UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant x Filed by a Party other than the Registrant ¨
Check the appropriate box:
Preliminary Proxy Statement |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
Definitive Proxy Statement |
¨ | Definitive Additional Materials |
¨ | Soliciting Material under §240.14a-12 |
E*TRADE Financial Corporation
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 |
(1) | Title of each class of securities to which the transaction applies: |
(2) | Aggregate number of securities to which the transaction applies: |
(3) | Per unit price or other underlying value of the transaction computed pursuant to Exchange ActRule 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 the transaction: |
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¨ | 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. |
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(4) | Date Filed: |
Notice of Annual Meeting of Stockholders
To Be Held May 10, 20126, 2014
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders of E*TRADE Financial Corporation (“E*TRADE,” the “Company”,“Company,” “us” or “we”), which will be held at the Time & Life Building Conference Center, 1271 Avenue of the Americas, 2nd Floor—The Michelangelo, 152 West 51st Street, The Roman Room # 1,(Mezzanine Level), New York, NY 10020,10019, on May 10, 20126, 2014 at 10:008:30 a.m. local time,EDT, for the following purposes:
1. | To |
To approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers. |
To |
To act upon such other business as may |
The Board has fixed the close of business on March 12, 20127, 2014 as the record date for determining those stockholders entitled to receive notice of, to attend and to vote at the Annual Meeting.
We have adoptedThe Company is pleased to continue utilizing the U.S. Securities and Exchange Commission rulerules that allowsallow companies to furnish their proxy materials to their stockholders over the Internet. As a result, we are mailing a Notice of Internet Availability of Proxy Materials (the “Internet Availability Notice”) to our stockholders instead of a paper copy of this Proxy Statement and our 2011 Annual Report on Form 10-K, other than to those stockholders who have previously requested printed materials. The Internet Availability Notice contains instructions on how to access and review those documents over the Internet as well as instructions on how to obtain printed materials. We believe that this process allows us to provide our stockholders with the information they need in a more timely manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. If you received ana Notice of Internet Availability Noticeof Proxy Materials (the “Internet Availability Notice”) by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Internet Availability Notice.
All stockholders of record on March 12, 2012 are invited to attend the Annual Meeting. To gain admission to the Annual Meeting, you will be required to present identification containing a photograph and some indication that you are a stockholder of the Company. For security purposes prior to gaining admission to the Annual Meeting, you will be required to go through building security in the main lobby of 1271 Avenue of the Americas, New York, NY 10020. In addition, packages and bags may be inspected and they may have to be checked at the door. Finally, other measures may be used for the security of those attending the meeting. Please plan accordingly.
Representation of at least a majority of all outstanding shares of the Company’s Common Stock in person or by proxy is required to constitute a quorum for the Annual Meeting. For that reason, itIt is important that your shares be represented at the Annual Meeting. WHETHER OR NOTEVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SUBMIT YOUR PROXY BY INTERNET, PHONE OR MAIL AS SOON AS POSSIBLE. If you later choose to revoke your proxy or change your vote, you may do so by following the procedures described in the attached proxy statement. Unless you have previously requested printed materials or you request a paper copy of our proxy materials in the manner specified in the Internet Availability Notice, you will not receive a paper proxy card. We encourage you to submit your proxy online. Your proxy may be revoked online at any time prior to 11:59 p.m. EDT on May 9, 2012.
Please read the proxy materials carefully. Your vote is important and the Company appreciates your cooperation in considering and acting on the matters presented.
Very truly yours, | ||
Chairman of the Board |
[ ], 2012March 25, 2014
New York, New York
Stockholders Should Read the Entire Proxy Statement Carefully
Prior to Returning Their Proxy Cards
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS OF E*TRADE FINANCIAL CORPORATION
To Be Held May 10, 20126, 2014
This Proxy Statement is furnished in connection with the solicitation by the Company’s Board of Directors (the “Board”) of E*TRADE Financial Corporation (“E*TRADE,” the “Company”, “us” or “we”) of proxies to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”), which will be held at the Time & Life Building Conference Center, 1271 Avenue of the Americas, 2nd Floor—The Michelangelo, 152 West 51st Street, The Roman Room # 1,(Mezzanine Level), New York, NY 10020-1302,10019, on May 10, 20126, 2014 at 10:008:30 a.m. local time,EDT, or at any adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. The Notice of Internet Availability of Proxy Materials (the “Internet Availability Notice”) wasThese materials were first mailedsent or made available to stockholders on or about [ ], 2012. On or about [ ], 2012, we also mailed paper copies of this Proxy Statement and the proxy card to certain stockholders who previously requested paper materials. The principal offices of E*TRADE are located at 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302.March 25, 2014.
VOTING PROCEDURES—QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Who may vote and how many votes doWhy am I have?receiving these materials?
Common stockholdersWe have made these materials available to you on the Internet or, upon your request, have delivered printed versions of record atthese materials to you by mail, in connection with the closeBoard’s solicitation of business on March 12, 2012 (the “Record Date”) may vote. On that date there were [ ] outstanding shares of our Common Stock, $0.01 par value per share (the “Common Stock”).
All of the shares of Common Stock are entitled to voteproxies for use at the Annual Meeting. Stockholders of recordMeeting to be held on Tuesday, May 6, 2014, at 8:30 a.m. EDT, and at any postponements or adjournments thereof. You are invited to attend the Annual Meeting and are requested to vote on the Record Date will have one vote for each share of Common Stock they hold.proposals described in this proxy statement (the “Proxy Statement”).
How do proxiesWhat is the purpose of the Annual Meeting?
At the Annual Meeting, stockholders will act upon the matters outlined in the Notice of Annual Meeting of Stockholders. These include the election of directors, an advisory non-binding vote to approve compensation paid to our Named Executive Officers (“NEOs”) and ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm. Also, once the business of the Annual Meeting is concluded, representatives from the Company and Deloitte & Touche LLP will be available to respond to questions from stockholders.
What is a “proxy” and how does it work?
The Board is asking for your proxy. A “proxy” is your legal designation of another person to vote the stock you own in the manner you direct. If you designate someone as your proxy in a written document, that document also is called a proxy or proxy card. By giving your proxy to the persons named as proxy holders in the proxy card accompanying this Proxy Statement, you authorize them to vote your shares of Common Stockour common stock, $0.01 par value per share (the “Common Stock”), at the meetingAnnual Meeting in the manner you direct. You may vote your shares for, against or abstain for all, some or none of the director nominees and you may choose to vote your shares for, against or to withhold your sharesabstain with respect to the other matters we are submitting to a vote of our stockholders at the Annual Meeting.
If you complete and submit your proxy voting instructions,in one of the manners described below, but do not specify how to vote, the persons named as proxiesproxy holders will vote your shares FOR declassifying the Company’s Board as described in “Proposal 1—Declassification of the Company Board of Directors”; FOR the election of directors as described in “Proposal 2—1—Election of Directors”; FOR approval of the compensation paid to the Named Executive Officers of the Company as described in “Proposal 3—”2—Advisory Vote to Approve Executive Compensation”; and FOR ratification of the selection of accountants as described in “Proposal 4—3—Ratification of Selection of Independent Registered Public Accounting Firm”.Firm.”
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How can I receive a paper or electronic copy of this proxy statement?Proxy Statement?
We mailed the Internet Availability Notice to our stockholders, instead of a paper copy of this Proxy Statement and our 2011 Annual Report on Form 10-K, except to certain stockholdersthose who had previously requested paper materials. The Internet Availability Notice contains instructions on how to access and review those
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documentsthe proxy materials and our 2013 Annual Report on Form 10-K over the Internet. If you received an Internet Availability Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Internet Availability Notice.
HowWho may vote and how many votes do I vote?have?
YouOnly common stockholders of record at the close of business on March 7, 2014 (the “Record Date”) may vote at the Annual Meeting. On that date there were 288,369,664 outstanding shares of our Common Stock.
All of the outstanding shares of Common Stock are entitled to vote at the Annual Meeting. Stockholders of record on the Record Date will have one vote for each share of Common Stock they hold.
What is the difference between a stockholder of record and a beneficial owner of stock held in person by attending the meeting or by proxy.street name?
Stockholders of Record. If your shares are registered in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are a stockholder of record with respect to those shares and the Internet Availability Notice or the proxy materials were sent directly to you by Broadridge Financial Solutions, Inc.
Street Name Holders. If you hold your shares in an account at a bank or broker, then you are the beneficial owner of shares held in “street name.” The Internet Availability Notice or proxy materials were forwarded to you by your bank or broker, who is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your bank or broker on how to vote the shares held in your account.
What different methods can I use to vote?
By Written Proxy. All stockholders of record who received an Internet Availability Notice or the proxy materials electronically can request a proxy card at any time by following the instructions on the Record Date,Internet Availability Notice or on the voting website (www.proxyvote.com). If you are a street name holder, you will receive instructions on how you may vote from your bank or broker, unless you previously enrolled in electronic delivery.
By Telephone or Internet. All stockholders of record can vote by proxytelephone using the toll-free telephone number on the Internet Availability Notice, or through the Internet by telephone or by mail. You may follow the instructions on the proxy card or the instructions below for voting by one of these methods.
To vote through the Internet, please visitvisitingwww.proxyvote.com before 11:59 p.m. EDT on May 9, 2012.5, 2014. The Internet and telephone voting procedures are designed to authenticate the stockholder’s identity and tostockholders’ identities, allow stockholders to vote their shares and to confirm that their instructions have been properly recorded. If you would like to receive future stockholder materials electronically, please enroll after you complete your voting process onwww.proxyvote.com.
Please help us reduce the impact on the environment and save time and postage costs Street name holders may vote by voting through the Internet or by telephone. If your shares are heldtelephone if their bank or broker makes those methods available, in “street name” by awhich case the bank or broker or other nominee, you will receiveenclose instructions fromwith the holderproxy materials.
In Person. All stockholders of record that you must followmay vote in order toperson at the Annual Meeting. Street name holders may vote your shares. in person at the Annual Meeting if they have a legal proxy, as described below.
Whether you plan to attend the Annual Meeting or not, we encourage you to vote by proxy as soon as possible.Please note that the Internet Availability Notice is not a proxy card and it cannot be used to vote your shares.
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What does it mean if I receive more than one Internet Availability Notice or Proxy Card?Voting Instruction Form?
You may receive more than one Internet Availability Notice or Proxy Cardvoting instruction form depending on how you hold your shares. You will receive an Internet Availability Notice or Proxy Card for shares registered in your name. If you holdare the beneficial owner of shares through someone else, such as a bank or broker,held in street name, you may also receive materialsa voting instruction form from themyour bank or broker asking how you want to vote. If your shares are registered differently and are in more than one account, you will receive more than one Internet Availability Notice or Proxy Cardvoting instruction form and may have to cast multiple votes. We encourage you to have all accounts registered in the same name and address whenever possible.
Can I change my vote?
You canStockholders of record may revoke youra proxy and/or change their vote before the time of voting at the Annual Meeting in several ways (the revocation has to be received before the Annual Meeting to be counted):
• | by voting again atwww.proxyvote.com or by telephone before 11:59 p.m. EDT on May |
by mailing a revised proxy card dated later than the prior proxy, or
by notifying our Corporate Secretary in writing that you are revoking your proxy.proxy before the Annual Meeting. Our Corporate Secretary may be reached at our principal offices located at 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302.
You canmay also revoke your proxy by voting in person at the Annual Meeting.
Street name holders may revoke a proxy and/or change their vote before the time of voting at the Annual Meeting in several ways:
by submitting new voting instructions in the manner provided by your bank or broker, or
by contacting your bank or broker to request a legal proxy in order to vote your shares at the Annual Meeting.
Who can attend the Annual Meeting?
Only stockholders of record on March 12, 2012as of the Record Date, or their duly appointed proxies, and guests of the Company may attend the Annual Meeting.
Stockholders of Record. Please bring photo identification and proof of share ownership with you to the meeting.Annual Meeting. For example, the Internet Availability Notice received in connection with this meeting or a bank or brokerage account statement showing you owned Common Stock in the Company on March 12, 2012, the Record Date is acceptable proof.
Street Name Holders. If you are a street name holder, you may not vote your shares at the Annual Meeting unless you obtain a legal proxy from your bank or broker. A legal proxy is a bank’s or broker’s authorization for you to vote the shares it holds in its name on your behalf. To obtain a legal proxy, please contact your bank or broker for further information. Please bring photo identification and a legal proxy with you to the Annual Meeting.
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What constitutes a “quorum” for the Annual Meeting?
A quorum is necessary to conduct business at the Annual Meeting. A quorum requires the presence of a majority of the outstanding shares of Common Stock entitled to vote, in person or represented by proxy. YouYour shares will be counted toward the quorum requirement if you have voted by proxy.
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Abstentions and broker non-votes and votes withheld from director nominees count as “shares present” at the meeting for purposes of determining a quorum. A broker non-vote occurs when a broker or other nominee who holds shares for anothera beneficial owner does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the beneficial owner of the shares.
ThereIf a quorum is no separatenot present, the Annual Meeting will be adjourned until a quorum requirement for the advisory vote to approve the compensation paid by the Company to its Named Executive Officers in Proposal 3.is obtained.
How many votes are needed?needed to approve each of the proposals?
ApprovalFor “Proposal 1—Election of Proposal 1 to amend our Charter to declassify the Board requires the affirmative vote of the holders of at least two-thirds of all shares of Common Stock entitled to vote at the Annual Meeting. For Proposal 2, assuming a quorum is present, in an uncontested electionDirectors,” directors arewill be elected by a majority of the votes cast. “Votes cast” excludes both abstentions and “broker non-votes.”non-votes” (described below). In an uncontested election, such as this year’s election, any director nominee who receives an equal or greater number of votes “against” or “withheld” from his or her election as compared to votes “for” his or her election must tender his or her resignation to the Nominating and Corporate Governance Committee of the Board. The Nominating and Corporate Governance Committee is required to make recommendations to the Board with respect to any such tendered resignation. The Board will act on the tendered resignation within 90 days from the certification of the stockholder vote and will publicly disclose its decision, including its rationale. Please see “Board Meetings and Committees—Majority Voting Policy” below for further details.
TheFor “Proposal 2—Advisory Vote to Approve Executive Compensation,” the outcome of the votes on the compensation paid by the Company to its Named Executive Officers in Proposal 3vote will not be binding on the Board. Therefore, there is no required vote on these resolutions. TheHowever, the Board, in the exercise of its fiduciary duties, will consider the outcome of the advisory vote in determining how to proceed following such vote. An affirmative vote of the majority of the shares of common stockCommon Stock present in person or represented by proxy and entitled to vote on the item will be considered the approval, by an advisory vote, of the Company’s compensation ofpaid to our Named Executive Officers in Proposal 3Officers. Abstentions and to recommend, by an advisory vote, and to ratify the selection of the independent registered public accounting firm in Proposal 4. If you hold your shares in your own name and abstain from voting on these matters, your abstentionbroker non-votes will have the same effect as a vote against Proposals 1, 3Proposal 2.
For “Proposal 3—Ratification of Selection of Independent Registered Public Accounting Firm,” an affirmative vote of the majority of the shares of Common Stock present in person or represented by proxy and 4.entitled to vote on the item will be considered ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm. Abstentions will have the same effect as a vote against Proposal 3.
If you hold your shares of Common Stock through a bank or broker and you do not instruct the bank or broker on how to vote your shares, your bank or broker may exercise its discretionary authority to vote your shares regardingwith regard to Proposal 4,3, but cannot exercise its discretionary authority to vote your shares regarding Proposals 1 and 2, and 3. Such broker non-votes will have the effect of a vote against Proposal 1, but will have no effect with respect to Proposals 2 and 3.thus resulting in “broker non-votes.”
Who pays for the solicitation of proxies?
The Company pays the cost of soliciting proxies. We retained Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902Innisfree M&A Incorporated to advise the Company and assist with theour solicitation of proxies for an estimated fee of $17,500 plus reasonable out-of-pocket expenses. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for sending soliciting materials to stockholdersbeneficial owners and obtaining their votes. In addition to solicitation by mail, proxies may be solicited personally, or by telephone or electronic media by our employees.
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What if only one copy of thesethe Internet Availability Notice or proxy materials was delivered to multiple stockholders who share a single address?
In some cases, only one mailing envelope with multipleThe Company has adopted a procedure approved by the Securities and Exchange Commission (the “SEC”) called “householding.” Under this procedure, the Company may deliver a single copy of the Internet Availability NoticesNotice (or delivery of one copy of this Proxy Statement and the accompanying 20112013 Annual Report on Form 10-K, for those stockholders who previously requested paper copies) is being delivered to multiple stockholders sharing anwho share the same address unless we havethe Company has received contrary instructions from one or more of the stockholders. This procedure reduces the
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Company’s printing and mailing costs, and the environmental impact of its annual meetings. We will deliver promptly, upon written or oral request, a separate copy of the mailing to a stockholder at a shared address to which a single copy of the mailing was delivered. To request a separate delivery of the mailing now or in the future, you may submit a written request to our Corporate Secretary, at the Company’s principal offices located at 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302. You may also send an email to ir@etrade.com or call us at (646) 521-4340. Additionally, any stockholders who are presently sharing an address and receiving multiple copies of the same mailings and who would rather receive a single copy of such materials may instruct us accordingly by directing their request to us in the manner provided above.
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PROPOSAL 1
DECLASSIFICATION OF THE COMPANY BOARD OF DIRECTORS
Proposed Amendment to the Company Charter
Currently, the Company’s Amended and Restated Certificate of Incorporation (the “Charter”) divides Board members into three classes. One class is elected at each Annual Meeting of Stockholders, to hold office for a term beginning on the date of the election and ending on the date of the third Annual Meeting of Stockholders following the beginning of the term.
After careful consideration, the Board has determined that it would be in the best interests of the stockholders to declassify the Board to allow the stockholders to vote on the election of the entire Board each year, rather than on a staggered basis. The proposed amendment to the Charter is set forth in Annex A to this Proxy Statement. In addition, the Board has also conditionally approved, subject to stockholder approval of this proposal, amendments to the Amended and Restated Bylaws of the Company, set forth in Annex B to this Proxy Statement, in order to further implement the changes under this proposal. Furthermore, each Class I director whose term would otherwise expire at the 2014 Annual Meeting of Stockholders has submitted a letter of resignation providing for his resignation effective immediately prior to the 2013 Annual Meeting of Stockholders, subject to the approval of this proposal by the stockholders.
If this proposal is approved by the stockholders, the proposed amendment will be filed with the Delaware Secretary of State, and the directors standing for election at this year’s Annual Meeting of Stockholders, if elected, will serve for a one-year term expiring at the 2013 Annual Meeting of Stockholders and, commencing at the 2013 Annual Meeting of Stockholders, all directors will become subject to election on an annual basis for a one-year term. Vacancies which may occur during the year may be filled by the Board and each director so appointed shall serve for a term which will expire at the next Annual Meeting of Stockholders.
If the stockholders do not approve this proposal, then the Board will remain classified, with each class of directors serving a term of three years, and the term of the directors standing for election at this year’s Annual Meeting of Stockholders, if elected, will expire on the date of the 2015 Annual Meeting of Stockholders.
Notwithstanding the foregoing, in all cases, each director will hold office until his or her successor is duly elected, or until his or her earlier resignation or removal.
Considerations of the Board
The Board recognizes that a classified structure may offer several advantages, such as promoting board continuity and stability, encouraging directors to take a long-term perspective, and ensuring that a majority of the Board will always have prior experience with the Company, especially in light of an increasingly complex and changing regulatory environment. Additionally, classified boards may motivate potential acquirors seeking control to initiate arms-length discussions with the Board, rather than engaging in unsolicited or coercive takeover tactics, since potential acquirors are unable to replace the entire Board in a single election, thereby better enabling the Board to maximize stockholder value and to ensure the equal and fair treatment of stockholders. The Board also recognizes that a classified structure may reduce directors’ accountability to stockholders because such a structure does not enable stockholders to express a view on each director’s performance by means of an annual vote. Moreover, many institutional investors believe that the election of directors is the primary means for stockholders to influence corporate governance policies and to hold management accountable for implementing those policies.
In determining whether to support declassification of the Board, the Board considered the arguments in favor of and against continuation of the classified board structure and determined that it would be in the best interests of the Company and the stockholders to declassify the Board.
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Required Vote
Approval of this proposal requires the affirmative vote of the holders of at least two-thirds of all shares of Common Stock entitled to vote at this Annual Meeting. If you hold your shares in your own name and abstain from voting on this matter, your abstention will have the same effect as a negative vote. If you hold your shares through a broker and you do not instruct the broker on how to vote on this proposal, your broker will not have authority to vote your shares. Broker non-votes will have the same effect as a negative vote.
The Board unanimously recommends that you vote “FOR” the proposal to amend the Charter to declassify the Board.
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PROPOSAL 2
ELECTION OF DIRECTORS
FiveListed below are the Company’s eleven directors, are currently standing for election toeach of which have been nominated by the Board. Currently, the Company Charter divides Board members into three classes. One class is elected at each Annual Meeting of Stockholders, to hold office for a term beginning on the date of the election and ending on the date of the third Annual Meeting of Stockholders following the beginning of the term. Mr. Petrilli was appointed as a Class III director and named Chairman of the Board in January, 2012 and Mr. Lawson and Ms. Saeger were appointed as Class III directors in February, 2012. Each will be standing for election by ourthe stockholders at the Annual Meeting and have agreed to be named in this Annual Meeting.
If Proposal 1 is approved by the Stockholders,Proxy Statement and to serve if elected. Under the Company’s Charter will be amended to provide that all directors standing for election will become subject to election on an annual basis for a one-year term. As a result,Amended and Restated Certificate of Incorporation, each of the fiveeleven nominees standing for election at this Annual Meeting would, if elected, serve for a one-year term expiringbeginning on the date of election and ending at the 20132015 Annual Meeting of Stockholders. In addition, as discussed further under Proposal 1, assuming Proposal 1 is approved by the stockholders, each of the directors who is not otherwise scheduled to stand for election until following the 2013 Annual Meeting of Stockholders has submitted a letter of resignation providing for his resignation effective immediately prior to the 2013 Annual Meeting of Stockholders. Accordingly, if Proposal 1 is approved by the stockholders, all directors will stand for election for a one-year term beginning at the 2013 Annual Meeting of Stockholders.
Notwithstanding the foregoing, in all cases, each director will hold office until his or her successor is duly elected, or until his or her earlier resignation or removal. Stephen Willard is not standing for re-election at the Annual Meeting.
The nominees for the Board are set forth below. In the absence of contrary instructions, the proxy holders intend to vote all proxies received by them in the accompanying form FOR the nominees for director listed below. InAlthough we know of no reason why any of the event thatnominees would not be able to serve, if any nominee is unable to or declines to serve as a director at the time of the Annual Meeting, the proxies will be votedunavailable for any nominee who is designated by the present Board to fill the vacancy. In the event that additional persons are nominated for election, as directors, the proxy holders intend to vote all proxies they receiveyour Common Stock for any substitute nominee proposed by the nominees listed below. As of the date of this Proxy Statement, the Board is not aware of any nominee who will be unable or decline, to serve as a director.Board.
Qualifications of Directors
The Board, acting through the Nominating and Corporateits Governance Committee, (the “Nominating Committee”), is responsible for recommending to the stockholders a group of nominees that, taken together, have a significant breadth and diversity of experience, professional expertise, knowledge and abilities to carry out the experience, qualifications, attributes and skillsBoard’s responsibilities. Our Governance Committee Charter requires the Governance Committee to function effectively as a board. Our Corporate Governance Guidelines require the Nominating Committee periodically to review the composition of the Board and its committees in light of the risks, current challenges and needs of the Company and determine whether to add or remove individuals “afterafter considering issues of knowledge, expertise, judgment, term of service, age, skills, diversity of background and experience and relations with various constituencies.” Our Corporate Governance Guidelines contemplate that a director will not stand for election after reaching age 70. In accordance with the Corporate Governance Guidelines, the Board has approved a waiver of such guideline for Mr. Kanner and Ms. Weaver, both of whom are nominated to stand for re-election at the Annual Meeting.
In presenting this year’s nominees, the NominatingGovernance Committee considered, among other things, the invaluable experience theythe nominees gained in dealing withenhancing their oversight over management in light of the heightened expectations from the Company’s credit and capital issues,its subsidiaries’ regulators, their ability to work as a collegial group during various intense and stressful periods and their willingness to spend the time necessary to perform their role despite other professional commitments.
In addition to the characteristics common to all of our directors, which include integrity, a strong professional reputation and a record of achievement in senior executive capacities, the NominatingGovernance Committee has included on our Board persons with diverse backgrounds and skills reflecting the needs of the Company.
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In determining thatevaluating each member of the Board should servenominee for service on the Board, the NominatingGovernance Committee considersconsidered the following specific experience and skills of the current Board:
experience in a broad range of occupations and industries which provides differing viewpoints and expertise relating to execution of the Company’s business plans. These include banking, brokerage and financial services (Messrs. Freiberg, Griffin,Carbone, Fahmi, Idzik, Lam and Lawson, Parks and Petrilli, Ms. Saeger and Messrs. Sclafani Velli and Willard)Velli), technology and e-commerce (Messrs. Fisher,Flink, Idzik, Lam and Lawson and Petrilli and Ms. Weaver), marketing and consumer retail (Messrs. Freiberg,Flink, Lawson and Petrilli, Mmes. Saeger and Weaver), legal (Mr. Kanner) and legalenterprise risk management (Messrs. KannerFahmi, Lam and Willard)Lawson);
experience as an early (Mr. Fisher) or recent (Mr. Griffin) major investor in the Company, or experience as a long-time director of the Company’s largest subsidiary, E*TRADE Bank (Mr. Willard); and
significant substantive experience in areas applicable to service on the Board’s committees, including corporate financial management, auditing and accounting (Messrs. Carbone, Fahmi, Lawson and Sclafani and Ms. Weaver), credit and risk management (Messrs. Freiberg, Griffin, LawsonFahmi, Lam and Parks)Lawson), regulated financial services (Messrs. Freiberg,Carbone, Fahmi, Idzik, Lam, Lawson Parks, Petrilli,and Sclafani, Ms. Saeger and Mr. Velli), bank regulation (Messrs. Freiberg, Petrilli, Velli and Willard),(Mr. Idzik) and corporate governance (Mr.(Messrs. Kanner and Lam and Ms. Weaver); and.
geographical diversity to reflect the Company’s broad and international client base, including Western U.S. (Mr. Parks and Mmes. Saeger and Weaver), Europe (Mr. Willard), Japan (Mr. Fisher), Midwest U.S. (Mr. Griffin) and Eastern U.S. (Messrs. Freiberg, Kanner, Lawson, Petrilli, Sclafani and Velli).6
Nominees to the Board of DirectorsDirectors:
Name | Principal Occupation | Director Since | Class | If Elected and Proposal 1 is not approved, Year of Annual Stockholder Meeting at Which Director Will Next Stand for Election | Age as of May 10, 2012 | Principal Occupation | Director Since | Age as of May 6, 2014 | ||||||||||||||||||
Richard J. Carbone | Retired Financial Services Executive | 2013 | 66 | |||||||||||||||||||||||
Mohsen Z. Fahmi | Senior Portfolio Manager, Moore Capital Management | 2013 | 58 | |||||||||||||||||||||||
Christopher M. Flink | Partner, IDEO | 2013 | 42 | |||||||||||||||||||||||
Paul T. Idzik | Chief Executive Officer, E*TRADE Financial Corporation | 2013 | 53 | |||||||||||||||||||||||
Frederick W. Kanner | Senior Of Counsel, Covington & Burling LLP | 2008 | 71 | |||||||||||||||||||||||
James Lam | President, James Lam & Associates | 2012 | 53 | |||||||||||||||||||||||
Rodger A. Lawson | Retired Financial Services Executive | 2012 | Class III | 2015 | 65 | Retired Financial Services Executive | 2012 | 67 | ||||||||||||||||||
Frank J. Petrilli | Chairman of the Board, E*TRADE Financial Corporation and E*TRADE Bank | 2012 | Class III | 2015 | 61 | |||||||||||||||||||||
Rebecca Saeger | Retired Marketing Executive | 2012 | Class III | 2015 | 57 | Retired Marketing Executive | 2012 | �� | 59 | |||||||||||||||||
Joseph L. Sclafani | Retired Banking Executive | 2008 | Class III | 2015 | 63 | Retired Banking Executive | 2008 | 65 | ||||||||||||||||||
Stephen H. Willard | Chief Executive Officer, Flamel Technologies S.A. | 2005 | Class III | 2015 | 51 | |||||||||||||||||||||
Joseph M. Velli | Retired Financial Services Executive | 2010 | 56 | |||||||||||||||||||||||
Donna L. Weaver | Retired Corporate Executive | 2003 | 70 |
Richard J. Carbonehas been a director of the Company since August 2013. Mr. Carbone was formerly Chief Financial Officer of Prudential Financial, Inc. from 1997 through 2013, and served as Executive Vice President until retiring from that position in February 2014. Mr. Carbone brings nearly four decades of experience in financial services, having held senior finance office positions in both the banking and securities industries, including Managing Director and Controller of Salomon Brothers and Senior Vice President and Controller of Bankers Trust Company. He began his career at Price Waterhouse & Co. Mr. Carbone received an M.B.A. from St. John’s University and is a Certified Public Accountant. He was an officer in the United States Marine Corps from 1969 to 1972. Mr. Carbone is also a director on the Board of a non-profit organization focused on helping disabled adults and indigent children. Mr. Carbone is a member of the E*TRADE Bank board and a member of the Audit Committee, where he is designated an audit committee financial expert, and the Compensation Committee.
Mohsen Z. Fahmi has been a director of the Company since July 2013. Mr. Fahmi has over 30 years of experience in global financial services and is currently serving as Senior Portfolio Manager at Moore Capital Management. Since joining Moore Capital in 2003, Mr. Fahmi has held various positions within the firm including Chief Operating Officer. Previously, Mr. Fahmi served as the co-head of the Bond & Currency Proprietary Trading division of Tokai Bank Europe for five years, operating in the global fixed income, foreign exchange and equity markets. His career also included investment and portfolio management roles with a number of other renowned financial institutions, including Salomon Brothers Asset Management, Goldman Sachs, and J.P. Morgan. Mr. Fahmi began his career at The World Bank, holding a number of positions over a 13-year period, including Chief Investment Officer. Mr. Fahmi earned his B.S. in Engineering from Ain Shams University, Cairo. He also holds an M.S. in Engineering from Ohio State University and an M.B.A. from Stanford University. Mr. Fahmi is a member of the E*TRADE Bank board and a member of the Risk Oversight Committee.
Christopher M. Flink has been a director of the Company since October 2013. Mr. Flink has been a Partner with IDEO, a global design and innovation firm, since 1997. In addition to his responsibilities at IDEO, Mr. Flink is a Consulting Associate Professor at Stanford University, his alma mater, with adjunct appointments from both the Graduate School of Business and the School of Engineering. Mr. Flink graduated with a B.S. in Engineering and Product Design from Stanford University in 1994 and an M.S. in Management from Stanford University’s Graduate School of Business in 2005. He is one of the founding faculty members of the “d.school” (the Hasso Plattner Institute of Design at Stanford), where he serves as a member of its leadership team. He also currently serves as a member of the Board of Directors for Fiserv Inc., as well as on Advisory Boards for Target Corporation and JetBlue Airways. Mr. Flink is a member of the E*TRADE Bank board.
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Paul T. Idzik has been a director of the Company and Chief Executive Officer since January 2013. Prior to joining the Company, Mr. Idzik was Group Chief Executive of DTZ Holdings plc in London from November 2008 to August 2011. He also spent 10 years at Barclays PLC, first as Chief Administration Officer, then Chief Operating Officer at Barclays Capital Group and then as Group Chief Operating Officer of Barclays PLC. Mr. Idzik began his career as a consultant and spent over a decade with Booz Allen Hamilton, Inc. Mr. Idzik has a B.A. in Economics and Computer Applications from the University of Notre Dame and an M.B.A. in Finance and Accounting from the University of Chicago. He is President of E*TRADE Bank and a member of the E*TRADE Bank board.
Frederick W. Kanner has been a director of the Company since April 2008. Mr. Kanner is Senior Of Counsel at the law firm of Covington & Burling LLP in New York City since May 2012. He was a partner in the law firm of Dewey Ballantine LLP and subsequently Dewey & LeBoeuf LLP from 1976 until he retired from the full-time practice of law at the end of 2009 and was Of Counsel until 2012. He served as Chairman of Dewey’s Corporate Finance practice for more than 15 years and as a member of its Management Committee for 20 years. He is a member of the board of directors of Financial Guaranty Insurance Company, National Benefit Life Insurance Company (where he serves as Chairman of the Audit Committee) and the Lawyers’ Committee for Civil Rights Under Law. Mr. Kanner received a B.A. in Economics from the University of Virginia and a J.D. from the Georgetown University Law Center. Mr. Kanner is a member of the E*TRADE Bank board and a member of the Audit Committee, the Compensation Committee and the Governance Committee.
James Lamhas been a director of the Company since November 2012. Mr. Lam is currently President of James Lam & Associates, a firm focused on corporate governance and risk management, since January 2002. He previously served as Founder and President of ERisk, Chief Risk Officer of Fidelity Investments and Chief Risk Officer of GE Capital Markets Services, Inc. He is the author of the best-selling book,Enterprise Risk Management (Wiley, 2003). Mr. Lam graduatedsumma cum laude with a B.B.A. from Baruch College in 1983 and received an M.B.A. with honors from UCLA in 1989. In 2004, he was appointed Senior Research Fellow at Peking University. Mr. Lam has taught M.B.A. classes at Babson College and the Hult International Business School. He has also guest lectured at Harvard Business School. Mr. Lam is a member of the E*TRADE Bank board, a member and Chair of the Risk Oversight Committee and a member of the Audit Committee.
Rodger A. Lawsonhas been a director of the Company since February 2012.2012 and Chairman of the Board since May 2013. Mr. Lawson also served as Lead Independent Director from August 2012 to January 2013. Mr. Lawson is a retired financial services executive who most recently served as President and CEOChief Executive Officer of Fidelity Investments – Financial Services.Services from 2007 through 2010. Prior to joining Fidelity, Mr. Lawson served in several senior executive roles with Prudential Financial including Vice Chairman of Prudential Financial. He has held numerous other executive positions in financial services, including President and CEOChief Executive Officer of Van Eck Global, and President, CEOChief Executive Officer and Partner of Global Private Banking at Bankers Trust Asset Management.Company. Previously, Mr. Lawson was President and CEOChief Executive Officer of Fidelity Investments Retail Group and CEOChief Executive Officer of the Dreyfus Service Corporation. Mr. LawsonHe is currently on the Boardboard of Directorsdirectors of UnitedHealth Group, Inc., where his appointment was endorsed by CalPERS, the largest US public pension fund, for its best practices nomination process. Mr. Lawson is a member of the E*TRADE Bank board.
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He previously served in board roles for the Dreyfus Service Corporation, Fidelity Investments, and Van Eck Global. Mr. Lawson earned a Bachelor of Arts from London University and a Master of Science from Bradford University.
Frank J. Petrilli has been a director and Chairman of the Board since January 2012. Most recently, Mr. Petrilli was Chief Executive Officer of Surge Trading, Inc. and previously served as President and Chief Executive Officer of Nexxar Group, Inc. From 1995 to 2004 he held several positions at TD Waterhouse, during that period a US subsidiary of TD Bank Group, including President and CEO. Prior to TD Waterhouse, he was President and Chief Operating Officer of American Express Centurion Bank. Mr. Petrilli has served on various non-profit Boards, including the American Red Cross in Greater New York, Big Brothers Big Sisters of NYC, and Fordham University. He holds a Bachelor of Science from Fordham College of Business and an M.B.A. from Fordham Graduate School of Business and he received his Chartered Financial Analyst (CFA) designation in 1986. Mr. Petrilli is the Chairman and a member of the E*TRADE Bank board and is also a member of the Company’s Nominating and Corporate Governance Committee.
Rebecca Saeger has been a director of the Company since February 2012. Ms. Saeger wasserved as Executive Vice President and Chief Marketing Officer at Charles Schwab (“Schwab”) from 2004 through 2010.2010, most recently as Chief Marketing Officer. Prior to joining Charles Schwab, she was Executive Vice President, Marketing at Visa U.S.A. Previously, Ms. Saeger was Senior Vice President and head of Account Management at Foote, Cone & Belding and Senior Vice President at Ogilvy & Mather. She has served on the Boardboard of Directorsdirectors as Chair of the Association of National Advertisers (ANA). Ms. Saeger is member of the E*TRADE Bank board. She received a Bachelor of ArtsB.A. from Muhlenberg College and an MBAM.B.A. from the Wharton School at the University of Pennsylvania. Ms. Saeger is a member of the E*TRADE Bank board and a member of the Governance Committee and Compensation Committee.
8
Joseph L. Sclafani has been a director of the Company since June 2008. Mr. Sclafani is formerwas formerly Executive Vice President and Controller of JPMorgan Chase & Co., responsible for corporate financial operations, regulatory reporting, financial accounting and reporting and accounting policies until December 2006. His 38 years of experience include 27 years at JPMorgan Chase & Co. and its predecessors, serving most recently as Corporate Controller responsible for corporate financial operations, regulatory reporting, financial accounting and reporting and accounting policies.predecessors. Mr. Sclafani also spent 11 years at KPMG as a certified public accountant. He earned a Bachelor of Arts degreeB.A. from St. Francis College in Brooklyn and completed post-graduate studies in finance at Bernard Baruch. Mr. Sclafani is a member of the E*TRADE Bank board, a member and the Chair of the Audit Committee, where he is designated an audit committee financial expert, and is a member of the Finance and Risk Oversight Committee.
Stephen H. Willard has been a director of the Company since April 2005. He is the Chief Executive Officer of Flamel Technologies S.A. (“Flamel Technologies”), a biopharmaceutical company. Mr. Willard is an expert in bank regulatory matters and previously served as Associate Director of Resolutions of the Federal Deposit Insurance Corporation (“FDIC”), where he was responsible for management and resolution of troubled banks with assets in excess of $1 billion. He also worked as an investment banker and as an attorney in private practice. Mr. Willard serves on the board of directors of Flamel Technologies. From June 2000 until joining the Company’s Board, Mr. Willard served as an independent member of the board of directors of ETB Holdings, Inc. and E*TRADE Bank and is currently a member of the E*TRADE Bank board. Mr. Willard received a Bachelor of Arts degree from Williams College and a Juris Doctorate from Yale Law School. He is a member of the Audit Committee where he is designated an audit committee financial expert, the Finance and Risk Oversight Committee, and the Nominating and Governance Committee
The Board of Directors recommends that stockholders vote FOR election of all of the nominees as directors listed above.
9
Directors Not Standing for Election
The members of the Board who are not standing for election at this year’s Annual Meeting are set forth below.
Name | Principal Occupation | Director Since | Class | If Proposal 1 is not approved, Year of Annual Stockholder Meeting at Which Term Will Expire | Age as of May 12, 2012 | |||||||
Ronald D. Fisher | President of SoftBank Holdings, Inc. | 2000 | Class II | 2013 | 64 | |||||||
Steven J. Freiberg | Chief Executive Officer of E*TRADE Financial Corporation | 2010 | Class II | 2013 | 55 | |||||||
Kenneth C. Griffin | Founder and Chief Executive Officer of Citadel, LLC. | 2009 | Class II | 2013 | 43 | |||||||
Frederick W. Kanner | Of Counsel, Dewey & LeBoeuf LLP | 2008 | Class I | 2014 | 69 | |||||||
Michael K. Parks | Managing Director, Crescent Capital Group | 2003 | Class III | 2012 | 52 | |||||||
Joseph M. Velli | Chairman and Chief Executive Officer of ConvergEx Group, LLC | 2010 | Class I | 2014 | 54 | |||||||
Donna L. Weaver | Chairman of MxSecure, Inc. | 2003 | Class II | 2013 | 68 |
Ronald D. Fisher has been a director of the Company since October 2000. Mr. Fisher is President of SoftBank Holdings, Inc. (“SoftBank”), where he oversees all of SoftBank’s activities outside of Asia, and is a managing partner of SoftBank Capital. He joined SoftBank in October 1995, and serves as a director of SoftBank Corporation, Japan. Mr. Fisher received a Bachelor of Commerce degree from the University of Witwatersrand, South Africa and a Master of Business Administration from Columbia University. Mr. Fisher is a member of the E*TRADE Bank board and the Chair of the Compensation Committee.
Steven J. Freiberg has served as the Company’s Chief Executive Officer and as a director since April 2010. Mr. Freiberg served as the Company’s Chairman of the Board from May 2011 until January 2012. Mr. Freiberg is a financial services industry veteran, having served in multiple senior level positions over a 30-year career at Citigroup. Most recently, Mr. Freiberg served as Co-Chairman and Co-CEO of Citigroup’s Global Consumer Group. During his tenure at Citigroup, Mr. Freiberg also served as Chairman and CEO of Citi Cards. Prior to that, as Chairman and CEO of Citigroup’s Investment Products Division N.A., Mr. Freiberg had responsibility for retail investment products, platforms, sales and service. Mr. Freiberg has served as a board member of MasterCard International since 2006. He also serves on the board of the March of Dimes and the board of trustees of Hofstra University, and is Co-Chair of the NYC Council of Habitat for Humanity. Mr. Freiberg is also on the Board of E*TRADE Bank and several other subsidiaries of the Company. Mr. Freiberg holds both a B.B.A. and an M.B.A. from the Zarb School of Business at Hofstra University. Mr. Freiberg is a member of the Finance and Risk Oversight Committee.
Kenneth C. Griffin has been a director of the Company since June 2009, pursuant to a director nomination right granted in 2007 to affiliates of Citadel LLC (together with its affiliates, “Citadel”). Mr. Griffin is the Founder and Chief Executive Officer of Citadel, a global financial institution. Mr. Griffin serves as Vice Chairman of the Chicago Public Education Fund and is a member of the board of trustees for the Art Institute of Chicago and the Museum of Contemporary Art. Mr. Griffin is a member of the World Economic Forum and the Economic Club of Chicago. Mr. Griffin received a bachelor’s degree from Harvard College. Mr. Griffin is a member of the Finance and Risk Oversight Committee.
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Frederick W. Kanner has been a director of the Company since April 2008. Mr. Kanner is Of Counsel at the law firm of Dewey & LeBoeuf LLP in New York City. He was a partner of the firm from 1976 until he retired from full-time law practice on December 31, 2009. He served as Chairman of the firm’s Corporate Finance Group for more than 15 years and as a member of its Management Committee for 20 years. He is a member of the board of directors of National Benefit Life Insurance Company, where he serves as Chairman of the Audit Committee, and the Lawyers’ Committee for Civil Rights Under Law. Mr. Kanner received a Bachelor of Arts degree in economics from the University of Virginia and a Juris Doctor from the Georgetown University Law Center. Mr. Kanner is a member of the E*TRADE Bank board, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.
Michael K. Parks has been a director of the Company since April 2003. Mr. Parks is a Managing Director of Crescent Capital Group and for limited purposes a Managing Director of TCW Asset Management Company. From 2000 through December 2010, Mr. Parks was a Managing Director of The Trust Company of the West. From 1993 to 2000, he held various executive level positions at Aurora National Life Assurance Company (“Aurora”), a privately owned life insurance company, holding the positions of Chief Executive Officer, President and Chief Investment Officer from 1996 to 2000. From 1981 to 1992, he held various positions at Salomon Brothers Inc., including the position of Director, Financial Buyers/Leveraged Finance from 1990 to 1992. Mr. Parks also serves as a director of El Paso Electric Company, a publicly traded company, and Aurora. Mr. Parks received a Bachelor of Arts degree from Haverford College. Mr. Parks is a member of the E*TRADE Bank board, Chair of the Finance and Risk Oversight Committee, a member of the Nominating and Corporate Governance Committee and the Audit Committee, where he is designated an audit committee financial expert. Mr. Parks notified the Board that he would not stand for re-election when his term expires at the 2012 Annual Meeting.
Joseph M. Velli has been a director of the Company since January 2010. Mr. Velli is the Chairman andwas formerly Chief Executive Officer of ConvergEx Group, LLC (“ConvergEx”), a global provider of software products and technology services to asset managers and financial intermediaries. Mr. Velliintermediaries from October 2006 to November 2013. Prior to that, he was formerly Senior Executive Vice President of The Bank of New York and Chief Executive Officer of BNY Securities Group. During his tenure with the Bank of New York, Mr. Velli led Global Issuer Services, Global Custody and related Investor Services, Consumer Banking and Global Marketing and Sales. He was also Sector Head of Global Issuer Services and Senior Executive Vice President, responsible for Consumer Banking at the Bank of New York. Prior to joining The Bank of New York, Mr. Velli was head of Citibank’s Depositary Receipt business. He currently serves on the board of ConvergEx Group, LLC and Paychex, Inc. and is also a member of the Compensation Committee, Governance Committee, Investment Committee and Executive Committee of Paychex, Inc. Mr. Velli holds an M.B.A. in Finance from Fairleigh Dickinson University and a B.A. in accounting from William Paterson University of New Jersey. Mr. Velli is a member of the E*TRADE Bank board and a member and Chair of the Compensation Committee.
Donna L. Weaverhas been a director of the Company since April 2003. Ms. Weaver is Chairman of MxSecure, Inc., a provider of internet-based transcription, electronic health recordretired corporate financial executive and speech recognition services and software to medical practices nationwide.business owner. A Certified Management Accountant, Ms. Weaver received a Bachelor of ScienceB.S. in Economics and Finance from the University of Arizona in Economics and Finance and a Master of Sciencean M.S. in Management from the Stanford Graduate School of Business. Since 1986, Ms. Weaver has served on the boards of several public and private companies during her career.companies. Ms. Weaver is a member of the E*TRADE Bank board, a member and the Chair of the Nominating and Corporate Governance Committee and a member of the Audit Committee and the Risk Oversight Committee.
The Board of Directors recommends that stockholders vote FOR the election of each of the nominees as directors listed above.
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BOARD MEETINGS AND COMMITTEES
The Board held a total of 1613 meetings during 2011.2013. Each current director, other than the directors appointed to the Board in 2013, attended at least 75% of the aggregate of the total number of meetings of (i) the Board and (ii) the committees of the Board on which he or she served. Messrs. Carbone, Fahmi, Flink and Idzik, each of whom was appointed to the Board during 2013, attended at least 75% of all meetings of the Board, and the committees of the Board on which he served, that were held during the period that each individual served as a member of the Board in 2013. Our non-management directors meetmet in executive session without management at least quarterly. The Chairman of the Board or another independent Board member during Mr. Freiberg’s tenure as interim Chairman, led these meetings during 2011.2013. Communications to the Board, the Chairman of the Board, the non-management directors or any other director may be sent to: E*TRADE Financial Corporation, at 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302, Attention: Corporate Secretary. We doThe Company does not have a formal policy regarding director attendance at our annual stockholder meeting, and ninemeetings; however, 10 of the twelve12 then-current directors attended the 20112013 Annual Meeting of Stockholders.
During 2011,2013, the Board had anfour standing committees: Audit, Committee, a Compensation, Committee, a FinanceGovernance and Risk Oversight Committee and a Nominating and Corporate Governance Committee.Oversight. Each member of the Audit Committee, Compensation Committee, Governance Committee and Nominating and Corporate GovernanceRisk Oversight Committee met the applicable independence requirements of the NASDAQ Global Select Market (“NASDAQ”) and all members of the Finance and Risk Oversight Committee, with the exception of Mr. Freiberg, met these independence requirements.. The charters of each of these committees, as well as our Code of Professional Conduct, Corporate Governance Guidelines and Related Person Transaction PolicyParty Transactions and Procedures Policy, are available on our website at investor.etrade.comabout.etrade.com in the “Corporate Governance” section. You may also request a copy of each of these documents free of charge by writing to E*TRADE Financial Corporation, at 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302, Attention: Corporate Secretary. We intend to post on our corporate website referred to above any amendments to, or waivers from, our Code of Professional Conduct or Related Transaction PolicyParty Transactions and Procedures Policy that apply to our executive officers, including our principal executive officer, principal financial officer and principal accounting officer. The information on our website is not a part of this Proxy Statement. The committees of the Board, their members during 2011,2013, their primary responsibilities and the number of times the committees met during 20112013 are described below.
Committee(1) | Members During | Primary Responsibilities | Number of | |||
Audit Committee(2) | Joseph Sclafani (Chair)
Frederick Kanner
Donna Weaver Stephen Willard(4) | Reviews the Company’s financial reporting processes. This Committee also reviews the results of the Company’s | 13 meetings |
12
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Compensation Committee | Joseph Velli (Chair)(5) Richard Carbone(3) Ronald Fisher
Frederick Kanner
| Recommends to the Board the compensation arrangements for the Company’s senior executives and oversees administration of our benefit plans, including our equity incentive plans. This Committee also reviews the performance of the Chief Executive Officer and the members of the Company’s senior management team at least annually. As discussed in the |
10
Committee(1) | Members During 2013 | Primary Responsibilities | Number of | |||
Governance Committee | Donna Weaver (Chair) Frederick Kanner Rodger Lawson(7) Rebecca Saeger Joseph Velli(5) Stephen Willard(4) | Oversees the Board’s and its committees’ governance practices. This Committee also leads any search for new Board members; recommends committee assignments and develops, recommends and oversees compliance with the Company’s Corporate Governance Guidelines and the Company’s Code of Professional Conduct. The Committee also leads the Board’s succession planning activities. | 10 meetings | |||
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James Lam (Chair)
Kenneth Griffin
Joseph Sclafani Joseph Velli(5) Donna Weaver Stephen Willard(4) |
13
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(1) | Our |
(2) | The Board has determined that |
(3) | Mr. Carbone joined the Board |
(4) | Mr. Willard was a member of the Governance Committee until May |
(5) | Mr. Velli became the Chair of the Compensation Committee effective May 9, 2013. He was a member of the Governance Committee until May 8, 2013. He was a member of the Risk Oversight Committee from May 9, 2013 until August 8, 2013. |
(6) | Mr. Fisher was a member of the Board and a member and Chair of the Compensation Committee until May 8, 2013. |
(7) | Mr. Lawson was a member of the Compensation Committee until May 8, 2013. He became a member of the Governance Committee effective May 9, 2013. |
(8) | Mr. Fahmi joined the Board effective July 23, 2013. He became a member of the Risk Oversight Committee effective August 8, 2013. |
(9) | Mr. Griffin was a member of the Board and the |
11
Risk Management
The Board plays an active role, as a whole and also at the committee level, in overseeing the management of the Company’s risks. The Board regularly reviews reports from members of senior management and committees on areas of material risk to the Company, including credit, interest rate, liquidity, market, operational, financial,strategic, reputational, legal, strategicregulatory and regulatorycompliance risks. In particular, the Finance and Risk Oversight Committee assists the Board and senior management, including the Company’s Chief Risk Officer, the Company’s General Counsel and the Company’s Chief Compliance Officer, in the effective identification, assessment and management of the Company’s risks and in working to improve the financial risk and return of the Company. The Finance and Risk Oversight Committee reviews financial matters including capital expenditures, asset and liability management and cash management policies, funding and liquidity requirements, capital structure and financing, regulatory capital and ratios and dividend policy;policy, and reviews, challenges and approves the Company’s risk governance framework;appetite statement, the Company’s policies and procedures for managing operational risk, credit risk, market risk, interest rate risk, investmentliquidity risk, strategic risk, reputational risk, legal risk, treasury risk, regulatory risk and liquidity risk;compliance risk, and the Company’s policies governing mergers and acquisitions, principal investments, and dispositions of assets.assets and compliance with legal and regulatory requirements. The Compensation Committee assists the Board in evaluating risks arising from Company executive and non-executive compensation programs as well as succession planning for our executive officers. The Nominating and Corporate Governance Committee assists the Board in overseeing risks associated with boardBoard organization, membership and structure, succession planning for our directors, and corporate governance. The Audit Committee assists the Board in overseeing risks associated with financial reporting and internal controls and compliance with legal and regulatory requirements.controls.
14
Director Independence
The Board has adopted categorical standards to assist in its evaluation of the independence of directors. The categorical standards describe various types of relationships that could exist between a Board member and the Company and setsset thresholds at which such relationships would be deemed to be material in the determination of a director’s independence. Although any director who meets the independence criteria of NASDAQ and the Board’s own categorical standards (as well as Rule 10A-3(b) of the Exchange Act in the case of Audit Committee members) will be presumed to be independent, the Board may make a decision to the contrary based on its review of any other relevant factors. The Board’s categorical standards are as follows:
1.
A director who serves as an executive officer or employee of, or beneficially owns more than a 10% equity interest in, any corporation, partnership or other business entity that during the most recently completed fiscal year, made payments to the Company or received payments from the Company for goods and services, is still presumed independent if such payments were less than the greater of 5% of such other entity’s gross consolidated revenues for such fiscal year and $200,000.
2.
A director who serves as an executive officer or employee of, or beneficially owns more than a 10% equity interest in, any bank, corporation, partnership or other business entity to which the Company was indebted at the end of its most recently completed fiscal year is still presumed independent if the indebtedness is in an amount less than the greater of 5% of such other entity’s total consolidated assets at the end of such fiscal year and $200,000.
3.
A director who is a member or employee of a law firm that has provided services to the Company during the most recently completed fiscal year is still presumed independent if the total billings for such services were less than the greater of 5% of the law firm’s gross revenues for such fiscal year and $200,000.
4.
A director who is a partner, executive officer or employee of any investment banking firm that has performed services for the Company (other than as a participating underwriter in a syndicate) during the most recently completed fiscal year is still presumed independent if the total compensation received for such services was less than the greater of 5% of the investment banking firm’s consolidated gross revenues for such fiscal year and $200,000.
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After a review of all relevant factors and applying these categorical standards and the independence criteria of NASDAQ, the Board has determined that:that during 2013:
Messrs. Fisher, Griffin,Carbone, Fahmi, Flink, Kanner, Lam and Lawson, Parks, Petrilli, Ms. Saeger, Messrs. Sclafani and Velli, Ms. Weaver and Mr. Willard arewere each independent.
Mr. Freiberg, Chief Executive Officer, isIdzik was not independent.
In determining that Mr. Velli was independent, the Nominating and Corporate Governance Committee considered a contract for clearing and transfer agent services entered into in 2010 between a subsidiary of the Company and a subsidiary of ConvergEx where Mr. Velli iswas Chairman and the CEO. TheChief Executive Officer until November 2013. A subsidiary of the Company conducted a competitive process, without any involvement by Mr. Velli, and ultimately chose ConvergEx to provide the services because the terms and price were substantially better than those offered by other providers. TheseBased upon information received from ConvergEx, these payments to ConvergEx during 20112013 represented less than 2%1% of ConvergEx’s consolidated revenues for the year.
In determining that Mr. Griffin was independent, the Nominating and Corporate Governance Committee considered Mr. Griffin’s affiliation with Citadel, the Company’s largest shareholder, and the fact that entities controlled by Citadel pay the Company for order flow pursuant to at will arrangements at negotiated rates that are subject to change at any time. During 2011, these payments represented approximately 1% of the Company’s consolidated total net revenue for the year.
The Board has also determined that each member of the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee is independent.
15
Identifying and Evaluating Director Nominees
The Nominating and Corporate Governance Committee uses various methods to identify director nominees. The Nominating and Corporate Governance Committee regularly assesses the appropriate size and composition of the Board and the particular needs of the Board, considering skill sets required and whether any vacancies are expected due to retirement or otherwise. Candidates may come to the attention of the Nominating and Corporate Governance Committee through current Board members, professional search firms, stockholders or other parties. While there is no diversity policy or fixed set of qualifications that must be satisfied before a candidate will be considered, we seek nominees with a broad diversity of experience, professions, skills, geographic representation and backgrounds. All candidates are then evaluated based on a review of the individual’s qualifications, skills, independence and expertise, including the criteria included in our Corporate Governance Guidelines and the Board’s desire to draw on diverse perspectives and expertise in conducting its work.
Under our Bylaws, there shall not be less than six nor more than twelve directors concurrently serving on the Board. The Board will reduce its size to eleven directors upon the election of directors at the Annual Meeting. Our Bylaws permit the Board to increase its size within the authorized range and add new directors between stockholder meetings. Any director elected by the Board in accordance with the preceding sentence shall hold office for a term expiring at the next Annual Meeting.
NominationsSubmission of Director Nominees to the Governance Committee by Stockholders
The Nominating and Corporate Governance Committee will consider director candidates submitted by any stockholder who has continuously held at least 5% of our voting securities (either directly or as part of a group) for at least one year and is not a competitor of the Company. Such recommendations must be mailed to:to E*TRADE Financial Corporation, 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302, Attention: Corporate Secretary. Such recommendations should be accompanied by (i) evidence of the stockholder’s stock ownership over the previous twelve months,months; (ii) a statement that the stockholder is not a competitor of the Company,Company; (iii) a resume and contact information for the director candidate, as well as a description of the candidate’s qualifications,qualifications; and (iv) a statement whether the candidate has expressed interest in serving as a director. The Nominating and Corporate Governance Committee follows the same process and uses the same criteria for evaluating candidates proposed by stockholders as it does for candidates proposed by other parties. The Nominating and Corporate Governance Committee will consider such candidacy and will advise the recommending stockholder of its final decision. Any stockholder nominee for the Board, at the request of the Board, must submit a statement that, if elected, the nominee intends to comply with the Company’s majority voting policy, described below.
13
Board Leadership
The Board believes that separating the functions of Chairman and Chief Executive Officer (“CEO”) generally strengthens the Board’s independence from management. When Mr. DruskinIdzik was appointed Chief Executive Officer in January 2013, Mr. Petrilli became our non-executive Chairman of the Board until he resigned in May 2011. For an interim period, Mr. Freiberg served as Chairman of the Board. In January 2012,May 2013, Mr. Petrilli was namedLawson became non-executive Chairman of the Board.Board, following Mr. Petrilli’s departure. We believe this structure is appropriate at this time andfor the Company because it strengthens the Board’s independence from management.
Majority Voting Policy
In May 2008, our Board amended ourOur Bylaws and revised our Corporate Governance Guidelines to changeprovide that the voting standard for the election of directors in uncontested elections from a plurality tois a majority voting standard. Under our majority voting policy, in an uncontested election, each nominee shall be elected to the Board by the majority of the votes cast with respect to the director’s election (that is, the number of votes “for” a director’s election must exceed 50% of the votes cast with respect to that director’s election). Directors will continue to be elected by plurality vote in contested elections (that is, when the number of nominees for election exceeds the number of directors to be elected). Whether an election is contested or not is determined on the last day by which stockholders may submit notice to nominate a person for election as a director pursuant to the Company’s Charter.Amended and Restated Certificate of Incorporation.
If a nominee who is serving as a director is not elected by a majority vote at the annual meeting,Annual Meeting, Delaware law provides that the director would continue to serve on the Board as a “holdover director.” However, under our Bylaws and Corporate Governance Guidelines, each director must submit in advance an irrevocable, contingent resignation to the Chair of the Nominating and Corporate Governance Committee that the Board may accept if the director fails
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to be elected by the majority of the votes cast with respect to the director’s election. In that situation, the Nominating and Corporate Governance Committee will act on an expedited basis to determine whether to accept the director’s resignation, and submit its recommendation to the Board. The Board will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind its decision within 90 days following certification of the stockholder vote. The Nominating and Corporate Governance Committee in making its recommendation, and the Board, in making its decision, may each consider any factors or other information that it considers appropriate and relevant.
The Board expects that any director whose resignation becomes effective pursuant to this policy will excuse himself or herself from participating in the consideration of his or her resignation by either the Nominating and Corporate Governance Committee or the Board. If an incumbent director’s resignation is not accepted, he or she will continue to serve until the next annual meetingAnnual Meeting and until his or her successor is duly elected, or until his or her earlier resignation or removal. In 2011, allAll nominees currently serve on the Board.
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DIRECTOR COMPENSATION
Cash Compensation.The Director Compensation policy for cash fees for non-employee directors in 20112013 was as follows:
Annual Board Retainer for All Board Members | $ | 50,000 | $ | 50,000 | ||||
Additional Annual Retainer for Each Committee Chairperson | $ | 10,000 | $ | 10,000 | ||||
Additional Annual Retainer for Service as Non-Executive Chairman of the Board | $ | 50,000 | ||||||
Additional Annualized Retainer for Service as Non-Executive Chairman of the Board or Lead Independent Director | $ | 50,000 | ||||||
Each Board Meeting Attended or Action by Written Consent | $ | 2,500 | $ | 2,500 | ||||
Each Committee Meeting Attended or Action by Written Consent as Committee Chairperson | $ | 2,500 | $ | 2,500 | ||||
Each Committee Meeting Attended as Non-Executive Chairman(1) | $ | 2,500 | ||||||
Each Committee Meeting Attended as Non-Executive Chairman or Lead Independent Director(1) | $ | 2,500 | ||||||
Each Committee Meeting Attended or Action by Written Consent as Committee Member | $ | 2,000 | $ | 2,000 |
(1) | In addition to membership on any particular |
All non-employee directors receive reimbursement for reasonable out-of-pocket expenses incurred in connection with meetings of the Board and its committees. Non-employee directors do not participate in any other benefit plan (including pension or deferred compensation plan) or receive perquisites.
Equity Compensation.In 2011, each The Director Compensation policy for equity compensation for non-employee director, other than Mr. Griffin, receiveddirectors in 2013 was as follows:
Non-employee directors receive initial grants when they join the following grantBoard (generally a prorated portion of a restricted stock award onthe annual grant) and then annual grants at the time of the Annual Meeting.
Non-employee directors as of May 9, 2013, the date of our annual meeting:
A2013 Annual Meeting of Stockholders, received a grant of restricted stock with a fair market value on thethat date of grant (measured as the average of the high and low of the price of the Common Stock on thatthe grant date) equal to $50,000, which resulted in the grant of 3,086or 4,575 restricted shares to each individual.shares.
Each restricted stock award vests over two years in two equal annual installments,one year from the date of issuance, subject to immediate vesting upon (i) certain changes in the ownership or control of the Company or (ii) the death of the director while serving as a Board member.
The Nominating and Corporate Governance Committee changed the Equity Compensation policy for directors if Proposal 1 is approved by the stockholders such that if Proposal 1 is approved, then following this Annual Meeting, each restricted stock award granted will vest in one year, subject to immediate vesting upon (i) certain changes in the ownership or control of the Company or (ii) the death of the director while serving as a Board member.
Generally, non-employee directors receive initial grants when they join the Board and then annual grants at the time of the annual meeting. The Nominating and Corporate Governance Committee regularly reviews our non-employee director compensation policy.
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20112013 Director Compensation Table
The table below does not include Mr. Idzik, who did not receive separate compensation for his service on the Board.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) (2) (3) | Total ($) (4) | |||||||||
Robert A. Druskin | 116,000 | — | 116,000 | |||||||||
Ronald D. Fisher | 144,000 | 50,000 | 194,000 | |||||||||
Steven J. Freiberg | — | — | — | |||||||||
Kenneth C. Griffin | 102,000 | — | 102,000 | |||||||||
Frederick W. Kanner | 180,000 | 50,000 | 230,000 | |||||||||
Michael A. Parks | 170,500 | 50,000 | 220,500 | |||||||||
C. Cathleen Raffaeli | 56,500 | — | 56,500 | |||||||||
Lewis E. Randall | 146,000 | 50,000 | 196,000 | |||||||||
Joseph L. Sclafani | 184,500 | 50,000 | 234,500 | |||||||||
Joseph M. Velli | 138,000 | 50,000 | 188,000 | |||||||||
Donna L. Weaver | 177,500 | 50,000 | 227,500 | |||||||||
Stephen H. Willard | 167,500 | 50,000 | 217,500 |
Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) (3) (4) | Total ($) (5) | |||||||||
Richard J. Carbone(6) | 35,000 | 35,000 | 70,000 | |||||||||
Mohsen Z. Fahmi | 49,000 | 40,000 | 89,000 | |||||||||
Ronald D. Fisher(7) | 25,000 | — | 25,000 | |||||||||
Christopher M. Flink | 28,000 | 28,000 | 56,000 | |||||||||
Kenneth C. Griffin(7) | 29,500 | — | 29,500 | |||||||||
Frederick W. Kanner | 153,000 | 50,000 | 203,000 | |||||||||
James Lam | 174,000 | 50,000 | 224,000 | |||||||||
Rodger A. Lawson | 208,500 | 50,000 | 258,500 | |||||||||
Frank J. Petrilli(7) | 60,000 | — | 60,000 | |||||||||
Rebecca Saeger | 123,500 | 50,000 | 173,500 | |||||||||
Joseph L. Sclafani | 162,500 | 50,000 | 212,500 | |||||||||
Joseph M. Velli | 135,000 | 50,000 | 185,000 | |||||||||
Donna L. Weaver | 174,000 | 50,000 | 224,000 | |||||||||
Stephen H. Willard | 156,000 | 50,000 | 206,000 |
(1) | Director fees are paid quarterly in arrears. Amounts reported in this column constitute fees paid during fiscal 2013, except for Mr. Carbone. |
(2) | Amounts reported in this column constitute the aggregate grant date fair value of each award calculated in accordance with the stock compensation accounting guidance under accounting principles generally accepted in the United States of America (“GAAP”) as more fully described in Note |
As discussed above, on May |
As of December 31, |
There are no compensation or benefit programs available for directors other than the cash fees and restricted stock awards described above. Consequently, the Company has not included columns in the Director Compensation Table for non-equity incentive plan compensation, change in pension value and non-qualified deferred compensation earnings or all other compensation, as the values for each of these items would be reported as zero. |
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(6) | Mr. Carbone earned this amount as a retainer upon joining the Board; however, actual payment was made in early 2014. |
(7) | Messrs. Fisher’s, Griffin’s and Petrilli’s terms ended at the 2013 Annual Meeting of Stockholders. |
Policy of Equity Ownership for Board of Directors
The Board believes that directors should hold meaningful equity ownership positions in the Company to help align the interests of directors with those of stockholders. Under our policy regarding equity ownership for directors, non-employee directors, directors are expected to be beneficial owners of shares of the Company’s Common Stock with a market value equivalent to at least two years’ annual retainer fees (not including any additional retainer for service as a Committee Chair or Non-Executive Chairman) within two years of joining the Board. Until a director has met this equity ownership guideline, directors arehe or she is expected to hold any stock acquired bythrough exercise of a stock option or vesting of restricted stock, net of the cost of acquisition and any tax obligation. Eachobligation, until the ownership level is met. During 2013, each of the Company’s non-employee directors iswas in compliance with thethis policy. The Company does not permit executive officers and directors to engage in hedging transactions involving Company stock.
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PROPOSAL 32
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
We are asking that you indicate your support, in a nonbinding advisory vote, for our executive compensation policies and practices as described inunder the Company’s Compensationheading “Compensation Discussion and Analysis,” the accompanying tables and related narrative contained in this Proxy Statement.
As described in detail under the heading “Compensation Discussion and Analysis,” we strive to weight our executive compensation program toward both cash and equity incentives that encourage and reward strong long-term performance and align the financial interests of our executives with the interests of our stockholders. Although, as an advisory vote, this proposal is not binding on the Company,Board, the Compensation Committee will carefully consider the stockholder vote on this matter. The next non-binding advisory vote to approve executive compensation will occur at our 2015 Annual Meeting.
Stockholders are being asked to vote on the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the named executive officers,Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 20122014 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange CommissionSEC (Item 402 of Regulation S-K), including the Compensation“Compensation Discussion and Analysis,” the compensation tables and the other related disclosure.”narrative disclosures.
The Board of Directors recommends that youstockholders vote FOR the proposal to approve the compensation of the NEOs as described in this proposal.Proxy Statement.
2018
PROPOSAL 43
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board isWe are asking the stockholders to ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2012. In the event2014. If the stockholders fail to ratify the appointment, the Audit Committee of the Board will consider it as a directionreconsider the appointment but is not obligated to select otherappoint another independent auditors for 2012.registered public accounting firm. Even if the selection is ratified, the BoardAudit Committee in its discretion may direct the appointment of a different independent auditor at any time during the year if the BoardAudit Committee determines that such a change would be in the best interests of the Company and its stockholders.
A representative of Deloitte & Touche LLP is expected to attend the Annual Meeting, will be given an opportunity to make a statement at the Annual Meeting if he or she desires to do so, and will be available to respond to appropriate questions from stockholders.
Audit Fees paid to Deloitte & Touche LLP
The aggregate fees billed by Deloitte & Touche LLP and their respective affiliates for professional services rendered in 20112013 and 20102012 are as follows:
Audit Fees (a) | Audit-Related Fees (b) | Tax Fees (c) | Total Fees | |||||||||||||
2011 | $ | 5,300,000 | $ | 900,000 | $ | 677,000 | $ | 6,877,000 | ||||||||
2010 | $ | 5,550,000 | $ | 1,364,000 | $ | 621,000 | $ | 7,535,000 |
Audit Fees (a) | Audit-Related Fees(b) | Tax Fees (c) | Total Fees | |||||||||||||
2013 | $ | 4,790,000 | $ | 786,000 | $ | 456,000 | $ | 6,032,000 | ||||||||
2012 | $ | 4,860,000 | $ | 900,000 | $ | 670,000 | $ | 6,430,000 |
(a) | Audit Fees in |
(b) | Audit-Related Fees in |
(c) | Tax Fees in |
All audit and non-audit services and fees were pre-approved by the Audit Committee either individually or by category. The Audit Committee has reviewed the nature of all non-audit services provided by Deloitte & Touche LLP and concluded that the provision of such services by Deloitte & Touche LLP wasare compatible with maintaining the maintenance of that firm’s independence in the conduct of its auditing functions.ability to serve as our independent registered public accounting firm.
Audit Committee Pre-Approval Policies and Procedures
Pursuant to its charter, the Audit Committee pre-approves all audit and permissible non-audit services provided by the independent auditors. The Audit Committee charter allows the Committee to delegate its authority to pre-approve services to one or more Committee members, provided that the designees present the pre-approvals to the full Audit Committee at its next meeting.
The Board of Directors recommends that stockholders vote FOR the proposal to ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2012.2014.
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EXECUTIVE OFFICERS OF THE COMPANY
In addition to Steven J. Freiberg,Paul T. Idzik, the Chief Executive Officer,CEO, the following are our executive officers are not directors and serve at the discretionas of the Board:March 7, 2014:
Name | Age As of May | Current Position | ||||
Matthew J. Audette | Executive Vice President, Chief Financial Officer | |||||
Michael | ||||||
| Executive Vice President, Chief | |||||
| ||||||
Karl A. Roessner | 46 | EVP, General Counsel and Corporate Secretary |
Matthew J. Audette is the Executive Vice President and Chief Financial Officer of the Company, a position he has held since January 2011. Mr. Audette joined E*TRADE in 2000, when the Company acquired Telebank, where he served as Controller in the Capital Markets department. Mr. Audette served from 2005 through 2010 as Senior Vice President, Corporate Controller.Controller for the Company. Prior to 2005, he served as Controller of E*TRADE Bank and Chief Financial Officer of E*TRADE Bank, a position he continues to hold. Mr. Audette also serves as Chief Financial Officer and as a board member of several of the Company’s other subsidiaries. He was also interim Chief Financial Officer in 2008. Since October 2011, he has served on the Board of Directors of Network for Teaching Entrepreneurship. HeMr. Audette began his career in public accounting at KPMG and holds a Bachelor of ScienceB.S. in accountingAccounting from Virginia Tech.
Michael J. CurcioE. Foleyis the Executive Vice President of the Company and President of E*TRADE Securities LLC, a position he has held since 2005. Mr. Curcio joined the Company in 2002. Mr. Curcio is responsible for the strategic direction, customer relationships and ongoing management of our core domestic retail franchise including our investing, trading and banking solutions. Prior to joining the Company, Mr. Curcio was employed at TD Waterhouse, where he last served as Executive Vice President, Customer Relationship Management. He is former vice chairman of the Philadelphia Stock Exchange board of governors. He serves on the board of directors of the Jazz Foundation of America and on the board for Operation Hope. Mr. Curcio also serves as a director and Chief Executive Officer of E*TRADE Capital Management, LLC and as an officer and a board member of several of the Company’s other subsidiaries. Mr. Curcio holds a bachelor’s degree in Business Administration from State University of New York at Plattsburgh.
Greg Framke is the Executive Vice President and Chief OperatingAdministrative Officer of the Company, a position he has held since July 2011,June 2013, having joined the Company in February 2013. Mr. Foley oversees the Company’s technology infrastructure, operations, human resources, facilities management and formerly heldprocurement functions. Mr. Foley has an extensive background in project management, making him well-suited to oversee a wide range of programs critical to the positionsuccessful execution of Chief Information and Operations Officer from 2005 to July 2011. Mr. Framke is responsible for the management of all global technology development and infrastructure, as well as our global clearing and operations. Mr. Framke has been recognized as one of InfoWorld’s 25 Most Influential CTOs and as a ComputerWorld Honors Program Laureate.Company’s strategic imperatives. Prior to joining the Company, Mr. FramkeFoley worked as a consultant at Foley & Cunningham from April 2009 to February 2013. Mr. Foley also held several roles at Barclays Bank PLC from January 2005 to April 2009, including Interim Chief Information Officer and Chief Administrative Officer, where he was Directorresponsible for several global functions supporting 170,000 employees across 60 countries. Mr. Foley began his career at Booz & Company, where he helped clients develop strategies and Global Equity Technology Chief Operating Officer for Deutsche Bank Securities, as well as an Executive Directorplans to address technology and operational issues over his 16 year career. Mr. Foley studied at Morgan Stanley & CoHatfield Polytechnic, in New York City and London. Mr. Framke is on the board of icouldbe.org and is also a director of E*TRADE Clearing LLC. Mr. Framke holds a B.A. in International Finance, graduating with honors from The George Washington University.Hertfordshire, England.
Nicholas UttonNavtej S. Nandra is the Executive Vice President Chief Marketing Officer of the Company, a position he has held since 2004.May 2013. Mr. UttonNandra is responsible for overseeing management of the Company’s core businesses. Mr. Nandra joined the Company from Morgan Stanley where he was Head of International for Morgan Stanley Investment Management and Chief Strategy Officer for Real Estate Investing and Merchant Banking from June 2010 to April 2013. In addition, he served on the Boards of Directors of Morgan Stanley Huaxin Fund Management Company, Morgan Stanley International Ltd. and Morgan Stanley & Co. International plc. Prior to Morgan Stanley, Mr. Nandra served on the Boards of Directors of Edelweiss Financial Services Ltd. and Edelweiss Tokio Life Insurance Co. Ltd., and as Senior Advisor to DTZ Holdings plc. Before that he held various positions at Merrill Lynch, including Head of Diversified Financial Services from 2008 through 2009, Chief Operating Officer of Global Wealth Management from 2007 through 2009, and Chief Operating Officer of Global Investment Banking and Head of Strategy for Global Markets and Investment Banking from 2004 through 2007. Mr. Nandra serves on the Boards of Directors of Edelweiss Financial Services, Ltd. and the Center of Governance, Institutions and Organizations, at the Business School of the National University of Singapore. He has also been a guest speaker at Columbia, Vanderbilt and Yale Universities and led the groundbreaking study with the Bank Administration Institute titled “Demand Strategy: Recapturing Share in Consumer Financial Services.” Mr. Nandra holds a P.G.D.M. (M.B.A.) from the Indian Institute of Management, Ahmedabad, and a Bachelor’s degree in Commerce (honors) from the University of Delhi.
Karl A. Roessner is Executive Vice President and General Counsel of the Company, a position he has held since May 2009. Mr. Roessner manages the legal, compliance and regulatory functions for the Company and its bank and brokerage subsidiaries. He also acts as Corporate Secretary to the Company’s and E*TRADE Bank’s
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Boards of Directors. Leveraging a depth of experience in legal matters related to highly regulated public companies, including board advisory, corporate governance, mergers & acquisitions and capital raising, Mr. Roessner is responsible for the oversight, guidance and direction of all marketing initiatives, including advertising, direct onlinelegal, compliance and offline marketing programs and branding campaigns as well as corporate communications.regulatory matters. Mr. Roessner has more than 20 years of experience practicing law. Prior to joining the Company in May 2009, Mr. Utton served as Executive Vice PresidentRoessner was a partner in the Corporate Practice group of Marketing at JP Morgan ChaseClifford Chance US LLP, one of the world’s leading law firms. There, he advised clients on negotiated public and Chief Marketing officer for MasterCard.private transactions, management and leveraged buyouts, capital raising activities and corporate governance matters. Mr. Utton holdsRoessner earned a graduate honors degreeB.S. in commerce, majoring in business economicsBusiness Administrationcum laude from Siena College and his J.D.cum laude from St. Johns University School of Law where he was a member of the St. John’s University of South Africa, Pretoria, and a bachelor’s degree in commerce, majoring in business administration and marketing from the University of Natal (South Africa).Law Review.
2221
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of the Common Stock as of March __, 2012,14, 2014, by (i) each director; (ii) each executive officer listed in the Summary Compensation Table;NEO; (iii) all current directors and executive officers as a group; and (iv) each person who is known to the Company to beneficially own more than 5% of the outstanding shares of the Common Stock of the Company. All Sharesshares are subject to the named person’s sole voting and investment power except where otherwise indicated. As of March 14, 2014, there were 288,372,837 shares of our Common Stock issued, outstanding and entitled to vote.
Name and Address of Beneficial Owner (1) | Number of Shares of Common Stock Beneficially Owned | Percentage of Common Stock Beneficially Owned (2) | ||||||
DIRECTORSAND EXECUTIVE OFFICERS: | ||||||||
Audette, Matthew J. (3) | 94,540 | * | ||||||
Curcio, Michael J. (4) | 272,147 | * | ||||||
Fisher, Ronald D. (5) | 30,342 | * | ||||||
Framke, Gregory A. (6) | 228,488 | * | ||||||
Freiberg, Steven J. (7) | 185,617 | * | ||||||
Griffin, Kenneth C. (8) | 27,423,986 | 9.60 | % | |||||
Kanner, Frederick W. (9) | 22,497 | * | ||||||
Lawson, Rodger A. | 2,679 | * | ||||||
Parks, Michael K. (10) | 25,869 | * | ||||||
Petrilli, Frank J. | 13,483 | * | ||||||
Saeger, Rebecca | 1,366 | * | ||||||
Sclafani, Joseph L. (11) | 12,709 | * | ||||||
Utton, Nicholas A. (12) | 257,916 | * | ||||||
Velli, Joseph M. | 7,173 | * | ||||||
Weaver, Donna L. (13) | 40,047 | * | ||||||
Willard, Stephen H. (14) | 26,367 | * | ||||||
All current directors and executive officers as a group (15) | 28,645,226 | 10.01 | % | |||||
STOCKHOLDERS OWNING MORETHAN 5%: | ||||||||
Fidelity Management & Research Company | 27,811,249 | (16) | 9.74 | % | ||||
82 Devonshire Street | ||||||||
Boston, MA 02109 | ||||||||
Citadel Investment Group II, L.L.C. | 27,423,986 | (17) | 9.60 | % | ||||
131 S. Dearborn Street, 32nd Floor | ||||||||
Chicago, IL 60603 | ||||||||
Vanguard Group, Inc. | 16,137,434 | (18) | 5.65 | % | ||||
100 Vanguard Blvd | ||||||||
Malvern, PA 19355 |
Name and Address of Beneficial Owner | Number of Shares of Common Stock Beneficially Owned (1) | Percentage of Common Stock Beneficially Owned (2) | ||||||
DIRECTORSAND EXECUTIVE OFFICERS: | ||||||||
Audette, Matthew J.(3) | 114,272 | * | ||||||
Carbone, Richard J. | 2,470 | * | ||||||
Curcio, Michael J.(4) | 549,725 | * | ||||||
Fahmi, Mohsen Z. | 2,923 | * | ||||||
Flink, Christopher M. | 1,647 | * | ||||||
Foley, Michael E. | 0 | * | ||||||
Framke, Gregory A.(5) | 312,409 | * | ||||||
Idzik, Paul T. | 46,493 | * | ||||||
Kanner, Frederick W.(6) | 32,226 | * | ||||||
Lam, James | 7,759 | * | ||||||
Lawson, Rodger A. | 27,169 | * | ||||||
Nandra, Navtej S. | 0 | * | ||||||
Petrilli, Frank J.(7) | 137,887 | * | ||||||
Roessner, Karl A.(8) | 105,746 | * | ||||||
Saeger, Rebecca | 11,095 | * | ||||||
Sclafani, Joseph L.(9) | 22,438 | * | ||||||
Velli, Joseph M. | 16,902 | * | ||||||
Weaver, Donna L.(10) | 49,776 | * | ||||||
Willard, Stephen H.(11) | 34,596 | * | ||||||
All current directors and executive officers as a group | 475,512 | * | ||||||
STOCKHOLDERS OWNING MORETHAN 5%: | ||||||||
T. Rowe Price Associates, Inc.(12) | 27,400,310 | 9.5 | % | |||||
100 E. Pratt Street | ||||||||
Baltimore, MD 21202 | ||||||||
The Vanguard Group, Inc.(13) | 21,457,907 | 7.5 | % | |||||
100 Vanguard Blvd. | ||||||||
Malvern, PA 19355 | ||||||||
FMR LLC(14) | 16,038,604 | 5.6 | % | |||||
245 Summer Street | ||||||||
Boston, MA 02210 | ||||||||
BlackRock, Inc.(15) | 15,511,078 | 5.4 | % | |||||
40 East 52nd Street | ||||||||
New York, NY 10022 | ||||||||
The Bank of New York Mellon Corporation(16) | 15,115,693 | 5.2 | % | |||||
One Wall Street, 31st Floor | ||||||||
New York, NY 10286 |
* | Less than 1% |
(1) |
|
22
(2) | Based on 288,372,837 shares outstanding on March |
(3) | Includes |
(4) | As of July 31, 2013, and includes 169,798 shares of Common Stock that are issuable upon exercise of vested options that are exercisable or will become exercisable within 60 days of March |
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(5) | As of March 28, 2013, and includes 18,671 shares of Common Stock that are issuable upon exercise of vested options that are exercisable or will become exercisable within 60 days of March |
(6) |
Includes 4,000 shares of Common Stock that are issuable upon exercise of vested options that are exercisable or will become exercisable within 60 days of March |
As of May 9, 2013. |
(8) | Includes |
Includes 4,000 shares of Common Stock that are issuable upon exercise of vested options that are exercisable or will become exercisable within 60 days of March |
Includes |
Includes 12,000 shares of Common Stock that are issuable upon exercise of vested options that are exercisable or will become exercisable within 60 days of March |
Number of shares |
Number of shares |
Number of shares based upon Form 13G filed February 14, |
Number of shares based upon Form |
Number of shares based upon Form 13G/A filed |
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Compensation Discussion and AnalysisCOMPENSATION DISCUSSION AND ANALYSIS
OurE*TRADE’s Compensation Philosophy: Compensation Considerations for 20112013
Our Compensation Committee strivesThe Company’s executive compensation program is designed to attract, motivate and retain highly qualified executive officers and establish a compensationstrong link between pay and achievement of the Company’s business goals. The Company seeks to accomplish this by establishing a program for executive officers that is heavily weighted toward incentives for sustainable long-term performance. In particular, we dothe Compensation Committee does this by allocating a significant percentage of annual compensation opportunities for our executive officers toward:
Annual cash payments based on important near-term financial and operational goals that we believethe Compensation Committee believes will improve our long-term results; and
Equity grants that vestvesting over a period of time andthat the Compensation Committee believes align managementexecutive officers’ economic interests with increasing shareholder value based on the long-term performancethose of our stock.stockholders and ensure that a significant portion of the executive officers’ compensation is tied to the Company’s long-term stock performance.
In 2011, we heldAt our first stockholder advisory vote to approve2013 Annual Meeting of Stockholders, over 89% of the compensation of our named executive officers, commonly referred to as a say-on-pay vote. Over 98% of stockholder votes cast (excluding abstentions and broker non-votes) were cast in favor of theour executive compensation, of our named executive officers.commonly referred to as a “say-on-pay vote.” Although this was only an advisory vote, we believethe Compensation Committee believes the approval by our stockholders shows support for our compensation philosophy of placing significant weight on the types of incentives that weincentive pay. For this and other reasons described below (including our business achievements for the year as described below)year), our compensation committeethe Compensation Committee retained its general approach to determining the compensation of our executive compensationNEOs, as described in this Compensation“Compensation Discussion and Analysis.”
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Fiscal 20112013 Business Highlights. Our core business is our trading and investing customer franchise. Building on the strengths of this franchise, our growth strategy is focusedcentered on two core objectives: accelerating the growth of our core brokerage business to improve our market position and strengthening our overall financial and franchise position, improving our market position in our retail brokerage business, acceleratingposition. Accelerating the growth of our corporate servicesbrokerage business focuses on enhancing the digital and market making businesses, enhancing our position with long-term investors, and optimizingoffline customer experience, capitalizing on the value of our bank franchise.corporate services business and maximizing the value of deposits through E*TRADE Bank. Strengthening our overall financial and franchise position focuses on managing down our legacy investments, mitigating credit losses and executing on our capital plan. Our executive compensation program has been designed to recognize these efforts.
In determining whether ourthe appropriate executive compensation was appropriate for 2011,2013, the Board and the Compensation Committee recognized our business achievements and challenges. In addition to improving in our financial results during 2013, we made meaningful headway toward rationalizing our capital structure, took steps to position ourselves for growth and refocused management’s efforts on the core of our Company – the customer. Mr. Idzik was hired as our CEO in January 2013, which was an important transition year for the Company. Mr. Idzik, along with his team of continuing key management members and newly hired executives, through renewed leadership, have refocused our business, and the Board and the Compensation Committee recognized the following areasachievements in particular:
WeThe Company made significant progress on our long-term capital plan, including receiving approval from our regulators for $175 million in dividends from E*TRADE Bank to the Company.
The Company improved its capital ratios through better core earnings and some targeted deleveraging.
The Company reduced its legacy loan portfolio from $10.6 billion at the end of 2012 to $8.6 billion at the end of 2013.
The Company continued to focus on engagement with long-termits core businesses, entering into a definitive agreement to sell the market making business, G1 Execution Services, LLC (“G1X”), to an affiliate of Susquehanna International Group, LLP for approximately $75 million. The sale of G1X was completed on February 10, 2014.
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The Company continued building out its enterprise risk management capabilities and retirement investors, as well as corporate clients and continued to grow our sales force, increasing our financial consultant team by 42% in 2011;enhancing the Company’s regulatory relationships.
We developed E*TRADE 360,The Company launched a fully dynamicnumber of customer-facing products and customizable online investing dashboard now availableservices, in addition to all customers;
We developed a newly redesigned public website featuring simplified navigation, personalization based on objectives and experience levels, and enhanced content;
We added several new features to our E*TRADE Pro platform, including new options strategies (multi-legged orders), expanded CNBC content and logarithmic charts;
We introduced a suiteenhancements of sophisticated Options Tools designed to help traders quickly and easily identify and analyze potential investment opportunities;existing offerings during the year, including:
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— | An upgraded E*TRADE Pro platform with enhanced capabilities including the integration of futures trading, allowing us to provide customers with a much more streamlined futures trading experience; and |
We introduced weekly options on select stocks, indexes and ETFs.
— | The hosting of our second annual National Retirement Education Day in New York, broadcasted nationally via the Internet and in person at all of our branches, to provide customers with perspectives on how to better prepare for and manage their retirement assets. |
Process for Determining Executive Compensation
Compensation Committee. As previously described, above, all members of the Compensation Committee are independent.independent and were independent throughout 2013. The Compensation Committee is responsible for establishing and administering compensation programs for our senior executives, including programs for the Named Executive Officers (also called our NEOs) listed in the Summary Compensation Table below.NEOs. The Compensation Committee reviews and approves executive compensation or, with respect to the CEO’s compensation, recommends his compensation to the independent members of the full Board for approval or ratification.
Compensation Consultants. The Compensation Committee has full authority to retain any consultant(s) it deems appropriate and for 2011appropriate. In 2013, the Compensation Committee retained Johnson Associates as its outside compensation consultant to advise the Compensation Committee on matters including executive compensation practices and market compensation levels. Representatives from Johnson Associates attend meetings of the Compensation Committee. No services were provided by Johnson Associates to the Company outside of its engagement with the Compensation Committee. The Compensation Committee considered the independence of Johnson Associates and determined there were no conflicts of interest.
Role of Management. The Compensation Committee works with management, led by the CEO, in an effort to ensure that executive compensation programs will be as effective as possible to meet the Compensation Committee’s objectives of retaining and motivating executive officers and rewarding desired performance. In particular, the Compensation Committee considers the CEO’s review of the performance of other executive officers, given his daily experience with them and his particular knowledge of their roles. However, the Compensation Committee ultimately makes its own determinations regarding form and amount of any executive’sexecutive officer’s compensation and may accept or reject any recommendation from its consultants and management. In addition, the CEO is not present when the Compensation Committee or independent members of the full Board determine the CEO’s compensation.
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Comparative Data. To determine whether our compensation programs are competitive, the Compensation Committee considered publicly available data provided by Johnson Associates concerning programs and compensation levels offered by other companies in relevant markets. In particular, the Compensation Committee reviewed compensation data for the companies listed below, although it did not target a specific percentile for comparing compensation. Instead, it used this information as a reference point when considering whether compensation was appropriate and competitive.
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Associated Banc-Corp | ||
Broadridge Financial Solutions, Inc. | Northern Trust Corporation | |
Comerica Incorporated | Raymond James Financial, Inc. | |
The Charles Schwab Corporation | SEI Investments Company | |
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| T. Rowe Price Group, Inc. | |
| TD Ameritrade Holding Corporation |
Overview of 20112013 Named Executive Officer Compensation
Total Compensation. Each NEO has a total target compensation, which consists of a combination of:of three elements:
fixed cash compensation (base salary);
variable cash incentive payments (target annual cash bonus); and
long-term equity compensation (target initial value of restricted stock awards and/or stock options)awards).
Base salary is a fixed, competitive component of pay, based on responsibilities, skills and experience. The Compensation Committee intends thattarget annual cash incentives willbonus is intended to reward annual financial and operating objectives, while non-cashobjectives. Long-term equity compensation is intended to reward longer term performance through vesting requirements and ties to our stock price over time. For our existing NEOs,The total target cashcompensation for 2013, including each element of compensation, and equity values were not increased for 2011 because the Committee believed it was more appropriate to concentrate on rewarding actual performance at year-end. The target cash and equity values for Mr. Audette became effective when he was appointed as CFOindividual changes in January 2011 and were determined based on the factorsparticular elements from 2012 are described below under “New CFO Compensation”. below.
At least once a year, the Compensation Committee reviews “tally sheets” for each of the NEOs,NEOs. These tally sheets are prepared by management and quantify the elements of each NEO’s total compensation, including potential total annual compensation at different performance levels and the value of outstanding equity awards. The Compensation Committee did not recommend specific changes for NEOs’ fiscal 20112013 compensation in response to this particular review, although it uses the tally sheet information as one data point when considering executive compensation matters.
The differences in pay among executive officersNEOs is a result of the Compensation Committee’s review of the individual’seach NEO’s position and level of authority within the Company, experience, unique skill sets, thesignificant achievements, competitive level of total compensation as compared with the market, and/or individual negotiations in connection with hiringaccepting employment with the executive.Company. For example, our CEO’s and our President’s total compensation iswere each significantly higher than thatthose of our other executive officers because the CEO overseesand the President oversee all of our business units and functions. Mr. Curcio’s incentive compensation target amounts for 2011 werefunctions as well as the highest amongimplementation of the other NEOs because he is in charge of our trading and investingCompany’s business which represents our core business and strategic focus.strategy. The Compensation Committee also considers compensation of our NEOs in light of changes in roles and responsibilities. For example, in July 2011, Mr. Framke was given the additional responsibility of growing our Platform Services business, so his compensation has increased for 2012.
CEO Compensation. In connection with Mr. Freiberg’s appointment as CEO on April 1, 2010, based upon the recommendation of the Compensation Committee, the independent members of the Board approved an employment agreement with Mr. Freiberg, pursuant to which he receives an annual base salary of $1,000,000 and
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is eligible for an annual cash performance bonus with a target of $3,000,000 and for annual equity incentives with a target initial value of $3,000,000 (with the actual amount based on the performance of the Company) and subject to vesting over four years following the grant. The Compensation Committee believed that the CEO’s compensation should be heavily weighted toward incentive compensation. In determining the amounts of the CEO’s compensation, the Compensation Committee considered a variety of factors, including data from the companies listed above (but it did not target a specific level within the market data), discussions with Johnson Associates as to market practice, and the Compensation Committee’s collective judgment about levels needed to attract and incentivize the type of talented individual needed for the position. His salary and target awards have not changed since this initial negotiation because the Compensation Committee believes these amounts continue to offer appropriate incentive to Mr. Freiberg.
Compensation for New CFO.In connection with Mr. Audette’s appointment as the Company’s CFO as of January 1, 2011, the Compensation Committee approved an employment agreement with Mr. Audette, pursuant to which he received an annual base salary of $500,000 and is eligible for an annual cash performance bonus with a target of $600,000 and for annual equity incentives with a target value of $500,000 (with the actual amount based on the performance of the Company) and subject to vesting over four years following the grant. In determining the amounts of his compensation, the Compensation Committee primarily considered its discussion with Johnson Associates as to market practice (but did not target a specific level within available market data) and the Compensation Committee’s collective judgment about levels needed to incentivize the individual for the position. For 2011 only, Mr. Audette received a relocation bonus and the Company reimbursed Mr. Audette for expenses incurred in connection with his relocation to our corporate headquarters.
20112013 Performance Metrics. Our strategy for 2011 continued to be2013 was to maintain the strength of our operating business while managing risks, particularly those arising from the balance sheet management segment. Accordingly, our incentive compensation program focused on these areas, but included a significant element associated with strategic and qualitative performance. The determination of our bonus pool for 20112013 was based on the following criteria:criteria.
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(i)Operating Performance (65%):
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27Because of the changing and uncertain economic environment, the Compensation Committee believed it was important to continue to allocate a meaningful portion of the bonus pool (35%) to reward significant achievements in executing key initiatives. Although this component did not have specific performance targets, the Compensation Committee specified that it expected to focus on accomplishments in the following key initiatives: (i) growth in key brokerage metrics; (ii) execution of cost reduction efforts; (iii) management of regulatory initiatives; (iv) employee engagement; (v) enterprise risk management build-out; and (vi) execution of deleveraging activities.
In addition, the Compensation Committee had discretion to adjust the overall bonus pool upward or downward by 25%. For purposes of the incentive plan, operating income is before bonus accrual and excludes certain one-time items as applicable.discussed further below.
Determination of 20112013 Compensation
Compensation of Our CEO
Mr. Idzik was hired as our CEO in January 2013 during an important transition period for our Company. The Board set his compensation at a level it viewed as reflective of Mr. Idzik’s strategic importance to the Company’s leadership. Mr. Idzik receives compensation under the terms of his employment agreement, approved by the Compensation Committee and independent members of the Board in connection with his hiring in January 2013. Pursuant to that agreement, in 2013 Mr. Idzik received an annual base salary of $1,000,000, was eligible for an annual cash performance bonus (at target) of $3,000,000 and was issued a one-time equity grant of restricted stock units with an initial value of $9,000,000 (subject to vesting over the four years following the grant date). The Compensation Committee believed that the CEO’s compensation should be heavily weighted toward incentive compensation, in the form of both annual cash bonuses based on performance and long-term equity awards, which ties his interests to those of our stockholders. The Compensation Committee believed that time-based restricted stock units were appropriate for a newly hired CEO to offer both incentives to increase long-term stock price and to offer retentive value in a challenging market for top executives. In determining the amounts of the CEO’s compensation, the Compensation Committee considered a variety of factors, including data from the companies listed above (but did not target a specific level within the market data), and discussions with Johnson Associates as to market practices.
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Compensation of Our Other NEOs
For our other NEOs, 2013 total compensation approved by the Compensation Committee, after consultation with our CEO, was as follows:
Base salary for each NEO was set at a level reflective of his position within the Company, experience, unique skills and individual negotiations undertaken during the hiring process. Messrs. Audette, Nandra, Foley and Roessner received an annual base salary of $500,000, $750,000 (prorated for his first year), $450,000 (prorated for his first year) and $800,000, respectively.
Annual cash performance bonus targets for Messrs. Audette, Nandra, Foley and Roessner were set at $800,000, $1,650,000, $600,000 and $400,000, respectively.
Annual long-term equity award targets for each NEO, other than Mr. Idzik, were set at levels reflective of each NEO’s position within the Company, the importance of the various business segments or functions overseen to the Company’s strategy and success and the overall compensation of the NEOs. The Compensation Committee set target values for equity grants of restricted stock for Messrs. Audette, Nandra, Foley and Roessner at $700,000, $1,650,000, $450,000 and $800,000, respectively.
Base Salary
In 2011, Mr. Audette was appointed toFor 2013, the role of CFO with a base salary of $500,000 as described more fully above. For 2011,Compensation Committee made no significant changes were made to base salary for the otherour continuing NEOs, Messrs. Audette and Roessner, and our former NEOs because the Compensation Committee determined that their base salaries were sufficientcompetitive and instead focusedpreferred to focus on performance-based cash compensation and long-term equity compensation when making adjustments to total compensation. For our newly-hired NEOs, base salary was determined through negotiations between the individual and the Company based on a combination of factors, including compensation foregone at their prior job and the Compensation Committee’s view of reasonable compensation for a new executive based on specific responsibilities, skills and experience.
Cash Incentive Program
Annual Cash Incentive Awards. This cash-based element of compensation provides executivesNEOs an incentive and a reward for achieving meaningful near-term performance objectives that we believethe Compensation Committee believes will lead to sustainable long-term performance. The Compensation Committee believes that it is important to rigorously assess achievement of our performance goals in determining whether and how much to pay in cash bonuses, but that it is important to retain a degree of flexibility given the nature of our business. AtIn 2013, the endCompensation Committee made no significant changes to the target cash bonus awards for Mr. Roessner or our former NEOs, because the Compensation Committee determined that these targets were competitive and in line with market compensation levels. The Compensation Committee increased Mr. Audette’s target cash bonus target for 2013 in recognition of his leadership in executing the debt restructuring and deleveraging efforts during 2012 and to better align Mr. Audette’s target with his internal peer and external peer group. The Compensation Committee also increased Mr. Foley’s target cash bonus as a result of his change in title and responsibilities in June 2013.
Cash Awards for 2013 Performance. In early 2013, the Compensation Committee established target cash bonus awards for each of our NEOs, in the amounts set forth in the “Grants of Plan-Based Awards” table, for which the actual payout amounts would depend on the Compensation Committee’s review of the year,Company’s 2013 performance against the pre-established performance criteria described below. In early 2014, after reviewing both our financial and strategic performance, the Compensation Committee first approved a total bonus pool based on the factors described below and then assesseddetermined appropriate individual payments. In determining that the total bonus pool for 2013 should be 106%113% of the accrued target budget, (and the same dollar amount as the prior year’s total bonus pool), the Compensation Committee considered the following factors: (i) eachthe pro forma operating income of our financial performance metricsthe Company was nearly achieved or34% above target levels set for bonus plan purposes,budget; (ii) an emphasis on exceeding goals and well abovenot merely meeting them at the threshold levels for bonus payout;executive level; and (ii) our(iii) the Company’s execution of key initiatives and accomplishment of our various operational and strategic goals, when
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combined with special considerations, andthe regulatory environment, market developments as well asand the macro-economic environment that we believed impacted some of our financial and strategic goals, was above the target level.environment.
(i)Financial GoalsOperating Performance. Results for each of the pre-established financial performance metrics for 20112013 excluding the impact of plan payments, the impairment of goodwill in connection with the Company’s decision to exit its market making business, restructuring costs and reserves for certain one-time legal expenses itemsfor severance payments and executive search fees were as follows:
• | Trading and Investing Segment. Our performance at |
• | Balance Sheet Management Segment. Our performance at |
• | Unallocated Corporate Costs.Our performance at |
(ii)Strategic and Qualitative PerformanceExecution of Key Initiatives. In assessing our level of achievement of this metric, after considering the following factors together with thoseCompensation Committee reviewed accomplishments in the key areas described above as well as execution of the initiatives described under “Our Compensation Philosophy: Compensation Considerations for 2011”2013.” In determining that our collective strategic and qualitative performance was in line with target performance level, the Compensation Committee believed that collective performance in this important area was significantly aboveparticularly focused on the target level:Company’s strategy, which includes the following:
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As part of this assessment of the qualitative component of the bonus pool, the Compensation Committee also considered factors that may have reduced our performance results:
Adjustmentsresults including additional costs incurred as a result of heightened expectations from our regulators with respect to budget—Operating income metrics were lower because of Board-directed lower levels of interest rate riskcompliance with laws and strategic decision to invest moreregulations, including our controls and business processes and changes in the brand and marketing than in the original budget.macro-economic environment.
Market environment—There was an overall decline in market volumes, which we believed negatively impacted the number of daily average revenue trades (or DARTS).
Individual Cash Bonus Payouts. Based on the above factors, the Compensation Committee established the overall bonus pool slightly aboveat 113% of target. In determining the individual NEO payments from this bonus pool, the Compensation Committee primarily considered which business segments were most successful and thetheir importance to our business plan of the strategicstrategy and successes, together with its view of leadership and effort by each individual officer. Thisofficer and each individual’s overall compensation. As further described below, this resulted in the payments set forth in the “Summary Compensation Table”. For the NEOs (other than the CEO), theof $3,500,000, $800,000, $1,650,000, $600,000 and $500,000 for each of Messrs. Idzik, Audette, Nandra, Foley and Roessner, respectively. As a result, bonus payments ranged from approximately 107%100% to 128%125% of the individual’s target. Mr. Framke receivedIn paying cash bonuses at or above target, the highest percentage of target as a result of his increased responsibilities and Mr. Curcio receivedCompensation Committee reiterated its desire to emphasize exceeding, not just meeting, goals for the next highest percentage of target as a result of our continuingyear, to encourage focus on the tradingimproving brokerage business and investing business. Our CEO,to make “target” bonuses difficult to achieve at the executive level.
Given the Company’s strong business results in 2013, all bonus payouts were at or above target. However, the Compensation Committee approved slightly different allocations (as a percentage of targets) due to the particular responsibilities and roles of each individual NEO. Mr. Freiberg,Idzik received 117% of target in recognition of his responsibility for all of the Company’s business units and functions and his leadership in strengthening the executive management team and the execution of key initiatives, including continuing the build-out of the Company’s Enterprise Risk Management function, as well as enhancing the Company’s and E*TRADE Bank’s
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regulatory relationships. Mr. Audette received 100% of target based on his leadership in significant efforts that have contributed to the Company’s financial results and that will enable the Company to achieve its strategic and business goals, such as deleveraging the Company’s balance sheet. Mr. Nandra also received 100% of target bonus because he was directly or indirectly in charge of a significant portion of the Compensation Committee believedCompany’s business units and functions as well as the implementation of the Company’s business strategy. Mr. Foley received 100% of target in recognition of his leadership of the Company’s technology infrastructure and operations functions. Mr. Roessner received 125% of target amount wasbecause of the importance of the Legal and Compliance function in a sufficientperiod in which the Company has been enhancing regulatory relationships and appropriate amount to reward him for our overall performance.building out the Company’s Enterprise Risk Management Program.
Equity Compensation
Annual Long-Term Incentive Compensation. In early 2011,2013, the Compensation Committee approved equity grants for the continuing NEOs based on 20102012 performance, as described in detail under “Compensation Discussion and Analysis” in our 20112013 Proxy Statement. These equity grants vest annually over four years following the date of grant. These award amounts are set forth in the “Grants of Plan-Based Awards” table below because they were granted in 2011, although we consider them2013, however they were earned as part of 20102012 compensation because they related to 20102012 performance. The equity grants made to our newly hired NEOs were determined based on a combination of negotiation, the Compensation Committee’s view of reasonable and appropriate incentives compared to cost, and the unvested equity awards forfeited by the executives upon departure of their prior jobs.
Equity Awards Earned for 2013 Performance. Also in early 2011,2013, the Compensation Committee established a program that would result in equity grants in early 2012,2014, with the amounts depending on the Compensation Committee’s viewreview of 20112013 performance (that is, based on the performance criteria and results described under “Cash Incentive Program” above, but with the individual amounts ultimately determined inat the Compensation Committee’s discretion). Therefore,The Compensation Committee set 2013 equity bonus targets for Mr. Roessner and our former NEOs at the same levels as their 2012 targets, because the Compensation Committee determined that these targets were competitive and in line with market compensation levels. The Compensation Committee increased Mr. Audette’s equity bonus target in recognition of his leadership in executing the debt restructuring and deleveraging efforts during 2012. Equity targets for our new NEOs were determined through negotiations between the individual and the Company, based on a combination of factors including compensation foregone at their prior job and the Compensation Committee’s view of reasonable compensation for a new executive based on specific responsibilities, skills and experience. The Compensation Committee increased Mr. Foley’s equity target as a result of his change in title and responsibilities in June 2013.
In February 2014, the Compensation Committee determined long-term equity target awards for each NEO based on the Compensation Committee’s review of 2013. Mr. Idzik did not receive an equity grant in February 2012,2014 because of his significant new hire equity grant in 2013 and the Company does not intend to grant additional equity to Mr. Idzik during the initial three-year term of his employment agreement. Based on the Company’s financial results and the Company’s performance under the performance criteria, the Compensation Committee approved equity awards to our NEOs with grant date values ranging from 100%112% to 120%129% of the individual’s target. Our CEO received 100% of his target. The reasons for the differences among our other NEOs were substantially similar to the reasons for the cash bonus payment differences, as described above. The Compensation Committee granted 100% or more of the target amount of each award in restricted stock units principally because it felt that, the share amounts for restricted stock units would result in less dilution to stockholders than options and, given the stock market volatility, these awards offered better retentive and incentive value than options with less potential dilution to stockholders, while still motivating the recipients to work to increase ourthe Company’s stock price.
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Because these awards were made in 2012,2014, SEC disclosure rules require that they not be reflected in the “Summary Compensation Table” or “Grants of Plan-Based Awards” table below. However, we are reporting them in this Compensation“Compensation Discussion and AnalysisAnalysis” because we consider them part of our 20112013 compensation.
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Each of the following restricted stock unit awards was granted to the following current executive officers on February 9, 20127, 2014 and vests annually over fourthree years:
Name | Number of RSUs (rounded down to the nearest whole number) | Aggregate Grant Date Fair Value | ||||||
Steven Freiberg | 328,587 | $ | 3,000,000 | |||||
Matthew Audette | 65,717 | $ | 600,000 | |||||
Michael Curcio | 142,387 | $ | 1,300,000 | |||||
Greg Framke | 136,911 | $ | 1,250,000 | |||||
Nicholas Utton | 109,529 | $ | 1,000,000 |
Name | Number of RSUs (rounded down to the nearest whole number) | Aggregate Grant Date Fair Value | ||||||
Matthew J. Audette | 44,631 | $ 900,000 | ||||||
Michael E. Foley | 27,274 | $ 550,000 | ||||||
Navtej S. Nandra | 104,140 | $ 2,100,000 | ||||||
Karl A. Roessner | 44,631 | $ 900,000 |
Equity Ownership Guidelines.Guidelines
The Company has implemented the following equity ownership guidelines:
The CEO should hold equityChief Executive Officer is expected to be the beneficial owner of shares of Company stock with a market value equal to at the time of acquisition ofleast five times his base salary. Priorsalary (as adjusted from time to meetingtime). Each of the recommended equity level, if he exercises a stock option or vests in a restricted stock award or restricted stock unit, heother NEOs (as well as certain other employees of the Company) is expected to retain equity with a value equal to 75%be the beneficial owner of the profit after taxes realized on the exercise or vesting.
Other NEOs should hold equityshares of Company stock with a market value equal to at the time of acquisition ofleast three times theirhis or her base salary. Priorsalary (as adjusted from time to time).
Any NEO not meeting the recommended equity level, if an NEO exercises a stock option or vests in aownership threshold is required to hold 50% of all after-tax shares remaining from the vesting of restricted stock award or restricted stock unit, he or she is expected to retain equity with a value equal toawards and 50% of the profit after taxes realized onall after-tax shares remaining from the exercise or vesting.of vested stock options until such time as the executive officer meets the applicable threshold.
Recoupment Policy
Our recoupment policy is applicable to all NEOs and certain other employees. If the Compensation Committee determines that incentive compensation was overpaid as a result of a restatement of our reported financial results or any inaccurate data used to calculate such compensation, the Compensation Committee will review the cash bonus and long-term incentive plan awards granted, vested or accrued and determine the amount and kind of the overpayment. To the extent practicable, in the best interests of stockholders, and as permitted by applicable law, the Compensation Committee will seek to recover or cancel any such overpayments. The Compensation Committee may make determinations of overpayment at any time through the date the Company files its audited financial statements for the fiscal year that follows the year for which the inaccurate performance criteria were measured. However, if the Compensation Committee determines that any person purposefully provided inaccurate information or otherwise was culpable in the inaccuracy of the performance metrics, the Compensation Committee shall be entitled to determine that the overpayment with respect to such person is the entire amount of the bonus or other incentive payment or equity awarded for the applicable year, and without regard to when the event occurred.
Severance and Change in Control Provisions
As described in detail (including a quantification of potential benefits) under “Employment Agreements and Potential Post-Employment Payments”“Potential Payments on Termination or Change in Control” elsewhere in this Proxy Statement, we have entered into employment agreements with each of our current NEOs providing for severance benefits, including enhanced severance benefits in connection with a change in control as well as certain other benefits outside of a change in control. The Compensation Committee periodically reviews these arrangements and considers the costs and benefits, but believes these are appropriate in order to help prevent executives’alleviate executive officers’ concern over being arbitrarily terminated. The Compensation Committee balances the potential costs of these agreements against the need to retain our executivesexecutive officers in a market for top executive candidates that, in spite of the challenges over the last few years, remains competitive. In 2013, our former NEOs received separation payments, as further described below under
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“Potential Payments on Termination or Change in Control.” We do not provide any tax gross-up if the excise tax resulting from Section 280G is applied to any NEO.
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Other Benefit Plans and Perquisites
We offer a non-qualified deferred compensation plan for senior management,executive officers, but the amounts in a participating executive’s plan account consist solely of the deferred compensation portion of his or her salary or cash incentive payments (as elected by the executive) and the market return on the deferred amounts, and we do not provide matching contributions or guaranteed returns. We have retained life insurance policies to support the payment of obligations under this plan.
We provide matching contributions to our 401(k) plan, which are made for executivesexecutive officers in the same manner as for our other employees. We do not sponsor any defined benefit retirement plan for our executive officers or supplemental executive retirement plan. We provide executive officers with an “umbrella” liability insurance policy, providing for insurance coverage for the executive officer beyond what the executive officer has retained on his or her own behalf, with a cost per executiveindividual of less than $5,000 per annum. Beyond this, there are no perquisites offered to our senior executivesexecutive officers with anything other than ade minimis value, except, as reported in the Summary Compensation Table, for (i) payments in fiscal 2011 to Mr. Audette reflecting a $150,000 relocation bonus and $78,258Idzik in satisfaction of our agreement to pay for certain personal travel related to Mr. Idzik’s relocation from the United Kingdom to the U.S., including up to six months of temporary housing and additional relocation expenses, for him and his family; and (ii) payments to Mr. Freiberg in satisfactionassistance with the preparation of our agreement to pay him a specified amount if he declined participation in our health plan given his eligibility under a prior employer’s plan, whichcertain tax returns for fiscal 20112013, all of which resulted in aggregate payments of $37,188.approximately $95,688.
Tax Considerations
The tax deductibility of compensation is not currently a material consideration by the Compensation Committee. Although some of our incentive plans are structured so that certain types of awards will qualify as deductible, when determining executive compensation the Compensation Committee instead focuses on the other considerations described in this Compensation“Compensation Discussion and Analysis.”
Compensation Risk Assessment
During 2011,2013, the Compensation Committee considered the risk profile of its compensation programs, including a review of both executive and non-executive compensation in a series of meetings with its outside compensation consultant and members of our legalLegal and Human Resources teams. In particular, the Compensation Committee requested that its compensation consultant review all of our incentive plans. We may periodically adjust individual plans in response to this review to ensure that the plans aredo not materially risky.pose a material risk to the Company. With respect to our executive officer compensation program, we believe the program supports long-term growth and does not encourage excessive risk-taking because of the following features of our program, as further described under the headingin this “Compensation Discussion and Analysis” above:Analysis,” listed below:
the balance between fixed and variable pay;
operating income rather than revenue funds the incentive program, meaning executivesexecutive officers must focus on all aspects of the Company’s objectives and strategic plans;capital plan;
the aggregate bonus pool funding is capped;
we grant equity awards with long-term vesting criteria, which we believe prevents a focus on a short-term run-up in ourthe Company’s stock price;
our equity ownership guidelines, as further described above, limitdiscourage the short-term gain our executivesexecutive officers could realize if permitted to sell a large portion of their holdings;
executives’executive officers’ incentive compensation depends on both pre-established financial performance objectives and subjective assessments by the Compensation Committee of the quantitative and qualitative performance at the business and individual level; and
we have implemented a recoupment policy for incentive compensation, as further described above.
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EXECUTIVE COMPENSATION
20112013 Summary Compensation Table
The following table includes information for our “Named Executive Officers” (also called our NEOs)NEOs which includes each person who served as our principal executive officer or principal financial officer at any time during fiscal 2011 and2013, our other three most highly compensated executive officers at the end of fiscal 2011.2013 and two other highly compensated former executive officers. Compensation is set forth for the most recent fiscal year for all Named Executive OfficersNEOs and for up to two additional fiscal years for named executive officersNEOs who also served in that capacity during such fiscal yearsyears.
Name | Year | Salary | Stock Awards (1) | Option Awards (2) | Non-Equity Incentive Plan Compensation (3) | All Other Compensation (4) | Total Compensation | |||||||||||||||||||||
Steven J. Freiberg, (5) | 2011 | $ | 1,000,000 | $ | 1,507,485 | $ | 742,497 | $ | 3,000,000 | $ | 44,392 | $ | 6,294,374 | |||||||||||||||
Chief Executive Officer | 2010 | $ | 738,462 | — | — | $ | 2,250,000 | $ | 41,769 | $ | 3,030,231 | |||||||||||||||||
Matthew Audette, (6) | 2011 | $ | 496,154 | $ | 696,492 | $ | 252,223 | $ | 650,000 | $ | 235,292 | $ | 2,330,161 | |||||||||||||||
EVP, Chief Financial Officer | ||||||||||||||||||||||||||||
Michael Curcio, | 2011 | $ | 450,000 | $ | 870,984 | $ | 428,995 | $ | 1,350,000 | $ | 9,971 | $ | 3,109,950 | |||||||||||||||
EVP, President, E*TRADE Securities LLC | 2010 | $ | 450,000 | $ | 938,000 | $ | 453,944 | $ | 1,350,000 | $ | 7,308 | $ | 3,199,252 | |||||||||||||||
2009 | $ | 467,307 | (7) | $ | 1,773,000 | $ | 297,048 | $ | 1,500,000 | $ | 7,244 | $ | 4,044,599 | |||||||||||||||
Greg Framke, | 2011 | $ | 450,000 | $ | 803,986 | $ | 395,997 | $ | 1,250,000 | $ | 7,206 | $ | 2,907,189 | |||||||||||||||
EVP, Chief Operating Officer | 2010 | $ | 450,000 | $ | 804,000 | $ | 389,094 | $ | 1,100,000 | $ | 18,408 | $ | 2,761,502 | |||||||||||||||
2009 | $ | 467,307 | (7) | $ | 1,706,000 | $ | 264,043 | $ | 1,100,000 | $ | 36,939 | $ | 3,574,289 | |||||||||||||||
Nicholas Utton, | 2011 | $ | 500,000 | $ | 736,989 | $ | 362,999 | $ | 800,000 | $ | 7,034 | $ | 2,407,022 | |||||||||||||||
EVP, Chief Marketing Officer | 2010 | $ | 500,000 | $ | 737,000 | $ | 356,669 | $ | 800,000 | $ | 7,203 | $ | 2,400,872 | |||||||||||||||
2009 | $ | 519,231 | (7) | $ | 1,572,000 | $ | 198,032 | $ | 900,000 | $ | 7,372 | $ | 3,196,635 |
Name & Position | Year | Salary | Stock Awards(1) | Option Awards (2) | Non-Equity Incentive Plan Compensation (3) | All Other Compensation (4) | Total Compensation | |||||||||||||||||||||
Paul T. Idzik | 2013 | $ | 919,231 | $ | 8,999,996 | (5) | $ | — | $ | 3,500,000 | $ | 104,437 | $ | 13,523,664 | ||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||||
Frank J. Petrilli | 2013 | $ | 544,615 | $ | — | $ | — | $ | — | $ | 116 | $ | 544,731 | |||||||||||||||
Former Chairman of the Board of Directors & Interim Chief Executive Officer(6) | 2012 | $ | 2,463,462 | $ | 62,490 | $ | — | $ | — | $ | 836 | $ | 2,526,788 | |||||||||||||||
Matthew J. Audette EVP, Chief Financial Officer | 2013 | $ | 500,000 | $ | 899,996 | $ | — | $ | 800,000 | $ | 7,303 | $ | 2,207,299 | |||||||||||||||
2012 | $ | 500,000 | $ | 599,996 | $ | — | $ | 1,000,000 | $ | 7,212 | $ | 2,107,208 | ||||||||||||||||
2011 | $ | 496,154 | $ | 696,492 | $ | 252,223 | $ | 650,000 | $ | 235,292 | $ | 2,330,161 | ||||||||||||||||
Michael J. Curcio | 2013 | $ | 303,846 | $ | 1,000,000 | $ | — | $ | — | $ | 1,656,102 | $ | 2,959,948 | |||||||||||||||
Former EVP, | 2012 | $ | 499,038 | $ | 1,299,993 | $ | — | $ | 1,000,000 | $ | 9,242 | $ | 2,808,273 | |||||||||||||||
President, E*TRADE Securities LLC(7) | 2011 | $ | 450,000 | $ | 870,984 | $ | 428,995 | $ | 1,350,000 | $ | 9,971 | $ | 3,109,950 | |||||||||||||||
Michael E. Foley | 2013 | $ | 379,038 | $ | — | $ | — | $ | 600,000 | $ | 8,588 | $ | 987,626 | |||||||||||||||
EVP, Chief Administrative Officer | ||||||||||||||||||||||||||||
Gregory A. Framke(8) | 2013 | $ | 134,615 | $ | — | $ | — | $ | — | $ | 2,136,218 | $ | 2,270,833 | |||||||||||||||
Former EVP, Chief Operating Officer | 2012 | $ | 499,038 | $ | 1,249,997 | $ | — | $ | 750,000 | $ | 7,396 | $ | 2,506,431 | |||||||||||||||
2011 | $ | 450,000 | $ | 803,986 | $ | 395,997 | $ | 1,250,000 | $ | 7,206 | $ | 2,907,189 | ||||||||||||||||
Navtej S. Nandra | 2013 | $ | 484,615 | $ | — | $ | — | $ | 1,650,000 | $ | 2,373 | $ | 2,136,988 | |||||||||||||||
President, E*TRADE Financial Corporation | ||||||||||||||||||||||||||||
Karl A. Roessner | 2013 | $ | 800,000 | $ | 759,990 | $ | — | $ | 500,000 | $ | 8,748 | $ | 2,068,738 | |||||||||||||||
EVP & General Counsel |
(1) | Amounts reported in this column constitute the aggregate grant date fair value of each stock award granted for the |
33
(2) | Amounts reported in this column constitute the aggregate grant date fair value of each option award granted for the |
(3) | Non-equity incentive plan compensation reported for the applicable year was based on performance in that year, but paid in February of the following year. |
(4) | In accordance with SEC rules, the compensation described in this table does not include medical or group life insurance received by the |
32
for “other compensation” for |
(5) | Mr. |
(6) | Mr. |
(7) | Mr. Curcio’s responsibilities as |
(8) | Mr. Framke’s responsibilities as an executive officer ended on February 4, 2013. |
3334
GRANTS OF PLAN-BASED AWARDS (1)
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) (Dollars expressed in thousands and rounded to the nearest thousand) | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards ($/sh) (3) | Closing Price on Grant Date ($/sh) | Full Grant Date Fair Value of Equity Awards ($) (4) | |||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||||||||||||||
Steven Freiberg | 1,500 | 3,000 | (5) | 4,500 | ||||||||||||||||||||||||||||||||
2/10/2011 | 85,750 | 1,507,485 | ||||||||||||||||||||||||||||||||||
2/10/2011 | 87,079 | 17.58 | 17.68 | 742,497 | ||||||||||||||||||||||||||||||||
Matthew Audette | 300 | 600 | 900 | |||||||||||||||||||||||||||||||||
1/3/2011 | 34,509 | 562,497 | ||||||||||||||||||||||||||||||||||
1/3/2011 | 23,259 | 16.30 | 16.28 | 186,226 | ||||||||||||||||||||||||||||||||
2/10/2011 | 7,622 | 133,995 | ||||||||||||||||||||||||||||||||||
2/10/2011 | 7,740 | 17.58 | 17.68 | 65,997 | ||||||||||||||||||||||||||||||||
Michael Curcio | 575 | 1,150 | 1,725 | |||||||||||||||||||||||||||||||||
2/10/2011 | 49,544 | 870,984 | ||||||||||||||||||||||||||||||||||
2/10/2011 | 50,312 | 17.58 | 17.68 | 428,995 | ||||||||||||||||||||||||||||||||
Greg Framke | 488 | 975 | 1,462 | |||||||||||||||||||||||||||||||||
2/10/2011 | 45,733 | 803,986 | ||||||||||||||||||||||||||||||||||
2/10/2011 | 46,442 | 17.58 | 17.68 | 395,997 | ||||||||||||||||||||||||||||||||
Nicholas Utton | 375 | 750 | 1,125 | |||||||||||||||||||||||||||||||||
2/10/2011 | 41,922 | 736,989 | ||||||||||||||||||||||||||||||||||
2/10/2011 | 42,572 | 17.58 | 17.68 | 362,999 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) (Dollars expressed in thousands and rounded to the nearest thousand) | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) (3) | Closing Price on Grant Date ($/Sh) | Full Grant Date Fair Value of Equity Awards ($)(4) | |||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||||||
Paul T. Idzik | 1/22/2013 | 1,500 | 3,000 | 4,500 | 875,912 | 8,999,996 | ||||||||||||||||||||||||
Frank J. Petrilli | 0 | 0 | 0 | |||||||||||||||||||||||||||
Matthew J. Audette | 2/6/2013 | 400 | 800 | 1,200 | 82,455 | 899,996 | ||||||||||||||||||||||||
Michael J. Curcio | 2/6/2013 | 575 | 1,150 | 1,725 | 91,617 | 1,000,000 | ||||||||||||||||||||||||
Michael E. Foley | 300 | 600 | 900 | |||||||||||||||||||||||||||
Gregory A. Framke | 575 | 1,150 | 1,725 | |||||||||||||||||||||||||||
Navtej S. Nandra | 825 | 1,650 | 2,475 | |||||||||||||||||||||||||||
Karl A. Roessner | 2/6/2013 | 200 | 400 | 600 | 69,628 | 759,990 |
(1) |
Amounts listed in these columns do not represent amounts actually paid or that may be paid in the future. Rather, these amounts are the target payments that were established under the Company’s non-equity compensation plan for |
Pursuant to SEC disclosure rules, this table does not include equity grants made in early 2014 for performance during 2013 as further described in the “Compensation Discussion and Analysis.” The table only includes equity awards actually granted during 2013. Pursuant to our prior year’s performance plan, these grants were made in early 2013 based on 2012 performance. |
(3) | In accordance with the terms of its equity compensation plan, the Company has traditionally set the exercise price for stock options as the average of the high and low sale prices of the Company’s stock on the date of the grant. The Company believes that using the average price provides a more accurate representation of the fair market value on the date of the grant, rather than selecting a single point in time (such as the closing of the market, when traders are balancing portfolios and clearing positions for the day, sometimes resulting in anomalies to the stock price). |
(4) | The Company calculated the aggregate grant date fair value of the equity awards in accordance with the stock compensation accounting guidance under GAAP. |
3435
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Grant Date | |||||||||||||||||||||
Steven Freiberg | — | 87,079 | 17.58 | 2/10/2018 | ||||||||||||||||||||||||
85,750 | $ | 682,570 | 2/10/2011 | |||||||||||||||||||||||||
Matthew Audette | 500 | — | 38.00 | 3/13/2013 | ||||||||||||||||||||||||
175 | — | 144.35 | 2/20/2014 | |||||||||||||||||||||||||
7,500 | — | 143.50 | 3/5/2014 | |||||||||||||||||||||||||
5,294 | — | 132.25 | 2/16/2015 | |||||||||||||||||||||||||
2,445 | — | 231.05 | 2/10/2013 | |||||||||||||||||||||||||
1,624 | — | 274.80 | 4/21/2013 | |||||||||||||||||||||||||
1,831 | — | 242.80 | 2/21/2014 | |||||||||||||||||||||||||
9,177 | — | 51.90 | 2/11/2015 | |||||||||||||||||||||||||
16,250 | — | (4) | 9.24 | 2/20/2016 | ||||||||||||||||||||||||
5,813 | 11,624 | (3) | 14.60 | 2/11/2017 | ||||||||||||||||||||||||
— | 23,259 | 16.30 | 1/3/2018 | |||||||||||||||||||||||||
— | 7,740 | 17.58 | 2/10/2018 | |||||||||||||||||||||||||
21,232 | $ | 169,007 | 2/11/2010 | |||||||||||||||||||||||||
34,509 | $ | 274,692 | 1/3/2011 | |||||||||||||||||||||||||
7,622 | $ | 60,671 | 2/10/2011 | |||||||||||||||||||||||||
Michael Curcio | 10,000 | — | 40.70 | 10/4/2012 | ||||||||||||||||||||||||
7,000 | — | 38.00 | 3/14/2013 | |||||||||||||||||||||||||
2,500 | — | 103.95 | 11/24/2013 | |||||||||||||||||||||||||
7,500 | — | 138.90 | 2/6/2014 | |||||||||||||||||||||||||
2,000 | — | 144.35 | 2/20/2014 | |||||||||||||||||||||||||
2,470 | — | 132.25 | 2/16/2015 | |||||||||||||||||||||||||
4,127 | — | 231.05 | 2/10/2013 | |||||||||||||||||||||||||
5,052 | — | 237.70 | 2/15/2013 | |||||||||||||||||||||||||
3,126 | — | 233.25 | 2/13/2014 | |||||||||||||||||||||||||
16,290 | — | 51.90 | 2/11/2015 | |||||||||||||||||||||||||
48,752 | — | (4) | 9.24 | 2/20/2016 | ||||||||||||||||||||||||
17,325 | 34,649 | (3) | 14.60 | 2/11/2017 | ||||||||||||||||||||||||
50,312 | 17.58 | 2/10/2018 | ||||||||||||||||||||||||||
42,830 | (3) | $ | 340,927 | 2/11/2010 | ||||||||||||||||||||||||
49,544 | $ | 394,370 | 2/10/2011 | |||||||||||||||||||||||||
Greg Framke | 400 | — | 103.25 | 1/2/2012 | ||||||||||||||||||||||||
7,500 | — | 138.90 | 2/6/2014 | |||||||||||||||||||||||||
2,400 | — | 144.35 | 2/20/2014 | |||||||||||||||||||||||||
2,381 | — | 132.25 | 2/16/2015 | |||||||||||||||||||||||||
3,515 | — | 231.05 | 2/10/2013 | |||||||||||||||||||||||||
4,458 | — | 237.70 | 2/15/2013 | |||||||||||||||||||||||||
3,126 | — | 233.25 | 2/13/2014 | |||||||||||||||||||||||||
16,290 | — | 51.90 | 2/11/2015 | |||||||||||||||||||||||||
43,335 | — | (4) | 9.24 | 2/20/2016 | ||||||||||||||||||||||||
14,850 | 29,699 | (3) | 14.60 | 2/11/2017 | ||||||||||||||||||||||||
— | 46,442 | 17.58 | 2/10/2018 | |||||||||||||||||||||||||
36,712 | (3) | $ | 292,228 | 2/11/2010 | ||||||||||||||||||||||||
45,733 | $ | 364,035 | 2/10/2011 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Grant Date | |||||||||||||||||||||
Paul T. Idzik | ||||||||||||||||||||||||||||
875,912 | 17,202,912 | 1/22/2013 | ||||||||||||||||||||||||||
Matthew J. Audette | ||||||||||||||||||||||||||||
17,254 | 338,869 | 1/3/2011 | ||||||||||||||||||||||||||
3,810 | 74,828 | 2/10/2011 | ||||||||||||||||||||||||||
49,287 | 967,997 | 2/9/2012 | ||||||||||||||||||||||||||
82,455 | 1,619,416 | 2/6/2013 | ||||||||||||||||||||||||||
175 | 144.35 | 2/20/2014 | ||||||||||||||||||||||||||
1,831 | 242.80 | 2/21/2014 | ||||||||||||||||||||||||||
7,500 | 143.50 | 3/5/2014 | ||||||||||||||||||||||||||
9,177 | 51.90 | 2/11/2015 | ||||||||||||||||||||||||||
5,294 | 132.25 | 2/16/2015 | ||||||||||||||||||||||||||
16,250 | 9.25 | 2/20/2016 | ||||||||||||||||||||||||||
17,437 | 14.60 | 2/11/2017 | ||||||||||||||||||||||||||
11,630 | 11,629 | 16.30 | 1/3/2018 | |||||||||||||||||||||||||
3,870 | 3,870 | 17.58 | 2/10/2018 | |||||||||||||||||||||||||
Michael J. Curcio | ||||||||||||||||||||||||||||
12,386 | 243,261 | 2/10/2011 | ||||||||||||||||||||||||||
71,193 | 1,398,231 | 2/9/2012 | ||||||||||||||||||||||||||
68,712 | �� | 1,349,504 | 2/6/2013 | |||||||||||||||||||||||||
7,500 | 138.90 | 2/6/2014 | ||||||||||||||||||||||||||
3,126 | 233.25 | 2/13/2014 | ||||||||||||||||||||||||||
2,000 | 144.35 | 2/20/2014 | ||||||||||||||||||||||||||
16,290 | 51.90 | 7/31/2014 | ||||||||||||||||||||||||||
2,470 | 132.25 | 7/31/2014 | ||||||||||||||||||||||||||
48,752 | 9.25 | 7/31/2014 | ||||||||||||||||||||||||||
51,974 | 14.60 | 7/31/2014 | ||||||||||||||||||||||||||
37,734 | 12,578 | 17.58 | 7/31/2014 | |||||||||||||||||||||||||
Michael E. Foley |
3536
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Grant Date | ||||||||||||||||||||||||||||||||||||||||||
Nicholas Utton | 22,500 | — | 112.55 | 6/25/2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory A. Framke | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11,573 | — | 108.80 | 5/3/2012 | 7,500 | 138.90 | 2/6/2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||
4,012 | — | 237.70 | 2/15/2013 | 3,126 | 233.25 | 2/13/2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||
5,002 | — | 233.25 | 2/13/2014 | 2,400 | 144.35 | 2/20/2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||
16,290 | — | 51.90 | 2/11/2015 | 16,290 | 51.90 | 3/28/2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||
32,501 | — | (4) | 9.24 | 2/20/2016 | 2,381 | 132.25 | 3/28/2014 | |||||||||||||||||||||||||||||||||||||||||||||||||
13,612 | 27,224 | (3) | 14.60 | 2/11/2017 | 34,832 | 17.58 | 3/28/2014 | |||||||||||||||||||||||||||||||||||||||||||||||||
— | 42,572 | 17.58 | 2/10/2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Navtej S. Nandra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Karl A. Roessner | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
33,652 | (3) | $ | 267,870 | 2/11/2010 | 2,381 | 46,763 | 2/10/2011 | |||||||||||||||||||||||||||||||||||||||||||||||||
41,922 | $ | 333,699 | 2/10/2011 | 69,824 | 1,371,343 | 2/9/2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
69,628 | 1,367,494 | 2/6/2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,712 | 14.60 | 2/11/2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,419 | 2,418 | 17.58 | 2/10/2018 |
(1) | Unless otherwise noted, all unvested option awards vest equally over a four-year period measured from the date of |
(2) | Unless otherwise noted, all unvested restricted stock or restricted stock unit awards vest equally over a four-year period measured from the date of grant. The market value of unvested stock awards is based on |
2013.
OPTION EXERCISES AND STOCK VESTED
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | ||||||
Steven Freiberg | N/A | N/A | N/A | N/A | ||||||
Matthew Audette | N/A | N/A | 25,519 | $ | 452,079 | |||||
Michael Curcio | N/A | N/A | 106,580 | $ | 1,489,671 | |||||
Greg Framke | N/A | N/A | 98,687 | $ | 1,349,219 | |||||
Nicholas Utton | N/A | N/A | 87,655 | $ | 1,152,793 |
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||
Paul T. Idzik | — | — | — | — | ||||||||||||
Frank J. Petrilli | — | — | 6,717 | 72,765 | ||||||||||||
Matthew J. Audette | — | — | 37,579 | 397,539 | ||||||||||||
Michael J. Curcio | — | — | 140,286 | 1,833,028 | ||||||||||||
Michael E. Foley | — | — | — | — | ||||||||||||
Gregory A. Framke | 87,884 | 508,324 | 109,678 | 1,189,383 | ||||||||||||
Navtej S. Nandra | — | — | — | — | ||||||||||||
Karl A. Roessner | — | — | 25,995 | 285,253 |
(1) | Aggregate value realized upon exercise or vesting is based on the fair market value of our |
37
PENSION BENEFITS AND DEFERRED COMPENSATION
We do not offer any defined benefit retirement plan to any of our employees, including the Named Executive Officers.our NEOs.
Although we have a non-qualified deferred compensation plan, during the fiscal year ended December 31, 2011,2013, none of our NEOs elected to contribute to this plan and there were no aggregate withdrawals, distributions or balancebalances as of December 31, 20112013 with respect to any of our NEOs.
36
EMPLOYMENT AGREEMENTSPOTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
Employment Agreements with Named Executive Officers
Under the terms of their employment agreements, each Named Executive Officer (including our Chief Executive Officer)NEO in the table below is entitled to severance benefits in the event of (i) an involuntary termination of the executive’sexecutive officer’s employment without “Cause” (as defined in the employment agreement); or (ii) a voluntary termination of the executive’sexecutive officer’s employment due to an event of “Good Reason”,Reason,” subject to the executive officer signing a release. The term “Good Reason” is defined in the applicable agreement, but generally includes such events as a material decrease in compensation; a material, adverse change in the executive’sexecutive officer’s title, authority, responsibilities or duties; relocation; or a material breach by the Company of the agreement. If the termination occurs in anticipation of, or within two years following, a change in control (which we refer to as a “CIC Termination” below), the severance benefits are increased, as described below. The severance benefits (other than for our CEO) include:
A lump sum payment equal to one times (or two times upon a CIC Termination) base salary and target cash bonus;
A pro-rated share of target bonus for the year of the termination if we meet our target performance objectives for the year;
Continued medical coverage for 12 months following termination of employment (or 24 months following a CIC Termination); and
12 months’ (or 100% for Mr. Nandra) accelerated vesting of outstanding equity compensation awards.awards (or full accelerated vesting upon a CIC Termination).
Our CEO’s employment agreement provides the following severance benefits:
A lump sum payment equal to one times base salary and target cash bonus;
A prorated share of target bonus for the year of the termination if we meet our target performance objectives for the year;
Continued medical coverage for 12 months following termination of employment; and
A portion of his initial equity awards that were granted upon his hiring in 2013 would be accelerated subject to a formula based upon the year of termination, as described below, except that these equity awards would become fully vested following a CIC Termination. The formula for determining the amount that will be accelerated absent a CIC Termination is: (i) an amount, if any, such that an aggregate of 1/3 of such initial equity awards have become vested (whether through regular vesting during employment or accelerated vesting); and (ii) if the termination occurs after the first anniversary of his start date, an additional amount calculated as (A) 2/3 of the total number of shares subject to such initial equity awards multiplied by (B) a fraction, the denominator of which is 36 and the numerator of which is the number of months from the most recent annual anniversary of his start date to the date of termination.
In addition, under our standard forms of equity compensation agreement (including for executive officers), all equity awards become vested in the event of the employee’s death. In addition, in the event of thean NEO’s death or permanent disability, we will pay his estate a pro-ratapro rata share of his non-equity incentive plan amount for that year.
38
The following table shows the estimated value of benefits under each of the above scenarios, assuming the specified event occurred on December 31, 2011.2013.
Name | Cash Payment | Accelerated Vesting of Equity (1) | Other Benefits (2) | Total | ||||||||||||
Steven Freiberg | ||||||||||||||||
Involuntary Termination | $ | 7,000,000 | (3) | $ | 170,754 | $ | 20,000 | $ | 7,190,754 | |||||||
CIC Termination | $ | 14,000,000 | (3) | $ | 682,999 | $ | 40,000 | $ | 14,722,999 | |||||||
Death | $ | 7,000,000 | (4) | $ | 682,999 | $ | — | $ | 7,682,999 | |||||||
Matthew Audette | ||||||||||||||||
Involuntary Termination | $ | 1,700,000 | (3) | $ | 168,460 | $ | 11,719 | $ | 1,880,179 | |||||||
CIC Termination | $ | 3,400,000 | (3) | $ | 504,686 | $ | 23,438 | $ | 3,928,124 | |||||||
Death | $ | 1,700,000 | (4) | $ | 504,686 | $ | 2,204,686 | |||||||||
Michael Curcio | ||||||||||||||||
Involuntary Termination | $ | 2,750,000 | (3) | $ | 269,225 | $ | 11,719 | $ | 3,030,944 | |||||||
CIC Termination | $ | 5,500,000 | (3) | $ | 735,759 | $ | 23,438 | $ | 6,259,197 | |||||||
Death | $ | 2,750,000 | (4) | $ | 735,759 | $ | 3,485,759 | |||||||||
Greg Framke | ||||||||||||||||
Involuntary Termination | $ | 2,400,000 | (3) | $ | 237,277 | $ | 18,089 | $ | 2,655,366 | |||||||
CIC Termination | $ | 4,800,000 | (3) | $ | 656,674 | $ | 36,178 | $ | 5,492,852 | |||||||
Death | $ | 2,400,000 | (4) | $ | 656,674 | $ | 3,056,674 | |||||||||
Nicholas Utton | ||||||||||||||||
Involuntary Termination | $ | 2,000,000 | (3) | $ | 217,500 | $ | 15,267 | $ | 2,232,767 | |||||||
CIC Termination | $ | 4,000,000 | (3) | $ | 601,947 | $ | 34,929 | $ | 4,636,876 | |||||||
Death | $ | 2,000,000 | (4) | $ | 601,947 | $ | — | $ | 2,601,947 |
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Name Event of Termination | Cash Payment | Accelerated Vesting of Equity(1) | Benefits (2) | Total | ||||||||||||
Paul T. Idzik | ||||||||||||||||
Involuntary Termination | $ | 7,000,000 (3) | $ | 5,734,310 | $ | 11,772 | $ | 12,746,082 | ||||||||
CIC Termination | $ | 7,000,000 (3) | $ | 17,202,912 | $ | 11,772 | $ | 24,214,684 | ||||||||
Death | $ | 3,000,000 (4) | $ | 17,202,912 | $ | — | $ | 20,202,912 | ||||||||
Frank J. Petrilli | ||||||||||||||||
Termination(5) | $ | — | $ | — | $ | — | $ | — | ||||||||
Matthew J. Audette | ||||||||||||||||
Involuntary Termination | $ | 2,100,000 (3) | $ | 957,781 | $ | 12,108 | $ | 3,069,889 | ||||||||
CIC Termination | $ | 3,400,000 (3) | $ | 3,047,923 | $ | 24,216 | $ | 6,472,139 | ||||||||
Death | $ | 800,000 (4) | $ | 3,047,923 | $ | — | $ | 3,847,923 | ||||||||
Michael J. Curcio | ||||||||||||||||
Termination(5) | $ | 1,650,000 | $ | 1,070,501 | $ | — | $ | 2,720,501 | ||||||||
Michael E. Foley | ||||||||||||||||
Involuntary Termination | $ | 1,650,000 (3) | $ | — | $ | 1,548 | $ | 1,651,548 | ||||||||
CIC Termination | $ | 2,700,000 (3) | $ | — | $ | 3,096 | $ | 2,703,096 | ||||||||
Death | $ | 600,000 (4) | $ | — | $ | — | $ | 600,000 | ||||||||
Gregory A. Framke | ||||||||||||||||
Termination(5) | $ | 2,133,562 | $ | 486,061 | $ | — | $ | 2,619,623 | ||||||||
Navtej S. Nandra | ||||||||||||||||
Involuntary Termination | $ | 5,700,000 (3) | $ | — | $ | 7,716 | $ | 5,707,716 | ||||||||
CIC Termination | $ | 6,450,000 (3) | $ | — | $ | 15,432 | $ | 6,465,432 | ||||||||
Death | $ | 1,650,000 (4) | $ | — | $ | — | $ | 1,650,000 | ||||||||
Karl A. Roessner | ||||||||||||||||
Involuntary Termination | $ | 1,600,000 (3) | $ | 824,876 | $ | 11,772 | $ | 2,436,648 | ||||||||
CIC Termination | $ | 2,800,000 (3) | $ | 2,790,581 | $ | 23,544 | $ | 5,614,125 | ||||||||
Death | $ | 400,000 (4) | $ | 2,790,581 | $ | — | $ | 3,190,581 |
(1) | The market value of any equity awards that would vest on each event is based on |
(2) | Consists of continued medical coverage, assuming a cost of |
(3) | For all NEOs except Mr. Idzik, represents one times (or two times for |
(4) | Because this scenario presumes the triggering event occurred on December 31, |
(5) | Reflects the actual value received in cash severance payment and acceleration of outstanding restricted stock unit awards at termination. |
Interim CEO Agreement. During his service as Interim CEO, we agreed to pay Mr. Petrilli $500,000 per month, in lieu of his director meeting fees. He was not eligible for severance benefits. In the event of a change in
39
control, his non-employee director equity awards provided for accelerated vesting; however, all equity awards granted to Mr. Petrilli had fully vested as of May 9, 2013, such that no equity awards were subject to acceleration as of his date of departure from the Company.
Former NEO Separation Payments. Upon their departures, Messrs. Curcio, Framke and Petrilli received the separation payments reflected in the Summary Compensation Table above, consistent with their employment agreements previously described, except that Mr. Curcio also received eligibility for vesting of all of his equity awards in exchange for signing a non-competition agreement.
Equity Compensation Plan Information
The following table summarizes information, as of December 31, 2011,2013, regarding our equity compensation plans.plans:
Number of Securities To Be Issued upon Exercise of Outstanding Options, Warrants and Rights (1) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | ||||||||||||||||||||||
(in thousands, except price data) | Number of Securities To Be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||||||||||||||||||||
Equity compensation plans approved by stockholders | 4,680,054 | $ | 68.84 | 13,000,884 | 5,035,078 | $ | 62.52 | 8,384,242 | ||||||||||||||||
Equity compensation plans not approved by stockholders | — | $ | — | — | — | — | — | |||||||||||||||||
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Total | 4,680,054 | $ | 68.84 | 13,000,884 | 5,035,078 | $ | 62.52 | 8,384,242 |
(1) | Includes stock options and |
(2) | Excludes |
38
COMPENSATION COMMITTEE REPORT
The information contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act, of 1934, except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
The Compensation Committee reviewed and discussed the Compensation“Compensation Discussion and AnalysisAnalysis” set forth in this Proxy Statement with management. Based on the above-mentioned review and discussions with management, the Compensation Committee recommended to the Board that the Compensation“Compensation Discussion and Analysis set forth in this Proxy StatementAnalysis” be included in this proxy statement.Proxy Statement.
Submitted by the Compensation Committee of the Board of Directors:
Ronald Fisher,Joseph M. Velli, Chair
Richard J. Carbone, Member
Frederick W. Kanner, Member
Joseph Velli,Rebecca Saeger, Member
Stephen H. Willard, Member
Compensation Committee Interlocks and Insider Participation
As discussed above, at various times during 2011, Ronald2013, Messrs. Carbone, Fisher, Frederick Kanner Cathleen Raffaeli, Lewis Randall and JosephLawson, Ms. Saeger and Messrs. Velli and Willard served on the Compensation Committee. None of these individuals was at any time during 2011,2013, or at any other time, an officer or employee of the Company. No executive officer of the
40
Company serves as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of the Company’s Board or Compensation Committee.
TRANSACTIONS WITH RELATED PERSONS
Policies and Procedures for Approval of Related PersonParty Transactions
In April 2007, the Board formally adopted a Policypolicy, which was most recently updated on February 7, 2013, with respect to Related Person Transactions to documentrelated party transactions that provides procedures pursuant to which such transactions are reviewed, approved or ratified. The policy applies to any transaction in which (1) the Company is a participant, (2) any related person has a direct or indirect material interest and (3) the amount involved exceeds $120,000, but excludes any transaction that does not require disclosure under Item 404(a) of Regulation S-K. The Nominating and Corporate Governance Committee is responsible for reviewing, approving and ratifying any related party transaction. The Nominating and Corporate Governance Committee intends to approve only those related personparty transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders. The policy is available, without charge, from our Corporate Secretary and made available on our website at investor.etrade.comabout.etrade.com in the “Corporate Governance” section.
Certain Relationships and Related Transactions
In 2007, Citadel became a principal stockholder and debt holder of the Company, signed a registration rights agreement with the Company and received the right to appoint a director to the Company’s Board, which right was exercised in 2009 when Kenneth C. Griffin, Founder and Chief Executive Officer of Citadel Investments LLC, became a director of the Company. Also in 2007, the Company and Citadel entered into an agreement pursuant to which the Company committed to route substantially all of its customer orders in exchange-listed options and 40% of its customer orders in Regulation NMS Securities to Citadel for order handling and execution through December 31, 2010. During 2011 entities controlled by Citadel paid the Company for order flow pursuant to at-will arrangements at negotiated rates that are subject to change at any time. In 2009, Citadel acquired newly-issued convertible debentures of the Company in exchange for corporate debt of the Company. In 2010 and 2011, Citadel sold shares of the Company’s common stock in registered underwritten transactions that the Company facilitated under the registration rights agreement. In connection with the 2011 secondary offering
39
of Company Common Stock owned by Citadel, the Company and the trustee amended the indenture for the convertible debentures to permit temporary ownership by Citadel in excess of a conversion blocker in order to facilitate Citadel’s sale of shares to the underwriter in such transaction. The Company believes based on publicly available information that Citadel owns approximately 9.6% of the Company’s outstanding common stock and no debt securities.
LEGAL PROCEEDINGS
We are not involved in any legal proceedings in which any director or executive officer is adverse to the Company. Certain lawsuits we are involved in are discussed under Note 2120 of Item 8. Financial Statements and Supplementary Data in our Annual Report on Form 10-K for the year ended December 31, 2011,2013, filed on February 23, 201225, 2014 with the SEC.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership of Common Stock and other equity securities of the Company with the Securities and Exchange Commission (the “SEC”).SEC. Officers, directors and beneficial owners of more than 10% of any class of the Company’s equity securities are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file.
Based solely upon review of the copies of such reports furnished to the Company and written representations that no other reports were required, the Company believes that all required filings applicable toof our directors, executive officers and owners of more than ten percent10% of our common stock were made and that such persons were in complianceCommon Stock complied with the Exchange Act requirements.all Section 16(a) filing requirements during 2013.
STOCKHOLDER PROPOSALS
Stockholder Proposals to Be Considered for Inclusion in the Company’s 2015 Proxy Materials. Stockholders may submit proposals intended to be includedfor inclusion in the Company’s Proxy Statementproxy materials for next year’sthe 2015 Annual Meeting of Stockholders in accordance with SEC Rule 14a-8. To be considered for inclusion in our proxy materials for the 2015 Annual Meeting, stockholder proposals must be received no later than December [ ], 2012. The proposal must be mailed toNovember 25, 2014 at the Company’s principal offices, 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302, Attention: Corporate Secretary. Such proposalsSecretary, and must comply with all provisions of Rule 14a-8. If we do not receive a stockholder proposal by the deadline described above, the proposal may be includedexcluded from our proxy materials for the 2015 Annual Meeting.
41
Other Stockholder Proposals for Presentation at the 2015 Annual Meeting. A stockholder proposal that is not submitted for inclusion in next year’s Proxy Statement if they comply with certain rules and regulations promulgated byour proxy materials for the SEC. Under the terms of the Company’s Bylaws, stockholders who intend to present an item of business at next year’s2015 Annual Meeting of Stockholders, other than those they wishbut is instead intended to includebe presented at the 2015 Annual Meeting, or that intends to submit a candidate for nomination as director, must comply with the “advance notice” deadlines in the Company’s proxy materials must provideour Bylaws. As such, notice of such business toor nominations must be received by the Corporate SecretaryCompany no earlier than November [ ], 2012October 26, 2014 and no later than December [ ], 2012,November 25, 2014 as set forth more fully in the Company’s Bylaws, and must comply with the other requirements set forth in the Bylaws. Such notices must be in writing and received within the “advance notice” deadlines described above at the Company’s principal offices, 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302, Attention: Corporate Secretary.
4042
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act, of 1934, except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933, or the Exchange Act.
In accordance with its written charter as adopted by the Board, the Audit Committee of the Board assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company. During the year ended December 31, 2011,2013, the Audit Committee met 13 times and discussed the interim financial information contained in each quarterly earnings announcement with the Company’s Chief Financial Officer and independent auditors prior to public release. The members of the Audit Committee, along with other members of the Board, receive director education from its independent auditors at least once a year. The Audit Committee is entirely made up of independent directors as defined in applicable SEC and NASDAQ rules as well as the Company’s Corporate Governance Guidelines. These independent directors meet in executive session with the Company’s independent and internal auditors without management on at least a quarterly basis.
In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors’ independence consistent with applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”), discussed with the auditors any relationships that may impact their objectivity and independence, including whether the independent auditors’ provision of non-audit services to the Company is compatible with the auditors’ independence, and satisfied itself as to the auditors’ independence. The Audit Committee also discussed with management, the internal auditors and the independent auditors the quality and adequacy of the Company’s internal controls and the internal audit function’s organization, responsibilities, budget and staffing. The Audit Committee reviewed with both the independent and the internal auditors their audit plans, audit scope and identification of audit risks.
The Audit Committee discussed and reviewed with the independent auditors all communications required by accounting principles generally accepted in the United States of America, and standards of the PCAOB, including those described in PCAOB AU Section 380,Auditing Standard No. 16, “Communication with Audit Committees,” and, with and without management present, discussed and reviewed the results of the independent auditors’ examination of the financial statements. The Audit Committee also discussed the results of internal audit examinationsexaminations.
The Audit Committee reviewed and discussed the audited financial statements of the Company as of and for the year ended December 31, 2011,2013, with management and the independent auditors. Management has the responsibility for the preparation of the Company’s financial statements and the independent auditors have the responsibility for the examination of those statements.
Based on the above-mentioned review and discussions with management, the internal auditors and the independent auditors, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended December 31, 2011,2013, for filing with the Securities and Exchange Commission.SEC. The Audit Committee also recommended the reappointment, subject to stockholder ratification, of the independent auditors, and the Board concurred in such recommendation.
Submitted by the Audit Committee of the Company’s Board of Directors:
Joseph L. Sclafani (Chair) |
Richard J. Carbone |
Frederick A. Kanner |
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Donna L. Weaver |
|
4143
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON MAY 10, 2012.6, 2014
ThisThe Internet Availability Notice, the Proxy Statement and the Company’s Annual Report on Form 10-K are available at www.proxyvote.com.www.proxyvote.com.
FORM 10-K
On February 23, 2012,25, 2014, the Company filed anits Annual Report on Form 10-K for the year ended December 31, 20112013 with the Securities and Exchange Commission.SEC. Stockholders may obtain a copy of the Annual Report, as well as copies of this Proxy Statement and a proxy card, without charge on the Company’s website atabout.etrade.com, by writing to the Corporate Secretary, at the Company’s principal offices located at 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302, oremailing ir@etrade.com or by calling us at (646) 521-4340.
OTHER MATTERS
Management does not know of any matters to be presented at this Annual Meeting of Stockholders other than those set forth herein and in the Notice accompanying this Proxy Statement.
4244
E*TRADE FINANCIAL CORPORATION 1271 AVENUE OF THE AMERICAS 14TH FLOOR NEW YORK, NY 10020 | VOTE BY INTERNET -www.proxyvote.com | |||
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | ||||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||||
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | ||||
VOTE BY PHONE - 1-800-690-6903 | ||||
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. | ||||
VOTE BY MAIL | ||||
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
Annex A
In the proposed Amendment to the Company Charter, Section (b) of Article SEVENTH will be amended and restated in its entirety and Section (c) of Article SEVENTH will be deleted in its entirety, each as shown below. In addition, Sections (d) and (e) of Article SEVENTH will be re-lettered to reflect the deletion of Section (c) of Article SEVENTH.
(b) Subject to the rights of the holders of any series of Preferred Stock to elect additional Directors under specified circumstances, each Director elected at and after the annual meeting of stockholders of 2012 shall be elected for a term expiring at the next succeeding annual meeting of stockholders and until such Director’s successor shall have been elected and qualified, or until such director’s earlier death, resignation or removal. For the avoidance of doubt, any Director elected prior to the annual meeting of stockholders of 2012 shall serve for the remainder of the term to which such Director was elected or until such Director’s earlier death, resignation or removal.
(c) In the event of any increase or decrease in the authorized number of Directors, (i) each Director then serving as such shall nevertheless continue as a Director of the class of which he or she is a member until the expiration of his or her current term, or his or her early resignation, removal from office or death, and (ii) the newly created or eliminated directorship resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of Directors so as to maintain such classes as nearly equally as possible.
A-1
Annex B
If “Proposal 1—Declassification of Company Board” is approved by the stockholders, Sections 2.02 and 2.03 of the Amended and Restated Bylaws of the Company will be amended and restated to read in their entirety as follows:
Section 2.02. Number; Election; Tenure and Qualification.Subject to amendment in accordance with Article FIFTH of the Certificate of Incorporation, the number of directors which shall constitute the whole Board of Directors shall be fixed from time to time by resolution of the Board of Directors but shall not be less than six or more than twelve. Except as otherwise provided in the Certificate of Incorporation, each Director elected shall hold office until the next annual meeting of stockholders and their successors shall be elected in accordance with Article SEVENTH of the Certificate of Incorporation. Directors need not be stockholders of the corporation.
Section 2.03. Vacancies.Unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board of Directors, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director; provided, however, a vacancy created by the removal of a director by the vote of the stockholders or by court order may be filled only by the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute a majority of the required quorum). Any director elected by the Board of Directors in accordance with the preceding sentence shall hold office for a term expiring at the next annual meeting of stockholders and until such director’s successor shall have been elected and qualified, or until such director’s earlier death, resignation or removal.
B-1
E*TRADE FINANCIAL CORPORATION 1271 AVENUE OF THE AMERICAS 14TH FLOOR NEW YORK, NY 10020 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: M43115-P21638 KEEP THIS PORTION FOR YOUR RECORDS
M69829-P50651 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY E*TRADE FINANCIAL CORPORATION The Board of Directors recommends you vote FOR For Against Abstain the following: 1. To amend the Company’s Amended and Restated Certificate of Incorporation and declassify the Company’s Board of Directors The Board of Directors recommends you vote FOR For Against Abstain The Board of Directors recommends you vote FOR the following advisory proposal: the following: For Against Abstain 3. To approve the compensation of the named executive officers, as disclosed in the Proxy Statement for the 2012 Annual Meeting 2. Election of Directors: 2a. Rodger A. Lawson 2b. Frank J. Petrilli The Board of Directors recommends you vote FOR the following: For Against Abstain 2c. Rebecca Saeger 4. To ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2012 2d. Joseph L. Sclafani 2e. Stephen H. Willard For address changes and/or comments, please check this box and write them on the back where indicated. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
E*TRADE FINANCIAL CORPORATION | ||||||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following: | ||||||||||||||||||||||||||||||||||||
For | Against | Abstain | ||||||||||||||||||||||||||||||||||
1. | Election of Directors: | |||||||||||||||||||||||||||||||||||
1a. Richard J. Carbone | ¨ | ¨ | ¨ | |||||||||||||||||||||||||||||||||
1b. Mohsen Z. Fahmi | ¨ | ¨ | ¨ | |||||||||||||||||||||||||||||||||
1c. Christopher M. Flink | ¨ | ¨ | ¨ | |||||||||||||||||||||||||||||||||
1d. Paul T. Idzik | ¨ | ¨ | ¨ | The Board of Directors recommends you vote FOR the following advisory proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||
1e. Frederick W. Kanner | ¨ | ¨ | ¨ | 2. | To approve the compensation of the Named Executive Officers, as disclosed in the Proxy Statement for the 2014 Annual Meeting | ¨ | ¨ | ¨ | ||||||||||||||||||||||||||||
1f. James Lam | ¨ | ¨ | ¨ | |||||||||||||||||||||||||||||||||
1g. Rodger A. Lawson | ¨ | ¨ | ¨ | The Board of Directors recommends you vote FOR the following: | ||||||||||||||||||||||||||||||||
1h. Rebecca Saeger | ¨ | ¨ | ¨ | 3. | To ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2014 | ¨ | ¨ | ¨ | ||||||||||||||||||||||||||||
1i. Joseph L. Sclafani | ¨ | ¨ | ¨ | |||||||||||||||||||||||||||||||||
1j. Joseph M. Velli | ¨ | ¨ | ¨ | NOTE:In their discretion, the proxies are authorized to vote on such other business as may properly come before the meeting or any adjournment thereof. | ||||||||||||||||||||||||||||||||
1k. Donna L. Weaver | ¨ | ¨ | ¨ | |||||||||||||||||||||||||||||||||
For address changes and/or comments, please check this box and write them on the back where indicated. | ¨ | |||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. M43116-P21638 E*TRADE FINANCIAL CORPORATION Annual Meeting of Stockholders May 10, 2012 10:00 AM This proxy is solicited by the Board of Directors The undersigned hereby appoints Steven J. Freiberg and Karl A. Roessner, and each or any of them as Proxies of the undersigned, with full power of substitution, and hereby authorizes them to represent and to vote, as directed on the reverse side of this card, all of the shares of Common Stock of E*TRADE Financial Corporation, held of record by the undersigned on March 12, 2012 at the Annual Meeting of Stockholders of E*TRADE Financial Corporation to be held May 10, 2012, or at any postponement or adjournment thereof. If no such directions are made, this proxy will be voted as recommended by our Board of Directors. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side
M69830-P50651
E*TRADE FINANCIAL CORPORATION Annual Meeting of Stockholders May 6, 2014 8:30 AM | ||||||||||||||
This proxy is solicited by the Board of Directors | ||||||||||||||
The undersigned hereby appoints Paul T. Idzik and Karl A. Roessner, and each or any of them as Proxies of the undersigned, with full power of substitution, and hereby authorizes them to represent and to vote, as directed on the reverse side of this card, all of the shares of Common Stock of E*TRADE Financial Corporation, held of record by the undersigned on March 7, 2014 at the Annual Meeting of Stockholders of E*TRADE Financial Corporation to be held May 6, 2014, or at any postponement or adjournment thereof.If this card is properly executed and returned and no such directions are made, this proxy will be voted as recommended by our Board of Directors. | ||||||||||||||
Address Changes/Comments: | ||||||||||||||
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side |