022 annual meeting of shareholders held on May 16, 2022.
Board Self-Evaluation and Individual Director Evaluation
Our Board of Directors conducts an annual self-evaluation of the Board’s performance as a whole to determine whether it and its committees are functioning effectively. The Nominating and Governance Committee receives comments from all directors and reports the results of the board and committee evaluations to the Board of Directors and its committees. The results are discussed with the full Board of Directors and among the respective committees, as applicable. Our Board of Directors believes such evaluations are valuable tools in assessing the Board’s effectiveness in performing its oversight of management and fulfilling its responsibilities.
Audit Committee
The current members of our Audit Committee are Mr. Bane (chair), and Messrs. Borgen, Connolly, Markell, and Spiess, and their committee report is included in this Proxy Statement under the heading “Audit Committee Report.” Each of the Audit Committee members is independent under the listing standards of Nasdaq, including under Rule 10A-3 of the Exchange Act, and our Audit Committee Independence Policy. Each of our independent directors Messrs. Markell and Borgen has been designated by our Board of Directors as an “audit committee financial expert” (as defined in applicable SEC regulations). None of the Audit Committee members is an employee of ours or any of our subsidiaries, nor simultaneously serves on the audit committees of more than two public companies, including ours.
Our Audit Committee is responsible for assisting the Board in overseeing and monitoring: | |||||
• | the integrity of the Company’s financial statements and other financial information provided by the Company to its shareholders; | ||||
• | the integrity of the accounting and financial reporting processes of the Company, and the audit of the Company’s financial statements; | ||||
• | the Company’s compliance with legal, regulatory and public disclosure requirements; | ||||
• | the appointment, qualifications, independence, performance and retention of the Company’s independent external auditor; and | ||||
• | the performance of the Company’s internal audit function and its Sarbanes-Oxley internal controls function. | ||||
The Audit Committee meets regularly with management and our independent registered public accounting firm to discuss the annual audit of our financial statements, our disclosures in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual and quarterly reports filed with the SEC, the quarterly reviews of our financial statements and our quarterly and annual earnings disclosures prior to their release. The Audit Committee also reviews the experience and qualifications of the lead partner and other senior members of Ernst & Young LLP, our independent registered public accounting firm (“Ernst & Young” or "EY"“EY”), including compliance with applicable rotation requirements, and considers whether there should be rotation of the firm itself.
The Audit Committee has authority under its charter to obtain advice and assistance from outside legal counsel, accounting or other outside advisors as deemed appropriate to perform its duties and responsibilities.
Compensation and Human Capital Management Committee
The current members of the Compensation and Human Capital Management Committee ("C&HCM Committee") are Mr. Markell (chair), Ms. Jackson and Messrs. Bane, Borgen, Chung Connolly and Spiess. EachEach member of the CompensationC&HCM Committee is independent under the listing standards of Nasdaq, including the heightened standards that apply to compensation committee members.
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The Compensation and Human Capital Management Committee is responsible for: | |||||
• | reviewing and approving compensation of executive officers (other than the chief executive officer) and recommending the chief executive officer’s compensation for approval by the independent members of the Board of Directors; | ||||
• | reviewing and proposing goals and objectives relevant to the chief executive officer’s compensation and evaluating the chief executive officer’s performance in light of such goals and objectives; | ||||
• | overseeing the Company’s various compensation and benefits plans; | ||||
• | overseeing senior management succession planning; | ||||
• | •overseeing risk review processes for incentive compensation plans; | ||||
• | making recommendations to the Board regarding compensation of our directors; | ||||
• | overseeing the implementation of the Company's diversity, equity and inclusion | ||||
| related to human capital management; • | oversight of talent management programs, including employee engagement surveys and development initiatives; and | ||||
• | reviewing and approving the general design and terms of any significant non-executive compensation and benefits plans. | ||||
The CompensationC&HCM Committee has authority under its charter to obtain advice and assistance from outside legal counsel compensation consultants orand other outside advisors as deemed appropriate to perform its duties and responsibilities. For 2020,2022, the CompensationC&HCM Committee engaged an independent compensation consultant, Willis Towers Watson ("Willis Towers"Pearl Meyer & Partners, LLC (“Pearl Meyer”), to advise on compensation matters and provide experiential guidance on what is considered fair and competitive practice in our industry, primarily with respect to the compensation of our executive officers, and also with regard to director compensation. In December 2020, the Compensation engaged a new independent compensation consultant, Pearl Meyer & Partners, LLC ("Pearl Meyer"), to advise regarding similar matters.
The CompensationC&HCM Committee has the authority to delegate to subcommittees of the CompensationC&HCM Committee, to the chair of the CompensationC&HCM Committee, or one or more of our executive officers, as permitted under applicable law. The C&HCM Committee may also delegate to a committee of one or more directors, or one or more of our executive officers, subject to certain restrictions, the power to grant equity awards to employees who are not subject to Section 16 of the Exchange Act pursuant to the 2021 Equity Plan (as defined below). References to the CompensationC&HCM Committee in this proxy statementProxy Statement also refer to its subcommittees and its delegates, where applicable.
Compensation and Human Capital Management Committee Interlocks and Insider Participation
During 2020,2022, none of our officers, former officers or employees served on our CompensationC&HCM Committee. None of our executive officers serves or has served as a member of the board of directors, compensation committee,C&HCM Committee, or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our directors or on our CompensationC&HCM Committee.
Nominating and Governance Committee
The current members of the Nominating and Governance Committee are Mr. Connolly (chair), Mses. Jackson and Hessan and Messrs. Bane, Chung and Markell. Each member of the Nominating and Governance Committee is independent under the listing standards of Nasdaq.
The Nominating and Governance Committee is responsible for: | |||||
• | identifying, evaluating and recruiting qualified persons to serve on our Board of Directors; | ||||
• | selecting, or recommending to the Board for selection, nominees for election as directors; | ||||
• | reviewing and recommending the composition of the Board’s standing committees; | ||||
• | onboarding new directors and overseeing director education; | ||||
• | overseeing policies and programs for disclosure of environmental, social and governance (“ESG”) issues, including environmental and social matters and issues related to DE&I; •reviewing and assessing the Company’s Corporate Governance Guidelines; | ||||
• | overseeing compliance with our Related Party Transactions Policy; and | ||||
• | annually evaluating the performance, operations, | ||||
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The Nominating and Governance Committee has authority under its charter to obtain advice and assistance from outside legal counsel and other outside advisors as deemed appropriate to perform its duties and responsibilities.
Nomination of Directors
The Nominating and Governance Committee of our Board of Directors identifies and evaluates director candidates and recommends to our Board of Directors qualified candidates for nomination as directors for election at our annual meeting of shareholders or to fill vacancies on our Board of Directors. The process followed by the Nominating and Governance Committee in fulfilling its responsibilities includes requests to board members and others for recommendations, meetings to evaluate biographical information, experience and other background material relating to potential candidates, and interviews of selected candidates.
In considering candidates, the Nominating and Governance Committee reviews a candidates'candidate's qualifications and independence based on the criteria set forth in the Company's Corporate Governance Guidelines, its Director Independence Policy, Audit Committee Independence Policy, and the Nominating and Governance Committee's charter (or the charter of a particular committee). The Nominating and Governance Committee considers the composition of the Board or committees; succession planning; and current challenges and needs of the Board, its committees, the Company and the Bank, while taking into account the professional and business experience, leadership, skill, expertise, judgment, background, collegiality, diversity, availability, teamwork, and other aspects of the candidates.
Nasdaq listing requirements require each listed company to have, or explain why it does not have, two diverse directors on its board of directors, including at least one diverse director who self-identifies as female and one diverse director who self-identifies as an underrepresented minority or LGBTQ+ (subject to exceptions set forth in the Nasdaq rules). The composition of our current Board of Directors is in compliance with the Nasdaq diversity requirement.
The table below sets forth composition of our Board members within the categories prescribed by the Nasdaq listing requirements. Each category has the meaning as it is used in Nasdaq Rule 5605(f).
| Eastern Bankshares, Inc. Board of Directors Diversity | |||||||||||||||||||||||||||||
| As of March 20, 2023 | As of March 20, 2022 | ||||||||||||||||||||||||||||
| Total Number of Directors | 11 | 12 | |||||||||||||||||||||||||||
| Part I: Gender Identity | |||||||||||||||||||||||||||||
| Female | Male | Non-Binary | Did Not Disclose Gender | Female | Male | Non-Binary | Did Not Disclose Gender | ||||||||||||||||||||||
| Directors | 3 | 8 | 0 | 0 | 3 | 9 | 0 | 0 | |||||||||||||||||||||
| Part II: Demographic Background | |||||||||||||||||||||||||||||
| African American or Black | 1 | 0 | 0 | 0 | 1 | 1 | 0 | 0 | |||||||||||||||||||||
| Alaskan Native or Native American | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Asian | 0 | 1 | 0 | 0 | 0 | 1 | 0 | 0 | |||||||||||||||||||||
| Hispanic or Latinx | 0 | 1 | 0 | 0 | 0 | 1 | 0 | 0 | |||||||||||||||||||||
| Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| White | 2 | 6 | 0 | 0 | 2 | 6 | 0 | 0 | |||||||||||||||||||||
| Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| LGBTQ+ | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Did Not Disclose Demographic Background | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
While we do not have a formal policy on board diversity, we are proud of the diversity and talent of our boardBoard and our management team, and our Nominating and Governance Committee and Board of Directors have affirmed their commitment to
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actively seeking women, diverse and/or LGBTQ+ candidates for the pool from which director candidates are selected. Our current Board of DirectorsDirectors' composition is 25%27% women and 17%9% Black, 8%9% Asian and 8%9% Latino/x. The Nominating and Governance Committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees. The Nominating and Governance Committee believes that the backgrounds and qualifications of our Company’s directors, considered as a group, should provide a significant breadth of experience, knowledge and abilities to assist our Board of Directors in fulfilling its responsibilities. Nominees are not discriminated against on the basis of race, religion, national origin, sex, sexual orientation, gender identity or expression, disability or any other basis prohibited by law.
After completing its evaluation of potential nominees, the Nominating and Governance Committee makes a recommendation to our Board of Directors as to the persons who should be nominated for election to our Board of Directors, and our Board of Directors determines the nominees after considering the recommendation and report of the committee.
The Nominating and Governance Committee will consider candidates recommended by individual shareholders in accordance with the procedures and other requirements set forth in the Bylaws. Names and credentials must be provided to the committee on a timely basis for consideration prior to the Annual Meeting. Shareholders who wish to recommend an individual to the Nominating and Governance Committee for consideration as a potential candidate for director should submit the individual’s name, together with appropriate supporting documentation, to the Nominating and Governance Committee at the following address: Nominating and Governance Committee, c/o Corporate Secretary, Eastern Bankshares, Inc., 265 Franklin
Street, Boston, Massachusetts 02110. A submission will be considered timely if it is made during the timeframes disclosed in this proxy statementProxy Statement under “Shareholder Proposals.��” If our Board of Directors determines to nominate and recommend for election a shareholder-recommended candidate, then the candidate’s name will be included in our company’sthe Company’s proxy card for the next annual meeting of shareholders.
Risk Management Committee
The Risk Management Committee of our Board of Directors assists the board in fulfilling its oversight responsibilities with respect to oversight of Eastern Bank's enterprise risk management ("ERM"(“ERM”) practices and procedures, as well as its ERM framework ("(“ERM Framework"Framework”). TheThe current members of the Risk Management Committee are Mr. Spiess (chair), Mses. Harlam and Hessan and Messrs. Bane, Borgen, Connolly, Holbrook, Markell, Rivers and Shell.Rivers. The chair of the Risk Management Committee meets the criteria contained in the Federal Reserve Board’s Enhanced Prudential Standards (12 C.F.R. § 252.33(a)(4)(ii)), as is required under this committee's charter.
The Risk Management Committee is responsible | |||||
| for: • | oversight of the design, implementation and operation of the ERM Framework, approval of ERM policies, and risk monitoring practices by the Bank's enterprise risk management committee; | ||||
| review of reports related to the Bank's risk profile; | |||||
• | review of management's assessments in connection with the Bank's credit risk management and provide related reports to the Audit Committee; | ||||
• | review of capital, liquidity, and interest rate risks within the business and advise the Board with respect to the adequacy of capital allocated; | ||||
• | oversight of regulatory compliance, operational and cyber risk; and | ||||
• | review of adequacy of major insurance policies and coverage and related reports from the Bank's subsidiary, Eastern Insurance Group LLC. | ||||
The Risk Management Committee has authority under its charter to obtain advice and assistance from outside legal counsel and other outside advisors as deemed appropriate to perform its duties and responsibilities.
Board Role in Risk Oversight
Our Board of Directors administers its internal controls and risk management oversight function directly and through its Audit, CompensationC&HCM and Risk Management Committees. In general, management is responsible for the day-to-day management of the risks our Company faces, while the Board of Directors, acting as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
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Our Board of Directors has formed the Risk Management Committee to assist it in fulfilling its oversight responsibilities with respect to management’s identification, evaluation, management and monitoring of our Company’s critical enterprise risks, including major operational, strategic and financial risks inherent in our business.
The Board of Directors and the Audit Committee regularly discuss with management, and our independent auditors and our Sarbanes-Oxley controls group the Company's major risk exposures, their potential financial impact on our company,the Company, and the steps we take to manage these risks. The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements. In addition, the Audit Committee discusses policies with respect to our internal auditors and theSarbanes-Oxley controls group, as well as our independent auditors.
The CompensationC&HCM Committee assesses whether our compensation arrangements encourage inappropriate risk-taking, and whether risks arising from our compensation arrangements are reasonably likely to have a material adverse effect on the Company. See the “Compensation Disclosure and Analysis” belowsection starting at Page 25 for information regarding the CompensationC&HCM Committee’s assessment of risks arising from our compensation practices.
Board Refreshment
Our Board of Directors believes that our boardBoard represents a balance of experience in the industries served by our Company and in the financial and business communities, which provides effective guidance and oversight to management. Our Board of Directors also recognizes the desire to keep our Board of Directors “refreshed” and has adopted a policy limiting director tenure to age 75 for members. Directors retire at the end of the year in which they turn age 75.
Declassified Board of Directors
Historically, our Board of Directors has been divided into three classes of directors serving staggered three-year terms, with each class being as equal in number as possible. Directors for each class are elected at the annual meeting of shareholders held in the year in which the term for their class expires. However, in accordance with an amendment approved by our shareholders in 2022, our Articles of Organization have been modified such that for our annual meetings of shareholders in 2025 and 2026, the classes of directors whose terms expire at those meetings will be nominated for re-election for two- and one-year terms, respectively, and our Board of Directors will be fully declassified, with all directors standing for annual election, beginning with the Company's 2027 annual meeting of shareholders.
Communications with Directors
Shareholders and other interested parties who wish to send written communications on any topic to our Board of Directors, or the presiding director of executive sessions of the non-employee and independent directors, may do so by addressing such communications to our Board of Directors, c/o Corporate Secretary, Eastern Bankshares, Inc., 265 Franklin Street, Boston, Massachusetts 02110. Communications will be distributed to the chair of the Board, the Lead Independent Director or the other members of the Board as appropriate depending on the facts and circumstances outlined in the communication received.
Code of Business Conduct and Ethics
Our company’s Code of Conduct is applicable to all our employees, officers and directors, as well as those representing the Company in an official capacity. A current copy of our Code of Conduct is posted on our website at investor.easternbank.com under “Governance Documents” in the “Corporate Governance” section. We intend to satisfy disclosure requirements of the SEC and Nasdaq regarding amendments to, or waivers of, our Code of Conduct by providing information on our website.
Certain Relationships and Related Party Transactions
We review relationships and transactions between our Company and our directors, nominees for director, executive officers and their immediate family members to determine whether these individuals have a direct or indirect material interest in a transaction, based on the facts and circumstances. Directors and executive officers are canvassed in writing to determine whether such related party transactions exist or are under consideration, and are required under our Code of Conduct to disclose to us potential conflicts of interest with our Company.
SEC rules require us to disclose certain relationships and related party transactions our Company enters into with our directors, nominees for director, executive officers, owners of more than 5% of the outstanding shares of our common stock, or
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members of their immediate families. In accordance with the charter of the Nominating and Governance Committee and our written Related Party Transaction Policy ("(“RPT Policy"Policy”), the Nominating and Governance Committee is responsible for reviewing and approving related party transactions. If it is not feasible to approve related party transactions in advance, the Nominating and Governance Committee is permitted to ratify such transactions after the Company has entered into them, subject to the procedures and considerations described below.
The RPT Policy applies to any transaction, arrangement or relationship, or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which:
•the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year;
•the Company or any of its subsidiaries is a participant; and
•any related person has or will have a direct or indirect interest.
Under the RPT Policy, a related person is:
•A non-employee director (or nominee for election as director) or executive officer of the Company;
•any beneficial owner of more than five percent5% of our common stock; or
•any immediate family member of the foregoing.
Under the RPT Policy, a related entity is:
•Any entity (other than the Company or its subsidiaries), including non-for-profit or for-profit entities, of which a related person is an employee, executive officer, partner or principal, or in which a related person directly or indirectly owns at least a 10% equity interest; or
•Any non-for-profit entity for which a related person serves as a director or trustee.
•Executive and director compensation;
•Certain transactions with companies for which the only relationship of a related person is as an employee, beneficial owner of less than a 10% equity interest, or in the case of partnerships, a partner if the aggregate amount involved does not exceed the greater of $1,000,000 or 2% of that company's total annual revenues;
•Ordinary course transactions, including financial services, personal loans, and business relationships, provided that they are made in the ordinary course of business on terms substantially the same as those prevailing at the time for comparable services provided to non-affiliates;
•Certain charitable contributions made by Eastern Bank or its affiliate Eastern Bank Charitablethe Foundation ("EBCF") to organizations where a related person is a director if the aggregate amount does not exceed the lesser of $500,000 or 2% of the donee's total annual expenses;expenses, as well as charitable contributions made to organizations under common control with the Company that have been preapproved by the Board of Director or the board of trustees of the Foundation; and
•Transactions where a related person's interest arises solely from ownership of the Company's common stock and all holders of the stock receive the same benefit on a proportional basis.
The Nominating and Governance Committee is provided with the material facts of all transactions that require the Nominating and Governance Committee’s approval under the RPT Policy. In determining whether to approve or ratify a particular transaction, the Nominating and Governance Committee will take into account, among other factors it deems appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
Under the RPT Policy, a director is not permitted to participate in any discussion or approval of a transaction for which he or she (or an immediate family member) is the related person, and such director must provide the Nominating and Governance Committee with all material information concerning the transaction. If an approved transaction is ongoing, the Nominating and Governance Committee may establish guidelines for management to follow in its dealings with such person and will annually review and assess compliance with such guidelines, and whether the transaction remains appropriate for the Company.
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Transactions with Certain Related Persons
Our Company has not entered into any such disclosable relationships or transactions under the RPT Policy since the beginning of our 2022 fiscal year and no such disclosable relationships or transactions are currently proposed.
The Sarbanes-Oxley Act of 2002 generally prohibits publicly traded companies from making loans to their executive officers and directors, but it contains a specific exemption from the prohibition for loans made by federally insured financial institutions, such as Eastern Bank, to their executive officers and directors in compliance with federal banking regulations. At March 15, 2021, we had $8.5 million in deposits fromDuring 2022, certain directors and $1.6 millionexecutive officers of loans tothe Company and Eastern Bank, as well as related persons and related entities as defined in the RPT Policy. Theseassociated with those directors and executive officers, were customers of Eastern Bank and had loans outstanding. Such loans were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to Eastern Bank, and, in the opinion of management, did not involve more than the normal risk of collectability or present other unfavorable features. These loans were performing according to their original terms at March 15, 2021 and were made in compliance with federal banking regulations.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table provides certain information regarding our executive officers who are not directors. Ages are as of the date of this Proxy Statement. Our executive officers serve at the discretion of our Board of Directors.
| Name | Age | Position | ||||||
| Quincy L. Miller | President, Eastern Bankshares, Inc.; Vice Chair and President of Eastern Bank | |||||||
| James B. Fitzgerald | Chief Administrative | |||||||
| Steven L. Antonakes | Executive Vice President, Enterprise Risk Management of Eastern Bank | |||||||
| Gregory P. Buscone | 58 | Executive Vice President, Senior Commercial Banking Officer of Eastern Bank | ||||||
| Martha A. Dean | 61 | Executive Vice President, Senior Operations Director of Eastern Bank | ||||||
| Barbara J. Heinemann | Executive Vice President, Consumer Banking of Eastern Bank | |||||||
| Kathleen C. Henry | Executive Vice President, General Counsel and Corporate Secretary of Eastern Bankshares, Inc.; Executive Vice President, General Counsel, Corporate Secretary and Chief Human Resources Officer of Eastern Bank | |||||||
| President | ||||||||
| Matthew A. Osborne | 48 | Executive Vice President, | ||||||
| Nancy Huntington Stager | President and Chief Executive Officer of the Eastern Bank | |||||||
| Daniel J. Sullivan | Executive Vice President, Chief Credit Officer of Eastern Bank | |||||||
| Donald M. Westermann | Executive Vice President, Chief Information Officer of Eastern Bank | |||||||
| Sujata Yadav | 45 | Executive Vice President, Chief Marketing Officer of Eastern Bank | ||||||
Executive Officers
Quincy L. Miller - President, Eastern Bankshares, Inc.; Vice Chair and President of Eastern Bank
Mr. Miller is President of Eastern Bankshares, Inc. and Vice Chair and President of Eastern Bank. Mr. Miller joined Eastern in 2016 as Chief Banking Officer and was promoted to his current position with the Bank in 2017. He oversees a numberMarketing and all of departments, including ourthe Bank's Consumer, Banking businesses, Business Banking, Institutional BankingCommercial, and Eastern Wealth Management,Divisions, and, with the Chief Executive Officer, leads the overall strategic direction of Eastern. Prior to joining Eastern, Mr. Miller served as the President of Citizens Bank, Massachusetts, and President of its Business Banking division. He started his career in consumer banking at M&T Bank in New York City in 1997. Mr. Miller is a founding member of The New Commonwealth Racial Equity & Social Justice Fund. He also serves on the Board of Directors for The Boys and Girls Club of Boston, The Bottom Line, Blue Cross Blue Shield of MA, The Alliance for Business Leadership, The Greater Boston YMCA Board of Overseers,and Mill Cities Community Investments and as Board Emeritus of The Greater Boston Food Bank and Chair Emeritus of The Urban League of Eastern Massachusetts. Mr. Miller earned a B.A. in economics and business from Lafayette College and graduated from the Consumer Bankers Association’s Executive Banking School. He currently serves on the Board of The Consumer Bankers Association.
James B. Fitzgerald - Chief Administrative Office,Officer, Chief Financial Officer &and Treasurer, Eastern Bankshares, Inc.; Vice Chair, Chief Administrative Officer, and Chief Financial Officer of Eastern Bank
Mr. Fitzgerald is the Chief Administrative Officer, Chief Financial Officer and Treasurer of Eastern Bankshares, Inc., and Vice Chair, Chief Administrative Officer and Chief Financial Officer of Eastern Bank. Since joining Eastern in 2012, his responsibilities have included managing the Finance, Legal, Technology, Operations and General Services groups. He brings nearly 37over 38 years of experience in the financial services industry to Eastern Bank. In 2009, Mr. Fitzgerald co-founded and was chief financial officer for NBH Holdings Corp., the bank holding company for Bank Midwest NA of Kansas City. Prior to that, Mr. Fitzgerald served as an executive vice president and chief financial officer at Citizens Financial Group for eight years. He began his career as a financial leader in mergers and acquisitions at First Fidelity Bancorp, Citizens Financial Group and Washington Mutual. Mr. Fitzgerald currently servicesserves as a trustee of the Massachusetts Taxpayers Association a trusteeand of SBERA,the Savings
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Bank Employees’ Retirement Association, and serveshe is on the board of the Thompson Island Outward Bound Education Center. Mr. Fitzgerald earned his bachelor’s degree in finance at Lehigh University and his MBA at Fordham University.
Steven L. Antonakes - Executive Vice President, Enterprise Risk Management of Eastern Bank
Mr. Antonakes is the Executive Vice President for Enterprise Risk Management at Eastern Bank.Bank, a role he has held since March 2018. He oversees Eastern Bank’s Enterprise Risk Management function, which includes Bank Secrecy Act/Anti-Money Laundering, Compliance, Credit Risk Review, Information Security, Financial and Model Risk Management, and Operational Risk. He joined Eastern Bank in 2015 as Senior Vice President, Chief Compliance Officer, and was promoted to Senior Vice President, Director, Enterprise Risk Management in 2017. He was promoted to his current position in March 2018.Officer. Mr. Antonakes previously served as the Deputy Director and the Associate Director for Supervision, Enforcement, and Fair Lending at the Consumer Financial Protection Bureau. Prior to joining the Bureau, Mr. Antonakes served as the Massachusetts Commissioner of Banks from 2003 to 2010. Preceding his appointment as Commissioner, Mr. Antonakes served in a variety of managerial positions at the Division of Banks having joined the agency as an entry-level bank examiner in 1990. During his 25-year regulatory career, Mr. Antonakes staffed the Financial Stability Oversight Council, served as the first state-voting member of the Federal Financial Institutions Examination Council, Vice Chairman of the Conference of State Bank Supervisors, and as a founding member of the governing board of the Nationwide Multistate Licensing System. Mr. Antonakes serves on the Board of Trustees of Mass General Brigham Salem Hospital and on the Board of Directors of Camp Fire North Shore, and he is Chair of the Executive Board of Directors of the Lynn Business Partnership. Mr. Antonakes earned his B.A. from Penn State University, an MBA from Salem State University, and a PhDPh.D. in Law and Public Policy from Northeastern University.
Gregory P. Buscone - Executive Vice President, Senior Commercial Banking Officer of Eastern Bank
Gregory P. Buscone is Executive Vice President, Senior Commercial Banking Officer of Eastern Bank, a position he has held since March 2019. Mr. Buscone joined Eastern in 2017 as Senior Vice President and Regional Group Head in Commercial Banking with responsibility for Eastern’s Commercial & Industrial lending portfolio, which expanded its Asset Based Lending team in 2018. Prior to joining Eastern, Mr. Buscone spent 17 years at Citizens Bank, serving as a Senior Vice President and Market Manager for Massachusetts Middle Market and Specialized Lending. Active in the community, he is the Treasurer and a member of the Board of Directors of Bay Cove Human Services and the Associated Industries of Massachusetts, where he also chairs its Diversity, Equity and Inclusion Committee. He earned his B.A. degree from the College of the Holy Cross and his MBA degree from Northeastern University.
Martha A. Dean - Executive Vice President, Senior Operations Director of Eastern Bank
Martha A. Dean is Executive Vice President, Senior Operations Director of Eastern Bank, a role she has held since March 2021. She joined Eastern in December 2014 as Senior Vice President of Operational Risk Management and in July 2018, was promoted to Senior Vice President of Operations. Her prior experience includes Chief Operations and Risk Officer at Centreville Savings Bank; Chief Operating Officer at Grafton Suburban Credit Union; Chief Operations Officer and Chief Information Officer at Wainwright Bank; and Chief Operations Officer at Commonwealth National Bank, a de novo bank where she had the experience of building a brand new bank, brand and strategy to meet the financial needs of a community. She is a Board member of Operation ABLE, a nonprofit organization that provides training programs and employment services to job seekers from economically, racially and occupationally diverse backgrounds. She holds a bachelor's degree from Worcester State University.
Barbara J. Heinemann - Executive Vice President, Consumer Banking of Eastern Bank
Ms. Heinemann is Executive Vice President of Consumer Banking at Eastern Bank. She joined Eastern in 2001. She has served in her current role since 2017 and oversees Retail Banking, Private Banking, Mortgage Banking and the Customer Service Center, bringing more than 35 years of experience to her role. Ms. Heinemann was previously the Executive Vice President of Enterprise Risk Management overseeing Corporate Security, Corporate Compliance, Bank Secrecy Act Compliance, Information Security and Operational Risk Management Departments from 2014 to 2017. Prior to that she held the title of Executive Vice President, Chief Information Officer at Eastern with responsibilities for the Technology and Operations Divisions, and prior to that held various leadership positions within our Operations Department. Before joining Eastern, Ms. Heinemann spent more than 13 years with Cambridgeport Bank, where she was Director of Retail Banking and then served as Senior Vice President of Technology & Operations for seven years in addition to managing numerous enterprise-wide initiatives. She serves as a trustee of the North Shore Community College and holds Board seats on the North Shore Community College Foundation Board, the New England Automated Clearing House ("NEACH"(“NEACH”) Board, the NEACH Payments Group Board, and the Burbank Reading YMCA Board of Advisors. She earned an MBA from the University of Maryland and graduated from America's Community Bankers' National School of Banking at Fairfield University, and the Massachusetts Bankers' Association School of Financial Studies at Babson College.
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Kathleen C. Henry - Executive Vice President, General Counsel and Corporate Secretary of Eastern Bankshares, Inc.; Executive Vice President, General Counsel, Corporate Secretary and Chief Human Resources Officer of Eastern Bank
Ms. Henry is Executive Vice President, General Counsel and Corporate Secretary of Eastern Bankshares, Inc. and Executive Vice President, General Counsel, Corporate Secretary and Chief Human Resources Officer of Eastern Bank. Ms. Henry joined Eastern Bank in 2016 as General Counsel and Corporate Secretary as a Senior Vice President and was promoted to Executive Vice President in 2018. She oversees a legal team responsible for managing the legal affairs of Eastern Bankshares, Inc. and its affiliates, including Eastern Bank and Eastern Insurance Group LLC. She also serves as the primary legal advisor to Eastern’s Board of Directors, Chief Executive Officer and senior management. She is responsible for serving as Secretary to the Boards of Directors of Eastern Bankshares, Inc. and Eastern Bank, directing all governance activities for Eastern Bankshares, Inc., Eastern Bank and their respective subsidiaries. Ms. Henry who began serving as Chief Human Resource Officer in November
2020 also leads all aspects of talent acquisition and development and compensation and benefits, and is part of the leadership team focused on diversity, equity and inclusion. Before joining Eastern, she was General Counsel and before that Deputy General Counsel of Plymouth Rock Assurance Corporation and a litigation partner at Choate, Hall & Stewart LLP, specializing in insurance and reinsurance litigation.LLP. Ms. Henry serves on the board of directors of the Political Asylum Representation Project, on the Advisory Board for the Northeastern University School of Law’s Women in the Law Conference, and as trustee of the Boston Bar Foundation and has served on numerous committees of the Boston Bar Association.Foundation. She earned a B.AB.A. in journalism from Boston University and a J.D. from Northeastern University School of Law.
Nancy Huntington Stager - President and Chief Executive Officer of the Eastern Bank Charitable Foundation; Executive Vice President of Eastern Bank
Ms. Stager is President and Chief Executive Officer of the Eastern Bank Charitable Foundation, an affiliate of the Company, and is Executive Vice President of Eastern Bank. Ms. Stager joined Eastern Bank in 1995 as Senior Vice President, Chief Human Resources Officer, and was promoted to Executive Vice President in 2008. She served as Chief Human Resources Officer until November 2020. Ms. Stager has led the Eastern Bank Charitable Foundation since 2001 and was appointed its first President and Chief Executive Officer in July 20192019. In this role, she leads Eastern's philanthropy, volunteerism programming, and civic advocacy. Ms. Stager leads efforts to provide financial assistance and volunteers to support non-profit organizations across Eastern Bank’s footprint. She
market area and serves as a leading advocate for social justice issues in line with Eastern Bank’s advocacy platform. She is Board President for the Foundation for Business Equity, a private foundation started through a grant from Eastern Bank Charitable Foundation, which works with Black and Latinx businesses to build capacity and facilitate access to capital and contracts to enable growth. Ms. Stager serves on a number of community boards across the Greater Boston area.area, including as a member of the Board of Directors of Mill Cities Community Investments, a community development financial institution with a mission of providing financing to low- and moderate-income families, developers of residential projects, and small businesses. She is also a founding partner and Treasurer of the Massachusetts LGBT Chamber of Commerce. Ms. Stager earned a B.S. in Industrial and Labor Relations from Cornell University.
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Daniel J. Sullivan - Executive Vice President, Chief Credit Officer of Eastern Bank
Mr. Sullivan is Executive Vice President and Chief Credit Officer of Eastern Bank. Mr. Sullivan joined Eastern Bank in 1996 as Director of Managed Assets and was promoted to Chief Credit Officer in 2001. He oversees all credit underwriting, credit
training, managed assets and default management for the Bank. He also serves as chair of the Credit Policy and Credit Committee, where credit policies and larger credit requests are approved. In addition, he oversees all loan portfolio reviews. Prior to joining Eastern Bank, Mr. Sullivan was a vice president at Shawmut Bank, where he worked in loan workout and as a commercial relationship manager. Mr. Sullivan is an active member of the Risk Management Association (“RMA”) at the national and local levels and is certified by the RMA in credit risk management. He earned a B.S. in Economics from the University of Lowell.
Donald M. Westermann - Executive Vice President, Chief Information Officer of Eastern Bank
Mr. Westermann is an Executive Vice President and the Chief Information Officer at Eastern Bank. He joined Eastern in 2007 as Senior Vice President, Technology Engineering & Operations, a position he held until 2010. He served as Senior Vice President, Chief Technology Officer from 2010 to 2015, when he was promoted to Executive Vice President, Chief Information Officer. Currently, he leads the Technology, Operations and Eastern Labs Teams and is responsible for all aspects of the technology, operations and innovation strategy for Eastern, including digital, cyber-security, innovation, software engineering, data management, and delivery. Prior to joining Eastern, Mr. Westermann served as a Senior Manager with Grant Thornton and before that served as a consultant with Arthur Andersen, in each case in positions focused on technology and management information systems. Mr. Westermann earned a B.S. in Business Administration and Management Information Systems from Villanova University and an MBA from the Sloan School of Management of the Massachusetts Institute of Technology.
Sujata Yadav - Executive Vice President, Chief Marketing Officer of Eastern Bank
Sujata Yadav is Executive Vice President, Chief Marketing Officer of Eastern Bank, a role she has held since August 2021. Ms. Yadav joined Eastern as Senior Vice President, Consumer Lending Director in 2017, where she was responsible for delivering Eastern Bank's first, fully integrated online platforms for unsecured lending and home equity. Her responsibilities were expanded in 2019 to include product marketing and analytics, which have improved Eastern’s product marketing and performance measurement capabilities. Prior to Eastern, Ms. Yadav worked at Citibank N.A. for 14 years in both national and international leadership roles across the consumer bank, where she had responsibility for integrated omni-channel marketing, product development and portfolio optimization strategies. She has a bachelor's degree in Commerce from the University of Rajasthan and an MBA from IIM (Indian Institute of Management), Lucknow. Ms. Yadav serves on the the Boards of Directors for the United Way of Mass Bay and Merrimack Valley and the Boston Ad Club and also serves on the Board of Advisors for Winchester Hospital.
COMPENSATION DISCUSSION AND ANALYSIS
Overview
This Compensation Discussion and Analysis (“CD&A”) describes the objectives and elements of the Company’s executive compensation program and discusses the 20202022 compensation earned by our NEOsNamed Executive Officers ("NEOs") listed below.It also explains the rationale for the Compensation and Human Capital Management ("C&HCM") Committee’s 20202022 executive compensation decisions. Our NEOs for 2022 were:
| Executive Officer | Title | ||||
| Robert F. Rivers | Chief Executive Officer and Chair of the Board of Directors, Eastern Bankshares, Inc.; Chief Executive Officer and Chair of the Board of Directors, Eastern Bank | ||||
| Quincy L. Miller | President, | ||||
| James B. Fitzgerald | Chief Administrative Officer, Chief Financial Officer and Treasurer, Eastern Bankshares, Inc.; Vice Chair, Chief Administrative Officer | ||||
| Donald M. Westermann | Executive Vice President, Chief Information Officer of Eastern Bank | ||||
| Kathleen C. Henry | Executive Vice President, General Counsel and Corporate Secretary of Eastern Bankshares, Inc.; Executive Vice President, General Counsel, Corporate Secretary and Chief Human Resources Officer, Eastern Bank | ||||
Executive Summary
Business Overview
In 2022, we posted record net income of $199.8 million, which was 29% higher than the previous record we had set in 2021 of $154.7 million. This result was bolstered by a milestone yearnumber of significant achievements in 2022 with regard to our history ascore business and key initiatives, including the continued integration of Century Bancorp, Inc., which we converted from a mutualacquired in November 2021; record levels of commercial loan and home equity originations; continued strong asset quality; the acquisition of two insurance agencies; continued strong employee engagement; record achievements in diversity hiring and supplier diversity, which were key strategic focus areas for 2022; and upgrades to a publicly traded company. Our business philosophy remains unchanged:and enhancements of our technology platforms.
With regard to operate as a diversified financial services enterprise providing a broad array of banking and other financial services primarilyloans, our overall loan portfolio increased 10.5% to retail, commercial and small business customers. Highlights from 2020 include:
Additionally, despite a competitive labor market, we achieved record racial diversity in our hiring, with people of color comprising 47% of our new hires throughout 2022. Also, 60% of our new hires were women in 2022, and women overall comprised 66% of our workforce as of December 31, 2019. This increase was primarily2022. We increased our spend to suppliers who identify as diverse by 41% in 2022 ($12,896,328) compared to 2021 ($9,124,156).
Notably, our achievements in 2022 were accomplished against the resultbackdrop of an increase in demand deposits of $1.4 billion, an increase in interest checking deposits of $566.2 million,a particularly challenging and an increase in moneycompetitive environment for the banking industry due to factors such as widespread market deposits of $429.5 million. The average cost of deposits fell from 0.29% in 2019 to 0.10% in 2020.
Compensation Highlights
Our compensation program includes three main components: base salary, short-term cash incentives, and long-term equity compensation. Short-term cash incentives are granted under our Management Incentive Plan ("MIP"), pursuant to which
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recipients are offered target award opportunities based on job responsibilities and market data. Long-term equity incentives are granted pursuant to our 2021 Equity Plan, which was approved by shareholders in November 2021. Historically, we also had granted cash awards under a legacy long-term cash-based incentive plan that predated our initial public offering ("IPO") in October 2020. The last awards under this cash-based legacy plan were granted in 2019, and the legacy plan was subsequently frozen in 2020. As a result, no long-term incentives were awarded to our executive leadership team in either 2020 or 2021. Highlights of our programs are below. See “Our 2022 Executive Compensation Program decisions were made whilein Detail” within this CD&A section for more information.
| Base Salary | For fiscal year 2022, the C&HCM Committee approved no base salary increase for Mr. Rivers, 2.6% increases for Messrs. Miller and Fitzgerald, and 3% increases for Ms. Henry and Mr. Westermann. | ||||
| Short-Term Incentives | Based on 2022 performance, each of our NEOs received a short-term incentives payout equal to 109% of target under our MIP, aligned with overall company performance. Total payouts for 2022 performance were $976,100 for Mr. Rivers, $385,900 for each of Messrs. Miller and Fitzgerald, and $227,300 for each of Ms. Henry and Mr. Westermann. | ||||
| Long-Term Incentives | Initial equity grants: In February 2022, the C&HCM Committee approved the grant of equity incentive compensation awards to the Company’s executive officers, including the NEOs, using a target mix of 50% performance stock units (“PSUs”) and 50% time-based restricted stock units (“RSUs”). These awards, granted under the 2021 Equity Plan, were the first long-term incentive awards granted to any of our NEOs since 2019. They represent an important step in the transition of our legacy approach of granting 100% cash-based long-term incentive awards to our new approach of 100% equity-based long-term incentive awards (see “Transition of Long-Term Incentive Compensation” below for details). Legacy Cash-Based LTIP Awards: The Legacy LTIP awards granted to our NEOs in 2018 (“2018 LTIP Awards”) had no value when they matured on December 31, 2022. Accordingly, our NEOs received no long term award payment in 2022. | ||||
Transition of Long-Term Incentive Compensation: From Cash to Equity
The C&HCM Committee is committed to putting forth market-competitive compensation programs that support the Company was still a mutual holding companybusiness strategy and thusalign the 2020 Executive Compensation Program itself does not reflect equity awards. The Compensationinterests of our executives and shareholders. In 2021, the C&HCM Committee worked with the support ofmanagement and its independent compensation consultant Willis Towers Watson,to design and implement a new market-competitive, equity-based long-term incentive plan (“Equity LTIP”). Awards were first made to NEOs under the new plan in 2022, following shareholder approval of the 2021 Equity Plan in November 2021. As we disclosed last year, the Company:
•Froze the legacy, cash-based LTIP, which we had offered as a mutual bank before we went public, and adopted a new, shareholder-approved equity incentive plan in accordance with applicable SEC and Nasdaq rules.
•Did not provide any grants of cash or equity-based long-term compensation awards in 2020 or 2021 to any executive officers.
With this as the backdrop, the C&HCM Committee determined that the initial equity awards granted to senior management in 2022 would be delivered in part to “make-up” for the two years of missed awards. These awards were also intended to recognize significant efforts and achievement in connection with our IPO in October 2020; the Company’s acquisition of Century in November 2021; and other critical Company milestones achieved between 2019 and 2022. Accordingly, the size and terms of the 2022 equity awards reflected such considerations.
The C&HCM Committee also determined the new equity awards would be structured to reflect its commitment to putting forth a long-term incentive program that incentivizes executives to execute on longer-term financial goals that drive shareholder value creation and support the Company’s leadership retention objectives, making half of the grant at target contingent on the achievement of pre-established performance goals. The 2022 award was structured as follows:
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| Equity Vehicle | Weight | Design At-A-Glance | ||||||
| Performance Share Units (PSUs) | 50% (at Target) | Rewards achievement of financial goals measured over a three-year performance period (January 1, 2022-December 31, 2024) and puts appropriate focus on long-term alignment of pay and performance. •Half of the target PSU opportunity (25% of the total equity award) is based on the Company's total shareholder return (“TSR”) performance relative to the performance of the KRX Banks* over the performance period. •Half of the target PSU opportunity is based on the growth of the Company's operating earnings per share (“EPS”) relative to that of the KRX Banks* over the performance period. The number of earned PSUs can range between 25% (threshold) and 150% (maximum) of the target award. If the Company's performance is below the threshold achievement level, no PSUs will be earned. | ||||||
| Restricted Stock Units (RSUs) | 50% | RSUs will vest in equal installments over a five-year period tied to the anniversary of the grant date, March 1, 2022. | ||||||
*"KRX Banks" is defined in the "Long-Term Incentive Compensation" subsection within this CD&A.
The structural change to our long-term incentive awards, from historic cash-based awards to an equity-based approach, creates a temporary reporting anomaly in the Summary Compensation Table. Specifically, legacy cash awards must be disclosed in the final year of the performance period (when earned), while stock-based awards are disclosed in the year of the grant. Thus, so long as legacy LTIP cash grants are outstanding, we must report two cycles of long-term incentive awards in one year: the earned payout from the prior legacy cash LTIP cycle; and the grant date fair value of equity awards under the new stock-based structure.
For 2022, however, since the legacy cash LTIP cycle maturing in 2022 was determined to have no value, our NEOs' 2022 compensation will not reflect this anomaly. Following the 2023 plan year and the 2024 proxy statement, this overlap of historic cash LTIP payouts and current equity awards reported in the Summary Compensation Table will cease, as the final performance cycle under the legacy plan for cash awards that were granted in 2019 will be completed at the end of 2023.
2023 Executive Compensation Program Structure
Furthering its commitment to put forth a market-competitive, shareholder-aligned executive compensation program, in early 2023, the C&HCM Committee made the following decisions pertaining to the 2020 Executive Compensation Program in accordance with its desire to attract, retain and motivate our highly skilled, talented executives:setting compensation opportunities for 2023.
| Base Salary | |||||
| Short-Term Incentives | Annual target award opportunities, which are based | ||||
Long-Term Incentives | |||||
| Named Executive Officer | Fiscal Year 2023 Salary | LTI Target Award Opportunity (as a % of Salary) | LTI Target Award Opportunity ($) | ||||||||
| Robert F. Rivers * | $995,000 | 100% | $995,000 | ||||||||
| Quincy L. Miller | $590,000 | 60% | $354,000 | ||||||||
| James B. Fitzgerald | $590,000 | 60% | $354,000 | ||||||||
| Donald M. Westermann | $463,500 | 40% | $185,400 | ||||||||
| Kathleen C. Henry | $463,500 | 40% | $185,400 | ||||||||
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The charts below show the conversion fromtarget pay mix for our CEO, Mr. Rivers, and our other NEOs for fiscal year 2023. These charts illustrate that a mutual to a publicly traded company (the "Conversion"), the Compensation Committeemajority of CEO target total direct compensation is reviewing certain aspects of its executivevariable at 65.5%. The average target total direct compensation program to better align with public companyfor our other NEOs is 51.1% variable. Variable compensation programsis represented by both short-term incentive (MIP) and shareholder value creation. Cash-based long-term incentive grants were not made in 2020 in anticipation that the Company may adopt equity-based long-term incentive plans subject to shareholder approval. The(equity grants) at target.
2023 CEO Compensation Committee also plans to review its Supplemental Executive Retirement Plan, as described further below, in coordination with its decision to focus long-term compensation on shareholder value creation going forward. The short-term annual cash incentive program also is under review, and the(at Target) 2023 Other NEO Compensation Committee did not increase salaries in 2021 for the NEOs or any members of the senior executive leadership team (other than two non-NEOs who received market adjustments). In making any changes to the Executive Compensation program, the Compensation Committee will work closely with management to ensure the changes align with the Company’s compensation philosophy of attracting, retaining and motivating high-caliber executives to achieve the short-term and long-term goals of the Company while creating long-term shareholder value.(at Target)
Shareholder Advisory Votes on Executive Compensation
At our 2022 annual meeting of shareholders, we received strong support for our NEO compensation program, as 96.2% of the total votes cast on the advisory vote on say-on-pay voted to approve the proposal. The C&HCM Committee has considered, and each year will consider, the results of the prior advisory vote as it reviews and determines the total compensation packages for our NEOs in the current year. The Company highly values input from its shareholders, and the CompensationC&HCM Committee plans to incorporate this feedback when making compensation decisions going forward. As such, the Company is voluntarily seeking a say-on-pay vote and an advisory vote to hold such say-on-pay votes on annual basis, though neither is a requirement as an EGC. Please see Proposals 2 and 3 in this Proxy Statement for more information.
Compensation Governance Practices
The Company has in place the following executive compensation best practices and policies which promote sound compensation governance and are in the best interests of our shareholders:
| What We DO | What We Don’t Do | ||||
| ☑ | ☒ No guaranteed incentive payments | ||||
| ☑ | ☒ No uncapped non-sales incentive plans | ||||
| ☑ Double trigger for change in control payments | ☒ No significant/excessive perquisites | ||||
| ☑ Clawback policy | ☒ No tax gross-ups | ||||
| ☑ Anti-hedging and pledging provisions | ☒ No severance benefits exceeding 3x base salary and annual cash bonus | ||||
| ☑ | |||||
| ☑ Independent compensation consultant | |||||
| ☑ Annual say-on-pay vote | |||||
What Guides Our Program
Philosophy and Objectives of Executive Compensation
Our executive compensation philosophy is to attract, motivate, and retain the executive talent we need to achieve the short-term and long-term goals of the Company while creating long-term shareholder value through the implementation of
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sound compensation principles and policies. These principles include paying for performance, ensuring equity, fairness and non-discrimination in pay and compensation risk mitigation.
Principal Elements of Compensation
Our executive compensation is comprised of fourprogram has three key elements:base salary, annual short-term incentive awards, and long-term incentive awards, and benefits.awards.
| Element of 2022 NEO Compensation | How it is Paid | Key Objectives | ||||||
| Base Salary | Cash (Fixed) | Driven primarily by a NEO’s demonstrated value to the Company and market competitiveness, base salaries are reviewed annually and are set to attract and retain highly skilled, talented | ||||||
| Annual Short-Term Incentive | Cash (Variable) | Incentivizes a NEO to achieve short term (annual) financial and strategic goals, with | ||||||
| Long-Term Incentive | Company’s | |||||||
Process for Determining Executive Officer Compensation
The Role of the Compensation and Human Capital Management Committee
The CompensationC&HCM Committee is composed entirely of non-employee directors who meet the Nasdaq standards for independence, including the heightened standards applicable to compensation committee members. The CompensationC&HCM Committee oversees executive compensation of our executive officers, including our NEOs, and is comprised of independent, non-employee members of the Board of Directors.NEOs. The CompensationC&HCM Committee regularly reviews the structure of our executive compensation program to ensure it aligns with Company strategy, philosophy, market practices, risk tolerance and, now that the Company is publicly traded, the interests of our shareholders. The CompensationC&HCM Committee reviews compensation and performance of peer companies (detailed below) as it considers executive compensation. The CompensationC&HCM Committee’s specific responsibilities are set forth in its charter, which can be found on the Company’s Investor Relations website at investor.easternbank.com under “Governance Documents” in the “Corporate Governance” section.The CompensationC&HCM Committee approves all NEO compensation, other than that of our CEO, including base salary, short term incentives and long-termlong term incentives. The CompensationC&HCM Committee also recommends our CEO’s compensation, which is approved by the independent members of the Board.
The Role of Management
Select senior members of our management team attend regular meetings of the CompensationC&HCM Committee at which executive compensation, Company performance, peer group, market and competitive compensation levels and compensation policies and practices are discussed, including in executive session without other management members present. However, only members of the CompensationC&HCM Committee vote on decisions about NEOcompensation for our NEOs (other than our CEO), and the independent members of our Board of Directors vote on our CEO's compensation. Our CEO is not involved in decisions or deliberations about his own compensation, but he does make recommendations regarding non-NEOnon-CEO executive compensation in consultation with the CompensationC&HCM Committee.
The Role of Our Independent Compensation Consultant
The CompensationC&HCM Committee has the authority to engage its own advisors to assist it in carrying out its responsibilities. As part of its oversight of executive compensation and director compensation, the CompensationC&HCM Committee seeks input from its independent compensation consultant. In connection with 20202022 executive compensation decisions, the CompensationC&HCM Committee engaged Willis TowersPearl Meyer to advise the CompensationC&HCM Committee on the amount and form of executive compensation. In December 2020, the Compensation Committee engaged Pearl Meyer as its new independent compensation consultant. In the instance of either firm, theThe independent compensation consultant reports directly to the CompensationC&HCM Committee and does not provide any other services to the Company. The CompensationC&HCM Committee has conducted an independence assessment of both Willis Towers and Pearl Meyer in accordance with SEC and Nasdaq listing rules. Based on this review and in reliance upon a letter from eachthe firm confirming its respective independence based on factors set forth in the Nasdaq rules for compensation committee advisors, the CompensationC&HCM Committee determined that each firmPearl Meyer is an independent advisor.
The Role of Peer Market Data
The C&HCM Committee uses a criteria-based approach in selecting peer companies. The criteria include banks and thrifts on a national exchange, geography (U.S.-based and major metropolitan areas), financial institutions of similar size (assets and revenue ranging from 0.5x to 2.0x the assistanceCompany’s size), similar loan mix, and comparable market capitalization. For purposes of its independentsetting 2022 compensation consultant, the Compensation Committee utilizes a peer group of publicly traded companies to benchmark executive compensation programs and practices and compare key performance metrics. For 2020,levels, our compensation peer group included the following 1619 companies, all of which arewere publicly traded commercial banks:banks at the time of their selection to our peer group:
| Ameris Bancorp. | Fulton Financial Corporation | PacWest Bancorp, Inc. | ||||||
| Atlantic Union Bankshares Corporation | Pinnacle Financial | |||||||
| BankUnited, Inc. | Independent Bank Corp. | South State Corporation | ||||||
| Cathay General Bancorp | Independent Bank Group, Inc. | Umpqua Holdings Corporation | ||||||
| Columbia Banking System, Inc. | Investors Bancorp Inc. | Valley National Bancorp | ||||||
| F.N.B. Corporation | Old National Bancorp. | |||||||
| First Midwest Bancorp, Inc. | Pacific Premier Bancorp, Inc. | |||||||
In 2022, the C&HCM Committee, with the assistance of Pearl Meyer, refreshed the Company's peer group, removing four companies for reasons due to merger and acquisition activity and replacing them with four peers that meet our criteria. As part of this review and update, the peer group used for 2023 compensation decisions was modified as follows:
| Added | ||||||||
| Columbia Banking System, Inc. | Bank OZK | |||||||
| First Midwest Bancorp, Inc. | ||||||||
| Umpqua Holdings Corporation | ||||||||
| United Community | ||||||||
In addition to peer group data, the CompensationC&HCM Committee also considers other factors when setting NEO compensation, including the skill sets of the NEOs, their individual performances, Company performance, retention risk, their tenure with the Company and succession planning.
Our 20202022 Executive Compensation Program in Detail
Base Salary
| Fiscal Year 2019 Salary | Fiscal Year 2020 Salary | Percentage Increase | |||||||||
| Robert F. Rivers Chief Executive Officer and Chair of the Board of Directors | $950,000 | $995,000 | 4.7 | % | |||||||
| Quincy L. Miller President and Vice Chair | $550,000 | $575,000 | 4.5 | % | |||||||
| James B. Fitzgerald Chief Administrative Officer, Chief Financial Officer and Treasurer | $550,000 | $575,000 | 4.5 | % | |||||||
| Minimum % of Base Salary (1) | Target % of Base Salary (1) | Maximum % of Base Salary (1) | |||||||||
| Robert F. Rivers | 40 | % | 80 | % | 120 | % | |||||
| Quincy L. Miller | 25 | % | 50 | % | 80 | % | |||||
| James B. Fitzgerald | 25 | % | 50 | % | 80 | % | |||||
| Named Executive Officer | Fiscal Year 2021 Salary | Fiscal Year 2022 Salary | Percentage Increase | ||||||||
| Robert F. Rivers Chief Executive Officer and Chair of the Board of Directors | $995,000 | $995,000 | 0 % | ||||||||
| Quincy L. Miller President | $575,000 | $590,000 | 2.6 | % | |||||||
| James B. Fitzgerald Chief Administrative Officer, Chief Financial Officer and Treasurer | $575,000 | $590,000 | 2.6 | % | |||||||
| Donald M. Westermann Chief Information Officer, Eastern Bank | $450,000 | $463,500 | 3.0 | % | |||||||
| Kathleen C. Henry General Counsel and Corporate Secretary | $450,000 | $463,500 | 3.0 | % | |||||||
Short-Term Incentive Plan
The MIP provides for the payment of annual cash incentive awards to the Company’s CEO, its other NEOs, members of its management committee, and select management employees (“Participants”). The C&HCM Committee believes the MIP further aligns its executive officers' incentives with shareholder value creation. Each Plan Year (as defined below), a Participant is assigned a target award opportunity as a percentage of base salary, based in part on job responsibilities and market data. The table below summarizes the annual incentive target opportunity for each NEO for 2022.
| Named Executive Officer | Fiscal Year 2022 Salary | MIP Target Award Opportunity (as a % of Salary) (1) | MIP Target Award Opportunity ($) | ||||||||
| Robert F. Rivers | $995,000 | 90% | $895,500 | ||||||||
| Quincy L. Miller | $590,000 | 60% | $354,000 | ||||||||
| James B. Fitzgerald | $590,000 | 60% | $354,000 | ||||||||
| Donald M. Westermann | $463,500 | 45% | $208,575 | ||||||||
| Kathleen C. Henry | $463,500 | 45% | $208,575 | ||||||||
(1)For purposes of MIP calculations, "Base Salary"“Base Salary” refers to a NEO's year-end base salary rate.
Actual award payouts are determined by measurement against one or more corporate performance measures (“Company Performance Measures”) and individual performance goals over a performance measurement period, beginning January 1 and ending December 31 (“Plan Year”). Company Performance Measures are approved by the C&HCM Committee, and annual targets with respect to such performance measures are established by the Board of Directors. Individual performance goals are established annually by each NEO and approved by his or her manager, except that the individual performance goals of the CEO are approved by the C&HCM Committee.
All awards are paid from a funding pool. For each Plan Year, the target funding pool (“Target Funding Pool”) is an amount equal to the sum of all Participants’ target awards for the year. Following completion of a Plan Year, the C&HCM Committee determines performance against the applicable Company Performance Measures including whether minimum performance thresholds have been met. The funding pool from which awards under the MIP (“MIP Awards”) are actually paid (“Actual Funding Pool”) is an amount that is based on the Target Funding Pool but is adjusted based on the Company’s performance against the Company Performance Measures for such year. The C&HCM Committee may adjust the level or nature of Company Performance Measures to accommodate non-recurring events not contemplated when such measures were originally set, such as an acquisition by the Company, and has the sole discretion to adjust the Target Funding Pool and/or the Actual Funding Pool amounts upward or downward, based on market factors, corporate events, future performance outlook, or any other situation it may deem appropriate.
Individual awards under the MIP are determined by (1) the Actual Funding Pool as approved by the C&HCM Committee based on performance against the Company Performance Measures, and (2) Participants’ overall achievement rating (on a scale of 1-5) in performance of their individual goals, subject to payout ranges as a percentage of target and applicable limitations on payouts to the NEOs. Individual MIP Awards are paid out of the Actual Funding Pool. The MIP Awards for the Company’s executive officers other than the CEO are approved by the C&HCM Committee. The MIP Award for the CEO is approved by the independent members of the Board of Directors, upon recommendation from the C&HCM Committee. The
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independent members of the Board and the C&HCM Committee, respectively, have discretion to modify the Actual Funding Pool payout for individuals based on the CEO's and the other NEOs' performance and achievement rating. For the NEOs in 2022, all received payouts based on the Actual Funding Pool at 109% of the Target Funding Pool, in alignment with 2022 Company performance results equal to 106% of the MIP Net Income Target (as defined below).
Company Performance Measure
For 2022, the Company Performance Measure was net income for the fiscal year ended December 31, 2022, as may be adjusted to accommodate non-recurring events (“MIP Net Income”). The C&HCM Committee chose MIP Net Income because it believes that it provides a useful metric in understanding the Company’s core earnings performance without the effects of certain events, items and transactions unrelated to its core business operations.
The C&HCM Committee established a range of funding for the Actual Funding Pool based on the Company’s actual MIP Net Income results relative to a specified performance target (“MIP Net Income Target”). The range of funding for the Actual Funding Pool was scaled such that performance at 80% of MIP Net Income target (net income of $150.1 million) would yield a payout of 80% of target, performance at MIP Net Income Target of $187.6 million would yield a target or 100% payout, and performance at 115% of target (net income of $215.7 million) would yield a payout of 125% of target. The C&HCM Committee also established a minimum performance threshold of 80% of the MIP Net Income Target to fund awards to our management committee, which includes our NEOs, and a minimum performance threshold of 50% of the MIP Net Income Target to fund awards to the rest of Participants. This scaled approach was intended to ensure that our financial results were the key element of the funding framework.
In 2022, the Company generated $199.8 million in net income. Pursuant to the previously established funding ranges, the level of the Company’s achievement of MIP Net Income represented performance equal to 106% of the MIP Net Income Target. Accordingly, the C&HCM Committee determined that the Corporate Performance Measure had been met, and the Actual Funding Pool was funded at a level that corresponded to 109% of the Target Funding Pool.
Individual Performance Goals
At the beginning of 2022, the C&HCM Committee established individual performance goals for the CEO, and each NEO likewise set individual performance goals that aligned with the CEO’s goals. For 2022, each of our NEOs’ individual performances were highly rated and contributed to the overall successful performance of the Company.
The C&HCM Committee also established MIP targets and maximums for the NEOs’ 2022 MIP awards early in 2022, subject to approval of independent members of the Board of Directors for the CEO. Notwithstanding such individual targets and maximums, our NEOs would not have received any MIP award if the Company’s performance achievement of MIP Net Income had been less than 80% of the MIP Net Income Target.
MIP Awards were granted to each NEO equal to 109% of their individual target award amounts, in alignment with overall Company performance on the Company Performance Measure and the Actual Funding Pool level at 106% of the MIP Net Income Target. While the independent members of the Board of Directors and C&HCM Committee have discretion to adjust MIP Awards based on individual performance, including for the CEO's and other NEOs' high performance ratings in 2022, respectively, they opted to align NEO's awards with overall Company performance. Accordingly, the MIP awards described below were approved:
| Named Executive Officer | MIP Award Earned in 2022 ($) (1) | MIP Award as % of Target Award | MIP Award as % of Base Salary (2) | ||||||||
| Robert F. Rivers | $976,100 | 109% | 98 | % | |||||||
| Quincy L. Miller | $385,900 | 109% | 65 | % | |||||||
| James B. Fitzgerald | $385,900 | 109% | 65 | % | |||||||
| Donald M. Westermann | $227,300 | 109% | 49 | % | |||||||
| Kathleen C. Henry | $227,300 | 109% | 49 | % | |||||||
(1)For purposes of MIP calculations, “Base Salary” refers to a NEO's year-end base salary rate
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Long-Term Incentive Compensation
The Company's philosophy on long-term incentive compensation is to grant awards arethat provide incentives for NEOs to execute on longer term financial performance objectives.
2022 Equity-Based LTIP Awards
During 2022, the C&HCM Committee continued its steps to transition our historic cash-based long-term incentive compensation program to an equity-based program. As described under the “Transition of Long-Term Incentive Compensation: From Cash to Equity” section earlier in this CD&A, the C&HCM Committee determined using two performance components: corporate performance and individual performance. Goals for each performance component are established annually by the Compensation Committee.
| Equity Vehicle | Weight | Design At-A-Glance | ||||||
| Performance Share Units (PSUs) | 50% (at Target) | Rewards achievement of financial goals measured over a three-year performance period (January 1, 2022-December 31, 2024) and puts appropriate focus on long-term alignment and pay relative both to market peers and shareholder returns. •Half of the target PSU opportunity (25% of the total equity award) is based on the Company's total shareholder return (“TSR”) performance relative to the performance of the KRX Banks*. •Half of the target PSU opportunity is based on the growth of the Company's operating earnings per share (“EPS”) relative to that of the KRX Banks*. | ||||||
| Restricted Stock Units (RSUs) | 50% | RSUs will vest in equal installments over a five-year period tied to the anniversary of the grant date, March 1, 2022. | ||||||
*“KRX” refers to the Eastern Bank Charitable Foundation valued at $91.3 million), also knownKBW Regional Banking Index, an index that is designed to track the performance of regional banks and thrift institutions that are publicly traded in the U.S. “KRX Banks” refers to the companies that comprise the KRX as net operating earnings; andof the last day of the performance period, excluding companies that have any of the following characteristics: (1) headquartered in Puerto Rico; (2) announced target of a pending acquisition; and/or (3) less than three years of performance history or trading data.
| Named Executive Officer | PSUs (at Target) | RSUs | Total Value* | ||||||||
| Robert F. Rivers | $2,250,000 | $2,250,000 | $4,500,000 | ||||||||
| Quincy L. Miller | $1,500,000 | $1,500,000 | $3,000,000 | ||||||||
| James B. Fitzgerald | $1,500,000 | $1,500,000 | $3,000,000 | ||||||||
| Donald M. Westermann | $1,000,000 | $1,000,000 | $2,000,000 | ||||||||
| Kathleen C. Henry | $1,000,000 | $1,000,000 | $2,000,000 | ||||||||
* Actual award amounts for RSUs and PSUs at the beginning of 2020:
A Closer Look at PSUs.
•PSUs will be eligible to become earned based on:
◦The Company’s total shareholder return (“TSR”) performance relative to the performance of the CEOKRX Banks over the three-year performance evaluation, which considered his performance against the following four goals: (1) successful implementation of IPO/growth; (2) 2020 business plan; (3) organizational development;period (January 1, 2022-December 31, 2024); and (4) brand, community and industry leadership.
•Mr. Miller – Received the highest individual performance rating, based upon his outstanding leadership of Eastern Bank's Consumer and Business Banking and Wealth Management lines of business to strong results, highlighted by record mortgage loan production, and its tenth consecutive year as the top U.S. Small Business Administration lender in New England, despite COVID-19 pandemic-related challenges.
| Corporate | Individual | MIP Award Earned in 2020 ($) (1) | MIP Award as % of Base Salary (2) | |||||||||||
| Robert F. Rivers | $ | 278,600 | $ | 358,200 | $ 637,000 | 64 | % | |||||||
| Quincy L. Miller | $ | 101,000 | $ | 138,000 | $ 239,000 | 42 | % | |||||||
| James B. Fitzgerald | $ | 101,000 | $ | 138,000 | $ 239,000 | 42 | % | |||||||
•The number of PSUs that can be earned range between 25% (threshold) and to align150% (maximum) of the program with shareholder value creation.target award.
•If the Company's performance is below the threshold achievement level, no PSUs will be earned.
| Performance Level (Relative Ranking) | PSUs Earned at the End of the Performance Period (% of Target) | ||||||||||
| TSR PSUs | EPS Growth PSUs | ||||||||||
| Less than 25th Percentile | (Below Threshold) | —% | —% | ||||||||
| 25th Percentile | (Threshold) | 25% | 25% | ||||||||
| 50th Percentile | (Target) | 100% | 100% | ||||||||
| 75th Percentile or Higher | (Maximum) | 150% | 150% | ||||||||
Frozen LTIP Awards (Vesting and Payouts Under the MIP award, the Compensation Committee approved a discretionary, one-time cash bonus for Mr. Miller of $110,000 in recognition of the leadership role he played in Eastern Bank’s successful response to the Small Business Administration’s Paycheck Protection Program ("PPP"), pursuant to which the Bank made $1.2 billion in loans, resulting in $13.9 million of net fee income in 2020. Legacy LTIP)
The Compensation Committee also approved a one-time cash bonus for Mr. Fitzgerald of $220,000 in recognition of his considerable role in executing the Company's successful IPO in a difficult market environment affected by the global COVID-19 pandemic, which offering raised $1.7 billion in capital.
other factors. The Compensation Committee did not make LTIP grantswas “frozen” in 2020, and does not plan to grant themthe most recent awards under it were made in 2021, in anticipation2019. Under the terms of the Company's future adoption of equity-based long-term incentive plans, which will be subjectLTIP, our NEOs were eligible to shareholder approval.receive payouts in 2023 and 2024 for awards made in 2018 and 2019 (“Outstanding LTIP Awards”), respectively.
2019 LTIP Awards. For the 2019 Awards, which mature December 31, 2023, a different LTIP calculation methodology was set at the time the award was granted such that those awards will primarily be based on growth of retained earnings over targeted levels, rather than on plan capital growth.
The table below shows the value of the 2018 LTIP Awards for Messrs. Rivers, Miller, Fitzgerald and Fitzgerald represented 60% of their 2016 base salary. The most recent LTIP awards were granted in 2019.
| Named Executive Officer | Granted 2018 Payable in 2023 | Granted 2019 Payable in 2024 (1) | Total | ||||||||
| Robert F. Rivers | $0 | $1,098,000 | $1,098,000 | ||||||||
| Quincy L. Miller | $0 | $366,000 | $366,000 | ||||||||
| James B. Fitzgerald | $0 | $366,000 | $366,000 | ||||||||
| Donald M. Westermann | $0 | $183,000 | $183,000 | ||||||||
| Kathleen C. Henry | $0 | $137,250 | $137,250 | ||||||||
(1)Values for the 2019 although payments for past LTIP awards will be provided in accordance with their terms. Outstanding LTIP awards are subject to three-year vesting with
| Long-Term Incentive Plan Payments (Grant Year / Payment Year) | |||||||||||||||||
| Estimated Values as of December 31, 2020 | |||||||||||||||||
| Granted 2016 Payable in 2021(1) | Granted 2017 Payable in 2022 (2) | Granted 2018 Payable in 2023 (2) | Granted 2019 Payable 2024 (2) | Total | |||||||||||||
| Robert F. Rivers | $ | 1,409,340 | $ | 1,482,000 | $ | 1,090,720 | $ | 430,800 | $ | 4,412,860 | |||||||
| Quincy L. Miller | $ | 704,670 | $ | 494,000 | $ | 401,000 | $ | 143,600 | $ | 1,743,270 | |||||||
| James B. Fitzgerald | $ | 704,670 | $ | 494,000 | $ | 401,000 | $ | 143,600 | $ | 1,743,270 | |||||||
Other Compensation Practices, Policies and Guidelines
Stock Ownership Guidelines
The Company’s Board of Directors believes that the Company’s most senior executives (including its NEOs) should hold meaningful equity ownership positions in the Company, in part to align the NEOs’ interests with those of the Company’s shareholders.Under the management stock ownership guidelines, each NEO is required to hold shares of the Company’s stock as set forth below:
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| Title | Multiple of Annual Base Salary | ||||
| Chief Executive Officer | Five (5) Times | ||||
| President and the Chief Financial Officer/Chief Administrative Officer | Three (3) Times | ||||
| All Other Executive Officers | Two (2) Times | ||||
To attain this ownership threshold, each NEO will have the longer of five (5) years from (i) the date of implementation of the stock ownership guidelines (September 2021), or (ii) the date that a NEO becomes a member of the Company’s management committee. There shall be a one-year holding period for 50% of a NEO’s vested shares (except in order to satisfy tax withholding obligations or to satisfy payment of an option exercise price) until the NEO has met, and continues to meet, his or her applicable minimum holding requirement.
Holdings that satisfy a NEO’s stock ownership requirement include all outstanding shares held, shares held through a 401(k), savings and profit-sharing plans, and all unvested time-based RSUs awarded to a NEO. Unvested awards of PSUs, stock options, warrants or other rights not listed above exercisable for or convertible into shares of common stock do not count towards satisfying the ownership requirement unless and until shares under such awards are issued to a NEO.
Compliance with stock ownership guidelines is evaluated annually. A NEO is not required to purchase additional shares to satisfy the applicable ownership requirement in the event of a decline in the Company’s stock price, but the NEO is generally prohibited from selling or transferring shares until the minimum ownership requirement has been achieved, except as otherwise determined by the C&HCM Committee. As of December 31, 2022, all of our NEOs were in compliance with the stock ownership guidelines.
Clawback Policy
The Company has a formal Clawback Policy, which calls for the recovery of incentive-based compensation awards (whether cash or equity) to the NEOs, other executive officers and other covered employees if the relevant performance measure upon which the award is based is restated in a manner that would reduce the size of an award. The Clawback Policy empowers the C&HCM Committee to recover such excess compensation received during the three completed fiscal years preceding the date on which the Board of Directors determines an accounting restatement is required to be filed with the SEC to correct a material non-compliance with any financial reporting requirements under applicable securities laws.
In October 2022, the SEC adopted new, final rules on clawback recovery of executive compensation. The Company intends to review and revise its Clawback Policy as needed to comply with any forthcoming Nasdaq requirements that are adopted pursuant the new SEC rules.
Anti-Hedging and Anti-Pledging Policy
The Company has an Insider Trading Policy that, among other things, prohibits all our employees (including officers) and directors from engaging in hedging or other speculative transactions relating to shares of the Company’s stock. Prohibited transactions include short sales, derivative securities (such as put and call options, or other similar instruments) and other hedging transactions (such as equity swaps, prepaid variable forwards, or similar instruments), or any transactions that have or are designed to have the effect of hedging or offsetting any decrease in the market value of the Company’s securities. In addition, Section 16 officers and directors are generally prohibited from holding the Company’s securities in a margin account or otherwise pledging the Company’s securities as collateral for a loan.
No Tax Gross Ups
Our C&HCM Committee has determined that no tax gross-ups for purposes of excess parachute payments under Section 280G of the Code (“Section 280G”) shall be provided to our executives as part of our executive compensation program. The dollar amount of the severance payment due under our CiC Agreements (as defined and further described below) will not be reduced in order to avoid an excess parachute payment under Section 280G, except in circumstances in which the application of the excise tax under Section 4999 of the Code (“Section 4999”) on the full amount of severance and other compensation deemed to be an excess parachute payment under Section 280G would leave the executive with a lower net after-tax amount than having the severance and other compensation reduced to the extent necessary so the excise tax would not apply. In circumstances in which the amount of severance and other compensation deemed to be a parachute payment under Section 280G is not reduced, the executive would owe the excise tax under Section 4999 and would not be entitled to a gross-up or reimbursement of that excise tax payment under his or her CiC Agreement.
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Double Trigger Change in Control Agreements
The Company entered into change in control agreements (“CiC Agreements”) with the NEOs and its most senior executive officers. With certain exceptions noted below, the CiC Agreements are substantially similar to each other, and provide that if, during a potential change in control period or within 18 months after the consummation of a change in control, the executive’s employment is involuntarily terminated for reasons other than for “cause,” disability or death, or the executive voluntary resigns for “good reason,” the executive would be entitled to a lump sum severance payment equal to a multiple of (a) his or her base salary, plus (b) the greater of the executive’s annual bonus for the year in which the termination occurred and the average of the executive’s bonuses for the three years immediately preceding the year in which the termination occurred. For Messrs. Rivers and Miller, the applicable multiplier is 300%; for each of the other executives (Messrs. Fitzgerald and Westermann and Ms. Henry), the multiplier is 200%. As noted above, any payment required under the CiC Agreements will be reduced to the extent necessary to avoid penalties under Section 280G, but only if such reduction would result in a higher after-tax amount to the executive. In exchange for the lump sum severance payments and other benefits, the CiC Agreements provide for certain post-employment obligations with respect to the executive’s ability to compete with the Company and solicit our employees or customers.
In addition, if the NEO was participating in the Company’s group health and dental plans immediately prior to the their termination and elects COBRA health continuation, then the Company shall pay to the NEO a monthly cash payment for 18 months or the NEO’s COBRA health continuation period, whichever ends earlier, in an amount equal to the monthly employer contribution that the Company would have made to provide health and dental insurance to the NEO if the NEO had remained employed by the Company. The Company will use commercially reasonable efforts to provide for such payments in a manner that allows the NEO to exclude such payments from income, unless the NEO’s COBRA health continuation period ends prior to the end of the eighteen-month payment period or the Company reasonably determines such payment to be discriminatory under Section 105(h) of the Code.
Severance Agreements
The provision of reasonable severance benefits can be important in recruiting and retaining key executives.Thus, the Company has in place separate agreements with two NEOs, Messrs. Rivers and Miller, governing certain terms of their employment with and separation from the Company in circumstances not involving a change in control of Eastern. Under the terms of those agreements, in the event an executive is terminated for cause, the executive will receive all earned but unpaid salary, all accrued but unused vacation pay, vested and accrued bonuses or other incentive compensation, and reimbursements for any reasonable, necessary and properly documented expenses. In the event of termination without cause, in addition to the payments outlined above, the Company will pay to the executive within 60 days of his termination a lump sum payment equal to 200% of his annual base compensation plus a prorated share of the annual incentive payment to which the executive would have been eligible under the MIP (described above) during the calendar year in which the termination date falls. The executive will also receive full vesting of benefits in existing grants under the Bank’s legacy LTIP. If Mr. Rivers elects COBRA coverage, Mr. Rivers will also receive 24 months of continued participation in Eastern group health and dental insurance plans, with Eastern Bank paying or reimbursing Mr. Rivers for the cost of such premiums, and Mr. Miller will receive a lump sum payment equivalent to 24x the amount of Eastern’s standard monthly contributions to Mr. Miller’s Eastern Bank group health and dental insurance premiums. The agreements provide for certain restrictive covenant obligations, which include each of Messrs. Rivers and Miller agreeing not to solicit customers and employees of Eastern Bank during their employment with Eastern Bank and continuing for a period ending 24 months following their termination of employment. In addition, Mr.Miller’s agreement also specifies that while he is employed, he will receive an annual base salary of not less than $450,000 (subject to adjustment), discretionary incentive and/or bonus compensation, and participation on generally applicable terms and conditions in other compensation and fringe benefit plans, an automobile allowance of $700 each month, and reimbursement of country club membership fees, if sought. Mr. Rivers’ agreement does not address compensation or benefits during employment.
Risk Assessments of Incentive Compensation Plans
The Company conducts a continuous review of compensation programs from design to actual results. This helps ensure that employees are not driven to take excessive risk that could have a significant negative impact on the Company’s annual results or future safety and soundness of the institution. The Company’s compensation philosophy is “risk-reflective,” meaning the pay structure and programs are created to appropriately reward the returns from acceptable risk-taking through optimal pay mix, performance metrics, calibration and timing. Employees eligible for incentives or commissions for new business are not permitted to make credit, investment, or consumer pricing decisions independently. The Company has no “highly-leveraged” incentive plans. Plan sponsors, who are those executives in charge of business lines in which incentive plans exist, are not eligible for awards under the plans they sponsor. All incentive and commission plans are tied to performance metrics related to revenue and/or profitability and all incentive plans have a trigger, where payments are not made if certain profitability hurdles are not met by the Company. Finally, all incentive plans undergo an annual incentive plan risk assessment
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led by leaders from the Internal Audit, Enterprise Risk Management, Legal and Human Resources Departments, with the results reported to the C&HCM Committee.
Other Programs
Benefit Plans
401(k) Plan. Our 401(k) Plan allows executives and other plan participants to make elective deferrals of their compensation to the 401(k) Plan up to limits of the Internal Revenue Service ("IRS"(“IRS“), and in 20202022 the Company made a safe harbor contribution to eligible participants’ accounts equal to 3% of the participant’s plan compensation earned during the plan year subject to IRS limits.
Employee Stock Ownership Plan. In connection with the Company's IPO, Eastern Bank adopted thehas an ESOP, an employee stock ownership plan, for eligible employees. Management believes the ESOP aligns the interests of all eligible employees – not just senior executives – with shareholders to create better alignment with total shareholder value.
At the time of the offering,IPO, the ESOP trustee purchased 14,940,652 shares of the Company’s common stock funded with a loan from the Company.Company (“ESOP Loan”). The loan will beESOP Loan is repaid principally through Eastern Bank’s contribution to the ESOP and dividends if any, payable on common stock held by the ESOP over the term of the loan. The ESOP’s independent trustee holds the shares purchased by the ESOP in an unallocated suspense account, and releases shares on a pro-ratapro rata basis as the loan is repaid. Released shares are allocated among participants on the basis of each participant’s proportional share of compensation relative to the compensation of all participants. A participant cliff-vests in their benefits after three years of vesting service with Eastern Bank or a participating subsidiary. Credited service includes both calendar years of service from January 1, 2020 (the initial effective date of the ESOP) and years of vesting service that a participant has earned under the Bank’s defined benefit pension plan prior to the adoption of the ESOP. A participant also will become fully vested in their benefit upon normal retirement, early retirement, death or disability, a change in control, or termination of the ESOP. A vested participant is entitled to receive a distribution from the ESOP upon separation from service or, if earlier, plan termination. The ESOP permits a participant to direct the trustee as to how to vote the shares of common stock allocated to their account. The ESOP trustee votes unallocated shares and allocated shares for which participants do not provide voting instructions on a matter in the same ratio as those shares for which participants provide instructions, subject to fulfillment of the trustee’s fiduciary responsibilities.
In December 2020,October 2022, a portion of the loanESOP Loan was repaid, and in March 2021,February 2023, the ESOP trustee allocated shares to eligible participants for the first time. The allocation was made in respect of the post-IPO portion of 2020. Mr. Rivers, Miller and Fitzgerald each received allocations of 104 shares (fractional shares have been rounded down).2022. The Company expects thatmakes allocations will be made annually to eligible participants in accordance with the terms of the ESOP. Each of Messrs. Rivers, Miller, Fitzgerald, Westermann and Ms. Henry received allocations of 875 shares (fractional shares have been rounded down) for 2022. Each of our NEOs is fully vested in his or her benefit under the ESOP.
Defined Benefit Pension Plan. Eastern Bank provides pension benefits (the "Pension Plan") to its employees, including our NEOs, through membership in the Savings Bank Employees’ Retirement Association (“SBERA”).Association. The Company's pension plan is a noncontributory, defined benefit plan. Our annual contribution to the defined benefit plan is based upon standards established by the Pension Protection Act. Effective November 1, 2020, the defined benefit pension plan converted from a “traditional pension plan” with a benefit formulaThe contribution is based on age,an actuarial method intended to provide not only for benefits attributable to service and salary, to a “cash balance” defined benefit plan. This conversion isdate but also for those expected to resultbe earned in cost savings for the Company.future.
Frozen Supplemental Executive Retirement Plan. Eastern maintainshad historically offered a defined contribution supplemental executive retirement plan (“SERP”("SERP"), in which Messrs. Rivers, Miller, and Fitzgerald currently participate.participated. Benefit accruals were frozen for then-active participants as to compensation received for work performed after 2021, and the SERP was closed to new participants. Under the SERP, each participating executive becomesis entitled to receive a benefit following his or her separation from service. During the executive’s service with the Company, his account is credited monthly by Eastern Bank at 20% of his salary and 20% target short-term incentive (subject to adjustment when the actual short-term incentive is determined). Each executive’s SERP benefit vests over a 10-year period commencing at 50% after five years of service and 10% each year thereafter. However, a participant will be fully vested if retirement eligible or upon death or disability. Messrs. Rivers and Fitzgerald are fully vested due to being retirement eligible.
Benefit Equalization Plan. The Company is reviewing the SERP in 2021.
January following retirement or death. In connection with the conversion of the defined benefit pension plan to a cash balance plan,All NEOs participated in the BEP was also amendedin 2022, since Company contributions to a cash balance format on November 1, 2020. SERP accounts for Messrs. Rivers, Miller and Fitzgerald ceased beginning with compensation for work performed in 2022.
409A Deferred Compensation Plans. The Company maintains two 409A deferred compensation plans — one for Eastern Bank employees (“409A Plan”) and one for Eastern Insurance Group LLC employees (“EIG SERP”). Each of these plans allow directors and selected executives to defer compensation under non-qualified deferred compensation plans. None of the NEOs participated in the BEPthese plans in 2020.2022.
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Executive Perquisites
Perquisites. Executive perquisites are not a core component of our executive compensation program. We do offer, however, our NEOs allowances for automobiles gas and parking. Our NEOs are entitled to reimbursement for costs associated with membership in a country club, but all of our NEOs declined to accept these club fees in 2020.2022.
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COMPENSATION AND HUMAN CAPITAL MANAGEMENT REPORT
The Compensation and Human Capital Management Committee believes that it is a compensation governance best practiceof our Board of Directors has reviewed and a reinforcement ofdiscussed the Company’s compensation philosophy to have in place a Clawback Policy, which calls for the recovery of incentive-based compensation awards to the NEOs, other executive officerspreceding Compensation Discussion and other covered employees if the relevant performance measure upon which the award is based is restated in a manner that would reduce the size of an award. The Clawback Policy empowersAnalysis with management. Based on such review and discussions, the Compensation and Human Capital Management Committee has recommended to recover such excess compensation received duringour Board of Directors that the three completed fiscal years precedingCompensation Discussion and Analysis be included in this Proxy Statement.
By the date on whichCompensation and Human Capital Management Committee of the Board of Directors, determines
Peter K. Markell (Chair)
Deborah L. Jackson
Richard C. Bane
Joseph T. Chung
Luis A. Borgen
Paul D. Spiess
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EXECUTIVE COMPENSATION
2022 Summary Compensation Table
The table below sets forth the total compensation paid to, or earned by, our NEOs for the years ended December 31, 2022, 2021 and 2020 in accordance with applicable SEC rules.
| Summary Compensation Table | |||||||||||||||||||||||||||||||||||||||||||||||
| Name and Principal Position | Fiscal Year (1) | Salary (2) | Bonus (3) | Non-Equity Incentive Plan Compensation (4)(5) | Stock Awards (6) | Change In Pension Value and Non-qualified Deferred Compensation Earnings (7) | All Other Compensation (8) | Total (9) | |||||||||||||||||||||||||||||||||||||||
| Robert F. Rivers | 2022 | $ | 995,000 | $ | — | $ | 976,100 | $ | 4,503,726 | $ | 13,486 | $ | 255,368 | $ | 6,743,680 | ||||||||||||||||||||||||||||||||
| Chief Executive Officer and Chair of the Board of Directors | 2021 | $ | 995,000 | $ | — | $ | 2,757,136 | $ | — | $ | 86,687 | $ | 369,720 | $ | 4,208,543 | ||||||||||||||||||||||||||||||||
| 2020 | $ | 987,500 | $ | — | $ | 2,046,340 | $ | — | $ | 200,363 | $ | 439,097 | $ | 3,673,300 | |||||||||||||||||||||||||||||||||
| Quincy L. Miller | 2022 | $ | 587,500 | $ | — | $ | 385,900 | $ | 3,002,449 | $ | 20,111 | $ | 114,166 | $ | 4,110,126 | ||||||||||||||||||||||||||||||||
| President | 2021 | $ | 575,000 | $ | — | $ | 948,712 | $ | — | $ | 45,562 | $ | 224,347 | $ | 1,793,621 | ||||||||||||||||||||||||||||||||
| 2020 | $ | 570,833 | $ | 110,000 | $ | 943,670 | $ | — | $ | 79,179 | $ | 219,081 | $ | 1,922,763 | |||||||||||||||||||||||||||||||||
| James B. Fitzgerald | 2022 | $ | 587,500 | $ | — | $ | 385,900 | $ | 3,002,449 | $ | 2,406 | $ | 125,410 | $ | 4,103,665 | ||||||||||||||||||||||||||||||||
| Chief Administrative Officer, Chief Financial Officer and Treasurer | 2021 | $ | 575,000 | $ | — | $ | 948,712 | $ | — | $ | 69,595 | $ | 249,614 | $ | 1,842,921 | ||||||||||||||||||||||||||||||||
| 2020 | $ | 570,833 | $ | 220,000 | $ | 943,670 | $ | — | $ | 139,042 | $ | 220,885 | $ | 2,094,430 | |||||||||||||||||||||||||||||||||
Donald M. Westermann Chief Information Officer | 2022 | $ | 461,250 | $ | — | $ | 227,300 | $ | 2,001,646 | $ | — | $ | 34,504 | $ | 2,724,700 | ||||||||||||||||||||||||||||||||
Kathleen C. Henry General Counsel and Corporate Secretary | 2022 | $ | 461,250 | $ | — | $ | 227,300 | $ | 2,001,646 | $ | 84,812 | $ | 35,975 | $ | 2,810,983 | ||||||||||||||||||||||||||||||||
(1)Neither Mr. Westermann nor Ms. Henry were NEOs in 2021 or 2020. Their respective compensation is therefore only disclosed for the year ended December 31, 2022.
(2)Represents base salary earned in 2022, 2021 and 2020, as applicable. Mr. Rivers' 2020 salary change was effective on March 1, 2020. For Messrs. Miller and Fitzgerald, 2022 and 2020 salary changes were effective March 1st of each year. Salary earned reflects January and February salary earnings at the prior rate, and March through December at the new effective salary rate.
(3)For Mr. Miller, the cash bonus he received for 2020 recognized his leadership with regard to the Company's participation in the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. For Mr. Fitzgerald, the cash bonus he received for 2020 recognized his considerable role in the successful execution of the Company’s IPO.
(4)Represents cash awards earned under the Company’s MIP during 2022, 2021 and 2020, and the amounts payable under legacy LTIP cash awards that matured on December 31, 2021 and December 31, 2020, respectively.
•MIP Awards: For Messrs. Rivers, Miller, Fitzgerald, Westermann and Ms. Henry, amounts earned under the MIP in 2022 were $976,100, $385,900, $385,900, $227,300 and $227,300, respectively. For Messrs. Rivers, Miller and Fitzgerald, amounts earned under the MIP in 2021 were $1,075,000, $388,000 and $388,000, respectively, and in 2020 were $637,000, $239,000 and $239,000, respectively.
•Legacy LTIP Awards: For Messrs. Rivers, Miller and Fitzgerald, the amounts payable under legacy LTIP awards that were granted in 2017 and matured on December 31, 2021 were $1,682,136, $560,712 and $560,712 respectively. For Messrs. Rivers, Miller and Fitzgerald, LTIP awards granted in 2016 that matured on December 31, 2020 were $1,409,340, $704,670, $704,670, respectively. Legacy LTIP cash awards that were granted in 2018 and matured on December 31, 2022, were valued at $0, and thus no amounts are included in 2022 for the 2018 LTIP cash awards.
(5)The amounts payable under LTIP awards that matured in 2021 and 2020 include interest paid thereon from December 31 of the year in which they matured through the dates of payment in March 2022 and March 2021, respectively. For awards that matured in 2021, the interest amounts were $636 for Mr. Rivers, $212 for Mr. Miller and $212 for Mr. Fitzgerald. For awards that matured in 2020, the interest amounts were $540 for Mr. Rivers, $270 for Mr. Miller and $270 for Mr. Fitzgerald.
(6)Represents the aggregate grant date fair value of RSUs and PSUs granted in 2022, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, which for RSUs was equal to the closing price of a share of Company common stock on the date of grant ($21.08 on March 1, 2022), multiplied by the number of RSUs in the grant; for the PSUs based on EPS as the performance measure, was equal to the closing price of a share of Company
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common stock on the date of grant date ($21.08 on March 1, 2022), multiplied by the number of PSUs at target award levels; and for the PSUs based on TSR as the performance measure, was valued based on the probable outcome of applicable performance conditions using a Monte Carlo simulation model, which priced our common stock on the grant date at $21.15 per unit, multiplied by the number of PSUs at target award levels. If it is assumed that that the maximum level of performance under the PSUs was achieved, the grant date fair value of the PSU portion of the grant would have been $3,380,596 for Mr. Rivers; $2,253,688 for each of Messrs. Miller and Fitzgerald; and $1,502,480 for each of Ms. Henry and Mr. Westermann.
(7)Represents the change in the value of the Pension Plan and BEP for all our NEOs, for the period from December 31, 2021 to December 31, 2022. No change in value of the Pension Plan is shown for Mr. Westermann for the applicable period, as his change in value would have reflected a negative amount of (-$199,432) and was thus excluded.
(8)All Other Compensation in the table above includes the amounts for 2022, 2021 and 2020, as applicable, set forth in the following table.
| All Other Compensation | ||||||||||||||||||||||||||||||||||||||
| Named Executive Officer | Fiscal Year | Perquisites (a) | 401(k) Plan Defined Contribution Plan (b) | Employer SERP Contributions (c) | Employer Allocations to ESOP (d) | Total (e) | ||||||||||||||||||||||||||||||||
| Robert F. Rivers | 2022 | $ | 16,109 | $ | 9,150 | $ | 215,000 | $ | 15,109 | $ | 255,368 | |||||||||||||||||||||||||||
| 2021 | $ | 17,197 | $ | 8,700 | $ | 326,400 | $ | 17,423 | $ | 369,720 | ||||||||||||||||||||||||||||
| 2020 | $ | 16,350 | $ | 8,550 | $ | 412,500 | $ | 1,697 | $ | 439,097 | ||||||||||||||||||||||||||||
| Quincy L. Miller | 2022 | $ | 12,307 | $ | 9,150 | $ | 77,600 | $ | 15,109 | $ | 114,166 | |||||||||||||||||||||||||||
| 2021 | $ | 13,424 | $ | 8,700 | $ | 184,800 | $ | 17,423 | $ | 224,347 | ||||||||||||||||||||||||||||
| 2020 | $ | 12,267 | $ | 8,550 | $ | 196,567 | $ | 1,697 | $ | 219,081 | ||||||||||||||||||||||||||||
| James B. Fitzgerald | 2022 | $ | 23,551 | $ | 9,150 | $ | 77,600 | $ | 15,109 | $ | 125,410 | |||||||||||||||||||||||||||
| 2021 | $ | 16,691 | $ | 8,700 | $ | 206,800 | $ | 17,423 | $ | 249,614 | ||||||||||||||||||||||||||||
| 2020 | $ | 14,071 | $ | 8,550 | $ | 196,567 | $ | 1,697 | $ | 220,885 | ||||||||||||||||||||||||||||
| Donald M. Westermann | 2022 | $ | 10,245 | $ | 9,150 | $ | — | $ | 15,109 | $ | 34,504 | |||||||||||||||||||||||||||
| Kathleen C. Henry | 2022 | $ | 11,716 | $ | 9,150 | $ | — | $ | 15,109 | $ | 35,975 | |||||||||||||||||||||||||||
(a)Amount includes automobile and parking and gas allowances and taxable imputed incomes.
(b)Represents employer contributions under our 401(k) Plan made on behalf of the NEO.
(c)Represents deemed employer SERP contributions made during 2022, 2021 and 2020, as applicable. The SERP was frozen at the end of 2021; employer SERP contributions were made in 2022 related to compensation earned in 2021.
(d)Represents the value of an accounting restatementallocation of shares of Company common stock pursuant to the terms of the Company’s ESOP in connection with the NEO’s service in fiscal year 2022, 2021 and 2020, as applicable. The value is requiredcalculated based on the closing price of Company stock on the last day trading of the year. For 2022, the amount represents an allocation of 875 shares multiplied by $17.25, for 2021, the amount represents an allocation of 863 shares multiplied by $20.17, and for 2020, the amount represents an allocation of 104 shares multiplied by $16.31 (fractional shares are rounded down). The ESOP allocation for 2020 reflects a shortened period post-IPO. Dividends paid on shares allocated through the ESOP are automatically reinvested to acquire additional shares. For each NEO, as applicable, the share allocation for 2021 includes one additional share acquired through dividend reinvestment and, for 2022, the share allocation includes 19 additional shares acquired through dividend reinvestment.
(e) Our NEOs' total compensation in the Summary Compensation Table does not include earnings on the SERP, in which Messrs. Rivers, Miller and Fitzgerald participate, because our NEOs do not receive any preferential or above-market investment earnings under such plans. Under the terms of the SERP, the value of the benefit provided increases or decreases based upon changes in one or more generally available investment benchmarks or strategies chosen by the respective participant.
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Grant of Plan-Based Awards in 2022
The table below provides information regarding plan-based awards granted to our NEOs in 2022.
| Estimated future payouts under equity incentive plan awards (1) | ||||||||||||||||||||||||||
| Named Executive Officer | Type of Award | Grant Date | Approval Date | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stocks or Units (#) (2) | Grant Date Fair Value of Stock and Option Awards | ||||||||||||||||||
| Robert F. Rivers | RSU | 3/1/2022 | 2/28/2022 | - | - | - | 106,736 | $2,249,995 | ||||||||||||||||||
| PSU - EPS | 3/1/2022 | 2/28/2022 | 13,342 | 53,368 | 80,052 | - | $1,124,997 | |||||||||||||||||||
| PSU - TSR | 3/1/2022 | 2/28/2022 | 13,342 | 53,368 | 80,052 | - | $1,128,733 | |||||||||||||||||||
| Quincy L. Miller | RSU | 3/1/2022 | 2/14/2022 | - | - | - | 71,157 | $1,499,990 | ||||||||||||||||||
| PSU - EPS | 3/1/2022 | 2/14/2022 | 8,895 | 35,578 | 53,367 | - | $749,984 | |||||||||||||||||||
| PSU - TSR | 3/1/2022 | 2/14/2022 | 8,895 | 35,578 | 53,367 | - | $752,475 | |||||||||||||||||||
| James B. Fitzgerald | RSU | 3/1/2022 | 2/14/2022 | - | - | - | 71,157 | $1,499,990 | ||||||||||||||||||
| PSU - EPS | 3/1/2022 | 2/14/2022 | 8,895 | 35,578 | 53,367 | - | $749,984 | |||||||||||||||||||
| PSU - TSR | 3/1/2022 | 2/14/2022 | 8,895 | 35,578 | 53,367 | - | $752,475 | |||||||||||||||||||
| Donald M. Westermann | RSU | 3/1/2022 | 2/14/2022 | - | - | - | 47,438 | $999,993 | ||||||||||||||||||
| PSU - EPS | 3/1/2022 | 2/14/2022 | 5,930 | 23,719 | 35,579 | - | $499,997 | |||||||||||||||||||
| PSU - TSR | 3/1/2022 | 2/14/2022 | 5,930 | 23,719 | 35,579 | - | $501,657 | |||||||||||||||||||
| Kathleen C. Henry | RSU | 3/1/2022 | 2/14/2022 | - | - | - | 47,438 | $999,993 | ||||||||||||||||||
| PSU - EPS | 3/1/2022 | 2/14/2022 | 5,930 | 23,719 | 35,579 | - | $499,997 | |||||||||||||||||||
| PSU - TSR | 3/1/2022 | 2/14/2022 | 5,930 | 23,719 | 35,579 | - | $501,657 | |||||||||||||||||||
(1) Represents PSUs that will, for each grant of PSUs based on EPS or TSR performance measures, respectively, vest in one installment on or around March 1, 2025, subject to continued service and the satisfaction of applicable performance conditions. The number of PSUs to be filed withearned is dependent on the SECCompany's growth of its EPS and TSR performance, each relative to correct a material non-compliance with any financial reporting requirements under applicable securities laws.
(2) Represents RSUs that vest in five equal installments on the anniversaries of Directors has adopted the grant date (March 1, 2022), subject to continued service.
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Outstanding Equity Awards at 2022 Fiscal Year End
The following table provides information regarding PSUs and RSUs, as applicable, held by our NEOs on December 31, 2022.
| Named Executive Officer | Equity Award Type (1) | Equity Incentive Plan awards: Number of underlying shares that have not yet vested | Equity Incentive Plan awards: Market Value of underlying shares that have not yet vested (2) | ||||||||
| Robert F. Rivers | RSU | 106,736 | $ | 1,841,196 | |||||||
| PSU - EPS | 13,342 | $ | 230,150 | ||||||||
| PSU - TSR | 13,342 | $ | 230,150 | ||||||||
| Quincy L. Miller | RSU | 71,157 | $ | 1,227,458 | |||||||
| PSU - EPS | 8,895 | $ | 153,430 | ||||||||
| PSU - TSR | 8,895 | $ | 153,430 | ||||||||
| James B. Fitzgerald | RSU | 71,157 | $ | 1,227,458 | |||||||
| PSU - EPS | 8,895 | $ | 153,430 | ||||||||
| PSU - TSR | 8,895 | $ | 153,430 | ||||||||
| Donald M. Westermann | RSU | 47,438 | $ | 818,306 | |||||||
| PSU - EPS | 5,930 | $ | 102,288 | ||||||||
| PSU - TSR | 5,930 | $ | 102,288 | ||||||||
| Kathleen C. Henry | RSU | 47,438 | $ | 818,306 | |||||||
| PSU - EPS | 5,930 | $ | 102,288 | ||||||||
| PSU - TSR | 5,930 | $ | 102,288 | ||||||||
(1) Each RSU award will vest in five equal installments on the anniversaries of the grant date (March 1, 2022), subject to continued employment. PSUs based on EPS and TSR performance, respectively, will vest in one installment on or around March 1, 2025, subject to continued employment and the satisfaction of applicable performance conditions. The number of PSUs to be earned is dependent on the Company's growth of its EPS and TSR performance, respectively, each relative to those of the KRX Banks, over the three-year performance period from January 1, 2022 through December 31, 2024. PSU amounts for both EPS and TSR performance measure awards reflect threshold performance levels.
(2) The market value of RSUs and PSU EPS and PSU TSR performance measure awards are based on the closing price of $17.25 of Company common stock ownership guidelines set forth below. Each director is expectedon December 30, 2022, the last trading day of 2022, multiplied by the number of underlying granted but unvested units.
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Nonqualified Deferred Compensation
The Company's nonqualified deferred contribution plans allow certain highly compensated or management employees to achievedefer portions of their current compensation, as specified in the applicable stock ownership threshold within five (5) yearsplan documents. These plans include the SERP and the 409A Plan (as described below). Distributions of eitheraccount balances under such plans may be made only in accordance with the date of implementationapplicable plan documents. None of these stock ownership guidelines (June 2020)plans provide our NEOs with any preferential or the date the director is first elected to the Board of Directors, whichever is later; each director’s stock holdings will be valued annually:
Frozen Supplemental Executive Retirement Plan. Messrs. Rivers, Miller and Fitzgerald each received employer SERP contributions in 2022 for compensation earned in 2021. The plan was frozen effective as of December 31, 2021. Although participants’ accounts will continue to be administered in accordance with the SERP document until their cash retainersrespective separations from service, the Company ceased accruing for benefits for SERP participants on earnings received after December 31, 2021 (other than with respect to the compensation earned in shares2021). Pursuant to the terms of the Company’s stock;frozen SERP, prior to 2022 an executive's account was credited monthly with an amount equal to 20% of their salary and credited annually with an amount equal to 20% of their short-term incentives. Under the terms of the SERP, each executive participating in the SERP becomes entitled to receive a benefit following his separation from service with the Company. The SERP benefit vests over a 10-year period and account balances are payable as a lump sum or in annual installments, as determined in accordance with the terms of the plan. Each of Messrs. Rivers and Fitzgerald are fully vested due to being retirement eligible under the terms of the SERP, and Mr. Miller is 70% vested.
409A Deferred Compensation Plans. The CEO shall hold four timesCompany's 409A Plan allows directors and selected executives to defer compensation under non-qualified deferred compensation plans. Under the 409A Plan, participants could defer up to 75% of base salary and up to 100% of any incentive compensation. The balances under these plans reflect compensation deferred in prior years and are payable as a lump sum or in annual installments, as determined in accordance with the terms of the applicable plan.
The table below sets forth the amounts of the contributions, earnings and value of histhe Company's nonqualified deferred compensation plans in which our NEOs participated during the year ended December 31, 2022.
| Nonqualified Deferred Compensation | |||||||||||||||||
| Named Executive Officer | Executive contributions | Employer contributions (1) | Aggregate earnings (2) | Aggregate withdrawals/distributions | Aggregate balance (3) | ||||||||||||
| Robert F. Rivers | $0 | $215,157 | $(1,733,748) | $0 | $7,824,576 | ||||||||||||
| Quincy L. Miller | $0 | $77,600 | $(315,261) | $0 | $1,431,960 | ||||||||||||
| James B. Fitzgerald | $0 | $77,600 | $(1,161,541) | $0 | $2,793,539 | ||||||||||||
| Donald M. Westermann | $0 | $0 | $(24,682) | $0 | $94,903 | ||||||||||||
| Kathleen C. Henry | $0 | $0 | $0 | $0 | $0 | ||||||||||||
(1) Amounts represent the Company's contributions to the SERP, as described above. The SERP was frozen at the end of 2021; employer SERP contributions were made in 2022 related to compensation earned for 2021.
(2) Represents the change in value for employee and Company contributions to the SERP and 409A Plan. As described above, neither of these plans provides for any preferential or her annual base salary in shares ofabove-market earnings on a participant's account balances.
(3) Amount shown is the Company’s stock; and
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Pension Benefits
Defined Benefit Pension Plan. The Company provides pension benefits to its employees, including our NEOs, through membership in the Company’s stock, depending on the positionPension Plan. The Pension Plan is a noncontributory, defined benefit plan, and asour annual contribution to this plan is based upon standards established by the Compensation Committee.Pension Protection Act. The Pension Plan is a cash balance format with compensation based on a participant's earnings reported on IRS Form W-2 for the applicable year. Participants vest in their account balances after three years of eligible service and the plan provides for payment in a lump sum or, if eligible, a life annuity at retirement. All of our NEOs are fully vested in their account balances under the Pension Plan.
The Company has an Insider Trading Policy that, among other things, prohibits all of our employees (including officers) and directors from engaging in hedging or other speculative transactions relating to shares of the Company’s stock. Prohibited transactions include short sales, derivative securities (such as put and call options, or other similar instruments) and other hedging transactions (such as equity swaps, prepaid variable forwards, or similar instruments), or any transactions that have or are designed to have the effect of hedging or offsetting any decreaseamounts reported in the markettable below equal the present value of the Company’s securities. In addition, Section 16 officers and directors are generally prohibited from holdingaccumulated pension benefits at the Company’s securities in a margin account or otherwise pledging the Company’s securities as collateralend of fiscal year 2022 for a loan.
| Pension Benefits | ||||||||||||||
| Named Executive Officer | Plan Name | Number of Years of Credited Service | Present Value of Accumulated Benefit as of 12/31/2022 | Payments during last fiscal year | ||||||||||
| Robert F. Rivers | Total | $ | 818,880 | $ | — | |||||||||
| Defined Benefit Plan | 16.9 | $ | 698,714 | $ | — | |||||||||
| BEP | $ | 120,166 | $ | — | ||||||||||
| Quincy L. Miller | Total | $ | 230,039 | $ | — | |||||||||
| Defined Benefit Plan | 6.8 | $ | 205,919 | $ | — | |||||||||
| BEP | $ | 24,120 | $ | — | ||||||||||
| James B. Fitzgerald | Total | $ | 563,086 | $ | — | |||||||||
| Defined Benefit Plan | 10.7 | $ | 529,357 | $ | — | |||||||||
| BEP | $ | 33,729 | $ | — | ||||||||||
| Donald M. Westermann | Total | $ | 867,171 | $ | — | |||||||||
| Defined Benefit Plan | 15.7 | $ | 385,588 | $ | — | |||||||||
| BEP | $ | 481,583 | $ | — | ||||||||||
| Kathleen C. Henry | Total | $ | 497,402 | $ | — | |||||||||
| Defined Benefit Plan | 6.3 | $ | 244,312 | $ | — | |||||||||
| BEP | $ | 253,090 | $ | — | ||||||||||
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2022
Executive Severance Agreements.
As described above under “Severance Agreements” within the CD&A section of this Proxy Statement, each of Messrs. Rivers and Miller has entered into an executive severance agreement, which provide for certain benefits in the event that either is terminated without cause. Under each of these agreements, “cause” is defined and further described below) will not be reducedas:
•any act of gross misconduct or gross negligence which results in ordermaterial harm to avoid an excess parachute payment under Section 280G, exceptthe Company, whether monetarily or otherwise;
•any act of dishonesty, disloyalty or fraud which results in circumstances in whichmaterial harm to the applicationCompany, whether monetarily or otherwise;
•a conviction of, or plea of nolo contendere to, any felony or any crime involving moral turpitude; or
•a failure to perform a substantial portion of the excise tax under Section 4999duties of his position adequately for a period of more than 30 days after written notice from the Code (“Section 4999”) on the full amountCompany describing such failure.
Under their respective executive severance agreements, each of severanceMessrs. Rivers and other compensation deemed to be an excess parachute payment under Section 280G would leave the executive with a lower net after-tax amount than having the severance and other compensation reduced to the extent necessary so the excise tax would not apply. In circumstances in which the amount of severance and other compensation deemed to be a parachute payment under Section 280G is not reduced, the executive would owe the excise tax under Section 4999 and would notMiller, if terminated without cause, will be entitled to the respective lump sum payment described above in the CD&A section, provided that each signs a gross-uprelease of claims against the Company, and which release becomes effective. Neither agreement provide for additional payments in the event of death or reimbursement of that excise tax paymentdisability, other than what each is entitled to under his or her CiC Agreement.other existing benefit plans, although each is entitled to the benefits described above if terminated for cause.
Defined Benefit Pension Plan. The Company provides pension benefits to its employees, including our NEOs, through membership in Control Agreements
Benefit Equalization Plan. The Company maintains the BEP, a non-qualified benefit equalization plan to provide a pension supplement to restore pension benefits for employees who were historically ineligible to participate in the SERP and whose compensation exceeds the annual statutory compensation maximum that can be considered under the Pension Plan, and/or exceeds the annual permitted pension benefit amount under the Code. The benefit formula for the BEP is the same as provided in the Pension Plan, with an offset for benefits provided by that plan. Benefits are generally paid in a lump sum in the January following retirement or death. Active participants in the SERP did not receive BEP benefits; Messrs. Rivers, Miller and Fitzgerald first became eligible for BEP in 2022.
The amounts reported in the table below equal to a multiple of (a) his or her base salary, plus (b) the greaterpresent value of the executive’s annual bonus foraccumulated pension benefits at the end of fiscal year in which the termination occurred and the average of the executive’s bonuses for the three (3) years immediately preceding the year in which the termination occurred. For Messrs. Rivers and Miller, the applicable multiplier is 300%;2022 for each of our NEOs. The Pension Plan is referred to as the other executives including Mr. Fitzgerald, the multiplier is 200%. As noted above, any payment required under the CiC Agreements will be reduced to the extent necessary to avoid penalties under Section 280G, but only if such reduction would result“Defined Benefit Plan” in a higher after-tax amount to the executive. In exchangethis table.
| Pension Benefits | ||||||||||||||
| Named Executive Officer | Plan Name | Number of Years of Credited Service | Present Value of Accumulated Benefit as of 12/31/2022 | Payments during last fiscal year | ||||||||||
| Robert F. Rivers | Total | $ | 818,880 | $ | — | |||||||||
| Defined Benefit Plan | 16.9 | $ | 698,714 | $ | — | |||||||||
| BEP | $ | 120,166 | $ | — | ||||||||||
| Quincy L. Miller | Total | $ | 230,039 | $ | — | |||||||||
| Defined Benefit Plan | 6.8 | $ | 205,919 | $ | — | |||||||||
| BEP | $ | 24,120 | $ | — | ||||||||||
| James B. Fitzgerald | Total | $ | 563,086 | $ | — | |||||||||
| Defined Benefit Plan | 10.7 | $ | 529,357 | $ | — | |||||||||
| BEP | $ | 33,729 | $ | — | ||||||||||
| Donald M. Westermann | Total | $ | 867,171 | $ | — | |||||||||
| Defined Benefit Plan | 15.7 | $ | 385,588 | $ | — | |||||||||
| BEP | $ | 481,583 | $ | — | ||||||||||
| Kathleen C. Henry | Total | $ | 497,402 | $ | — | |||||||||
| Defined Benefit Plan | 6.3 | $ | 244,312 | $ | — | |||||||||
| BEP | $ | 253,090 | $ | — | ||||||||||
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Potential Payments upon Termination or Change-in-Control for the lump sum severance payments and other benefits,Year Ended December 31, 2022
Executive Severance Agreements.
As described above under “Severance Agreements” within the CiC Agreements provide for certain post-employment obligations with respect to the executive’s ability to compete with the Company and solicit our employees or customers.
•any act of gross misconduct or gross negligence which results in material harm to solicit customers and employeesthe Company, whether monetarily or otherwise;
•any act of Eastern Bank during their employment with Eastern Bank and continuingdishonesty, disloyalty or fraud which results in material harm to the Company, whether monetarily or otherwise;
•a conviction of, or plea of nolo contendere to, any felony or any crime involving moral turpitude; or
•a failure to perform a substantial portion of the duties of his position adequately for a period ending 24 months following their termination of employment. In addition, Mr. Miller’s agreement also specifies that while he is employed, he will receive an annual base salary of not lessmore than $450,000 (subject to adjustment), discretionary incentive and/or bonus compensation, and participation on generally applicable terms and conditions in other compensation and fringe benefit plans, an automobile allowance of $700 each month, and reimbursement of country club membership fees, if sought. Mr. Rivers’ agreement does not address compensation or benefits during employment.
| Summary Compensation Table | ||||||||||||||||||||||||||||||||||||||||||||
| Name and Principal Position | Fiscal Year | Salary (1) | Bonus (2) | Non-Equity Incentive Plan Compensation ($)(3)(4) | Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | |||||||||||||||||||||||||||||||||||||
| Robert F. Rivers | 2020 | $ | 987,500 | $ | — | $ | 2,046,340 | $ | 1,351,220 | $ | 439,097 | $ | 4,824,157 | |||||||||||||||||||||||||||||||
| Chief Executive Officer and Chair of the Board of Directors | 2019 | $ | 929,167 | $ | — | $ | 1,945,261 | $ | 1,206,105 | $ | 408,459 | $ | 4,488,992 | |||||||||||||||||||||||||||||||
| Quincy L. Miller | 2020 | $ | 570,833 | $ | 110,000 | $ | 943,670 | $ | 222,539 | $ | 219,081 | $ | 2,066,123 | |||||||||||||||||||||||||||||||
| President & Vice Chair | 2019 | $ | 545,833 | $ | — | $ | 412,000 | $ | 148,375 | $ | 212,635 | $ | 1,318,843 | |||||||||||||||||||||||||||||||
| James B. Fitzgerald | 2020 | $ | 570,833 | $ | 220,000 | $ | 943,670 | $ | 682,719 | $ | 220,885 | $ | 2,638,107 | |||||||||||||||||||||||||||||||
| Chief Financial Officer, Chief Administrative Officer and Treasurer | 2019 | $ | 545,833 | $ | — | $ | 798,783 | $ | 417,049 | $ | 214,402 | $ | 1,976,067 | |||||||||||||||||||||||||||||||
| All Other Compensation | ||||||||||||||||||||||||||||||||||||||
| Named Executive Officer | Fiscal Year | Perquisites (1) | 401(k) Plan Defined Contribution Plan (2) | Employer SERP Contributions (3) | Employer Allocations to ESOP (4) | Total | ||||||||||||||||||||||||||||||||
| Robert F. Rivers | 2020 | $ | 16,350 | $ | 8,550 | $ | 412,500 | $ | 1,697 | $ | 439,097 | |||||||||||||||||||||||||||
| 2019 | $ | 16,226 | $ | 8,400 | $ | 383,833 | $ | — | $ | 408,459 | ||||||||||||||||||||||||||||
| Quincy L. Miller | 2020 | $ | 12,267 | $ | 8,550 | $ | 196,567 | $ | 1,697 | $ | 219,081 | |||||||||||||||||||||||||||
| 2019 | $ | 11,068 | $ | 8,400 | $ | 193,167 | $ | — | $ | 212,635 | ||||||||||||||||||||||||||||
| James B. Fitzgerald | 2020 | $ | 14,071 | $ | 8,550 | $ | 196,567 | $ | 1,697 | $ | 220,885 | |||||||||||||||||||||||||||
| 2019 | $ | 12,835 | $ | 8,400 | $ | 193,167 | $ | — | $ | 214,402 | ||||||||||||||||||||||||||||
Pension Benefits
Defined Benefit Pension Plan. The Company provides pension benefits to its employees, including our NEOs, through membership in the Pension Plan. The Pension Plan is a noncontributory, defined benefit plan, and our annual contribution to this plan is based upon standards established by the Pension Protection Act. The Pension Plan is a cash balance format with compensation based on a participant's earnings reported on IRS Form W-2 for the applicable year. Participants vest in their account balances after three years of eligible service and the plan provides for payment in a lump sum or, if eligible, a life annuity at retirement. All of our NEOs are fully vested in their account balances under the Pension Plan.
Benefit Equalization Plan. The Company maintains the BEP, a non-qualified benefit equalization plan to provide a pension supplement to restore pension benefits for employees who were historically ineligible to participate in the SERP and whose compensation exceeds the annual statutory compensation maximum that can be considered under the Pension Plan, and/or exceeds the annual permitted pension benefit amount under the Code. The benefit formula for the BEP is the same as provided in the Pension Plan, with an offset for benefits provided by that plan. Benefits are generally paid in a lump sum in the January following retirement or death. Active participants in the SERP did not receive BEP benefits; Messrs. Rivers, Miller and Fitzgerald first became eligible for BEP in 2022.
The amounts reported in the table below equal the present value of the accumulated pension benefitbenefits at the end of fiscal 2020year 2022 for each of our NEOs. The Pension Plan is referred to as the “Defined Benefit Plan” in this table.
| Pension Benefits | ||||||||||||||
| Named Executive Officer | Plan Name | Number of Years of Credited Service | Present Value of Accumulated Benefit as of 12/31/2020 | Payments during last fiscal year | ||||||||||
| Robert F. Rivers | Total | $ | 7,927,615 | $ | — | |||||||||
| Defined Benefit Plan | 14.9 | $ | 718,707 | $ | — | |||||||||
| SERP | 14.9 | $ | 7,208,908 | $ | — | |||||||||
| Quincy L. Miller | Total | $ | 1,336,942 | $ | — | |||||||||
| Defined Benefit Plan | 4.8 | $ | 164,366 | $ | — | |||||||||
| SERP | 4.8 | $ | 1,172,576 | $ | — | |||||||||
| James B. Fitzgerald | Total | $ | 3,241,331 | $ | — | |||||||||
| Defined Benefit Plan | 8.7 | $ | 491,085 | $ | — | |||||||||
| SERP | 8.7 | $ | 2,750,246 | $ | — | |||||||||
| Pension Benefits | ||||||||||||||
| Named Executive Officer | Plan Name | Number of Years of Credited Service | Present Value of Accumulated Benefit as of 12/31/2022 | Payments during last fiscal year | ||||||||||
| Robert F. Rivers | Total | $ | 818,880 | $ | — | |||||||||
| Defined Benefit Plan | 16.9 | $ | 698,714 | $ | — | |||||||||
| BEP | $ | 120,166 | $ | — | ||||||||||
| Quincy L. Miller | Total | $ | 230,039 | $ | — | |||||||||
| Defined Benefit Plan | 6.8 | $ | 205,919 | $ | — | |||||||||
| BEP | $ | 24,120 | $ | — | ||||||||||
| James B. Fitzgerald | Total | $ | 563,086 | $ | — | |||||||||
| Defined Benefit Plan | 10.7 | $ | 529,357 | $ | — | |||||||||
| BEP | $ | 33,729 | $ | — | ||||||||||
| Donald M. Westermann | Total | $ | 867,171 | $ | — | |||||||||
| Defined Benefit Plan | 15.7 | $ | 385,588 | $ | — | |||||||||
| BEP | $ | 481,583 | $ | — | ||||||||||
| Kathleen C. Henry | Total | $ | 497,402 | $ | — | |||||||||
| Defined Benefit Plan | 6.3 | $ | 244,312 | $ | — | |||||||||
| BEP | $ | 253,090 | $ | — | ||||||||||
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2022
Executive Severance Agreements.
As described above under “Severance Agreements” within the CD&A section of this Proxy Statement, each of Messrs. Rivers and Miller has entered into an executive severance agreement, which provide for certain benefits in the event that either is terminated without cause. Under each of these agreements, “cause” is defined as:
•any act of gross misconduct or gross negligence which results in material harm to the Company, whether monetarily or otherwise;
•any act of dishonesty, disloyalty or fraud which results in material harm to the Company, whether monetarily or otherwise;
•a conviction of, or plea of nolo contendere to, any felony or any crime involving moral turpitude; or
•a failure to perform a substantial portion of the duties of his position adequately for a period of more than 30 days after written notice from the Company describing such failure.
Under their respective executive severance agreements, each of Messrs. Rivers and Miller, if terminated without cause, will be entitled to the respective lump sum payment described above in the CD&A section, provided that each signs a release of claims against the Company, and which release becomes effective. Neither agreement provide for additional payments in the event of death or disability, other than what each is entitled to under other existing benefit plans, although each is entitled to the benefits described above if terminated for cause.
Double-Trigger Change in Control Agreements
As described further above under “Double-Trigger Change in Control Agreements” within the CD&A section of this Proxy Statement, each of our NEOs has entered into a double-trigger CiC Agreement. These agreements entitle the NEO to a lump sum payment described above in the event that their employment is terminated while a change in control event (as described below) has occurred and is pending, or within 18 months following a change in control event, and the reason for termination is for other than the NEO's death, disability or cause (as each of the latter terms are defined in the CiC Agreement), or is due to the NEO's own resignation for good reason (as defined below).
The CiC Agreement utilizes the following definitions:
A “change of control” is defined as the consummation of any of the following events:
•merger, consolidation or other business combination of the Company or Eastern Bank, after which either (A) our incumbent board of directors constitute less than two-thirds of the surviving board of directors (“Surviving Board”), or (B) less than 60% of the combined voting power of shares entitled to vote in an election of the Surviving Board is owned by persons who were shareholders of the Company prior to the merger, consolidation or other business combination;
•the acquisition by any person of 25% or more of our outstanding common stock or voting securities (unless such acquisition is by an entity under our common control);
•during any consecutive two year period, the failure of our incumbent directors to constitute a majority of our board of directors, with “incumbent directors” meaning directors who are members of our board of directors on the date of the agreement and members who are subsequently nominated or elected by a majority of the incumbent directors;
•the sale or other disposition of all or substantially all of our assets to any person, group or entity; and
•any other transaction that our board of directors deems to be a “change in control”.
The term “cause” is defined as:
•a material act of willful misconduct in connection with the performance of his/her duties, including, without limitation, misappropriation of the Company's funds or property;
•the conviction for, or plea of nolo contendere by the NEO to, any felony or a misdemeanor involving deceit, dishonesty, or fraud;
•the commission of any misconduct, whether or not related to the Company or its affiliates, that has caused, or would reasonably be expected to cause, material detriment or damage to the Company's or its affiliates’ reputation, business operation or relation with its employees, customers, vendors, suppliers or regulators;
46
•continued, willful and deliberate non-performance by duties (other than by reason of the NEO’s physical or mental illness, incapacity or disability) that has continued for more than 30 days following written notice providing the details of such non-performance;
• willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, or the deliberate destruction of or deliberate failure to preserve documents or other materials relevant to such investigation, or the willful inducement of others to fail to cooperate or to fail to produce documents or other materials; or
•removal or prohibition from participating in the conduct of the Company’s affairs by order issued under applicable law and regulations by a federal or state banking agency having authority over the Company.
The term “good reason” is defined as:
•a material diminution of the NEO's responsibilities, authorities or control from those exercise by the NEO immediately prior to the change in control event;
•any material reduction in the NEO's annual compensation or benefits (other than across-the-board reductions affecting all of the Company's executive officers);
•the relocation of the offices at which the NEO is employed to a location more than 25 miles from such office, or the requirement to be based at a location more than 25 miles from such office; or
•any material breach of the CiC Agreement by the Company.
Under the CiC Agreements, each of our NEOs will be entitled to the lump sum payment described above in “Double-Trigger Change in Control Agreements” within the CD&A section of this Proxy Statement in the event of a double-trigger change in control event, provided that each signs a separation agreement and release with the Company, which then becomes irrevocable. The CiC Agreement does not provide for additional payments in the event of death or disability, other than what a NEO is entitled to under other existing benefit plans. As described above under “No Tax Gross Ups,” the dollar amount of any severance payment due under the CiC Agreements will be reduced in certain circumstances in order to avoid an excess parachute payment under Section 280G.
Set forth below the table is a description of certain post-employment arrangements with our NEOs, including the severance benefits and change-in-control benefits to which they would have been entitled under applicable benefit plans as of December 31, 2022, if a termination of employment and/or a change-in-control had occurred on such date. None of our NEOs are entitled to receive payments if they are terminated for cause as of such date.
47
| Potential Payments upon Termination or Change-in-Control | ||||||||||||||
| Named Executive Officer | Without Cause/For Good Reason (1) | Death/Disability (2) | Retirement (3) | Change in Control (Double Trigger) (4) | ||||||||||
| Robert F. Rivers | ||||||||||||||
| Salary | $ | 1,990,000 | $ | — | $ | — | $ | 2,985,000 | ||||||
| MIP | $ | 895,500 | $ | 895,500 | $ | 895,500 | $ | 929,000 | ||||||
| RSU | $ | — | $ | 1,841,196 | $ | — | $ | 1,841,196 | ||||||
| PSU - EPS | $ | — | $ | — | $ | — | $ | 920,598 | ||||||
| PSU - TSR | $ | — | $ | — | $ | — | $ | 920,598 | ||||||
| Medical | $ | 56,856 | $ | — | $ | — | $ | 42,642 | ||||||
| Quincy L. Miller | ||||||||||||||
| Salary | $ | 1,180,000 | $ | — | $ | — | $ | 1,770,000 | ||||||
| MIP | $ | 354,000 | $ | 354,000 | $ | 354,000 | $ | 354,000 | ||||||
| RSU | $ | — | $ | 1,227,458 | $ | — | $ | 1,227,458 | ||||||
| PSU - EPS | $ | — | $ | — | $ | — | $ | 613,721 | ||||||
| PSU - TSR | $ | — | $ | — | $ | — | $ | 613,721 | ||||||
| Medical | $ | — | $ | — | $ | — | $ | — | ||||||
| James B. Fitzgerald | ||||||||||||||
| Salary | $ | — | $ | — | $ | — | $ | 1,180,000 | ||||||
| MIP | $ | — | $ | 354,000 | $ | 354,000 | $ | 354,000 | ||||||
| RSU | $ | — | $ | 1,227,458 | $ | — | $ | 1,227,458 | ||||||
| PSU - EPS | $ | — | $ | — | $ | — | $ | 613,721 | ||||||
| PSU - TSR | $ | — | $ | — | $ | — | $ | 613,721 | ||||||
| Medical | $ | — | $ | — | $ | — | $ | 29,729 | ||||||
| Donald M. Westermann | ||||||||||||||
| Salary | $ | — | $ | — | $ | — | $ | 927,000 | ||||||
| MIP | $ | — | $ | 208,575 | $ | 208,575 | $ | 259,000 | ||||||
| RSU | $ | — | $ | 818,306 | $ | — | $ | 818,306 | ||||||
| PSU - EPS | $ | — | $ | — | $ | — | $ | 409,153 | ||||||
| PSU - TSR | $ | — | $ | — | $ | — | $ | 409,153 | ||||||
| Medical | $ | — | $ | — | $ | — | $ | 45,297 | ||||||
| Kathleen C. Henry | ||||||||||||||
| Salary | $ | — | $ | — | $ | — | $ | 927,000 | ||||||
| MIP | $ | — | $ | 208,575 | $ | 208,575 | $ | 227,667 | ||||||
| RSU | $ | — | $ | 818,306 | $ | — | $ | 818,306 | ||||||
| PSU - EPS | $ | — | $ | — | $ | — | $ | 409,153 | ||||||
| PSU - TSR | $ | — | $ | — | $ | — | $ | 409,153 | ||||||
| Medical | $ | — | $ | — | $ | — | $ | 45,297 | ||||||
(1) Represents amounts payable under the Executive Severance Agreements for Messrs. Rivers and Miller. Salary amounts represent 200% of a NEO's base salary rate as of December 31, 2022. The MIP amounts represent a NEO's target payout under the MIP for 2022. For Mr. Rivers, medical represents the Company's cost to provide medical and dental coverage for 24 months. Mr. Miller is not enrolled in the Company's medical or dental coverage and therefore is not entitled to severance amounts related to medical or dental under the terms of his executive severance agreements. No amount is included for equity compensation, as our equity award agreements generally provide for forfeiture upon termination or resignation except as otherwise set forth in this table, subject to certain Board and C&HCM Committee discretionary authority.
(2) MIP amounts represent an NEO's target payout under the MIP for 2022, and RSU amounts represent the closing price of Company common stock ($17.25) on December 31, 2022, multiplied by the number of units that would vest as accelerated upon the occurrence of the qualifying event. PSUs would not be eligible for vesting until a determination is made at the end of a three-year performance period as to whether the applicable performance conditions are met; PSUs therefore are not included for purposes of this table. A valuation of the PSUs at threshold performance levels for each NEO as of December 31, 2022, is provided in the "Outstanding Equity Awards at 2022 Fiscal Year End" table.
48
(3) Amounts represent an NEO's target payout under the MIP for 2022.
(4) All NEOs are covered by CiC Agreements. For Messrs. Rivers and Miller, salary amounts are 300% of the base salary rate at December 31, 2022, and for Messrs. Fitzgerald and Westermann and Ms. Henry, salary amounts are 200% of the base salary rate at December 31, 2022. For Messrs. Rivers and Westermann and Ms. Henry, the MIP amount is equal to the average of the MIP payouts for the preceding three (3) years (2019, 2020 and 2021), which amounts are greater than the 2022 target annual bonus. For Messrs. Miller and Fitzgerald, the MIP amount is equal to the 2022 MIP target amount, which is greater than the average of the preceding three (3) years bonus payments. Medical payment amounts for Messrs. Rivers, Fitzgerald, and Westermann and Ms. Henry represent the cost of providing 18 months of medical and dental coverage. Mr. Miller is not enrolled in the Company's medical or dental coverage and therefore is not entitled to severance amounts related to these items. RSU and PSU amounts represent the closing price of Company common stock ($17.25) on December 31, 2022, multiplied by the number of units that would accelerate upon the occurrence of a qualifying termination following a change in control.
In addition to the amounts set forth in the table above, each of our NEOs would also receive the vested value of their accounts in the plans included in the Nonqualified Deferred Compensation and Pension Benefits tables above, which may include the SERP, the 409A Plan, the Pension Plan and the BEP.
CEO Pay Ratio
The following information is provided in accordance with Item 402(u) of Regulation S-K of the Securities Act of 1933, as amended. The pay ratio is an estimate of our median employee's total compensation to that of our CEO, Mr. Rivers, for 2022, as disclosed in the Summary Compensation Table.
To determine our median employee for 2022, we used our employee population as of October 31, 2022, excluding the CEO. The date of October 31st was selected to represent our employee population for the majority of 2022. As of October 31, 2022, Eastern's employee population, consisting of all full-time, part-time and seasonal employees, was 2,158 individuals. The median of all base salaries (excluding the CEO) was reviewed to determine our median base salary as the consistently applied compensation measure.
With the median employee identified, this individual's 2022 total compensation was determined following the same measures used to determine Mr. Rivers's total compensation in the Summary Compensation Table. These factors include base salary, incentive(s), change in pension value and all other compensation.
•2022 total annual compensation for the median employee was $74,548
•2022 total annual compensation for Mr. Rivers, the CEO, was $6,743,680
•The result is a median employee to CEO pay ratio of 1:90.5
SEC guidelines for determining the median employee provide discretion to companies in adopting a variety of compensation measure(s) to apply to the analysis. We believe the pay ratio reported above is a reasonable estimate based on our records, but it may not be readily comparable to other companies due to factors such as location, compensation practices, exclusions, estimates or assumptions that other companies may apply.
Pay Versus Performance
In accordance with rules adopted by the SEC, we provide the following disclosure regarding executive "Compensation Actually Paid" or "CAP" (as calculated in accordance with SEC rules) and certain Company performance for the fiscal years listed below. Please refer to the "Compensation Discussion and Analysis" starting at Page 25 of this proxy statement for a more complete description of how executive compensation relates to Company performance and how the C&HCM Committee makes its decisions.
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| Value of Initial Fixed $100 Investment Based on: | |||||||||||||||||||||||
| Year # | SCT Total for PEO | "Compensation Actually Paid" to PEO (1) | Average SCT Total for Non-PEO NEOs (2) | Average "Compensation Actually Paid" to Non-PEO NEOs (1) (2) | Company TSR (3) | Peer Group TSR (4) | Net Income (thousands $) (5) | ||||||||||||||||
| 2022 | $ | 6,743,680 | $ | 5,859,893 | $ | 3,437,369 | $ | 2,918,229 | $ | 147.04 | $ | 171.46 | $ | 199,759 | |||||||||
| 2021 | $ | 4,208,543 | $ | 4,189,967 | $ | 2,380,559 | $ | 2,321,245 | $ | 168.53 | $ | 184.23 | $ | 154,665 | |||||||||
| 2020 | $ | 3,673,300 | $ | 3,411,841 | $ | 2,008,597 | $ | 1,908,292 | $ | 134.24 | $ | 134.82 | $ | 22,738 | |||||||||
(1) Compensation Actually Paid to the Primary Executive Officer ("PEO") and Non-PEO NEOs reflects the totals from our Summary Compensation Table with the following adjustments:
•For each of the Pension Plan and BEP, the change in the actuarial present value was replaced with each plan's service cost.
•For equity incentive awards, the grant date fair values computed in accordance with FASB ASC Topic 718 were replaced with fair values as of December 31, 2022, as follows:
◦RSUs were valued based on the closing price of a share of Company common stock on December 31, 2022 ($17.25) instead of the March 1, 2022 grant date value ($21.08), multiplied by the number of RSUs outstanding.
◦PSUs based on EPS performance were valued based on the closing price of a share of Company common stock on December 31, 2022 ($17.25), instead of on the March 1, 2022 grant date value ($21.08), multiplied by the number of PSUs outstanding at target award levels.
◦PSUs based on TSR performance were valued based on the probable outcome of performance conditions using a Monte Carlo simulation model, which priced Company common stock at $12.26 per share as of December 31, 2022 (instead of the actual December 31, 2022 closing price of a share of Company common stock at $17.25), multiplied by the number of PSUs outstanding at target award levels.
•No equity awards were granted to our PEO or Non-PEO NEOs prior to 2022, and no equity awards were forfeited or both granted and vested in 2022. Thus, no adjustments were made for these items.
•Reconciliation for the variance between Summary Compensation Table data for the PEO and Non-PEO NEOs is included below this section in the 'Adjustments from Summary Compensation Table' for both the PEO and the Non-PEO NEOs respectively.
(2) Our Non-PEO NEOs included for each year are as follows:
•For 2022, our "Non-PEO NEOs" include our current NEOs, Messrs. Q. Miller, Fitzgerald, and Westermann and Ms. Henry.
•For 2021, our "Non-PEO NEOs" included Messrs. Q. Miller and Fitzgerald, as well as Jan A. Miller, our former Vice Chair and Chief Commercial Banking Officer, and John F. Koegel, the former President and CEO of Eastern Insurance Group LLC.
•For 2020, our "Non-PEO NEOs" were Messrs. Q. Miller and Fitzgerald.
(3) Company TSR reflects the value of a $100 investment made on October 15, 2020, the date the Company became a publicly listed company, through and including the end of the fiscal year for which our cumulative total shareholder return is provided.
(4) Peer Group TSR reflects the value of a $100 investment in the KRX beginning on October 15, 2020, through and including the end of the fiscal year for which our cumulative total shareholder return is provided.
(5) Under SEC rules, companies are required to provide data with respect to a “Company Selected Measure” which represents the most important financial measure that links CAP to company performance, and which is not otherwise required to be disclosed in this table. However, we do not have another financial measure that materially links CAP to company performance and, as such, we have omitted this column.
Adjustments from Summary Compensation Table for PEO
| 2022 | 2021 | 2020 | |||||||||
| Deduction for change in actuarial present values reported under the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” column in the Summary Compensation Table | $ | (13,486) | $ | (86,687) | $ | (200,363) | |||||
| Increase for service cost of Pension Plan and BEP | $ | 217,339 | $ | 68,111 | $ | 53,504 | |||||
| Increase/deduction for prior service cost of Pension Plan and BEP | $ | — | $ | — | $ | (114,601) | |||||
| Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table | $ | (4,503,726) | $ | — | $ | — | |||||
| Increase based on fair value of awards granted during year that remain unvested as of year-end, determined as of year-end | $ | 3,416,086 | $ | — | $ | — | |||||
| Total Adjustments | $ | (883,787) | $ | (18,576) | $ | (261,460) | |||||
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Adjustment from Summary Compensation Table for Non-PEO NEOs
| 2022 | 2021 | 2020 | |||||||||
| Deduction for change in actuarial present values reported under the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” column in the Summary Compensation Table | $ | (26,832) | $ | (86,477) | $ | (109,111) | |||||
| Increase for service cost of Pension Plan and BEP | $ | 111,932 | $ | 27,163 | $ | 30,488 | |||||
| Increase/deduction for prior service cost of Pension Plan and BEP | $ | — | $ | — | $ | (21,682) | |||||
| Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table | $ | (2,502,048) | $ | — | $ | — | |||||
| Increase based on fair value of awards granted during year that remain unvested as of year-end, determined as of year-end | $ | 1,897,809 | $ | — | $ | — | |||||
| Total Adjustments | $ | (519,139) | $ | (59,314) | $ | (100,305) | |||||
Most Important Performance Measures
In our assessment, the most important performance measures used to link Compensation Actually Paid to Company performance are listed in the table below, not ranked in order of importance.
| Net Income | ||
| Total Shareholder Return | ||
Analysis of the Information Presented in the Pay versus Performance Table
In accordance with Item 401(v) of Regulation S-K, the Company is providing the following graphical descriptions of the relationships between information presented in the Pay versus Performance table.
Compensation Actually Paid vs. Net Income
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Compensation Actually Paid vs. Total Shareholder Return
PROPOSAL 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Compensation Discussion and Analysis beginning on page 2425 of this Proxy Statement describes our executive compensation program and the compensation decisions that the Compensation and Human Capital Management Committee and Board of Directors made in 20202022 with respect to the compensation of our NEOs. The Board of Directors is asking shareholders to cast a non-binding, advisory vote FOR the following resolution:
| RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED. | ||
As we describe in the Compensation Discussion and Analysis section of this Proxy Statement, our executive compensation is designed to closely align the interests of our NEOs with those of our shareholders on both a short-term and long-term basis, and to attract and retain key executives critical to our success.
We urge shareholders to read the Compensation Discussion and Analysis beginning on page 2425 of this Proxy Statement and to review the 20202022 Summary Compensation Table and related compensation tables and discussion, appearing on pages 35 through 36, which provide detailed information on the Company’s executive compensation policies and practices.
Recommendation
Our Board of Directors recommends a vote FOR Proposal 2.
DIRECTOR COMPENSATION
For the year ended December 31, 2020,2022, each of our directors (other than the Chair of the Board) received an annual fee of $55,000 as a Board of Directors retainer of $55,000, an annual grant of restricted stock with a value approximately equal to $55,000, and annual committee member fees ranging from $5,000 to $6,250 in committee meeting fees.$10,000. The Audit, Compensation and Human Capital Management, Nominating and Governance and Risk Management committees are joint committees of the Board of Directors and the Board of Directors of Eastern Bank ("(“Bank Board'Board”). Directors also receive fees for their service on committees of the Bank Board, including its trust committee,and innovation committee,committees, and the Eastern Bank Charitable Foundation committee, which operates as the board of trustees of such foundation.the Foundation. Chairs of certain committees also received additional committee chair retainers.retainers ranging from $10,000 to $20,000, and the Lead Director receives an annual retainer of $40,000. In addition, directors received per meeting fees for attending meetings of Eastern Bank's board of advisors, board of ambassadors, annual meeting, and investment advisory committee.In 2020, the Board of Directors and various committees met more frequently than they had in past years, due to the Company’s IPO and the impact of the COVID-19 global pandemic, which resulted in additional meeting fees than paid in prior years. Directors who are also employees are not compensated for their service as directors.
Set forth below is a summary of the compensation received by each of our non-employee directors for the year ended December 31, 2020.2022.
| Name | Name | Fees Earned ($)(1) | Nonqualified Deferred Compensation Earnings (2) | All Other Compensation ($) (3) | Total ($) | Name | Fees Earned ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($)(4) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Richard C. Bane | Richard C. Bane | $ | 129,600 | $ | 447,339 | $ | 55,000 | $ | 631,939 | Richard C. Bane | $ | 124,800 | $ | 54,999 | $ | 5,719 | $ | 185,518 | ||||||||||||||||||||||||||||||||||||||||
| Luis Borgen | Luis Borgen | $ | 102,100 | $ | — | $ | 55,000 | $ | 157,100 | Luis Borgen | $ | 83,050 | $ | 54,999 | $ | 4,719 | $ | 142,768 | ||||||||||||||||||||||||||||||||||||||||
| Joseph T. Chung | Joseph T. Chung | $ | 113,350 | $ | — | $ | 55,000 | $ | 168,350 | Joseph T. Chung | $ | 105,800 | $ | 54,999 | $ | 5,719 | $ | 166,518 | ||||||||||||||||||||||||||||||||||||||||
| Paul M. Connolly | Paul M. Connolly | $ | 123,600 | $ | 59,764 | $ | 55,000 | $ | 238,364 | Paul M. Connolly | $ | 110,050 | $ | 54,999 | $ | 4,719 | $ | 169,768 | ||||||||||||||||||||||||||||||||||||||||
| Bari A. Harlam | Bari A. Harlam | $ | 89,600 | $ | 76,634 | $ | 55,000 | $ | 221,234 | Bari A. Harlam | $ | 82,300 | $ | 54,999 | $ | 5,719 | $ | 143,018 | ||||||||||||||||||||||||||||||||||||||||
| Diane S. Hessan | Diane S. Hessan | $ | 97,100 | $ | — | $ | 55,000 | $ | 152,100 | Diane S. Hessan | $ | 90,750 | $ | 54,999 | $ | 4,719 | $ | 150,468 | ||||||||||||||||||||||||||||||||||||||||
| Richard E. Holbrook | Richard E. Holbrook | $ | 103,600 | $ | — | $ | — | $ | 103,600 | Richard E. Holbrook | $ | 91,300 | $ | 54,999 | $ | 5,719 | $ | 152,018 | ||||||||||||||||||||||||||||||||||||||||
| Deborah C. Jackson | Deborah C. Jackson | $ | 138,350 | $ | — | $ | 55,000 | $ | 193,350 | Deborah C. Jackson | $ | 131,800 | $ | 54,999 | $ | 5,719 | $ | 192,518 | ||||||||||||||||||||||||||||||||||||||||
| Peter K. Markell | Peter K. Markell | $ | 127,600 | $ | — | $ | 55,000 | $ | 182,600 | Peter K. Markell | $ | 121,800 | $ | 54,999 | $ | 5,719 | $ | 182,518 | ||||||||||||||||||||||||||||||||||||||||
| Greg A. Shell | Greg A. Shell | $ | 98,350 | $ | — | $ | 55,000 | $ | 153,350 | Greg A. Shell | $ | 97,550 | $ | 54,999 | $ | 5,719 | $ | 158,268 | ||||||||||||||||||||||||||||||||||||||||
| Paul D. Spiess | Paul D. Spiess | $ | 117,100 | $ | — | $ | 55,000 | $ | 172,100 | Paul D. Spiess | $ | 101,050 | $ | 54,999 | $ | 5,219 | $ | 161,268 | ||||||||||||||||||||||||||||||||||||||||
