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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant    

Filed by a Party other than the Registrant    

Check the appropriate box:

 

   Preliminary Proxy Statement

 

       Confidential,for Use of the Commission Only

(as permitted by Rule 14a-6(e)(2))

   Definitive Proxy Statement

 

   Definitive Additional Materials

 

   Soliciting Material Pursuant to § 240.14a-12

 

SVB FINANCIAL GROUP

 

(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):

 

 

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 transaction applies:

 

 

  2)

Aggregate number of securities to which transaction applies:

 

 

  3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

  4)

Proposed maximum aggregate value of transaction:

 

 

  5)

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

 

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  1)

Amount Previously Paid:

 

 

  2)

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  3)

Filing Party:

 

 

  4)

Date Filed:

 

 


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NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS

 

LOGO

 

DATE

  

Thursday, April 21, 2022

TIME

  

4:30 PM Pacific Time

ACCESS

  

Virtual*

Dear Stockholders:

We are pleased to invite you to attend the 2022 Annual Meeting of Stockholders of SVB Financial Group (the “Company”). Similar to last year, the meeting will be held virtually.

The items of business at this year’s meeting, as more fully described in the Proxy Statement, are as follows:

 

  1.

Elect the eleven (11) directors named in the proxy statement;

 

  2.

Vote on an advisory resolution to approve executive compensation (“Say on Pay”);

 

  3.

Ratify the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year 2022;

 

  4.

Vote on a stockholder proposal, if properly presented at the meeting; and

 

  5.

Transact such other business as may properly come before the meeting.

Your vote is very important. To assure your representation at the meeting, we encourage you to vote your shares as soon as possible. This Notice and the Proxy Statement provide instructions on how you can vote your shares online or by telephone, or if you have received a printed copy of the proxy materials and a proxy card, by mail. You may attend the meeting and vote remotely even if you have previously voted by proxy.

You are entitled to vote at this year’s meeting (or any postponement or adjournment thereof) if you are a stockholder of record at the close of business on February 22, 2022.

After over two decades with SVB as Board Chair, director and advisory director, I will be retiring at the end of this current director term. It has been my honor and privilege to serve on the Board of Directors and to represent you as our stockholders. Thank you for your continued support of SVB Financial Group.

BY ORDER OF THE BOARD OF DIRECTORS,

/s/ Roger Dunbar

Roger Dunbar

Chair of the Board

Santa Clara, California

March 4, 2022

 

  *

Due to health concerns surrounding the COVID-19 pandemic and related federal, state and local orders and guidance, the meeting will be held solely by means of remote communications at www.virtualshareholdermeeting.com/SIVB2022. You will need your control number to participate, vote or ask questions during the virtual meeting. Your control number can be found on your proxy card, voting instruction form or other notices sent to you. Instructions for participation, voting and asking questions will be available on the meeting website on the meeting date. Those without a control number may attend as guests of the meeting, but they will not have the option to vote their shares or ask questions during the meeting. Following the meeting, we may post appropriate questions received during the meeting and the Company’s answers on our website.

 

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2022 PROXY STATEMENT

 

TABLE OF CONTENTS

 

 

LOGO

 

     Page  

2021 PERFORMANCE AND PROXY STATEMENT SUMMARY

     ii  

COMPANY AND PROXY STATEMENT INFORMATION

     1  

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

     2  

• Proposal No. 1 — Election of Directors

     2  

Board Governance and Oversight

     10  

Board Committees

     13  

Compensation Committee Interlocks and Insider Participation

     14  

Compensation for Directors

     15  

Corporate Governance Matters

     17  

Certain Relationships and Related Transactions

     18  

Environmental, Social and Governance (ESG)

     19  

EXECUTIVE OFFICERS AND COMPENSATION

  

Information on Executive Officers

     22  

• Proposal No. 2 — Advisory Approval of our Executive Compensation

     24  

Compensation & Human Capital Committee Report

     24  

Compensation Discussion and Analysis

     25  

Compensation for Named Executive Officers

     39  

CEO Pay Ratio

     51  

SECURITY OWNERSHIP INFORMATION

  

Security Ownership of Directors and Executive Officers

     52  

Security Ownership of Principal Stockholders

     53  

INDEPENDENT AUDITOR MATTERS

  

• Proposal No. 3 — Ratification of Appointment of Independent Registered Public Accounting Firm

     54  

Principal Audit Fees and Services

     54  

Audit Committee Report

     55  

OTHER PROPOSALS

  

• Proposal No. 4 — Stockholder Proposal

     57  

MEETING AND OTHER INFORMATION

  

Information About Voting and Proxy Solicitation

     60  

Stockholder Proposals and Director Nominations

     62  

Company Documents and Other Matters

     63  

 

• Indicates matters to be voted on at the Annual Meeting

 

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2021 PERFORMANCE AND PROXY STATEMENT SUMMARY

 

This summary highlights our 2021 performance, as well as information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should review this entire Proxy Statement, as well as our Annual Report on Form 10-K for the year ended December 31, 2021.

 

 

LOGO

2021 PERFORMANCE HIGHLIGHTS

We delivered another year of exceptional financial performance and business growth in 2021. Selected highlights are set forth below:

 

LOGO

2021

Business Highlights

  

We continued to execute on our strategy and vision in 2021, extending and
diversifying our business to support our clients as they continue to grow. In
particular:

 

   

We closed our acquisition of Boston Private Financial Holdings in July 2021. Our combined capabilities and team will position our Private Bank and Wealth Management business for continued growth.

 
   

SVB Securities (formerly known as SVB Leerink) added technology investment banking to its healthcare and healthcare services sector expertise. During 2021, SVB Securities hired over 100 investment bankers, as well as acquired equity research firm, MoffettNathanson LLC, and augmented our capabilities by adding leveraged finance, private placements and structured finance.

 
   

SVB Capital continued to grow, with the addition of two new credit funds and two new funds of funds, bringing total assets under management to approximately $7.3 billion.

 
   

To augment our core capabilities, we expanded our strategic partnerships to support our clients and the innovation ecosystem by adding our joint venture with Nasdaq Private Market (trading platform for private stock), as well as our partnership with Aumni (investment analytics platform for venture investors).

 
   

We continued to grow our market share, adding over 6,700 new commercial clients during 2021.

 
   

We continued to expand our ESG program through increased ESG reporting and disclosures, including employee diversity, equity and inclusion metrics, continued support of our employees, clients and communities during the COVID-19 pandemic and the development of an $11.2 billion Community Benefits Plan.

 

 

 

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ANNUAL MEETING AND PROXY STATEMENT INFORMATION

Annual Meeting Information and Proposals for Voting

 

    Time, Date, Access:    4:30 p.m. (Pacific Time), April 21, 2022; to be held virtually
    Voting & Record Date:    Stockholders as of the record date of February 22, 2022 are entitled to vote
    Proposals for Voting   
     

Board voting recommendation

  

1.  Election of Eleven (11) Directors

             LOGO  FOReach nominee
  

2.  Advisory Vote on Executive Compensation

             LOGO  FOR
  

3.  Ratification of KPMG LLP as Auditors for 2022

             LOGO  FOR
  

4.  Stockholder proposal

             LOGO  Against

 

Director Nominees (Proposal No. 1)         

 

LOGO Board recommends voting FOR ALL NOMINEES.

 

We are pleased to nominate the following eleven (11) incumbent directors for election.     

 

Mr. Roger Dunbar, our Board Chair for the past 10 years and director since 2004, is retiring from our Board of Directors at the end of the current director term. We are grateful for all of Mr. Dunbar’s years of leadership and service to our Board and Company. Additionally, Mr. John Clendening, our director since 2017, will not be standing for re-election and we also thank him for his years of contributions and service to our Board.

 

LOGO

 

  Name   Age    

Year Elected By     

Stockholders     

 

Other Public   

Boards   

  Committee Membership*
  LOGO      LOGO      LOGO      LOGO      LOGO      LOGO   
                   

  Greg Becker, CEO & President

  54   2011              

  Eric Benhamou

  66   2005   2         X   C   X

  Elizabeth “Busy” Burr

  60     2            

  Richard Daniels

  67   2021   1   X          

  Alison Davis

  60   2021   2   X     X      

  Joel Friedman

  74   2005           C   X   X

  Jeffrey Maggioncalda

  53   2012   1     X   X      

  Beverly Kay Matthews

  63   2020   2   X   X         X

  Mary Miller

  66   2016     C       X     X

  Kate Mitchell

  63   2010   1       C     X   X

  Garen Staglin

  77   2012   1     C       X   X

 

* As of March 4, 2022; “C” denotes committee chairperson; all memberships are as of the date of this Proxy Statement.

 

 

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  Executive Compensation (Proposal No. 2)     

 

LOGO Board recommends voting FOR Proposal No. 2.

 

    
         

    

 

Consistent with our Board’s recommendation, we submit an advisory vote to approve our executive compensation (otherwise known as “Say on Pay”) on an annual basis. Accordingly, we are seeking your approval, on an advisory basis, of the compensation of our Named Executive Officers, as further described in the “Compensation Discussion and Analysis” (“CD&A”) section of this Proxy Statement.

 

The executive compensation decisions made by the Board and Compensation & Human Capital Committee for 2021 reflected another year of exceptional performance, strong strategic execution and remarkable business growth. We maintained our core executive compensation program and continued to be guided by our compensation philosophy and program objectives, including pay for performance, attracting and maintaining top executive talent, strong governance and sound risk management practices, and alignment with stockholder and other stakeholder interests. Additionally, we continued to expand our focus on human capital management under the oversight of the newly-named Compensation & Human Capital Committee.

     

 

Compensation Practice Highlights

 

   Pay for performance with emphasis on long-term performance

 

   Competitive benchmarking against peers

 

   Incentive plans do not encourage excessive risk-taking

 

   Annual Say on Pay advisory vote

 

   Independent Board/Compensation Committee oversight

 

   Recoupment (or clawback) policy

 

   No hedging or pledging of Company securities

 

   No excessive executive perks, special executive retirement benefits, pension or SERP plans

 

    

 

 

Named Executive Officers

 

For 2021, our named executive officers (“NEOs”) are Mr. Greg Becker, President and Chief Executive Officer; Mr. Dan Beck, Chief Financial Officer; Mr. Michael Descheneaux, President, Silicon Valley Bank; Mr. Philip Cox, Chief Operations Officer; and Mr. Michael Zuckert, General Counsel.

 

In light of the evolution of our business structure, strategic direction and growth of our business, we reassessed and restructured the designation of our executive officers earlier in 2021. Our NEOs for 2021 also include two additional leaders that were designated executive officers prior to the executive restructure, Mr. John China, President of SVB Capital and Mr. Marc Cadieux, Chief Credit Officer.

 

For more information about executive compensation program and pay decisions for 2021, please refer to the CD&A section.

 

 

    

 

 

Independent Auditor Matters (Proposal No. 3)

 

     LOGO Board recommends voting FOR Proposal No. 3.     
 

 

 

As a matter of good corporate practice, we are seeking your ratification of KPMG LLP as our independent registered public accounting firm for the 2022 fiscal year. If our stockholders do not ratify the selection of KPMG LLP, the Audit Committee may reconsider its selection.

 

For 2021, the total fees for services provided by KPMG LLP were $12,008,408, of which approximately 94% represented audit and audit-related fees. (For more information, see “Independent Auditor Matters.”)

 

 

    

 

 

Stockholder Proposal (Proposal No. 4)

 

   

LOGO   Board recommends voting AGAINST Proposal No. 4.

 

    
 

 

We received a stockholder proposal regarding a racial justice audit. We are committed to creating a more diverse, equitable and inclusive company and advancing racial justice in the innovation ecosystem. Our diversity, equity and inclusion initiatives are thoughtfully and purposefully aligned with our corporate strategy, mission and values. Our mission is clear and our ability to stay focused on that mission is critical for us to maintain momentum. We recommend voting against this proposal.

 

 

 

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BOARD AND COMPANY INFORMATION

 

     
  Board of Directors Highlights      
   

    

   

    

 

 

      Composition and Independence

 

•   Separate Board Chairperson and CEO roles

 

•   All independent directors, except for CEO director

 

•   Independent Board Chairperson

 

•   Independent chairpersons and members of all Board
committees

 

•   No director “overboarding” concerns

 

•   Board and committee ability to hire outside advisors,
independent of management

 

•   Representation of diverse mix of skills, experience and
backgrounds

   

 

Accountability

 

•   Annual election of directors

 

•   Majority voting standard with director resignation policy

 

•   Annual Board and committee evaluations

 

•   Regular executive sessions of non-management directors

 

•   Robust executive and director equity ownership guidelines

 

•   Independent Board evaluation of CEO performance

 

•   Independent Board approval of CEO compensation

 

•   Ongoing director nominee identification and selection
process

 

•   Limit on director compensation under equity plan

 

 
 

 

 

Corporate Governance Highlights

     
   

    

   

    

 

 

      Stockholder Interests

 

   Active stockholder engagement practices

 

   One single voting class

 

   Proxy access under Bylaws

 

   Stockholders may act by written consent

 

   No cumulative voting

 

   No supermajority voting requirements

 

   No poison pill

 

 

   

 

Risk Management

 

   Board and individual committee oversight of risk

 

   Separate Board Risk Committee focused on enterprise-
wide risk management

 

   Risk Committee membership includes the chairpersons
of the Board and all Board committees

 

   Risk management guided by Risk Appetite Statement
(reviewed on an annual basis by the full Board)

 

 
 

 

Our Corporate Values

 

     
 

 

LOGO

 
 

 

*  *  *  *

 

 

 

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COMPANY AND PROXY STATEMENT INFORMATION

 

ABOUT SVB FINANCIAL GROUP

  LOGO

For nearly 40 years, SVB Financial Group (NASDAQ: SIVB) and its subsidiaries have helped innovative companies and their investors move bold ideas forward, fast. SVB Financial Group’s businesses, including Silicon Valley Bank, offer commercial, investment and private banking, asset management, private wealth management, brokerage and investment services and funds management services to companies in the technology, life science and healthcare, private equity and venture capital, and premium wine industries. Headquartered in Santa Clara, California, SVB Financial Group operates in centers of innovation around the world.

The Company is a Delaware corporation and financial holding company for Silicon Valley Bank.

PROXY STATEMENT INFORMATION

General Information

This Proxy Statement is furnished in connection with the solicitation of proxies by, and on behalf of, the Board of Directors (the “Board”) of SVB Financial Group (the “Company”) to be voted at our 2022 Annual Meeting of Stockholders and any adjournments or postponements of that meeting (the “Annual Meeting”). The Annual Meeting will be held solely by means of remote communications on Thursday, April 21, 2022 at 4:30 p.m., Pacific Time at www.virtualshareholdermeeting.com/SIVB2022. All stockholders will need their control number to participate, vote or ask questions during the virtual meeting. The control number can be found on proxy cards, voting instruction forms or other notices sent to stockholders. Instructions for participation, voting and asking questions will be available on the meeting website on the meeting date. Those without a control number may attend as guests of the meeting, but they will not have the option to vote their shares or ask questions during the meeting. Following the meeting, we may post appropriate questions received during the meeting and the Company’s answers on our website.

All properly executed written proxies and all properly completed proxies submitted by telephone or internet that are delivered pursuant to this solicitation will be voted at the Annual Meeting in accordance with the directions given in the proxy, unless the proxy is revoked prior to completion of voting at the meeting.

We are first furnishing the proxy materials to stockholders on or about March 4, 2022.

Principal Executive Offices

Our principal executive offices are located at 3003 Tasman Drive, Santa Clara, California 95054, and our telephone number at that location is (408) 654-7400.

Record Date

Only stockholders of record as of the close of business on February 22, 2022 (the “Record Date”) will be entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements of the meeting. At the close of business on the Record Date, there were 58,809,582 shares of our common stock, $0.001 par value (“Common Stock”), outstanding.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting

This Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2021 are available electronically at www.svb.com/proxy. The contents of our website are not incorporated herein by reference and any reference to our website address provided throughout this Proxy Statement is intended to be an inactive textual reference only. See also “Information about Voting and Proxy Solicitation—Delivery of Proxy Materials.

 

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

 

PROPOSAL NO. 1: ELECTION OF DIRECTORS

      The Board of Directors Recommends a Vote “FOR” All Nominees

 

LOGO

Director Nominees, Selection, Composition and Other Information

Our Directors

Our Board of Directors, pursuant to the recommendation of the Governance Committee, is pleased to nominate eleven (11) of our incumbent directors as director nominees for election this year. We believe that our director nominees, individually and together as a whole, possess the requisite skills, experience, attributes and tenure to maintain an effective Board to serve the long-term interests of the Company and its stockholders, as well as other important stakeholders including employees, clients, suppliers and the communities we operate in.

All nominees are incumbent directors and are deemed independent, except for our CEO. All nominees were elected to the Board by our stockholders at our 2021 Annual Meeting, except Ms. Elizabeth “Busy” Burr. Ms. Burr, our newest director, was elected by the Board in November 2021.

Two of our incumbent directors will not be standing for re-election at the Annual Meeting. Mr. Roger Dunbar, our Board Chair for the past 10 years and director since 2004, is retiring from our Board of Directors at the end of the current director term. We are grateful for all of Mr. Dunbar’s years of leadership and service to our Board and Company. Additionally, Mr. John Clendening, our director since 2017, will not be standing for re-election and we also thank him for his years of contributions and service to our Board.

For voting information, see “Meeting and Other Information — Information About Voting and Proxy Solicitation — Voting Required.”

Profile Highlights of our Director Nominees

 

Tenure              Gender                  Age              Other Diversity              Independence

LOGO

      LOGO       LOGO     LOGO     LOGO

Recruitment, Selection and Nomination

The Governance Committee, in coordination with the full Board, is responsible for the recruitment, selection and nomination of director candidates and for carrying out the Board’s commitment to maintaining a balanced and diverse composition of members. The Governance Committee identifies and recruits candidates for membership on the Board and recommends such candidates’ nomination to the Board based on their ability to diversify and complement the Board’s existing strengths, as well as to oversee the Company’s current and future strategy. The Governance Committee has no formal policy with regard to stockholder nominees and considers all nominees on their merits.

Identification of possible director candidates that possess the appropriate skills, qualifications, backgrounds and the desire to serve on a financial services public company board is a lengthy process. As such and as an ongoing matter, the Governance Committee discusses recruiting strategies and actively considers and evaluates potential director candidates, whether or not there is an immediate vacancy on the Board to fill. From time to time, the Governance Committee engages reputable outside recruiters to assist with identifying and evaluating potential candidates. The Governance Committee also regularly reports to, and discusses its director recruitment efforts and refreshment planning with, the full Board. Potential nominees meet with members of the Governance Committee (including the Board Chair), other members of the Board and the Chief Executive Officer, and then is considered for appointment by the full Board.

In 2021, long-term Board refreshment and director succession planning continued to be one of the Governance Committee’s top priorities, focusing on identifying prospective candidates that meet the current and future needs of the Board and the Company, as well as enhancing the multi-dimensional diversity of the Board.

 

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Composition of Director Nominees

Our director nominees are seasoned leaders and professionals that represent a diverse mix of skills, experience, knowledge, backgrounds, attributes and perspectives relevant to the Company’s business, strategy, growth and risk profile.

Skills and Experience

While the Governance Committee has not formally established any minimum qualifications for director nominees, it considers and assesses a broad range of skills and experience, including, but not limited to, the following primary areas:

 

Client Industry – Experience with our key client industries, including technology, life science/healthcare, private equity/venture capital and premium wine, to help deepen our expertise of the innovation and other markets in which we do business.

  LOGO
 

Banking/Financial Services – Experience with the global banking or financial services industry, to help support and grow our core business.

  LOGO
 

Global – Experience working outside of the United States, or with multinational companies or international business operations, to help facilitate our global expansion.

  LOGO
 

Finance/Accounting – Experience in financial and capital management, accounting, financial reporting or audit processes, to oversee our financial position and reporting, as well as to assess our strategic objectives from a financial perspective.

  LOGO
 

Leadership – Experience holding significant leadership positions, particularly as a CEO or head of a major business line, to help us drive business strategy, growth and performance.

  LOGO
 

Public Company Governance – Experience in public company governance, including corporate governance best practices and policies and managing relations with key stakeholders.

  LOGO
 

Risk Oversight/Management – Knowledge of or experience with key risk oversight or risk management functions, to help oversee the dynamic risks we face.

  LOGO

Regulatory/Government – Knowledge of or experience in regulated industries or governmental organizations to oversee our highly regulated business that is affected by regulatory and governmental actions.

  LOGO

Additionally, the Governance Committee considers other important areas relevant to the Company’s business needs, as it determines necessary, including the important attributes, such as: strong strategic, critical and innovative thinking; sound business judgment; high ethical standards; collegial spirit; ability to debate and challenge constructively; and availability and commitment to serve.

 

Board Diversity

 

One of our Company values is that we embrace diverse perspectives. We believe different points of view brought through diverse representation lead to better business performance, decision making, and understanding of the needs of our diverse clients, employees, stockholders, business partners and other stakeholders. This applies equally to our Board. The Board takes a multi-dimensional approach to diversity. In addition to industry experience and professional expertise as described above under “Skills and Experience,” the Board values representation that reflects diversity in other important categories, including gender, age, and race/ethnicity, as well veteran status, sexual orientation and geography.

 

 

Board Diversity Matrix (as of March 4, 2022)*

 

 

Total Number of Directors

   11
  Part I: Gender Identity    Female    Male
 

Directors

   5    6
  Part II: Demographic Background      
  African American or Black       1
  White    5    5
 

LGBTQ+

 

   1

 

  

 

 

 

     
 

*  Per Nasdaq’s board diversity requirements; inapplicable categories omitted.

The Governance Committee has a standing commitment to being more intentional about seeking and including diverse candidates in its director recruitment efforts to achieve the optimal balance for the Board. During 2021, the Governance Committee continued its focus and emphasis on Board diversity, and directed its outside director search firm to continue to actively include diverse candidates for consideration. As a result of those efforts, the Board added a new director who is a member of the LGBTQ+ community, Ms. Burr, in late 2021. Ms. Burr brings extensive banking, digital transformation and corporate innovation experience to the Board.

 

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Biographies of Director Nominees

The biographies of each of our director nominees are set forth below:

 

 

LOGO

 

 

  Age: 54

 

  Director since: 2011

 

  Committees:

•   None

 

  Independent: No

  

GREG BECKER

 

President and Chief Executive Officer of SVB Financial Group

 

Mr. Becker was appointed the President and Chief Executive Officer of the Company in April 2011. He first joined the Company in 1993 as part of the Northern California Technology Division and since then has served in a number of executive and senior management roles, including Division Manager of Venture Capital, Chief Banking Officer, Chief Operating Officer and President of the Bank. Mr. Becker has also served as a director of the Bay Area Council, as well as on the U.S. Department of Commerce’s Digital Economy Board of Advisors and the Board of Trustees of the Leukemia & Lymphoma Society (Silicon Valley/Monterey Bay Area).

 

Other Directorships and Positions

•   Guiding Council Member, One Mind at Work (since 2021)

•   Class A Director, Federal Reserve Bank of San Francisco (since 2019)

•   Chair, TechNet Executive Council, Member (since 2019; member since 2016)

•   Executive Council Member, Silicon Valley Leadership Group (since 2011; Chair (2015-2017))

•   Advisory Council Member, Alliance for Southern California Innovation (2017-2018)

 

Education

•   Bachelor’s degree in Business from Indiana University

 

Director Qualification Highlights

•   Strong leadership and execution demonstrated by current service as our CEO and prior executive and senior management roles

•   Career-long experience in the banking industry and the Company’s banking business

 

  

 

LOGO

 

 

  Age: 66

 

  Director since: 2005

 

  Committees:

•   Governance,

      Chair

•   Finance

•   Risk

 

  Independent: Yes

  

ERIC BENHAMOU

 

Chairman and Chief Executive Officer of Benhamou Global Ventures

 

Mr. Benhamou is Chairman and Chief Executive Officer of Benhamou Global Ventures, LLC, an investment firm focused on innovative high-tech companies around the world, which he founded in 2003. He also sits on various public and private technology company boards and serves on various educational and philanthropic organizations. His former roles include the CEO of 3Com Corporation and Palm, Inc., as well as director of Cypress Semiconductor Corporation (Chairman), Qubell, ConteXtream and several others.

 

Other Directorships and Positions

•   CEO and Director, Enterprise 4.0 Technology Acquisition Corp. (since 2021)*

•   Director, Evinced, Inc., a digital accessibility automation service provider (since 2021)

•   Director, Grid Dynamics Holdings, Inc., a digital transformation company (since 2020)*

•   Advisory Board member, Hyundai Motor Company, an automotive manufacturer (since 2018)

•   Mr. Benhamou also serves as the Chair of various companies, including Totango (since 2016), Virtana Instruments Corporation (since 2016) and Israel Venture Network (since 2000); He also served on the board of Ayehu Software Technologies Ltd. from 2015-2021.

 

Education

•   Engineering degree from l’École Nationale Supérieure d’Arts et Métiers in Paris, France

•   Master’s degree in Science from the School of Engineering at Stanford University

 

Director Qualification Highlights

•   Strategic and operational experience in global markets including Europe and Israel

•   In-depth experience with the technology and venture capital industries

 

 

*

Indicates current public company directorship

 

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LOGO

 

 

  Age: 60

 

  Director since: 2021

 

  Committees:

•   None

 

  Independent: Yes

  

ELIZABETH “BUSY” BURR

 

Former President and Chief Commercial Officer of Carrot, Inc.

 

Ms. Burr is the former President and Chief Commercial Officer of Carrot, Inc., a B2B2C digital health company where she built the go-to market strategy and team including sales, marketing, communications, financial planning, account management, business development and partnerships. Ms. Burr previously served in various executive management roles at Humana Inc., Citi Ventures, Morgan Stanley, Credit Suisse First Boston and Gap, Inc.

 

Other Directorships and Positions

•   Director, Rite Aid Corporation (since 2019)*

•   Director, Mr. Cooper Group (since 2019)*

•   Director, Satellite Healthcare (non-profit) (since 2018)

•   Director, Summit Prep Public Charter School (2010-2013)

•   Venture Investor & Board Observer, Omada Health, Aspire Health, Livongo Health (2016-2018)

•   Advisory Council Member, Smith College (2008-2014)

 

Education

•   Bachelor’s degree in Economics from Smith College

•   Master’s degree in Business Administration from Stanford University

 

Director Qualification Highlights

•   In-depth experience in marketing, innovation, digital transformation, business strategy and the financial services industry

•   Customer experience and growth strategy

 

  

LOGO

 

 

  Age: 67

 

  Director since: 2020

 

  Committees:

•   Audit

 

  Independent: Yes

  

RICHARD DANIELS

 

Former Executive Vice President and Chief Information Officer of Kaiser Permanente

 

Mr. Daniels retired from Kaiser Permanente, a nonprofit integrated managed care consortium, in 2020, where he served as Executive Vice President and Chief Information Officer. During his 12 years at Kaiser Permanente, he held a number of leadership positions, including Senior Vice President for both Enterprise Shared Services and Business Information. Other previous roles include a variety of management positions at Capital One Financial Corporation, JPMorgan Chase & Co., NetServ, Inc. and DataPoint Corporation.

 

Other Directorships and Positions

•   Director, Fastly, Inc., an edge cloud network provider (since 2021)*

•   Director, CSAA Insurance Exchange, a reciprocal insurer company that offers insurance products primarily to AAA club members (since 2020)

•   Chair, Playworks, a nonprofit that supports student learning and physical health (since 2018)

•   Director, Parkland Center for Clinical Innovation, a nonprofit healthcare analytics R&D organization (since 2017)

 

Education

•   Bachelor’s degree in business management, Texas State University-San Marcos

 

Director Qualification Highlights

•   Career-long experience and background in information technology

•   Deep leadership experience from his prior roles as Executive Vice President and Chief Information Officer of Kaiser Permanente and other management roles at Capital One and JPMorgan Chase

 

 

*

Indicates current public company directorship

 

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LOGO

 

 

  Age: 60

 

  Director since: 2020

 

  Committees:

•   Audit

•   Credit

 

  Independent: Yes

  

ALISON DAVIS

 

Managing Partner and Co-Founder of Blockchain Coinvestors

 

Ms. Davis is Managing Partner and Co-Founder of Blockchain Coinvestors, a blockchain venture investor and fund of funds. Ms. Davis has held a variety of key management positions in the finance and venture capital industries, including at Belvedere Capital Partners, Inc., Barclays Global Investors, A.T. Kearney and McKinsey & Company. She has also served on other public and private company boards.

 

Other Directorships and Positions

•   Director, NACD Northern California Chapter (since 2022)

•   Director, Janus Henderson Group PLC, a global asset management group (since 2021)*

•   Director, Cambridge in America (since 2021)

•   Director, Pacaso, a real estate platform (since 2021)

•   Director, Collibra, a data intelligence company (since 2019)

•   Director, Fiserv, an information management and e-commerce services company (since 2014)*

•   Director, Renaissance Entrepreneurship Center (since 2009)

•   Director, Ooma, a communication solutions and other connected services provider (2014-2020)

•   Director, Royal Bank of Scotland Group plc, a retail and commercial bank (2011-2020)

•   General Partner and Managing Partner, Belvedere Capital Partners, Inc. (2004-2010)

•   Chief Financial Officer, Barclays Global Investors (2000-2003)

 

Education

•   Bachelor’s degree in Economics from Cambridge University

•   Master’s degree in Economics from Cambridge University

•   Master’s degree in Business Administration from Stanford University

 

Director Qualification Highlights

•   Extensive finance and management experience in the finance and venture capital industries

•   Abundant experience as a director of numerous public and private companies

 

  

 

LOGO

 

  Age: 74

 

  Director since: 2004

 

  Committees:

•   Finance, Chair

•   Governance

•   Risk

 

  Independent: Yes

  

JOEL FRIEDMAN

 

Former President (Business Process Outsourcing), Accenture

 

Mr. Friedman retired in 2005 from Accenture PLC, a public company global management-consulting firm, where he held the position of President of the Business Process Outsourcing organization. Over the course of his 34-year career with Accenture, Mr. Friedman held a variety of senior leadership roles including Managing Partner, Banking and Capital Markets, Managing General Partner, Accenture Technology Ventures; and Founder, Accenture strategy consulting practice. He has also served as director on various companies and organizations, including Neustar, Inc., FTV Capital, Endeca Technologies, EXL Services (advisory director), Junior Achievement of Northern California, Accenture, Seisent, Inc. and Calico Commerce, Inc.

 

Other Directorships and Positions

•   Director, AbilityPath Housing (since 2021) and Advisory Director, AbilityPath (since 2013; director, 1991-2012), non-profit organizations

•   Advisory Director, Stanford Institute for Economic Policy Research (since 2019)

•   Advisory Director, Currency Capital, a financial services company (2018-2020)

•   Advisory Director, AbilityPath, a non-profit organization (since 2013; director, 1991-2012)

•   Member, Financial Advisory Committee, Town of Hillsborough, CA (since 2018)

 

Education

•   Bachelor’s degree in Economics from Yale University

•   Master’s degree in Business Administration from Stanford University

 

Director Qualification Highlights

•   Extensive experience working within the banking and venture capital industries

•   Career-long experience with corporate finance and capital markets

 

 

*

Indicates current public company directorship

 

 

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LOGO

 

 

  Age: 53

 

  Director since: 2012

 

  Committees:

•   Credit

•   Compensation & Human Capital

 

  Independent: Yes

  

JEFFREY MAGGIONCALDA

 

Chief Executive Officer of Coursera

 

Mr. Maggioncalda is currently the Chief Executive Officer of Coursera, Inc. (“Coursera”), an online education company and also serves on Coursera’s board of directors. He previously served as the founding Chief Executive Officer and director of Financial Engines, Inc. (“Financial Engines”), an independent investment advisory firm. Subsequent to his tenure at Financial Engines, Mr. Maggioncalda served as a senior advisor to McKinsey & Company, a global management-consulting firm.

 

Other Directorships and Positions

•   Director, Financial Engines (2011-2014)

•   Director, Affinity Circles, a social networking developer (2012)

•   Senior Adviser, McKinsey & Co., a strategy consulting firm (2017)

•   Chief Executive Officer, Financial Engines (1996-2014)

•   Summer Associate, McKinsey & Co., a strategy consulting firm (1995)

•   Associate, Cornerstone Research, an economic and financial consulting firm (1991-1994)

 

Education

•   Bachelor’s degree in Economics and English from Stanford University

•   Master’s degree in Business Administration from Stanford University

 

Director Qualification Highlights

•   Extensive management and consulting experience in the investment advisory and financial services industries

•   Executive leadership experience, including current and prior CEO roles at Coursera and Financial Engines

 

  

LOGO

 

 

  Age: 63

 

  Director since: 2019

 

  Committees:

•   Audit

•   Compensation & Human Capital

•   Risk

 

  Independent: Yes

  

BEVERLY KAY MATTHEWS

 

Former Vice Chair of the Americas Executive Board, Ernst & Young

 

Ms. Matthews retired from Ernst & Young LLP (“E&Y”), a multinational professional services firm, in 2019, where she served as Vice Chair of the Americas Executive Board, a member of the Global Practice Group and the Managing Partner of the West Region. During her 36 years at E&Y, she held a variety of leadership positions, including Senior Advisory Partner for key clients in the technology and transportation sectors, and Member of the U.S. Partner/Principal Matters Committee.

 

Other Directorships and Positions

•   Director, Main Street Capital Corporation, an investment firm focused on lower middle market and middle market companies (since 2020)*

•   Director, Coherent Inc., a provider of laser-based technologies (since 2019)*

•   Advisory Council Member, Texas Tech University, Rawls College of Business (since 2020)

•   Member, Global Practice Group, E&Y (2008-2019)

•   Americas Assurance and Advisory Chief Operating Officer and Managing Partner, E&Y (2005-2008)

•   Other key positions, including Audit Partner, Austin, Texas Office Managing Partner and Gulf Coast Region Assurance and Advisory Managing Partner, E&Y (1983-2005)

 

Education

•   Bachelor’s degree in Accounting from Texas Tech University

 

Director Qualification Highlights

•   Extensive experience working with technology companies and venture capital and private equity firms through E&Y

•   Career-long experience with finance, accounting and auditing as independent auditor

 

 

*

Indicates current public company directorship

 

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LOGO

 

 

  Age: 66

 

  Director since: 2015

 

  Committees:

•   Audit, Chair

•   Finance

•   Risk

 

  Independent: Yes

  

MARY MILLER

 

Former Under Secretary for Domestic Finance, U.S. Department of Treasury

 

Ms. Miller is the former Under Secretary for Domestic Finance for the U.S. Department of the Treasury (“U.S. Treasury”), a position that she held following her confirmation by the U.S. Senate from March 2012 to September 2014. Ms. Miller also served as Assistant Secretary of the Treasury for Financial Markets from February 2010 to March 2012. Prior to joining the U.S. Treasury, Ms. Miller led the Fixed Income Division for T. Rowe Price Group, Inc., her employer of 26 years.

 

Other Directorships and Positions

•   Director, T. Rowe Price Program for Charitable Giving (since 2021)

•   Director, UpSurge Baltimore (since 2021)

•   Director, The Jeffrey Company, an investment company (since 2016)

•   Director, Baltimore Neighborhood Impact Investment Fund, a non-profit organization (since 2018)

•   Director, Johns Hopkins University Technology Ventures, IDEA Advisory Board (since 2018)

•   Senior Fellow, Johns Hopkins University 21st Century Cities Initiative (since 2017)

•   Director, ICE Benchmark Administration, a unit of the Intercontinental Exchange (2014-2018)

•   Ms. Miller also holds various trustee and advisory positions, including at Baltimore Community Lending (since 2021), Cornell University (since 2015) and The Urban Institute (since 2014)

 

Education

•   Bachelor’s degree in Government from Cornell University

•   Master’s degree in City and Regional Planning, University of North Carolina at Chapel Hill

•   Chartered Financial Analyst (CFA)

 

Director Qualification Highlights

•   Distinguished government and finance experience, serving in key positions within the U.S. Treasury

•   In-depth experience in financial markets and the investment advisory industry

 

  

LOGO

 

 

  Age: 63

 

  Director since: 2010

 

  Committees:

•   Credit, Chair

•   Governance

•   Risk

 

  Independent: Yes

  

KATE MITCHELL

 

Partner and Co-Founder of Scale Venture Partners

 

Ms. Mitchell is a Partner and Co-Founder of Scale Venture Partners, a venture capital firm that invests in enterprise software companies, and has been instrumental in building the firm’s team and strategic direction. She has held various directorships and other senior management positions throughout her career. Prior to founding Scale, Ms. Mitchell spent 20 years in various leadership positions at Bank of America in technology, finance and operations.

 

Other Directorships and Positions

•   Director, Fortive Corporation, provider of instrumentation and industrial technologies (since 2016)*

•   Vice Chair, Private Equity Women Investor Network, a forum for women in private equity (since 2010)

•   Director, Venture Forward, a nonprofit organization committed to advancing a more inclusive venture capital community (since 2019; Founding Co-Chair and Member, National Venture Capital Association, 2014-2019)

•   Director, Silicon Valley Community Foundation, a non-profit organization (since 2016)

•   Director, Meals on Wheels San Francisco, a nonprofit organization (since 2019)

•   Advisory Director, Tuck School of Business, Dartmouth College (since 2018)

•   Member, GP Advisory Council, Institutional Limited Partners Association (since 2016)

•   Member, Broadway Angels, an angel investment group (since 2015)

 

Education

•   Bachelor’s degree in Political Science from Stanford University

•   Master’s degree in Business Administration from Golden Gate University

 

Director Qualification Highlights

•   Deep experience and knowledge of the venture capital industry and innovation companies

•   Broad experience in the banking industry, including asset/liability management experience

 

 

*

Indicates current public company directorship

 

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LOGO

 

  Age: 77

 

  Director since: 2011

 

  Committees:

•   Compensation & Human Capital, Chair

•   Governance

•   Risk

 

  Independent: Yes

  

GAREN STAGLIN

 

Founder and Proprietor of Staglin Family Vineyard

 

Mr. Staglin is the founder and proprietor of Staglin Family Vineyard, founded in 1985 in the Rutherford region of Napa Valley. Over the past 40 years, Mr. Staglin has also held a variety of positions in the financial services and insurance industries. Former directorships include Nvoicepay, Inc., Free Run Technologies, Bottomline Technologies and Solera Holdings, Inc. He was also the Founder and President of Bring Change 2 Mind, a nonprofit organization dedicated to addressing mental illness.

 

Other Directorships and Positions

•   Director, ExlService Holdings, Inc., provider of outsourcing services to global companies (since 2005; served as Chairman from 2014-2021)*

•   Vice Chairman, Profit Velocity Solutions, a manufacturing analytics firm (since 2007)

•   Advisory Director, FTV Capital (since 2004)

•   Chairman and Co-Founder, One Mind, a non-profit organization devoted to accelerating cures and treatments for all brain disorders (since 1995)

 

Education

•   Bachelor’s degree in Engineering–Electrical and Nuclear from the University of California, Los Angeles

•   Master’s degree in Business Administration, Finance and Systems Analysis from Stanford University

 

Director Qualification Highlights

•   Extensive experience working within transaction/payment processing industries, as well as experience working with innovation companies as a director

•   Deep experience working within the premium wine industry

 

 

*

Indicates current public company directorship

 

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BOARD GOVERNANCE AND OVERSIGHT

Board Independence and Leadership

The Board has determined that, with the exception of Mr. Becker, our President and CEO, all of our current directors, including Messrs. Clendening and Dunbar, are “independent” within the meaning of the director independence standards set by The NASDAQ Stock Market LLC (“NASDAQ”) and the Securities Exchange Commission (the “SEC”).

Separate Chairperson and CEO Roles

Our Board chairperson and CEO roles are separate. The Board has determined that it is in the best interests of the Company to continue to maintain these positions separately. We continue to believe that having an outside, independent director serve as chairperson is the most appropriate leadership structure for the Board, as it enhances the Board’s independent oversight of management and strategic planning, reinforces the Board’s ability to exercise its independent judgment to represent stockholder interests and strengthens the objectivity and integrity of the Board. Moreover, we believe an independent chairperson can more effectively lead the Board in objectively evaluating the performance of management, including the CEO, and guide the Board through appropriate governance processes. The Board may modify the structure as it deems appropriate given the specific circumstances then facing the Company.

The Board has determined that Mr. Dunbar, our current Chair of the Board, is independent within the meaning of the director independence standards described above. The Board has also determined that Ms. Beverly Kay Matthews is independent and subject to her re-election, is expected to serve as the Board’s Chair for the 2022-2023 director term.

Annual Board Evaluations

The Board conducts an annual evaluation of its performance and effectiveness. The Governance Committee determines the process for such evaluation and review, which typically involves an outside adviser and includes a review of how certain attributes affect Board and/or individual director effectiveness, such as Board size, meeting frequency, quality and timing of information provided to the Board, director communication, director education, director skills and qualifications, director independence and overall performance. In recent years, the Board has conducted an annual evaluation process that involves both a one-on-one interview with each director conducted by an outside advisor to solicit feedback, as well as written surveys.

Led by the Chairs of the Board and Governance Committee, the results of the evaluation are reviewed and discussed by the Board. The Governance Committee also leads an annual evaluation of the performance and effectiveness of each of the Board’s committees. See “Board Committees—Committee Governance” below.

Board Oversight of Strategy and Risk

The Board is actively engaged in overseeing the Company’s strategy. Each year, the Board conducts an annual in-depth, multi-day session to discuss our strategic and growth plans and review our overall business. Discussion topics may include the Company’s purpose, vision, mission, and values; new or expanded lines of business; clients and market share; global expansion; financial outlook; competition; industry trends; new products and services; strategic partnerships; business risk review; human capital management; business transformation initiatives; and regulatory environment. Discussions about the Company’s strategy and execution are also held during the Board’s regular meetings. Additionally, the Board approves the Company’s Corporate Strategy Plan, as well as routinely reviews progress against corporate strategic priorities and goals.

Oversight of the Company’s risk management is one of the Board’s key priorities and is carried out by the Board as a whole, as well as by the Risk Committee and the other committees. The committees routinely report back to the Board about key risk-related matters.

The Risk Committee of the Board oversees the Company’s risk profile and risk management, in coordination with and support from the other committees. The Risk Committee has primary oversight responsibility of the Company’s enterprise-wide risk management framework, including the oversight of risk management policies, and the monitoring of the Company’s risk profile. To allow cross-committee coordination of risk management, the Risk Committee includes the chairpersons of the Board and each of the Audit, Compensation & Human Capital, Credit, Finance and Governance Committees. The Chief Risk Officer of the Company reports directly to the Risk Committee, as well as, on an administrative basis, the Chief Executive Officer.

In coordination with the Risk Committee, each of the other Board committees is engaged in overseeing the Company’s risks as they relate to that committee’s respective areas of oversight. For example, the Audit Committee regularly oversees our risks relating to our accounting and financial reporting, as well as legal and operational matters (including information technology, cybersecurity and other security-related risks). The Compensation & Human Capital Committee engages in periodic risk assessments to review and evaluate risks in relation to our compensation programs. The Finance Committee actively oversees our treasury management and the

 

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associated risks (whether as an ongoing matter or as it relates specifically to a transaction, such as an equity or debt securities offering). Our Governance Committee oversees our compliance functions and routinely reviews our compliance risks. Moreover, the Credit Committee routinely oversees our management of credit risks. Each committee chairperson regularly reports to both the Risk Committee and the full Board on its risk oversight activities. In addition, the Board routinely engages in discussions with management about the Company’s risks.

Risk Appetite Statement

The Board oversees, and approves on at least an annual basis, the Company’s Risk Appetite Statement, which sets forth the tolerance levels with respect to the amount and types of key risks underlying the Company’s business. The Risk Committee is responsible for recommending changes to the Risk Appetite Statement for approval by the Board, as well as overseeing the Company’s compliance with the statement. Our other Board committees also share responsibility for the Risk Appetite Statement by overseeing and approving applicable risk metrics, including risk limits and thresholds, for each of their relevant areas of responsibility.

Risk & Controls

Under the Board and committee oversight outlined above, we are focused on, and continually invest in, our risk management and control environment. Our business teams, supported by our risk, compliance, legal, finance and internal audit functions, work together to identify and manage risks applicable to our business, as well as to enhance our control environment. Particular areas of focus include, among other areas, financial reporting, data management, privacy, bank regulatory requirements, and as further discussed below, cybersecurity.

Cybersecurity

Like other financial institutions, we are susceptible to information security breaches and cybersecurity-related incidents. We are committed to protecting and continually enhancing the security of our systems, networks and general technology environment. We have established a Security Program, which includes appropriate security risk assessments, security monitoring, incident response, policies, operating standards, global regulatory compliance and employee training. All employees are required to complete annual training on the following topics: information security, privacy, cybersecurity best practices (e.g., social engineering, incident reporting, managing third-party relationships), identity and access management, physical security and remote work best practices (e.g., mobile security).

We continually invest in enhancing our preventive and defensive capabilities in line with globally recognized information security standards, maintaining appropriate information security risk insurance policies, and implementing other measures to mitigate potential threats and losses, where possible. For example, we have invested in additional precautionary measures to mitigate cybersecurity risks resulting from our remote work environment in response to COVID-19. The Board is actively engaged in oversight of our cybersecurity practices, with the Audit Committee having primary oversight responsibility. The Audit Committee reviews and approves the Security Program on an annual basis, as well as receives management updates about information security matters on at least a quarterly basis. These management updates cover: external cybersecurity hot topics and notable events, current and emerging threats, cybersecurity program achievements and progress of key initiatives, key performance indicators, key risk indicators and notable internal events. In addition, the Audit Committee receives prompt reporting and updates on significant cybersecurity-related incidents.

Oversight of CEO and Executives

Annual CEO Performance Evaluations

The independent members of the Board evaluate the performance of our CEO on an annual basis. Each year, the Governance Committee approves a process to solicit feedback from each individual non-CEO director. Our Chair of the Board, together with the Chairs of the Governance and Compensation & Human Capital Committees, then lead discussions with the Board (without the CEO present) to evaluate the CEO’s performance, both generally as well as against predetermined annual goals. The results of such performance serve as the basis for determining and approving the annual compensation for the CEO.

CEO and Executive Succession Planning

As a matter of sound governance, the Board is responsible for the Company’s contingency or long-term plans for CEO and executive succession. These efforts may involve seeking input from our current CEO and our Chief Human Resources Officer, as well as external advisors, to the extent the Board deems appropriate. Succession plans are generally reviewed and discussed by the Board typically on an annual basis. The Governance Committee provides oversight support to the Board with respect to the CEO succession planning process, and the Compensation & Human Capital Committee provides similar oversight support with respect to succession planning for our other executives.

 

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Meeting Attendance

Board and Committee Meetings; Annual Meeting of Stockholders

 

The Board and its standing committees held a total of seventy-one (71) meetings during 2021. The Board itself held eleven (11) meetings during the year, including a two-day annual session focused on strategic planning and risk review. Similar to 2020, the Board continued to meet virtually due to the pandemic.

 

Each director attended in person or via teleconference 75% or more of the total number of meetings of the Board and the committees on which he or she served during 2021.

 

 

Total Number of 2021 Board and Committee Meetings– 71

 

 

 

  Board

 

 

 11 

 

 

 

Finance Committee

 

 

 

  11  

 

 

  Audit Committee

 

 

15

 

 

 

Governance Committee

 

 

 

9

 

 

 

  Compensation & Human

  Capital Committee

    10       Risk Committee       7  
 

  Credit Committee

 

 

 

 

8

 

 

 

   
 
       

It is the Board’s policy that each director employs his or her best efforts to attend our annual stockholder meetings. Ten (10) of our incumbent Board members attended our 2021 Annual Meeting of Stockholders virtually.

Executive Sessions

The Company’s independent directors meet in regularly scheduled executive sessions without management.

Director Matters

Outside Directorships

We encourage all directors to carefully consider the number of other company boards of directors on which they serve, taking into account the time required for board attendance, conflicts of interests, participation, and effectiveness on these boards. Directors are asked to report all directorships, including advisory positions, accepted, as well as to notify the Governance Committee in advance of accepting any invitation to serve on another public company board.

Director Education and Orientation

The Board believes that ongoing director education is important for maintaining a current and effective Board. Accordingly, the Board encourages directors to be continually educated on matters pertinent to their respective service on the Board. It is the Board’s view that continuing education may be achieved in various ways as appropriate for each individual director, including, among other things, participation in formal education programs, conferences or seminars (the reasonable expenses of which are reimbursable by the Company) or through independent study or outside reading. In addition, from time to time, management may also bring education opportunities to the Board through management presentations, additional education materials or outside speakers.

New directors joining the Board also participate in a director orientation program, which involves a variety of informational sessions about our business, strategy and governance with Board members and members of executive and senior management. Since there was limited opportunity for new directors to meet in-person during the current pandemic, we made an enhanced effort for our newer directors to meet with management and other Board members virtually outside of Board meetings. Additionally, new directors typically join at least one Board committee upon joining the Board and are also invited to participate as a guest director at the meetings of the other Board committees.

 

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BOARD COMMITTEES

Our Board committee structure is designed to help the Board carry out its responsibilities in an effective and efficient manner. While the Board may form from time to time ad hoc or other special purpose committees, there are six (6) core standing Board committees: Audit, Compensation & Human Capital, Credit, Finance, Governance and Risk.

Committee Chairpersons/Membership, Responsibilities and Meetings

All chairpersons of our six standing committees are independent and appointed annually by the Board of Directors. Each chairperson presides over committee meetings; oversees meeting agendas; serves as liaison between the committee members and the Board, as well as between committee members and management; and works actively and closely with executive and senior management on all committee matters, as appropriate. Each committee meets regularly, at least on a quarterly basis. The committees, typically through their committee chairpersons, routinely report their actions to, and discuss their recommendations with, the full Board. In addition, certain committees periodically hold extended meetings dedicated to discussing key strategic matters or other business items that are relevant or subject to the committee’s oversight responsibilities on a more in-depth basis.

The names of the current members (chairpersons’ names in bold)* and highlights of some of the key oversight responsibilities of the Board Committees are set forth below:

 

   

Audit Committee

 

•   Integrity of our financial statements, including internal controls over financial reporting.

 

•   Independent auditor of the Company.

 

•   Internal audit function.

 

•   Ethical compliance.

 

•   Other key areas: information technology, security (including cybersecurity), litigation and regulatory enforcement matters.

 

Compensation & Human Capital Committee

 

•   Compensation strategies, plans, policies and programs.

 

•   Director compensation.

 

•   Human capital management, including diversity, equity and inclusion (DEI), leadership development and talent management.

 

•   Executive succession planning (excluding CEO).

 

Governance Committee

 

•   Corporate governance practices.

 

•   Identification and nomination of director candidates

 

•   Annual performance evaluation processes of our Board and its committees and the CEO.

 

•   Regulatory compliance function of the Company, including financial crimes risk management.

 

•   Environmental, social and governance (“ESG”) program.

 

       
   

Members: Mary Miller,

Richard Daniels, Alison Davis, and
Beverly Kay Matthews

 

Members: Garen Staglin,

John Clendening, Jeffrey Maggioncalda
and Beverly Kay Matthews

 

Members: Eric Benhamou,

Roger Dunbar, Joel Friedman, Kate
Mitchell and Garen Staglin

       
   

Finance Committee

 

•   Financial and balance sheet strategies, and treasury management.

 

•   Annual budget of the Company, and recommendation to the Board for approval.

 

•   Material corporate development matters that may result in a significant financial impact, as delegated by the Board.

 

 

Credit Committee

 

•   Credit and lending strategies, objectives and risks, primarily of the Bank.

 

•   Credit risk management, including reviewing internal credit policies and establishing portfolio limits.

 

•   Quality and performance of the credit portfolio.

 

Risk Committee

 

•   Enterprise-wide risk management policies of the Company.

 

•   Operation of our enterprise-wide risk management framework.

 

•   Risk Appetite Statement of the Company, including recommendations to the Board regarding any changes.

 

•   Overall risk profile of the Company.

       
   

Members: Joel Friedman,

Eric Benhamou, Roger Dunbar and
Mary Miller

 

Members: Kate Mitchell,

John Clendening, Alison Davis and
Jeffrey Maggioncalda

 

Members: Roger Dunbar,

Eric Benhamou, Joel Friedman,
Beverly Kay Matthews, Kate Mitchell,
Mary Miller and Garen Staglin

 

*

Messrs. Dunbar and Clendening will not stand for re-election at the Annual Meeting and their terms as members of the committees specified above will end at the Annual Meeting. During the 2022-2023 term, Ms. Kate Mitchell is expected to serve as the Risk Committee chairperson, subject to her re-election.

 

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Committee Independence and Audit Committee Financial Experts

The Board has determined that each of the current members of the Audit Committee, Compensation & Human Capital Committee, Credit Committee, Governance Committee and Risk Committee are “independent” within the meaning of applicable SEC rules, NASDAQ director independence standards and other regulatory requirements, to the extent applicable.

In addition, the Board has determined that each of the following current Audit Committee members are “audit committee financial experts,” as defined under SEC rules, and possess “financial sophistication” as defined under the rules of NASDAQ: Ms. Miller, Ms. Davis and Ms. Matthews.

Committee Governance

Committee Charters

Each committee is governed by a charter that is approved by the Board, which sets forth each committee’s purpose and responsibilities. The Board reviews the committees’ charters, and each committee reviews its own charter, on at least an annual basis, to assess the charters’ content and sufficiency, with final approval of any proposed changes required by the Governance Committee and the full Board. The charters of each committee are available on our website.

Annual Committee Evaluations

The Governance Committee, in coordination with the Board, implements and develops a process to assess committee performance and effectiveness. The assessments are conducted on an annual basis and include a self-assessment by each committee. The review includes an evaluation of various areas that may include committee size, composition, performance, coordination among committee members and among the standing committees, and involvement with the full Board. The results of the committee performance assessments are reviewed by each committee, as well as by the Governance Committee, and discussed with the full Board.

Compensation Committee Interlocks and Insider Participation

During 2021, the Compensation & Human Capital Committee performed all executive compensation-related functions of the Board, except for the approval of CEO compensation, which was approved by the independent members of the Board based on the Compensation & Human Capital Committee’s recommendation. See discussion above under “Board Committees—Committee Chairpersons/Membership, Responsibilities and Meetings” for additional information on the Compensation & Human Capital Committee. Mr. Becker does not participate in any of the Board or Compensation & Human Capital Committee discussions related to the evaluation of his performance or the recommendation or determination of his compensation. See descriptions of related transactions between us and each of the members of the Compensation & Human Capital Committee, if any, under “Certain Relationships and Related Transactions” below.

None of the members of the Compensation & Human Capital Committee has ever been one of our officers or employees and none of our executive officers serves, or in the past fiscal year served, as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving on our Board.

 

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COMPENSATION FOR DIRECTORS

Overview

Our compensation for our non-employee directors is designed to be competitive with other financial institutions that are similar in size, complexities or business models. In addition, our director compensation is designed to be tied to business performance and stockholder returns, and to align director and stockholder interests through director ownership of the Company’s stock. The Compensation & Human Capital Committee (the “Comp/HC Committee”) oversees and approves our director compensation. In doing so, the Comp/HC Committee reports to and, as appropriate, consults with, the full Board on all relevant matters. Our CEO, the only employee director on the Board, does not receive any payment for his services as a director.

2021 Director Compensation

Director compensation is reviewed annually by the Comp/HC Committee with its independent compensation consultant based upon a market review. In April 2021, the Comp/HC Committee reviewed the director compensation structure, which had been unchanged since 2018, for the 2021-2022 director term and made the following changes, after taking into consideration peer and S&P 500 index company practices and pay levels:

 

   

Retainer Adjustments adjusted each director’s annual equity and cash retainer awards as follows:

 

   

Equity Award Value – increased from $125,000 to $150,000 (except Board Chair, whose equity award value increased from $200,000 to $225,000); and

 

   

Cash Retainer – increased from $70,000 to $80,000 (for each non-employee director).

 

   

Risk, Credit and Governance Committee Membership Fees – increased from $8,000 to $12,000.

 

   

Credit and Governance Chairperson Fees – increased from $12,000 to $15,000.

The Director’s Compensation Table below sets forth the current committee membership assignments, as well as the amounts earned or paid to each non-employee member of our Board of Directors during the year ended December 31, 2021. Individual compensation reflects the base cash and equity compensation, as well as incremental committee chairperson and membership fees, as applicable. Each director (other than Ms. Burr) serves on at least one committee, ranging up to three committees.

 

 

Name

 

 

Board Committee

Membership

(2021 – 2022 Term)

  

 

Fees Earned or
Paid in Cash ($)

  

 

Stock Awards
($) (1)

  

 

Total ($)

       LOGO             LOGO             LOGO             LOGO             LOGO             LOGO     

Roger Dunbar (Board Chair) (2)

        X   X   C    221,000    240,532    461,532

Eric Benhamou

        X   C   X    131,000    160,355    291,355

Elizabeth “Busy” Burr (3)

                 36,164      67,449    103,613

John Clendening (2)

    X   X          104,000    160,355    264,355

Richard Daniels

  X              105,000    160,355    265,355

Alison Davis

  X     X          117,000    160,355    277,355

Joel Friedman

        C   X   X    131,000    160,355    291,355

Jeffrey Maggioncalda

    X   X          104,000    160,355    264,355

Beverly Kay Matthews

  X   X         X    126,008    160,355    286,363

Mary Miller

  C       X     X    149,000    160,355    309,355

Kate Mitchell

      C     X   X    131,000    160,355    291,355

Garen Staglin

    C       X   X    131,000    160,355    291,355

 

C – denotes Committee Chairperson

(1)

Values indicated for annual director equity awards reflect the fair value of restricted stock units based on the closing stock price on the applicable grant date (May 3, 2021 ($564.63) for all directors other than Ms. Burr, and November 22, 2021 ($741.20) for Ms. Burr) rather than the equity award calculation methodology described below. Such values were computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718. As of December 31, 2021: Mr. Dunbar had 426 restricted stock units outstanding; Ms. Burr had 91 restricted stock units outstanding; and each of the other non-employee directors had 284 restricted stock units outstanding.

(2)

Messrs. Dunbar and Clendening will not stand for re-election at the Annual Meeting and their terms as members of the committees specified above will end at the Annual Meeting. During the 2022-2023 term, Ms. Matthews and Ms. Mitchell are expected to serve as the Board chairperson and Risk Committee chairperson, respectively, subject to their re-election.

(3)

Ms. Burr joined the Board of Directors in November 2021 and received compensation on a pro-rata basis.

 

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Elements of Director Compensation

 

Schedule of Director Fees for 2021-2022 Term   

Compensation for our non-employee directors reflects a combination of cash (annual retainer fees and committee retainer fees) and equity (annual restricted stock unit awards), as outlined in the Schedule of Director Fees to the left. The chairpersons of the Board and each committee are also entitled to annual chairperson fees. Additionally, directors are eligible for reimbursement for their reasonable expenses incurred in connection with attendance at meetings or the performance of their director duties in accordance with Company policy.

  Director Fee

   $80,000
  Chairperson Fees   

 

$90,000, Board

     

$20,000, Audit Committee

$15,000, All other committees

  Committee Member Fees    $25,000, Audit Committee
     

 

$12,000, All other committees

  Equity Award

   $225,000 (Board Chair) and $150,000 (all other directors) in restricted stock units

Director Equity Compensation

Our annual equity retainer awards are typically granted to directors in the form of restricted stock units. The awards are approved by the Comp/HC Committee and are granted shortly after the Company’s annual meeting of stockholders. The awards vest in full upon the completion of the annual director term on the date of the next annual meeting.

The determination of the number of shares to be granted to directors is based on the 30-day average stock price from the date of grant, rounded to the nearest dollar. New directors that join the Board during the annual director term receive a pro-rated award. For 2021, the Board Chair and each other director (except Ms. Burr) were each granted 426 and 284 restricted stock units, respectively. Ms. Burr, who joined the Board in November 2021, was granted a pro-rated award of 91 restricted stock units.

Deferred Equity

Non-employee directors may irrevocably elect to defer the settlement of restricted stock unit awards until the earliest of: (i) a specific future settlement date that meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, (ii) separation from service, (iii) a change in control, (iv) death, or (v) disability. Messrs. Daniels and Staglin each elected to defer the settlement of his 2021 equity grant.

Equity Plan Limits Applicable to Directors

Equity grants to directors are subject to the terms of our 2006 Equity Incentive Plan, as amended and restated, including the following limitations (as provided under the plan):

 

   

No non-employee director may be granted, in any fiscal year, awards covering shares having an initial value greater than $500,000.

 

   

Annual director grants may become fully vested no earlier than the last day of the director’s then current annual term of service, subject to certain limited exceptions as provided under the plan.

Determination of Director Compensation

Each year, the Comp/HC Committee, together with its independent compensation consultant, conducts a comprehensive review of director compensation, taking into consideration our overall compensation philosophy, as well as competitive compensation data from the Company’s Peer Group for the applicable year and other relevant and comparable market data and trends. The committee reviews, on at least an annual basis, each of the various pay components, the form and amount of payment, as well as the cash/equity compensation mix. Based on such review and any recommendations from its independent compensation consultant, the Comp/HC Committee may make changes to director compensation to the extent it deems appropriate.

Director Equity Ownership Guidelines

Under the current equity ownership guidelines for our non-employee directors, each non-employee member of the Board of Directors is expected to hold, within five years of becoming a director, shares of our Common Stock that have a minimum value equivalent to 600% of the annual director cash retainer fee (currently $80,000) for directors other than the Board Chair, who must satisfy the requirement with respect to $170,000. The Comp/HC Committee is responsible for setting and periodically reviewing the equity ownership guidelines. Equity ownership requirements for non-employee directors are established based upon a competitive review and subsequent recommendations by the committee’s independent compensation consultant. The Governance Committee is responsible for overseeing director compliance with these guidelines and reviews directors’ holdings on a quarterly basis. Any exceptions to meeting the guidelines due to personal financial or other reasons are reviewed and determined by the Governance Committee.

As of December 31, 2021, all non-employee directors had attained the applicable ownership requirements or otherwise remained on target to meet such requirements within the established compliance time frame.

 

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CORPORATE GOVERNANCE MATTERS

Corporate Governance

We are committed to having sound corporate governance practices, as governed by our organizational documents, as well as our Corporate Governance Guidelines and other applicable policies. Our practices are important to how we manage our business and to maintain our integrity in the marketplace. In setting our practices, we balance our corporate and stockholder interests, as well as applicable market practices and trends.

Our Corporate Governance Guidelines set forth a framework for our Company with respect to specific corporate governance practices. The guidelines are reviewed at least annually by the Governance Committee, as well as amended from time to time to continue evolving our practices. A copy of our guidelines is available at www.svb.com under “About Us—Investor Relations—Governance.”

Stockholder Rights

The Company’s charter documents provide our stockholders with important rights or other features, including:

 

   

Ability to act by written stockholder consent;

   

Proxy access (see “Meeting and Other Information - Stockholder Proposals and Director Nominations”);

   

One single voting class;

   

Majority voting standard for director elections (see “Meeting and Other Information - Majority Vote Standard”)

We do not have cumulative or supermajority voting requirements, nor do we have a “poison pill” in effect.

Communications with the Board

Individuals who wish to communicate with our Board may do so by sending correspondence to the attention of the Board (or committee, chairperson or individual director) to:

Corporate Secretary

SVB Financial Group

3003 Tasman Drive

Santa Clara, California 95054

Email: CorporateSecretary@svb.com

Telephone (408) 654-7400

Code of Conduct

A copy of our Code of Conduct, which applies to all of our directors, executives and U.S. employees, including our senior financial officers, is available on our website at www.svb.com under “About Us—Investor Relations—Governance,” or can be obtained without charge by any person requesting it from the Corporate Secretary at the contact information above. Violations or suspected violations of the Code of Conduct, including matters involving ethics, discrimination or harassment, may be reported through multiple channels, including to any member of our Executive Committee or the Chair of the Audit Committee. Additionally, anonymous and confidential reports of unethical conduct can be made through our “Ethics Point” Hotline, which may be accessed from the internet or by calling a toll-free number and is available 24 hours a day, seven days a week. We intend to disclose any waivers from our Code of Conduct granted to our directors, executive officers or senior financial officers, and any substantive changes to our Code of Conduct by posting such information on our website. No such waivers or substantive changes were made during fiscal year 2021.

Political Activities

Our corporate responsibility includes participation in the political and public policy process, specifically in areas that impact the innovation economy and the banking industry, as well as our clients, stockholders, employees and communities. It is important that we engage with legislators and policymakers, where appropriate, and support initiatives to advocate constructively for the long-term interests of our business and our key constituents. Our political activities are subject to the oversight of our Governance Committee, which recognizes the importance of appropriate governance and risk management of our corporate political activities, and reviews our activities for alignment with our business, strategy and corporate values, as well as compliance with applicable laws and regulations. Political contributions are made primarily through a federal Political Action Committee that is non-partisan and employee-funded. Political contributions utilizing corporate funds are limited and subject to restrictions and disclosure pursuant to our policies. For more information, see our “Statement on Political Activities,” which may be found on our website.

 

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Certain Relationships and Related Transactions

Related Party and Insider Loan Policies

We maintain written policies and procedures governing transactions with related persons (directors, director nominees, executive officers, holders of more than 5% of our common stock, and any of their immediate family members or affiliated entities (“Related Parties”) (“related party transactions”). Generally, these policies and procedures cover any transaction, arrangement or relationship in which: (i) we are a participant in the transaction; (ii) the aggregate transaction amount involved will or may be expected to exceed $120,000 in any calendar year; and (iii) a related person has or will have a direct or indirect material interest in the transaction. We also maintain written policies and procedures governing loan transactions with insiders (directors, executive officers and principal stockholders) and their related interests, pursuant to the applicable requirements of Regulation O of the Federal Reserve Act (“insider loans”).

The Audit Committee has primary responsibility for reviewing related party transactions and insider loans for potential conflicts of interest and approving them (or denying approval, as the case may be). The Audit Committee’s approval may be granted in advance, ratified, or delegated to the committee chairperson or other member. Additionally, the Governance Committee takes into consideration related party transactions and insider loans involving our directors as part of its annual director independence review. Further, in accordance with Regulation O, insider loans are subject to full Board approval; directors are prohibited from voting on any transaction in which they may have an interest.

Related Party Transactions

Ordinary Course Loan Transactions

During 2021, the Bank made loans to Related Parties, including certain companies in which certain of our directors or their affiliated venture funds are beneficial owners of 10% or more of the equity securities of such companies, that were (i) in the ordinary course of business, (ii) on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and (iii) not involving more than the normal risk of collectability or present other unfavorable features.

Employee Matters

SVB maintains a series of employee-funded investment funds known as Qualified Investors Funds (“QIFs”), which invest employees’ own capital in certain funds, including certain SVB Capital funds. We pass on the cost of external expenses to the QIF participants and do not charge a management fee. Participating employees must meet certain eligibility qualifications pursuant to applicable regulatory requirements. Of our executive officers, Messrs. Beck, Becker, Cox, Descheneaux, and Zuckert and Ms. Draper have each made commitments to QIFs in aggregate commitment amounts ranging from $50,000 to $1,525,000 depending on the number of QIF funds they participate in.

Vendor Arrangements

Cachematrix, a cash management platform provider for the Bank’s Cash Sweep Program, is controlled by BlackRock, Inc., which, together with its affiliates, owns greater than 5% of our outstanding voting securities. In 2021, we paid fees totaling approximately $706,674 to Cachematrix. Additionally, we offer certain BlackRock investment funds, among other third-party investment funds, under our Cash Sweep Program. In connection with offering BlackRock funds in our Cash Sweep Program, we earned approximately $30.0 million in fee sharing and related revenue for 2021. Client investments in the Cash Sweep Program are initiated and directed by clients themselves.

In addition, The Vanguard Group, which, together with its affiliates, owns greater than 5% of our outstanding securities, is the record-keeper and trustee of our 401(k) and Employee Stock Ownership Plan, as well as the record-keeper of our Deferred Compensation Plan. Fees relating to these services rendered for the fiscal year 2021 totaled approximately $322,391.

 

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

ESG Program Governance

The Board of Directors has delegated primary oversight of our ESG practices to the Governance Committee. The Governance Committee oversees, through periodic updates from management, our ESG initiatives, performance on ESG topics and stakeholder engagement activities. The full Board and other of its committees also receive updates on ESG-related matters. From a management perspective, our ESG program governance includes executive oversight, dedicated program management and a commitment to transparency and accountability. Our ESG program is led by our Chief Marketing and Strategy Officer, with appropriate alignment and involvement from the Chief Executive Officer, other executive leaders and cross-functional management support. Our ESG Program Office, under the leadership of the Head of Corporate Social Responsibility, is responsible for implementing ESG programs, processes and policies and partners across the organization to integrate ESG opportunities and risk management into the way we do business.

Our Commitment to ESG

For nearly 40 years, we have helped the world’s most innovative companies and their investors move bold ideas forward fast. Our ability to make a difference is magnified by the outsized impact our clients often make. They develop incredible solutions — such as vaccines and therapies, clean water for poor nations and funding sources for microbusinesses — and they create jobs around the world. Now more than ever, we strive to be agents of positive change and take care of our employees, clients, shareholders, communities and environment. By focusing on what matters most to our stakeholders, we more effectively manage our ESG impacts while continuing to help the innovation economy grow. This includes our dedication to expanding our commitment and investments to create a more diverse, equitable and inclusive company culture and innovation ecosystem, highlighted in our latest Diversity, Equity & Inclusion report.

As described in our 2021 Corporate Responsibility Report, we are currently focused on advancing seven ESG strategic initiatives:

 

1.     Engaging and empowering employees     5.     Providing access to affordable housing
2.     Promoting diversity, equity and inclusion (“DEI”) at SVB     6.     Financing environmentally sustainable solutions
3.     Championing DEI in the innovation economy     7.     Practicing responsible corporate governance
4.     Supporting our communities    

The contents of our website referenced in this section (including reports and other disclosures) are not deemed incorporated by reference in this Proxy Statement.

ESG Highlights

We continue to expand our ESG program and disclosures. This summary reflects selected highlights of our various ESG efforts during 2021, unless otherwise indicated, and is not an exhaustive list. See below for details on where you can find additional ESG disclosures.

Environmental

Climate

 

We made progress on identifying the societal, ecological and economic risks and opportunities of climate change to our business and integrating them into our business strategy and risk management. We are committed to disclosing and continuing to evolve our climate strategy in line with the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) and published our first TCFD Report.

 
 

We are actively pursuing climate-driven opportunities through our Climate Tech and Sustainability Banking and Project Finance business lines, which focus on disruptive technologies that support the transition to a low-carbon economy, including renewable energy project finance.

 
 

In January 2022, SVB committed to provide at least $5 billion in loans, investments and other financing by 2027 to support sustainability efforts. We also signed on as a member of the Risk Management Association’s Climate Risk Consortium with nearly 20 other banks.

 

Social

COVID Relief

 

We continued to support our employees by further expanding employee benefits, including offering mental health support, technology, equipment and utility stipends.

 
 

We continued to facilitate Small Business Administration loans via the Paycheck Protection Program (“PPP”), providing approximately $2.3 billion in relief to our clients in 2020 and 2021.

 

 

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We distributed more than $10 million to local, regional and global COVID-19 relief efforts, along with DEI-related scholarships in 2020 and 2021. The distributions were funded in part by our 2020 donation to the SVB Foundation of $20 million in net fees generated from the PPP.

 

DEI

 

We enhanced our workplace diversity disclosures, including providing more detailed metrics on the racial and gender representation of our Board, senior leadership and workforce, publishing an updated DEI Report and, for the first time, released our US EEO-1 Report and a new UK Branch Gender Pay Gap Report.

 
 

We increased our Board’s diverse representation with the addition of a new director.

 
 

We established Employee Resource Groups to unite diverse groups of employees to build community, enhance career development, and contribute to professional and personal development.

 
 

We committed $50 million over five years, beginning in 2021, to impact women, Black and Latinx founders, investors and professionals in the innovation economy through the Access to Innovation program, our signature program to increase funding and representation at all levels in the innovation economy.

 
 

We also committed to expanding our corporate supplier annual spend with businesses owned or led by members of historically underserved communities to at least 8% by 2026.

 
 

We engage on key issues impacting underrepresented groups from time to time, most recently regarding the disturbing increase in anti-Asian hate crimes.

 
 

We promote experiential DEI learning and skill-building, through formal training courses and on-demand resources designed to address bias, systemic racism and social oppression, as well as promote allyship and inclusive behaviors.

 

Community

 

We continued our commitment to supporting the communities in which we live and work through investment in affordable housing projects. To date, our Community Development Finance division has committed approximately $1.1 billion in investments and almost $1.6 billion in loans to help build or rehabilitate close to 10,000 affordable-housing units in the San Francisco Bay Area.

 
 

We met our annual, aspirational goal of giving 1% of our net income to charitable causes in 2021 by donating more than $18 million via our various philanthropic programs. We also aspire to give 1% of full-time employee time via volunteering and introduced a new benefit to provide one volunteer day to each employee annually.

 
 

The SVB Foundation granted more than $1.6 million to organizations in our community.

 
 

We launched a University Scholarship program to fund approximately 25 full-ride scholarships and SVB internships for students in need at four US-based universities.

 
 

We announced a five-year, $11.2 billion community benefits plan, in connection with the acquisition of Boston Private, to provide financial support to low- and moderate-income (“LMI”) communities in California and Massachusetts. From January 2022 through December 2026, SVB’s $11.2 billion commitment will provide financial support to these LMI communities, with a particular emphasis on communities of color, through small business loans, Community Reinvestment Act community development loans and investments, residential mortgages and charitable contributions.

 

Governance

Disclosures

 

Increased ESG reporting and disclosures, including our first TCFD report and World Economic Forum Stakeholder Capitalism (“WEF”) disclosure, in addition to continued reporting against the Sustainability Accounting Standards Board (“SASB”) framework and CDP survey.

 

ESG Governance

 

We enhanced our ESG governance framework by, among other means, formalizing additional management committees to address ESG-related risk and opportunities, including a Climate Risk Working Group and the addition of a director of climate risk and strategy.

 

2021 Recognitions

We are proud of the recognition our ESG-related initiatives received in 2021. For the fourth consecutive year, we were included in Bloomberg’s Gender-Equality Index, which tracks the financial performance of public companies committed to supporting gender equality through policy development, representation, and transparency. We were also included in the 2021 rankings of America’s Most JUST Companies, Newsweek’s list of America’s Most Responsible Companies, and the Bay Area Business Journal’s list of Top Corporate Philanthropists.

 

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Where You Can Find More Information

In 2021, we expanded our ESG disclosures consistent with our longstanding commitment to transparency and accountability. You can find our key ESG disclosures on our website under “About Us—Living Our Values,” including our:

 

2021 Corporate Responsibility Report

 
 

DEI reporting, including 2021 DEI Report, 2020 EEO-1 Report and 2020 UK Branch Gender Pay Gap Report

 
 

Climate reporting, including 2021 TCFD Disclosure, 2021 CDP Response and GHG inventory in accordance with the Greenhouse Gas Protocol

 
 

Additional reporting, including 2021 SASB Disclosure and 2021 World Economic Forum Disclosure.

 

 

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EXECUTIVE OFFICERS AND COMPENSATION

 

 

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INFORMATION ON EXECUTIVE OFFICERS

Our executive officers perform policy-making functions for us within the meaning of applicable SEC rules. They may also serve as officers of the Bank and/or our other subsidiaries. There are no family relationships among our directors or executive officers.

In light of the evolution of our business structure, strategic direction and growth of our business (including recent acquisitions), we reassessed and restructured the designation of our executive officers based on the leadership roles within our current organization. The following information outlines the name and age of each of our executive officers, as of the date of this Proxy Statement, and his or her principal occupation with the Company, followed by his or her biography below:

 

Name

    

Age

     

Principal Occupation

Greg Becker

    

54

 

    

  President and Chief Executive Officer

Dan Beck

    

49

 

 

 

Chief Financial Officer

Philip Cox

    

55

 

 

 

Chief Operations Officer

Michael Descheneaux

    

54

 

 

 

President, Silicon Valley Bank

Michelle Draper

    

54

 

 

 

Chief Marketing and Strategy Officer

Christopher Edmonds-Waters

    

59

 

 

 

Chief Human Resources Officer

Laura Izurieta

    

61

 

 

 

Chief Risk Officer

Michael Zuckert

    

63

 

 

 

General Counsel

Executive Biographies

Greg Becker’s biography can be found under “Proposal No. 1—Election of Directors” above.

 

 

    

Dan Beck, Chief Financial Officer, joined us in June 2017 and is responsible for our finance, treasury and accounting functions. Before joining the Company in 2017, Mr. Beck served as the Chief Financial Officer for Bank of the West, a subsidiary of BNP Paribas Group, from June 2015 to May 2017 and as Executive Vice President and Corporate Controller from June 2008 to June 2015. Prior to his tenure at Bank of the West, Mr. Beck held various finance and accounting roles with Wells Fargo Bank, the Federal Home Loan Mortgage Corporation, E*TRADE Financial Corporation and Deloitte & Touche LLP. Mr. Beck holds a Bachelor’s degree in Accounting from Virginia Commonwealth University and a Bachelor’s degree in Biology from Virginia Polytechnic Institute and State University.

 

 

    

Philip Cox, Chief Operations Officer, is responsible for our core operations, enterprise project management, client service and information technology teams. Mr. Cox joined us in 2009 as Head of UK, Europe & Israel, and was appointed Head of Europe, Middle East and Africa and President of the UK Branch in 2012, where he was focused on the international development of our business and was responsible for our UK Branch, prior to his appointment to his current role in 2019. Prior to joining the Company, Mr. Cox was Head of Commercial Banking at the Bank of Scotland in London, a division of Lloyds Banking Group (2008-2009) and the Chief Executive Officer of Torex Retail PLC (2005-2008). Prior to his tenure at Torex Retail PLC, Mr. Cox spent approximately 23 years with NatWest/RBS Group in a variety of positions, including Managing Director of Transport and Infrastructure Finance, Regional Managing Director of the North of England Region and the same position for the South West and Wales business. Mr. Cox is a member of the Chartered Institute of Bankers (UK) and the Association of Corporate Treasurers (UK).

 

 

    

Michael Descheneaux, President, Silicon Valley Bank, oversees the Company’s global commercial bank, private bank and funds management businesses, as well as credit administration. Mr. Descheneaux joined us in 2006 as Managing Director of Accounting and Financial Reporting, and was appointed as Chief Financial Officer in 2007, where he was responsible for all our finance, treasury, accounting and legal functions, as well as our funds management business until he assumed his current role in 2017. Prior to joining the Company, Mr. Descheneaux was a managing director of Navigant Consulting (2004-2006) and held various leadership positions with Arthur Andersen (1995-2002). Mr. Descheneaux holds a Bachelor’s degree in Business Administration from Texas A&M University. He is also a certified public accountant, as well as a member of the Texas State Board of Public Accountancy.

 

 

    

 

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Michelle Draper, Chief Marketing and Strategy Officer, is responsible for leading the corporate strategy, marketing, R&D and client capabilities to best serve clients and drive business results. Prior to joining us in 2013, Ms. Draper held various senior-level marketing positions at Charles Schwab & Co. (1992-2013), including as Senior Vice President of Institutional Services Marketing, where she oversaw advertising, brand management and other key marketing strategies. Prior to that, Ms. Draper also served as a director of Investor Services Segment Marketing and Vice President of Advisor Services Marketing Programs, developing marketing strategies for both the retail and institutional sides of the Charles Schwab business. Ms. Draper holds a Bachelor’s degree in Journalism from California Polytechnic State University – San Luis Obispo, as well as Series 7 General Securities Representative and Series 24 General Securities Principal licenses.

 

 

    

Christopher Edmonds-Waters, Chief Human Resources Officer, oversees our human resources function, which includes our compensation, global mobility, recruiting and learning and development functions. Mr. Edmonds-Waters joined us in 2003 as Director of Organization Effectiveness and was appointed to his current role in 2007. Prior to joining the Company, Mr. Edmonds-Waters held various senior-level human resources positions at Charles Schwab & Co. (1996-2003) and began his career at Macy’s California where he held various merchandising as well human resources roles. Mr. Edmonds-Waters holds a Bachelor’s degree in Intercultural Communications from Arizona State University and a Master’s degree in Human Resources and Organization Development from the University of San Francisco.

 

 

    

Laura Izurieta, Chief Risk Officer, is responsible for leading our enterprise-wide risk management, corporate compliance and regulatory functions. From 2000 until joining the Company in 2016, Ms. Izurieta held various roles of increasing responsibility at Capital One, including Vice President of Corporate Reputation and Governance, Vice President of Capital One Home Loans and Vice President of Information Technology, and most recently Executive Vice President and Chief Risk Officer, Retail and Direct Bank. Prior to her tenure at Capital One, Ms. Izurieta also held positions at Freddie Mac and Bank of America. Ms. Izurieta holds a Bachelor’s degree in Business Administration from Towson University and a Master’s degree in Applied Behavioral Science from John Hopkins School of Business.

 

 

    

Michael Zuckert, General Counsel, is responsible for all our legal and government affairs matters. Prior to joining the Company in 2014, he served in a wide range of legal positions within the financial services industry. Most recently, he served as Deputy General Counsel of Citigroup (2009-2014), where he served as general counsel for the company’s non-core assets business, Citi Holdings, and focused on mergers and acquisitions. Prior to his time at Citigroup, Mr. Zuckert held various senior-level positions at Morgan Stanley & Co. Inc. and was Vice President and General Counsel at TheStreet.com, Inc., an online financial news provider. Mr. Zuckert is a director of the Law Foundation of Silicon Valley, a member of the leadership council of Tech:NYC and a member of the Investment Committee of Waterman Ventures as well as an advisory member of the Board of the Silicon Valley Directors’ Exchange. He holds Bachelor’s degrees in History and Law and Society from Brown University and a Juris Doctor from New York University School of Law.

 

 

    

 

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PROPOSAL NO. 2: ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION

The Board of Directors Recommends a Vote “FOR” the Approval of the Compensation of our Named Executive Officers, as Disclosed in this Proxy Statement

Our advisory vote on executive compensation (otherwise known as “Say on Pay”) is held annually. This vote provides our stockholders the opportunity to vote to approve, on an advisory basis, the compensation of our Named Executive Officers (“NEOs”) as further described in the “Compensation Discussion and Analysis” section of this Proxy Statement, including the accompanying compensation tables and narrative discussion therein. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement.

We ask our stockholders to indicate their support for our executive compensation program for our NEOs and vote “FOR” the following resolution at the Annual Meeting:

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

Because your vote is advisory, it will not be binding upon the Board or the Compensation & Human Capital Committee (“Comp/HC Committee”) and may not be construed as overruling any decision by the Board or the Comp/HC Committee. However, the Board and Comp/HC Committee value the opinion of our stockholders and will take into consideration the outcome of this advisory vote when considering future executive compensation arrangements.

Stockholders are encouraged to carefully review the following “Compensation Discussion and Analysis” and “Compensation for Named Executive Officers” sections for a detailed discussion of our executive compensation program for our NEOs.

Approval, on an advisory basis, of our executive compensation requires the affirmative vote of the holders of a majority of the Common Stock represented and entitled to vote at the Annual Meeting.

 

 

COMPENSATION & HUMAN CAPITAL COMMITTEE REPORT

 

This Compensation & Human Capital Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Act or the Exchange Act, except to the extent that we specifically incorporate the information contained in the report by reference, and shall not otherwise be deemed filed under such acts.

 

The Comp/HC Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Proxy Statement. Based on this review and these discussions, the Comp/HC Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the year ended December 31, 2021 and this Proxy Statement.

 

This report is included herein at the direction of the members of the Comp/HC Committee.

 

COMPENSATION & HUMAN CAPITAL COMMITTEE

   

Garen Staglin

(Chair)

 

 

  John Clendening   Jeffrey Maggioncalda    Beverly Kay Matthews

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis (“CD&A”) discusses our 2021 executive compensation program, primarily as it relates to our “named executive officers” (“NEOs”) listed below.

 

 

Overview of 2021 Executive Compensation

 

From the Compensation & Human Capital Committee

 

We, the Compensation & Human Capital Committee of the Board of Directors (“Comp/HC Committee”), have primary oversight over the Company’s executive compensation program.

 

The Company delivered another year of exceptionally strong financial performance and business growth. We continued to focus our attention on prioritizing and supporting our business and people, developing strategies to continue to support clients and partners to innovate and thrive, and supporting a culture that promotes the growth of our employees. We also continued to maintain our core compensation strategy and objectives, including pay for performance, appropriate risk management and talent retention. As further explained in this CD&A, our key areas of focus in 2021 were:

 

•   Maintaining our core executive compensation program which emphasizes pay for performance, particularly long-term performance (in an effort to align with stockholders’ interests and drive accountability), consistent with prior years.

•   Structuring compensation practices to account for our unprecedented growth and to be the employer of choice in a competitive industry, all in order to attract and retain key talent.

•   Continuing to focus on risk management.

•   Further expanding our focus on the Company’s human capital, including DEI initiatives, leadership development & succession planning, and the continued evolution of our virtual workplace in an increasingly virtual environment.

•   Broadly continuing to support our employees during the ongoing pandemic crisis.

 

Earlier in 2022, we changed our committee name to the Compensation & Human Capital Committee to emphasize the importance of, as well as our focus on, managing one of our key assets, our human capital.

 

Overall, we are pleased to see another strong performance delivered by the Company. Our pay decisions reflected that performance, taking into account the Company’s unprecedented growth, expanding global business, and increasing regulatory complexities. Our executive compensation strategy is based on our commitment to effectively drive the Company’s sustainable, long-term global growth and strategy.

 

2021 Executive Compensation Elements At-A-Glance

        

 

 

LOGO

 

     LOGO            LOGO     
                
    

 

Salary

 

 

 

 

ICP

 

 

 

 

PRSUs

 

 

  

 

Stock Options

 

 

  

 

        RSUs        

 

 

   
                
 

 

Ongoing

 

 

 

1-Year

Performance Period

 

 

 

3-Year

Performance Period

 

  

 

4-Year

Vesting Period

 

 
                
 

 

Fixed

 

 

 

Performance-Based^

 

  

 

Fixed^

 

 
                
 

    

   

Performance Metrics:

 

  

    

 
   

 

ROE*

 

 

 

TSR*

 

ROE*

 

  

 

Stock Price Appreciation^

 

 
                

 

  ^

ICP and earned PRSU awards are determined after the performance period; RSU and stock option awards are based on a fixed number of shares at the time of grant; any incremental value realized above the grant value of RSUs and stock options, as well as earned PRSUs, is based on stock price appreciation.

 
  *

Includes measurement of performance relative to peers.

 

Glossary of

CD&A Terms

 

DCP  –  Deferred Compensation Plan

DEI  –  Diversity, equity and inclusion

EPS   –  Earnings Per Share

ERM  –  Enterprise-wide Risk Management

 

ICP    –  Incentive Compensation Plan (annual     cash incentive plan)

NEO   –  Named Executive Officer

PRSU   –  Performance-Based Restricted Stock Unit

    

ROE   –  Return on Equity

RSU   –  Restricted Stock Unit

TSR  –  Total Stockholder Return

 

 

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2021 Executive Compensation Highlights

 

Pay for Performance

 

 

 

LOGO

 
 

We delivered another year of strong strategic execution, business growth and financial performance, resulting in total net income, EPS, ROE and TSR performance for the year 2021 as highlighted on the right. We ranked first relative to our peer group for our 2021 ROE performance. Based on our established TSR measurement methodology, we ranked first with respect to our 2-year and 3-year TSR performance, and ranked second with respect to our 1-year TSR performance. Other notable accomplishments included: growing our workforce and talent base across business units and jurisdictions, continuing support of our clients and employees operating in a predominantly virtual environment, advancing our DEI initiatives, and acquiring Boston Private and MoffettNathanson in July and December 2021, respectively.

 

The Comp/HC Committee’s compensation decisions for 2021 reflected our strong performance, and commitment to maintaining our company’s strong culture and values during an exceptional year of growth, further definition of and collaboration across business units, and further adaptation to an increasingly virtual work environment. (For further details about our 2021 business and financial performance, see “2021 Performance and Proxy Statement Summary” in this Proxy Statement.)

 

    

 

2021 CEO Pay

 

In designing Mr. Becker’s 2021 compensation structure, we continued to emphasize long-term, performance-based pay. 87% of his total target pay is at risk and subject to Company/individual performance. We place greater emphasis on long-term, performance-based pay in our target CEO Pay Mix set forth below relative to our 2021 Peer Group. The average target pay mix for our Peer Group is: Performance-based Pay (62%) (compared to 70% for the Company); Fixed Pay (38%) (compared to 30% for the Company); Long-Term Pay (58%) (compared to 67% for the Company); and Short-Term Pay (42%) (compared to 33% for the Company).^

 

Mr. Becker’s actual total compensation for 2021 was commensurate with our 2021 performance. In fiscal year 2021, the Company experienced unprecedented growth of loans, client funds, core fees, SVB Securities revenue, and overall strong financial performance. The Company increased its human capital, with attention to growing key talent, as well as deepened the scope of existing business units, with a conscious focus on maintaining the Company’s commitment to engaging our people, advancing our values and culture, and scaling our infrastructure.

 

 

 

    

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* Based on the TSR calculation methodology discussed under “Long Term Equity Incentives”; our 221% represents our 3-year TSR performance (2019-2021).

^ Based on our 2021 Peer Group and peer compensation data available at the time of determination of Mr. Becker’s 2021 compensation.

† Special one-time equity award (subject to three-year cliff vesting) granted to Mr. Becker in 2019.

 

    

 

Leadership Updates

 

In light of the evolution of our business structure, strategic direction and growth of our business (including recent acquisitions), we reassessed and restructured the designation of our executive officers based on the leadership roles within our current organization. Our NEOs for 2021 include two additional leaders who were formerly designated as executive officers, Messrs. China and Cadieux, and, for this reason they are included in our 2022 proxy statement. See “Information on Executive Officers” for a list of our designated executive officers.

 

 

    

 

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Executive Compensation – Summary of Key Features

 

Highlights of the key features of our executive compensation program and practices are set forth below:

 

 

 

Compensation Design & Limits

  

Risk Management

 
 

•   Pay for performance with emphasis on long-term performance

 

•   Balanced performance metrics to drive both short-term and long-term objectives

 

•   Competitive benchmarking against peers

 

•   Double trigger change in control severance (under our executive Change in Control Plan)

 

•   No 280G excise tax gross-ups (under our executive Change in Control Plan)

 

•   No excessive executive perquisites

 

•   No special executive retirement benefits; no pension or SERP plans

  

   Incentive plans do not encourage excessive risk taking

 

   Recoupment (or clawback) policy

 

   Compensation risk management (including annual risk assessment, and ERM and internal audit involvement)

 

   Minimum and maximum performance thresholds/limits for funding purposes, subject to Comp/HC Committee discretion

 

   No hedging or pledging (executives not permitted by policy to hedge, sell puts, sell shorts or pledge our securities)

 

   Comp/HC Committee oversight of performance and compensation practices that maintain sound risk management and promote compliance with laws, regulations and policies

 

 
 

Compensation Oversight and Governance

  

Alignment with Stockholder Interests

 
 

   Independent Board* oversight of CEO compensation (based on the Comp/HC Committee’s recommendations)

 

   Independent Comp/HC Committee oversight of non-CEO executive compensation

 

   Independent compensation consultant to the Comp/HC Committee

 

   Active Comp/HC Committee engagement (held 10 meetings in 2021)

 

  

•   Say on Pay vote on an annual basis (89% approval in 2021)

 

•   Robust executive equity ownership guidelines

 

•   Continuing stockholder outreach to solicit feedback and to discuss our business and practices (throughout the year)

 

•   Performance metrics focused on stockholder return (including ROE and relative TSR)

 

•   No repricing of options without stockholder approval

 
 

 

* Independent members acting as a committee, without CEO participation

 

Executive Compensation Program Objectives

 

 

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Our compensation philosophy and program also take into account considerations including: our business and strategic objectives of sustainable long-term global growth; the relative complexity our business diversity represents in an organization of our size; emerging trends in executive compensation (particularly for financial institutions); and market practices.

 

* * * *

 

 

 

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Compensation Governance and Risk Management

Role of Compensation & Human Capital Committee and the Independent Board Members

All members of the Comp/HC Committee are “independent” under applicable NASDAQ rules. The Comp/HC Committee has primary oversight of our executive compensation program as provided in its charter, including the design and administration of executive compensation plans in a manner consistent with the executive compensation program objectives described above. More specifically, the committee determines compensation strategy, establishes applicable performance goals and metrics, selects forms of compensation, determines the overall pay mix, sets target pay levels, and approves final executive compensation awards.

In the case of the CEO, the Comp/HC Committee makes recommendations about CEO pay decisions for approval by the independent members of the full Board (all Board members except the CEO, acting as a committee). Subject to the recommendation of the Comp/HC Committee, all of the independent directors of the Board review and approve the compensation for the CEO. Such review and approval are conducted during executive sessions, where neither the CEO nor any other member of management is present. In the case of all other non-CEO executives, as well as other key positions, the Comp/HC Committee reviews and approves the compensation of such individuals. The determination of compensation awards for all non-CEO positions is conducted during executive sessions, where the CEO may participate at the Comp/HC Committee’s invitation.

The Comp/HC Committee regularly monitors performance against established goals, approves funding accruals, and focuses on other aspects of the compensation program, including, among other things, peer group review and determination, compensation risk review, and monitoring of market and governance trends impacting compensation.

In carrying out its oversight responsibilities, the Comp/HC Committee regularly reports to the Board on the actions it has taken, as well as confers with the Board on compensation matters, as necessary. The Comp/HC Committee also makes recommendations for all other compensation-related matters that require full Board approval.

The Comp/HC Committee meets on a regular basis, and routinely meets in executive sessions without management present. During 2021, the committee held 10 meetings, including a separate annual session dedicated to enhancing compensation strategy based on the direction of the business, sustaining our culture during exceptional growth, and attracting and retaining talent. In 2022, the Comp/HC Committee held two meetings to assess achievement of Company and individual performance objectives and make 2021 compensation decisions.

Role of Chief Executive Officer

At the Comp/HC Committee’s request, our CEO will attend portions of the Comp/HC Committee’s meetings and certain executive sessions to discuss the Company’s performance and compensation-related matters, as well as his recommendations for compensation for our executives of the Company (excluding himself). He does not participate in any deliberations relating to his own compensation. The Comp/HC Committee considers the CEO’s input and recommendations, but retains full discretion to approve all non-CEO executive compensation (and the independent members of the full Board have discretion to approve CEO compensation, as described above).

Role of Compensation & Human Capital Committee Consultant

Consistent with prior years, the Comp/HC Committee retained Pay Governance LLC, an independent executive compensation consultant, to provide advice and recommendations on all compensation matters under its oversight responsibilities as defined in the committee’s charter. The Comp/HC Committee in its sole discretion selects the consultant and determines its compensation and the scope of its responsibilities.

In 2021, Pay Governance assisted the Comp/HC Committee with: advice and recommendations regarding the Company’s compensation philosophy and strategies; advice on director and executive compensation levels and practices, including review and recommendations on director, CEO and other executive compensation and evaluation of CEO pay and Company performance; assessment of realizable pay and performance; advice on the Company’s peer group; guidance on the design of the Company’s compensation plans and policies, including recoupment policy and executive/director stock ownership guidelines; evaluation of performance metrics and peer performance; assistance with the Comp/HC Committee’s annual compensation risk review; and periodic reports to the Comp/HC Committee on market and industry compensation trends and regulatory developments.

Pay Governance provides services only to the Comp/HC Committee, and not to the Company, and did not provide any additional services to the Comp/HC Committee outside of executive and director compensation consulting during 2021. The Comp/HC Committee does not believe there were any potential conflicts of interest that arose from any work performed by Pay Governance during 2021.

 

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Compensation & Human Capital Committee – Key Areas of Focus

Compensation Risk Management

Compensation risk management is a primary area of oversight of the Comp/HC Committee. At the direction of the Comp/HC Committee, its compensation consultant conducts an annual review of the Company’s incentive programs, including design and risk assessment. Additionally, management performs an annual risk assessment of certain compensation plans, which includes back-testing of awards to evaluate against plan design, governance and risk mitigation. Our Chief Risk Officer reviews and shares her input on those risk assessments, and reports and discusses with the committee her risk assessment of our compensation programs (including plan design and execution), and any recommendations. Based on these assessments and discussions, we do not believe that our compensation program promotes excessive risk taking or creates risks that are reasonably likely to have a material adverse effect on the Company.

Moreover, from time to time, the Comp/HC Committee may implement policies or other tools to strengthen compensation risk management, such as the Company’s Recoupment Policy, which applies to our executives and certain senior level employees. See “Executive Benefits and Other Executive Compensation-Related Matters – Compensation Recovery Policy.”

Our compensation programs and risks are routinely discussed at the Board level, both with and without the CEO present. In particular, the chairperson of our Comp/HC Committee reports to and discusses significant compensation risk issues with the full Board and the Risk Committee. The chairperson of the Comp/HC Committee (Mr. Staglin) is also a member of the Risk Committee of the Board of Directors. Additionally, certain compensation matters are also reviewed by the Audit Committee, specifically those related to exclusions under our performance-based funding arrangements, where applicable.

Competitive Benchmarking Against Peers

 

  2021 Peer Group  

 

  Associated Banc-Corp  

  BOK Financial Corporation  

  Citizens Financial Group, Inc.  

  Comerica Incorporated  

  Cullen/Frost Bankers, Inc.  

  East West Bancorp, Inc  

  Fifth Third Bancorp  

  First Republic Bank  

  Huntington Bancshares  

  KeyCorp  

  M&T Bank Corporation  

  Northern Trust Corporation  

  Regions Financial Corporation  

  Signature Bank  

  Webster Financial Corp.  

  Zions Bancorporation  

 

 

 

 

 

The Comp/HC Committee routinely benchmarks and compares our compensation and performance against selected peer companies. It utilizes this information as a reference for setting pay and making pay decisions. The Comp/HC Committee, with its compensation consultant and management, conducts a review, at least annually, of the composition of the Company’s peer group to determine whether any changes are warranted. In its determination, the Comp/HC Committee considers a variety of factors and characteristics including, among other things, banking industry, business model, product offering, complexity of the business, geography, market capitalization, asset size, assets under management, number of employees, performance on financial and market-based measures, brand, and extent they compete with our business, as well as for talent. For example, in conducting its review, the Comp/HC Committee takes into account the increase in growth and complexity of our business, and the impact of such growth on demands on our existing talent, any further specialization needs for our workforce, as well as increased competition for our talent with other institutions of similar sophistication within the industry.

 

For 2021, the Comp/HC Committee selected 16 peer companies (listed to the left), based on its review of the evaluation criteria (described above). Compared with the peer group from 2020, we added Citizens Financial and CIT Group Inc. to our peer group, which we believed were relevant relative to our business and growth. The peer group benchmarking review for 2021 compensation was conducted in July 2020 and was based on our size and business scope at that time (which has since grown). Following such review, CIT Group Inc., which was originally added to the peer group, was acquired by First Citizens BancShares Inc. and was subsequently removed from the peer group in March 2021.

The Comp/HC Committee does not solely rely on comparative data from the peer group in making compensation decisions. Such comparative data provides helpful market information about our peer companies as a reference, but the Comp/HC Committee does not target any specific positioning or percentile, nor does it use a formulaic approach, in determining executive pay levels. The Comp/HC Committee may refer to other banks or financial companies outside of the peer group for additional benchmarking comparative information. It also utilizes other resources, including published compensation surveys (from Willis Towers Watson and McLagan), proxy statements and other available compensation data. All such comparative peer data and supplemental resources are considered, along with the Company’s pay for performance and internal parity objectives. All applicable information is reviewed and considered in aggregate, and the Comp/HC Committee does not place any particular weighting on any one factor.

 

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Performance-Based Compensation – Design and Assessment

Another primary area of focus of the Comp/HC Committee is the design of performance-based compensation, including selecting and setting appropriate performance metrics and measuring actual performance against those metrics. The committee monitors performance of current year performance-based awards, as well as designs and plans performance metrics for future years. In designing performance metrics, the committee reviews market and peer practices, as well as seeks the input of the full Board and the CEO to take into account key areas of strategic and business focus. As further discussed in this CD&A, specific performance metrics for recent annual and long-term incentive awards include ROE and TSR, and for long-term performance-based equity awards granted in 2019, strategic business objectives and EPS growth. In certain cases, such as ROE and TSR, our performance is measured relative to peer performance.

Determination of Compensation for Individual Executives

In making compensation decisions or recommendations for individual executives, the Comp/HC Committee takes into consideration the performance reviews conducted for each executive. The committee meets with the CEO to discuss his assessment of the performance of the other executives, based on their self-reviews and the CEO’s own evaluation of their performance. The independent members of the Board meet and discuss, without the CEO present, their collective performance assessment of the CEO, taking into consideration his self-review and each Board member’s individual evaluation. (See “Oversight of CEO and Executives – Annual CEO Performance Evaluations” under the “Corporate Governance and Board Matters” Section of this Proxy Statement.)

Executives are evaluated based on individual performance and overall contributions, in addition to Company performance against the broader corporate performance metrics discussed above. Specifically, individual evaluation criteria may include, among other things: skills and expertise, demonstrated leadership, development and execution of strategy, span of responsibility, achievement of corporate and individual goals, risk management, talent management, regulatory compliance, and alignment with the Company’s core values. The overall performance assessment by the Comp/HC Committee (or the Board) of each individual executive is also taken into consideration in setting the executive’s total target compensation for the following year.

Committee Decisions

The performance metrics utilized for executive compensation, where applicable, are largely used for target funding determination purposes. Funding determinations guide decisions for actual awards to executives by the Comp/HC Committee (or in the case of the CEO, the Board) at its discretion. We believe that discretion, when judiciously applied, is an important part of our compensation decision processes, as it allows the Comp/HC Committee (or in the case of the CEO, the Board) to better link executive pay to actual performance, or take into account extraordinary considerations. Discretion, both positive and negative, allows directors to make appropriate pay decisions based on their informed business judgment, particularly in circumstances where there may be other relevant performance factors or unforeseen circumstances that should be considered beyond the actual performance metrics. The Comp/HC Committee believes that a balanced utilization of performance metrics and committee discretion leads to appropriately calibrated compensation for executives or the broader employee base.

Enhanced Focus on Human Capital

For 2021, the Comp/HC Committee, along with the full Board, continued to focus on various human capital-related matters. In particular, the committee focused on the Company’s DEI initiatives, such as increasing diverse representation among the Company’s leadership, fair pay analyses, training and educational opportunities, employment awareness programs and resource groups, and promoting an inclusive culture. The Comp/HC Committee also focused on talent management, including leadership development, succession planning, competition for talent, workforce growth and culture. Additionally, the committee continued to focus on the future of work in an increasingly virtual environment, balancing employee flexibility, internal collaboration and engagement, as well as business needs.

Annual Say on Pay

We submit an advisory vote on executive compensation, or Say on Pay, to our stockholders on an annual basis. Our Board of Directors values the opinions of our stockholders and believes an annual advisory vote allows our stockholders to provide us with their input on our executive compensation program.

In 2021, 89% of the votes cast approved, on an advisory basis, our 2020 executive compensation program (as described in our 2021 proxy statement). In light of the strong voting support and feedback we have solicited from our stockholders (as described below), the Comp/HC Committee maintained consistency in our executive compensation philosophy, policies and overall program, and did not make any material changes. We continue to carry out our executive compensation program based on our key philosophy and

 

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objectives as described above. The Comp/HC Committee will continue to consider changes to the program on an ongoing basis, as appropriate, in light of evolving factors such as our corporate strategy, the business environment and competition for talent, as well as stockholder feedback.

Stockholder Alignment and Engagement

Aligning our executives’ interests with our stockholders’ interests is important. We use performance metrics tied to stockholder return for our performance-based incentive awards ---- total stockholder return, return on equity and, for long-term equity awards granted in 2019, earnings per share growth. We measure performance against our own goals and/or relative to our peer performance.

In addition to our active stockholder engagement activities throughout the year (approximately 200 (primarily virtual) stockholder meetings conducted in 2021), we reach out to our larger stockholders to invite their feedback on proxy matters, including their views about our executive compensation program. Feedback from stockholders is important to consider, and we value opportunities to seek their input.

Elements of Executive Compensation

In deciding compensation for our executives, the Comp/HC Committee (and in the case of the CEO, the Board) reviews each executive’s total target compensation package holistically, balancing long-term and short-term pay, cash and equity compensation, and performance- and non-performance-based pay, and taking into account market competitiveness and internal parity. The primary elements of executive compensation are discussed below:

Cash Compensation

Base Salary

 

We pay base salaries in order to provide executives with a reasonable level of fixed compensation. Executive base salary levels are typically reviewed at least annually by the Comp/HC Committee and adjusted as appropriate, typically to reflect merit, promotions or changes in responsibilities, or market adjustments. Base salaries are determined on an individual basis. When determining any base salary increases, the Comp/HC Committee considers an individual’s total compensation package, his or her performance, Company performance, comparative peer and market compensation data, internal parity, and other relevant factors, including the scope of the executive’s responsibilities relative to peers and other executives, and retention.

                       Base Salary                        

    Annual Cash Incentives (ICP)    

(% of Annual Base Salary)

 

 

  NEO    
    2021 Annual    
Base Salary ($)
 
 
   


Increase

Over 2020
(%)

 

 
 

     


2021 Annual

ICP Target
(%)

 


 

   


2020 Annual

ICP Target
(%)

 


 

           
 

 

Greg Becker

    1,050,000         5.0         150       130  
 

 

Dan Beck

       700,000       16.7         100       100  
 

 

Michael Descheneaux

       775,000         3.3         110       110  
 

 

Philip Cox

       625,000         4.2         100       100  
 

 

Michael Zuckert

       625,000         4.2         90         85  
 

 

John China

       650,000         4.0         110       100  
 

 

Marc Cadieux

       650,000         4.0         80         80  
           
           

In 2021, each NEO received adjustments to their base salaries based on individual performance, salary market positioning relative to peers, and internal parity, as applicable. More specifically, the 2021 base salary adjustments also reflected: (i) for Mr. Becker, continued outstanding leadership of the Company’s strong performance and growth; (ii) for Mr. Beck, continued excellence in financial management and strong leadership of key regulatory initiatives, including capital planning and liquidity management enhancements; (iii) for Mr. Descheneaux, continued outstanding leadership of the Commercial Bank, including business growth, product development initiatives and talent expansion; (iv) for Mr. Cox, excellent leadership of key technology transformation initiatives and strengthening of our operational and technological infrastructure; (v) for Mr. Zuckert, for outstanding leadership of legal matters and overall management of the Company’s legal department; (vi) for Mr. China, demonstrated strategic leadership of expanding and growing the SVB Capital platform and continued fundraising; and (vii) for Mr. Cadieux, strong leadership of credit risk management. The Committee also considered the overall exceptional growth of the Company, continued expansion of the business, and continuing pandemic-related business and operational challenges.

 

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Annual Cash Incentives (ICP)

Our NEOs, as well as other executives and employees, participate in the Company’s ICP, our annual cash incentive plan that provides rewards based on individual and Company performance. Each executive participant is assigned an incentive target, stated as a percentage of the individual’s annual base salary. Executive incentive targets are set by the Comp/HC Committee based on the objective of balancing overall total target pay mix with an appropriate allocation of at-risk compensation, as well as comparative peer and market compensation data for their respective positions, and in the case of our non-CEO executives, the CEO’s recommendations.

For 2021, the Comp/HC Committee adjusted the incentive targets for each of Messrs. Becker, Zuckert, and China based on merit due to strong performance and execution, as well as market compensation data. More specifically, ICP target adjustments for 2021 reflected the individual performance of and considerations for each of the applicable NEOs as described above.

ICP - Funding

Each year, the Comp/HC Committee establishes metric(s) used to measure Company performance for ICP funding purposes, on an absolute basis, as well as relative to peers. For 2021, the Comp/HC Committee maintained consistency with its prior methodology for funding the ICP by utilizing ROE as the primary performance metric on an absolute and relative basis. The Comp/HC Committee believes that ROE continues to be an appropriate indicator of financial performance that drives stockholder value. The funding methodology for 2021 was as follows, which includes an adjustment to the relative ROE slope to accommodate the increase in number of peer companies in our 2021 Peer Group:

 

 

 

ROE Performance Against Annual Budget

(Two-Thirds (2/3) of Pool)

 

Two-thirds (2/3) of the total incentive pool is funded based on the Company’s ROE performance (adjusted for applicable exclusions*) relative to our Board-approved annual target (budget) ROE, as illustrated by the graph below. There is no funding if the Company achieves less than threshold (80%), and a funding maximum (200%) at 150% or higher achievement (and subject to straight line interpolation between threshold and maximum levels).

 

   

  

 

   

 

ROE Performance Against 2021 Peer Group

(One-Third (1/3) of Pool)

 

One-third (1/3) of the total incentive pool is funded based on the Company’s actual (unadjusted) ROE performance of 17.10% for 2021, measured against ROE performance of the 2021 Peer Group, as illustrated in the graph below. There is no funding if our performance falls in the bottom five positions, and a maximum funding (200%) if our performance falls in the first five positions (and subject to straight-line interpolation between such levels).

 

 
   
 

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*

Exclusions/Adjustments. The Comp/HC Committee determines the extent to which the Company meets its budgeted ROE performance target. It may adjust for out of the ordinary or non-recurring items, or other items that are subject to factors beyond management’s control, such as investment securities gains and losses. Adjustments are determined by the Comp/HC Committee, in coordination with the Audit Committee, who assesses the adjustments based on impact to the Company’s financials. Similar to prior years, for 2021, excluded items included the impact from: (i) (x) certain gains or losses from the Company’s investment securities, largely because performance of such securities is subject to market performance beyond the Company’s control and (y) certain gains on warrants in excess of budgeted amounts; and (ii) certain tax-related adjustments. Additionally for 2021, the committee approved the exclusion of certain expenses related to the Boston Private merger, including (A) merger related expenses and (B) reduction of budgeted net income and increase of budgeted Shareholders Equity due to the consolidation of Boston Private. The impact of all 2021 exclusions resulted in a lower adjusted ROE that decreased the overall funding of the 2021 ICP pool.

 

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The Comp/HC Committee determines the final ICP funding and adheres to the pre-determined formulaic funding for the applicable year, unless it determines in its discretion an adjustment is necessary. Such adjustments are made infrequently.

For 2021, the Company’s performance exceeded target, and the Comp/HC Committee approved the funding of the total ICP pool at 178% of total target, based on: (i) 167% funding for performance against our annual budget (2/3 of pool), and (ii) 200% funding for performance against 2021 Peer Group (1/3 of pool).

ICP - 2021 NEO Awards

 

NEO

     2021 ICP Award  
($)
 

The Comp/HC Committee (or in the case of the CEO, the independent members of the Board) determines actual annual cash incentive awards for the NEOs based upon: the individual’s target incentive level; the funding based on the Company’s performance as described above; and the NEO’s individual performance. ICP awards for NEOs may be at, above, or below the target incentive. For 2021, each NEO was awarded the ICP amounts set forth in the table to the left.

 

In determining 2021 awards, the independent members of the Board (with respect to Mr. Becker) and the Comp/HC Committee (with respect to the other NEOs) considered a variety of factors, including: (i) the overall strong performance of the Company and the respective areas of oversight of each NEO in 2021, and (ii) each NEO’s contributions to our business and financial results, execution of our 2021 corporate initiatives, corporate risk management, and broader leadership within the organization. Based on strong Company and individual performance, Mr. Becker received 190% of his target and the other NEOs received ICP awards between 182% to 200% of their applicable ICP targets.

  
Greg Becker    3,000,000

Dan Beck

   1,400,000
    Michael Descheneaux        1,600,000
Philip Cox    1,200,000
Michael Zuckert    1,075,000
John China    1,300,000
Marc Cadieux    1,000,000
  

Specifically for Mr. Becker, key factors considered included:

 

 

Exceptional 2021 financial performance and growth:

   

Higher EPS, total net income and ROE than 2020

   

Strong total asset, loan and client funds growth

   

Solid credit quality

   

Strong capital and liquidity

 
 

Outstanding leadership in expanding the Company’s strategic vision and global business, including in particular:

   

Expansion of the Private Banking and Wealth Management business through the acquisition and integration of Boston Private Financial Holdings,

   

Expansion of our investment banking business through the addition of technology investment banking and the acquisition of equity research firm, MoffettNathanson,

   

Continued growth of the EMEA business, and

   

Continued focus on strategic investments and partnerships to extend capabilities to serve our clients

 

Strong focus on corporate brand and market share, resulting in various awards and recognitions for 2021, including Best Regional Bank and Best Regional Bank CEO (Bank Director magazine), inclusion in Forbes top ten Best Banks in America, and one of America’s Most Responsible Companies (Newsweek)

 

Continued steadfast focus on client satisfaction and client experience

 

Strong focus on the Company’s safety and soundness and regulatory compliance, including meeting “large financial institution” expectations

 

Continued strengthening of the Company’s risk management framework, infrastructure foundation and system of internal controls

 

Strong growth in employee base, with enhancements to key senior leadership positions in various functions, including technology, finance and risk management

 

Continued focus on employee engagement, particularly in the virtual work environment

 

Continued advancement of DEI, both internally and externally

 

Continued focus on navigating continued pandemic challenges, supporting employees, clients and community

Key factors considered by the Comp/HC Committee for the other NEOs, included: (i) for Mr. Beck, excellent execution of overall financial management (including strong balance sheet and capital management) and key business and regulatory initiatives; (ii) for Mr. Descheneaux, continued excellent leadership of our core banking business, including global business growth, talent expansion, client focus, and product development; (iii) for Mr. Cox, excellent leadership in the Company’s response to the continuing operational challenges from the pandemic and leading key technology transformation initiatives, as well as the continued strengthening of our operational and technological foundation; (iv) for Mr. Zuckert, excellent leadership in advising the legal strategy on key matters, as well as managing the overall legal affairs of the Company; (v) for Mr. China, strong leadership in the expansion of the SVB Capital platform (particularly credit funds) and achievement in fundraising; and (vi) for Mr. Cadieux, strong credit risk management and second line of defense enhancements.

 

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Long-Term Equity Incentives

 

The Company believes that equity-based awards, in combination with the Company’s equity ownership guidelines discussed below, tie each of the NEOs’ compensation to the Company’s long-term financial performance and align the interests of the NEOs and our stockholders. The Comp/HC Committee typically makes annual equity awards to each NEO, the size of which reflects the NEO’s role, performance, and total target compensation, as well as comparative market equity compensation data for the NEO’s external peers. The mix of equity awards is typically comprised of 25% each of stock options and RSUs and 50% of PRSUs.

 

Stock Options and Restricted Stock Units (RSUs)

 

Stock options and RSUs are subject to annual vesting over a 4-year period. The stock options have a maximum term of 7 years from the date of grant. No performance-based criteria are associated with stock options and RSUs, as the increase in their value is inherently tied to the future performance of our Common Stock.

 

 

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Performance-based Restricted Stock Units (PRSUs)

PRSUs are earned based on the achievement of certain performance metrics, as determined by the Comp/HC Committee. After the end of the specified performance period, the Comp/HC Committee will determine the extent the NEOs earned the PRSUs, subject to a maximum total payout of 150% of target award. For 2021, the Comp/HC Committee granted PRSUs subject to vesting over a three-year period (from 2021-2023) based on two performance metrics for the PRSUs, as further described below: (i) TSR relative to peers, and (ii) ROE relative to peers. In each case, the slope was adjusted to reflect the increase in the number of our peers for the 2021 Peer Group. In addition, for relative ROE, a threshold level (0.5x) was established in 2021. To the extent earned, these awards are subject to additional time-based vesting through January 31, 2024.

 

 

 

TSR Performance Against 2021 Peer Group

(50% of Award)

 

50% of the PRSU award is eligible to vest based on the Company’s TSR1 performance over a three-year period as ranked against the 2021 Peer Group. Consistent with prior years, the committee selected TSR because it correlates directly with the Company’s stock price performance, which is a direct measure of stockholder value. No payout is made if the Company ranks in any of the bottom five positions and a maximum payout (150%) is made if the Company ranks in the top five positions (and subject to straightline interpolation between rank of 12 (50%) and 5 (150%)), subject to a payout cap of 100% if we achieve a negative TSR.

   

  

 

   

 

ROE Performance Against 2021 Peer Group

(50% of Award)

 

50% of the PRSU award is eligible to vest based on the Company’s ROE performance, measured on an annual basis over a three-year period, as ranked against the 2021 Peer Group, with the final payout calculated by averaging the funding factor of each of the three years (“Relative ROE”). The Comp/HC Committee selected Relative ROE because it aligns with stockholder interests and emphasizes long-term focus. No payout is made if the Company ranks in any of the bottom five positions and a maximum (150%) payout is made if the Company ranks in the top five positions (and subject to straight-line interpolation between rank of 12 (50%) and 5 (150%)).

 
   
 

 

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  1

TSR is calculated on a cumulative basis with dividends reinvested. For purposes of this calculation, the stock price at the beginning of the performance period is the dividend-adjusted average closing stock price for the two months immediately preceding the performance period, and the stock price at the end of the performance period is the dividend-adjusted average closing stock price for the last two months of the performance period.

 

 

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Long-Term PRSU Awards for Performance Periods Ended in 2021

In 2019, each of the NEOs were granted (i) annual PRSU awards and (ii) special one-time executive equity awards, which included PRSU awards (SEE Awards), in each case subject to performance over a 3-year performance period (2019-2021). The SEE Awards were designed for retention purposes, and also to incentivize top performance.

Annual PRSU Awards

The annual 2019-2021 annual PRSUs were subject to the following performance metrics: (i) 50% of the award was subject to the Company’s TSR performance relative to peers (similar to the 2021 PRSU award performance metric and based on our 2019 peer group of 17 companies), and (ii) 50% of the award was subject to certain strategic business objectives. The strategic business objectives were focused on improving the Company’s operating leverage through the transformation of key business processes and the implementation of scalable solutions, primarily in three key areas: (a) scalable growth — evaluating our underlying financial fundamentals relative to operating expense growth, which was weighted 50%; (b) client experience — evaluating continual improvement in overall client satisfaction around our products and services (including net promoter scores), which was weighted 25%; and (c) employee enablement — evaluating our efforts to enhance processes and tools to make it easier for employees to perform their job responsibilities, which was weighted 25%. These multi-year efforts included initiatives to streamline our global client onboarding processes, enhance our data infrastructure (including digitization and governance), implement employee enablement tools, and build out our Digital Bank.

Upon completion of the 3-year performance period, the Comp/HC Committee (and in the case of the CEO, the Board) determined that 120% of the target PRSU awards were earned, based on: (i) the Company’s TSR outperformance relative to peers (ranking first, earning 150%); and (ii) solid performance towards improving scalability, client satisfaction and employee enablement (earning 90% due to overall performance). The Comp/HC Committee reviewed performance outcomes and other relevant factors, while completing its assessment of funding and each metric, determining whether achievement was better than expected, accomplished, partially accomplished or not accomplished. The awards were also subject to a time-based vesting requirement and were fully vested as of January 31, 2022. Messrs. Becker, Beck, Descheneaux, Cox, Zuckert, China and Cadieux each earned 10,492, 2,962, 4,690, 2,468, 1,728, 2,468 and 2,468 shares, respectively, of our Common Stock upon vesting of the 2019 annual PRSU awards.

SEE Awards - PRSUs

The PRSUs granted under the SEE Awards were subject to the following performance metrics: (i) earnings per share (EPS) compound annual growth rate (CAGR) (weighted 50%), subject to a required minimum achievement of over 5% EPS CAGR and a 150% maximum (based on an EPS CAGR of 15% or higher) over the three-year performance period; and (ii) relative ROE (weighted 50%) (based on our 2019 peer group of 17 companies), with no payout made if the Company ranked in any of the bottom five positions and a maximum payout of 150% if the Company ranked in the top four positions.

Upon completion of the 3-year performance period, the Comp/HC Committee (and in the case of the CEO, the Board) determined 150% of the target SEE Awards were earned for each of the NEOs, based on (i) the Company’s achievement of an EPS CAGR of 24.7% as determined by the committee and (ii) the Company’s outperformance of ROE relative to its peers (ranking first). For the EPS CAGR growth performance metric, the Comp/HC Committee assessed the Company’s overall strong performance throughout the applicable period, and took into account certain items, particularly our outperformance with respect to warrant and investment gains, as well as the impact from the lower rate environment and the COVID-19 pandemic (which resulted in both a negative impact (from rates) and a positive impact (from increased loans and deposit volumes) on income). Ultimately, taking into consideration the value creation experienced over the performance period, the Comp/HC Committee factored in the following adjustments: (i) 50% warrant and securities gains, and (ii) 50% of the impact of the lower rate environment derived by applying pre-COVID interest rates and excluding the increased growth rate of loans and deposit volumes on net income. Additionally, share repurchases were excluded. Such adjustments were similar to those made with respect to other performance-based programs sponsored by the Company. Similar to the 2019 annual PRSU awards, the PRSUs granted under the SEE Awards were also subject to a time-based vesting requirement and were fully vested as of January 31, 2022. Messrs. Becker, Beck, Descheneaux, Cox, Zuckert, China and Cadieux each earned 12,345, 3,085, 6,172, 6,172, 3,085, 6,172 and 6,172 shares, respectively, of our Common Stock upon vesting of the PRSUs granted under the SEE Awards.

 

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Executive Benefits and Other Executive Compensation-Related Matters

Executive Benefits

Employee Retirement Benefits

Our NEOs are eligible to participate in our SVB Financial Group 401(k) (“401(k) Plan”) and Employee Stock Ownership Plan (“ESOP”), our combined qualified retirement and profit-sharing plan that is generally available to the Company’s U.S. employees. Our NEOs participate in the plan on the same terms as all other eligible employees. We do not provide any pension, excess retirement or supplemental executive retirement (“SERP”) benefits to our NEOs.

Under our 401(k) Plan, our U.S. employees, including our NEOs, may make voluntary pre-tax and/or Roth post-tax deferrals up to the maximum provided for by IRS regulations and our Plan. The Company provides dollar-for-dollar matching contributions up to a maximum of 5% of eligible compensation or the Internal Revenue Section 401(a) compensation limit, whichever is less. Company 401(k) matching contributions vest immediately upon deposit into the individual’s 401(k) account.

The combined plan also includes a profit-sharing component. Under the ESOP, we may make discretionary annual contributions for U.S. employees, as determined by the Comp/HC Committee. ESOP and profit-sharing contributions may be in the form of cash, Common Stock or a combination of both, and are subject to certain vesting conditions. Contributions are determined based on the Company’s performance and are not adjusted to reflect individual performance.

Similar to prior years, for 2021, the Comp/HC Committee established performance criteria based on the Company’s adjusted ROE against budget (same as the calculation of 2/3 of the total ICP pool) to fund the ESOP and profit sharing contribution, and set the target funding level to 1.25% of a participant’s eligible compensation based on target ROE performance. The Comp/HC Committee has committed to a funding maximum of 5%, although a higher maximum is allowed under the 401(k) Plan. Based on the Company’s 2021 ROE performance, the Comp/HC Committee approved a contribution of 2.09% of eligible compensation in cash (50%) and Common Stock (50%) for all eligible participants.

Deferred Compensation Plan

We do not provide NEOs with any Company-funded deferred compensation benefits. However, in order to help them achieve their retirement objectives, we offer each NEO the opportunity to defer a portion of their compensation, beyond what is allowed to be deferred in the Company’s qualified retirement plan (“DCP”). Specifically, under our DCP, each individual may defer 5% to 50% of their base pay and 5% to 100% of eligible incentive payments during each plan year. The DCP is an unfunded plan, and participating executives bear the risk of forfeiture in the event that we cannot fund DCP liabilities. We do not match executive deferrals to the DCP. See “Compensation for Named Executive Officers—Non-Qualified Deferred Compensation” below.

We establish and maintain a bookkeeping account for each participant that reflects compensation deferrals made by the executive along with any associated hypothetical earnings, expenses, gains and losses. The amount in a participant’s account is adjusted for hypothetical investment earnings or losses in an amount equivalent to the gains or losses reported by the investment options selected by the participant from among the investment options designated for this purpose by the Company. A participant may, in accordance with rules and procedures we establish, change the investments to be used for the purpose of calculating future hypothetical investment adjustments to the participant’s account. The account of each participant is adjusted each business day to reflect: (i) the hypothetical investment earnings and/or losses described above; (ii) participant deferrals; and (iii) distributions or withdrawals from the account. Distributions or withdrawals from the DCP shall be made in full accordance with the requirements of Internal Revenue Code Section 409A. Mr. Becker is the only NEO who participates in the plan.

Health and Welfare Benefits/Time Away From Work

Our NEOs are eligible to participate in our standard health and welfare benefits program, which provides medical, dental, life, accident and disability coverage to all of our eligible employees on U.S. payroll as well as coverage under our wellness programs. We do not provide executives with any health and welfare benefits that are not generally available to other Company employees. Additionally, under our “time away from work” policy, U.S. exempt employees, including our NEOs, do not accrue vacation benefits. Rather, such employees are expected to manage their time away from work, subject to the demands and needs of their jobs. Non-exempt U.S. employees and other non-U.S. employees continue to accrue vacation benefits formulaically.

During 2021, executives continued to be eligible to participate in the same COVID-19-related benefits and support that were broadly available to employees, such as additional wellness webinars and resources, except that executives did not receive any stipend for utilities which the broader employee base received on a quarterly basis.

 

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NEO Termination Benefits

See “Compensation for Named Executive Officers—Other Post-Employment Payments” below.

Perquisites

We do not have any executive perquisite programs. Other than our executive Change in Control Plan, we do not have any special executive programs that offer benefits exclusively to our executives. Our executives receive the same retirement, health, welfare and other benefits that are generally available to our employees. Executives may also participate in certain programs that are available to members of senior management, such as our Deferred Compensation Plan described above. From time to time and on a limited basis, we may provide individual benefits deemed to be perquisites, which we generally believe serve, or are related to, a reasonable business- related or employment purpose. We provided certain benefits to Mr. Cox that are deemed to be perquisites, such as imputed income for spousal attendance at a business event. See “Compensation for Named Executive Officers—Summary Compensation Table.”

Executive Relocation

In connection with his promotion to Chief Operations Officer and the relocation of him and his family from London, England to California in 2019 and then to Arizona in 2020, Philip Cox (our former Head of EMEA and President of the UK Branch) received certain benefits, including immigration fees and related costs as well as tax preparation services costs. Some of these expenses were incurred in 2021 as well. Many of these benefits were similar to the relocation benefits the Company typically provides to other similarly-situated employees relocating internationally or are customary based on U.K. practices. Moreover, Mr. Cox’s relocation benefits are subject to repayment under certain employment termination events.

Employment Agreements

Except for our at-will offer letters, we do not have any individual employment agreements for our NEOs.

Compensation Recovery Policy

Our executives and other certain senior level employees are subject to our Recoupment Policy (or clawback policy). Under the policy, subject to the determination of the Board or (in the case of any non-CEO executive, the Comp/HC Committee), the Company may recover or adjust any cash or equity-based compensation paid or payable to any such officer, including our NEOs, in the event of: (i) a material financial restatement; (ii) a material miscalculation of a financial metric used to determine the payment of a bonus or incentive award to such officer, to the extent permitted by applicable law; or (iii) certain misconduct events.

Tax Considerations

Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), compensation paid to our covered executive officers (including our CEO) will not be deductible to the extent it exceeds $1,000,000. In 2021, the Comp/HC Committee considered the potential future effects of Section 162(m) when determining NEO compensation and the Comp/HC Committee is expected to consider the potential future effects of Section 162(m) when determining future NEO compensation.

Other Equity Practices

Grant Practices for Executives

The Comp/HC Committee approved all equity grants in 2021 made to executives of the Company, except that the independent members of the Board approved equity grants made to the CEO based on the Comp/HC Committee’s recommendation. Similar to prior years, 2021 annual equity compensation grants to executives were made effective during the second quarter of the year. Actual equity grants are determined based on the equity compensation dollar value awarded to executives, divided by either (i) the 30-day average (from date of grant) stock price (in the case of PRSUs and RSUs); or (ii) the 30-day average (from date of grant) stock price, multiplied by the ratio of the weighted average grant date fair value of stock options to the weighted average grant date fair value of RSUs, as reported in our most recent Annual Report on Form 10-K (in the case of stock options). The exercise price for stock option grants is equal to the closing market price on the grant’s effective date and time-based grants typically have an annual vesting period of 4 years, subject to continued employment or service. All 2021 annual grants to our NEOs were made in accordance with this practice.

For newly-hired executives, the Comp/HC Committee approves an equity grant amount prior to, or shortly after, the executive’s start of employment, and the effective grant date is typically set during an open trading window after they commence employment.

 

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Grant Practices for Other Employees

The Board has delegated authority to the Equity Awards Committee to make equity grants to non-executive employees under our 2006 Equity Incentive Plan. The Equity Awards Committee is comprised of our CEO and the Chair of our Board, and may not make equity grants to executives or certain other designated positions. The Equity Awards Committee may make grants only within established individual employee and aggregate share limits as determined by the Board. Any grant that does not meet the requirements established for the Equity Awards Committee must be made by the Board, the Comp/HC Committee or other authorized committee.

The Comp/HC Committee typically approves annual grants to all eligible employees, as well as any other grants that the Equity Awards Committee is not authorized to approve.

Policy Prohibitions Against Hedging and Pledging

Under our Insider Trading Policy, our employees, including our NEOs, and directors are not permitted to hedge, sell puts or short, or otherwise engage in any transaction designed to establish downside price protection in any of the Company’s publicly-traded securities at any time. Additionally, our policy restricts directors, and executive officers from holding in a margin account, or pledging or using as collateral to secure personal loans or other obligations, the Company’s publicly-traded securities at any time.

Equity Ownership Guidelines for Executive Officers

 

The Company maintains stock ownership guidelines for certain employees, including the Company’s executive officers and the NEOs. These stock ownership guidelines reflect the Board’s belief in the importance of aligning the economic interests of management with stockholders. The Comp/HC Committee is responsible for setting and periodically reviewing the guidelines. Guidelines for each position are determined based on factors including the executive role, scope of responsibilities, base salary levels, Company stock price performance and market data. The current equity ownership guidelines applicable to executive officers are based on the value of the Company’s common stock as a percentage of annual base salary, as set forth in the table on the right.

 

No changes to the equity ownership guidelines for executive officers were made in 2021.

  

 

Chief Executive Officer

 

     600%    

 

  

 

President of Silicon Valley Bank

 

    

 

400%    

 

  

 

Chief Financial Officer

Chief Operations Officer

Chief Risk Officer

 

     300%    
  

 

Chief Human Resources Officer

Chief Marketing and Strategy Officer

General Counsel

 

    

 

200%    

 

 

All executive officers have 5 years from the date on which they become an executive officer to attain the minimum level of ownership. The Governance Committee monitors compliance with these guidelines and reviews executive equity holdings on a quarterly basis. In evaluating whether executives are meeting the ownership guidelines, the Governance Committee considers the following as shares owned:

 

 

shares actually held,

 

shares owned through investment in the Company’s stock fund in the SVB Financial Group 401(k) and Employee Stock Ownership Plan, and

 

earned but unvested awards of restricted stock and restricted stock units.

Neither vested nor unvested stock options nor unvested restricted stock units subject to performance based conditions count towards the ownership guidelines; provided that earned restricted stock units (based on performance achievement) and subject only to continued time-based vesting conditions may be counted. Exceptions to meeting the guidelines due to personal financial or other reasons are reviewed and determined by the Governance Committee.

As of December 31, 2021, all of our NEOs were in compliance with the applicable ownership guidelines or otherwise expected to achieve the requisite ownership levels within the designated 5-year time-frame.

 

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COMPENSATION FOR NAMED EXECUTIVE OFFICERS

Summary Compensation Table

The following table sets forth the compensation paid to our NEOs for the years ended December 31, 2021, 2020 and 2019, respectively:

 

Name and Principal Position    Year    Salary
($) (1)(2)
     Stock Awards
($) (3)(4)
    

Stock

Option

Awards

($) (3) (4)

     Non-Equity
Incentive Plan
Compensation
($) (5)
    

All Other

Compensation
($) (6)

     Total
($)
 

    

 

Greg Becker

President & Chief Executive Officer

   2021      1,040,385        4,238,529        1,622,657        3,000,000        20,561        9,922,132  
   2020      1,007,692        3,573,032        1,245,305        1,690,000        19,172        7,535,201  
   2019      995,385        6,349,966        1,991,088        1,320,000        21,106        10,677,545  

Dan Beck

Chief Financial Officer

   2021      680,769        1,199,285        459,072        1,400,000        20,561        3,759,687  
   2020      604,616        992,397        345,882        830,000        4,176        2,777,071  
   2019      593,846        1,692,513        530,965        575,000        14,157        3,406,481  

Michael Descheneaux

President of Silicon Valley Bank

   2021      770,193        1,759,027        673,564        1,600,000        20,876        4,823,661  
   2020      755,769        1,588,055        553,476        1,100,000        18,828        4,016,128  
   2019      748,654        3,002,198        941,137        900,000        21,959        5,613,948  

Philip Cox

Chief Operations Officer

   2021      620,193        1,119,484        428,553        1,200,000        48,026        3,416,256  
   2020      604,616        992,397        345,882        800,000        296,423        3,039,318  
   2019      610,170        2,312,060        723,763        575,000        439,562        4,660,555  

Michael Zuckert (7)

General Counsel

   2021      620,193        878,951        336,782        1,075,000        20,561        2,931,487  

John China (8)

President of SVB Capital

   2021      645,192        1,119,484        417,480        1,300,000        20,943        3,503,099  
   2020      625,673        992,397        345,882        830,000        24,312        2,818,264  
   2019      595,539        2,312,060        723,763        650,000        19,340        4,300,702  

Marc Cadieux (7) (8)

Chief Credit Officer

   2021      645,192        998,655        372,675        1,000,000        20,561        3,037,083  

 

(1)

The “Salary” column represents base salary paid to each NEO during 2021, and includes amounts deferred under the Company’s 401(k) Plan and Deferred Compensation Plan, as applicable. For 2021, the percentage of base salary with respect to total compensation for Messrs. Becker, Beck, Descheneaux, Cox, Zuckert, China and Cadieux was 10%, 18%, 16%, 18%, 21%, 18% and 21%, respectively.

(2)

For Mr. Cox, the 2019 amount includes the value of accrued but unused U.K. Holiday Pay, which was paid to him upon his relocation to the U.S. For reporting purposes in this Proxy Statement and where applicable, any compensation for Mr. Cox paid or otherwise denominated in British pounds was converted to U.S. dollars based on the exchange rate on the date paid or incurred.

(3)

Values indicated for equity awards reflect the fair value of grants made during the fiscal year. Such values were computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). The amounts disclosed may never be realized. Assumptions used in calculating these amounts are included in the note entitled “Share-based Compensation” in our audited financial statements included in our Annual Report on Form 10-K for the applicable year. The amounts disclosed under the “Stock Awards” column also include the fair value of grants of certain performance-based restricted stock unit awards reported based on achievement at target level. The aggregate maximum grant date fair value of 2021 awards, assuming the highest level of achievement of the performance conditions (150% of the target level at grant date fair value) was $4,228,573, $1,196,470, $1,754,897, $1,116,855, $876,888, $1,116,855, and $996,311, for Messrs. Becker, Beck, Descheneaux, Cox, Zuckert, China and Cadieux, respectively. For details of 2021 grants, see “Grants of Plan-Based Awards”.

 

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(4)

2019 Stock Awards and Stock Option Awards include special one-time executive equity awards, subject to performance and/or time-based cliff vesting.

(5)

Non-Equity Incentive Plan Compensation is comprised of ICP payments for each NEO. For 2021, the percentage of ICP payout with respect to total compensation for Messrs. Becker, Beck, Descheneaux, Cox, Zuckert, China and Cadieux was 30%, 37%, 33%, 35%, 37%, 37% and 33%, respectively.

(6)

The following table provides the amounts of other compensation, including perquisites, paid to, or on behalf of, our NEOs during 2021 included in the “All Other Compensation” column. Perquisites and other personal benefits are valued on the basis of the aggregate incremental cost to the Company.

 

      Greg
Becker
    

Dan

Beck

     Michael
Descheneaux
    

Philip

Cox

    

Michael

Zuckert

    

John

China

    

Marc

Cadieux

 

401(k) Match (a)

     $14,500        $14,500        $14,500        $14,500        $14,500        $14,500        $14,500  

ESOP and Profit Sharing (a)

     6,061        6,061        6,061        6,061        6,061        6,061        6,061  

Taxes Either Reimbursed or Paid on Behalf of NEO (b)

                   315        3,047               382         

International Relocation Benefits (c)

                          23,716                       

Other Employment-Related Benefits (d)

                          702                       
  

 

 

 

Total

     $20,561        $20,561        $20,876        $48,026        $20,561        $20,943        $20,561  
  

 

 

 

 

  (a)

401(k) matching and ESOP and profit-sharing benefits are provided under broad-based employee benefit plans that are generally available to U.S. employees on a non-discriminatory basis.

  (b)

Amounts represent imputed income tax gross-ups related to non-cash awards and/or spousal attendance at business events, and, for Mr. Cox, imputed income for tax preparation services provided related to his relocation.

  (c)

Amount represents relocation benefits associated with Mr. Cox’s relocation from the U.K. to the U.S., which consisted of costs related to professional fees paid by the Company.

  (d)

For Mr. Cox, amount represents imputed income for spousal attendance at a business event.

 

(7)

Messrs. Zuckert and Cadieux were not NEOs in 2019 or 2020. As such, information provided in this Summary Compensation Table relates to 2021 only.

(8)

Messrs. China and Cadieux were formerly designated as executive officers. As they were executive officers for part of the 2021 year, they are included in this 2022 proxy statement.

 

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Grants of Plan-Based Awards

The following table sets forth all plan-based awards, including equity awards and non-equity incentive awards, made to our NEOs during the year ended December 31, 2021.

 

            Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)
          Estimated Future Payouts Under Equity
Incentive Plan Awards
(2)
   

All Other
Stock
Awards;

Number of
Shares of
Stock or
Units (3)

    All Other
Option
Awards;
Number of
Securities
Underlying
Options
    Exercise
or Base
Price of
Option
Awards ($)
    Grant Date Fair Value
of Stock and Option
Awards (4) ($)
 
  Name   Grant Date   Compensation
Committee or Board
Approval Date
  Threshold ($)     Target ($)     Maximum ($)           Threshold (#)     Target (#)    

Maximum

(#)

 
                           

 

Greg Becker

  January 21, 2021   January 21, 2021           1,575,000                                                    
  May 3, 2021   April 22, 2021                         2,514       5,028       7,542                         2,819,049  
  May 3, 2021   April 22, 2021                                           2,514                   1,419,480  
  May 3, 2021   April 22, 2021                                                 7,550       564.63       1,622,657  

Dan Beck

  January 20, 2021   January 20, 2021           700,000                                                    
  May 3, 2021   April 21, 2021                         711       1,423       2,134                         797,833  
  May 3, 2021   April 21, 2021                                           711                   401,452  
  May 3, 2021   April 21, 2021                                                 2,136       564.63       459,072  

Michael Descheneaux

  January 20, 2021   January 20, 2021           852,500                                                    
  May 3, 2021   April 21, 2021                         1,043       2,087       3,130                         1,170,118  
  May 3, 2021   April 21, 2021                                           1,043                   588,909  
  May 3, 2021   April 21, 2021                                                 3,134       564.63       673,564  

Philip Cox

  January 20, 2021   January 20, 2021           625,000                                                    
  May 3, 2021   April 21, 2021                         664       1,328       1,992                         744,570  
  May 3, 2021   April 21, 2021                                           664                   374,914  
  May 3, 2021   April 21, 2021                                                 1,994       564.63       428,553  

Michael Zuckert

  January 20, 2021   January 20, 2021           562,500                                                    
  May 3, 2021   April 21, 2021                         521       1,043       1,564                         584,779  
  May 3, 2021   April 21, 2021                                           521                   294,172  
  May 3, 2021   April 21, 2021                                                 1,567       564.63       336,782  

John China

  January 20, 2021   January 20, 2021           715,000                                                    
  May 3, 2021   April 21, 2021                         664       1,328       1,992                         744,570  
  May 3, 2021   April 21, 2021                                           664                   374,914  
  May 3, 2021   April 21, 2021                                                 1,994       564.63       417,480  

Marc Cadieux

  January 20, 2021   January 20, 2021           520,000                                                    
  May 3, 2021   April 21, 2021                         592       1,185       1,777                         664,394  
  May 3, 2021   April 21, 2021                                           592                   334,261  
  May 3, 2021   April 21, 2021                                                 1,780       564.63       372,675  

 

(1)

The ICP amounts represent target levels. There are no individual thresholds or maximum amounts.

(2)

For the performance-based restricted stock unit grants to the NEOs made in 2021, the performance achievement will be determined as of December 31, 2023 for the 2021-2023 performance period based upon the performance criteria presented under “Compensation Discussion and Analysis—Equity Incentives”.

(3)

The stock awards reported reflect restricted stock unit awards granted to each NEO.

(4)

The fair values reported above are also reported in the “Summary Compensation Table” under the “Stock Awards” and “Stock Option Awards” columns. Amounts shown represent the grant date fair values of stock options and stock awards granted in the fiscal year indicated, which were computed in accordance with ASC Topic 718. The amounts disclosed may never be realized. Assumptions used in calculating these amounts are included in the note entitled “Share-based Compensation” of our audited financial statements included in our Annual Report on Form 10-K for the applicable year.

 

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Outstanding Equity Awards at Fiscal Year End

The following tables set forth all outstanding equity awards to the NEOs as of December 31, 2021. The exercise price for each of the stock option grants reported below is equal to the closing market price on the applicable grant date. The vesting schedule for each outstanding equity award is provided in the footnotes to the table below. Outstanding stock awards are valued based upon the closing market price of our stock as of December 31, 2021, which was $678.24 per share.

 

     OPTION AWARDS    STOCK AWARDS  
 
  Name    Number of
Securities
Underlying
Unexercised
Options
(#  Exercisable)
    Number of
Securities
Underlying
Unexercised
Options (#
Unexercisable)
          

Equity
Incentive
Plan Awards;
Number of
Securities
Underlying
Unexercised
Unearned
Options 
(#)

     Option
Exercise
Price
($/Sh)
     Option
Expiration
Date
   Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#)
           Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
     Equity
Incentive
Plan
Awards;
Number of
Unearned
Shares,
Units or
Other  Rights
That Have
Not Vested
(#)
          

Equity
Incentive
Plan
Awards;
Market or
Payout
Value of
Unearned
Shares,
Units, or
Other Rights
That Have
Not Vested
($)

 
 

  Greg Becker

     12,451                  105.18      May 2, 2023      985       (1     668,066                –    
 
     15,920                  178.39      May 2, 2024      2,186       (2     1,482,633                –    
 
     9,267       3,089       (1     –         305.46      May 1, 2025      4,115       (1     2,790,958                –    
 
     6,085       6,084       (2     –         250.43      May 1, 2026      4,876       (3     3,307,098                –    
 
           11,453       (1     –         250.43      May 1, 2026      2,514       (4     1,705,095                –    
 
     4,744       14,230       (3     –         184.86      May 1, 2027      10,492       (5     7,116,094                –    
 
           7,550       (4     –         564.63      May 3, 2028      12,345       (6     8,372,873                –    
 
                           19,507       (7     13,230,428    
 
                           7,542       (8     5,115,286    
 

  Dan Beck

           578       (1     –         305.46      May 1, 2025      184       (1     124,796                –    
 
           1,718       (2        250.43      May 1, 2026      616       (2     417,796                –    
 
           2,863       (1     –         250.43      May 1, 2026      1,028       (1     697,231                –    
 
           3,952       (3     –         184.86      May 1, 2027      1,354       (3     918,337                –    
 
           2,136       (4     –         564.63      May 3, 2028      711       (4     482,229                –    
 
                    2,962       (5     2,008,947                –    
 
                    3,085       (6     2,092,370                –    
 
                           5,418       (7     3,674,704    
 
                           2,134       (8     1,447,364    
 

  Michael Descheneaux

     2,633               –         178.39      May 2, 2024      430       (1     291,643                –    
 
     4,050       1,349       (1     –         305.46      May 1, 2025      976       (2     661,962                –    
 
     2,720       2,720       (2     –         250.43      May 1, 2026      2,057       (1     1,395,140                –    
 
           5,726       (1     –         250.43      May 1, 2026      2,167       (3     1,469,746                –    
 
     2,109       6,324       (3     –         184.86      May 1, 2027      1,043       (4     707,404                –    
 
           3,134       (4     –         564.63      May 3, 2028      4,690       (5     3,180,946                –    
 
                    6,172       (6     4,186,097                –    
 
                           8,670       (7     5,880,341    
 
                           3,130       (8     2,122,891    
 

  Philip Cox

     109               –         178.39      May 2, 2024      178       (1     120,727                –    
 
     669               –         178.39      May 2, 2024      514       (2     348,615                –    
 
     1,677       559       (1     –         305.46      May 1, 2025      2,057       (1     1,395,140                –    
 
     1,432       1,431       (2     –         250.43      May 1, 2026      1,354       (3     918,337                –    
 
           5,726       (1     –         250.43      May 1, 2026      664       (4     450,351                –    
 
     1,318       3,952       (3     –         184.86      May 1, 2027      2,468       (5     1,673,896                –    
 
           1,994       (4        564.63      May 3, 2028      6,172       (6     4,186,097                –    
 
                           5,418       (7     3,674,704    
 
                           1,992       (8     1,351,054    

 

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     OPTION AWARDS    STOCK AWARDS  
 
  Name    Number of
Securities
Underlying
Unexercised
Options
(#  Exercisable)
    Number of
Securities
Underlying
Unexercised
Options (#
Unexercisable)
          

Equity
Incentive
Plan Awards;
Number of
Securities
Underlying
Unexercised
Unearned
Options 
(#)

     Option
Exercise
Price
($/Sh)
     Option
Expiration
Date
   Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#)
           Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
     Equity
Incentive
Plan
Awards;
Number of
Unearned
Shares,
Units or
Other  Rights
That Have
Not Vested
(#)
          

Equity
Incentive
Plan
Awards;
Market or
Payout
Value of
Unearned
Shares,
Units, or
Other Rights
That Have
Not Vested
($)

 
 

  Michael Zuckert

     580                  178.39      May 2, 2024      147       (1     99,701                –    
 
     1,389       462       (1        305.46      May 1, 2025      360       (2     244,166                –    
 
     1,002       1,002       (2        250.43      May 1, 2026      1,028       (1     697,231                –    
 
           2,863       (1        250.43      May 1, 2026      975       (3     661,284                –    
 
     949       2,845       (3        184.86      May 1, 2027      521       (4     353,363                –    
 
           1,567       (4        564.63      May 3, 2028      1,728       (5     1,171,999                –    
 
                    3,085       (6     2,092,370                –    
 
                           3,901       (7     2,645,814    
 
                           1,564       (8     1,060,767    
 

  John China

           771       (1            305.46      May 1, 2025      246       (1     166,847                –    
 
     1,432       1,431       (2            250.43      May 1, 2026      514       (2     348,615                –    
 
           5,726       (1            250.43      May 1, 2026      2,057       (1     1,395,140                –    
 
     1,318       3,952       (3            184.86      May 1, 2027      1,354       (3     918,337                –    
 
           1,994       (4            564.63      May 3, 2028      664       (4     450,351                –    
 
                    2,468       (5     1,673,896                –    
 
                    6,172       (6     4,186,097                –    
 
                           5,418       (7     3,674,704    
 
                           1,992       (8     1,351,054    
 

  Marc Cadieux

     2,716                  129.81      May 1, 2022      196       (1     132,935                –    
 
     4,829                  105.18      May 2, 2023      514       (2     348,615                –    
 
     3,095                  178.39      May 2, 2024      2,057       (1     1,395,140                –    
 
     1,851       617       (1        305.46      May 1, 2025      1,083       (3     734,534                –    
 
     1,432       1,431       (2        250.43      May 1, 2026      592       (4     401,518                –    
 
           5,726       (1        250.43      May 1, 2026      2,468       (5     1,673,896                –    
 
     1,054       3,162       (3        184.86      May 1, 2027      6,172       (6     4,186,097                –    
 
           1,780       (4        564.63      May 3, 2028             4,335       (7     2,940,170    
 
                           1,777       (8     1,205,232    

 

  (1)

Options and restricted stock units scheduled to vest on May 1, 2022.

  (2)

Options and restricted stock units scheduled to vest with respect to one-half of the underlying shares on each of May 1, 2022 and 2023, respectively.

  (3)

Options and restricted stock units scheduled to vest with respect to one-third of the underlying shares on each of May 1, 2022, 2023 and 2024, respectively.

  (4)

Options and restricted stock units scheduled to vest with respect to one-fourth of the underlying shares on each of May 3, 2022, 2023, 2024 and 2025, respectively.

  (5)

Performance-based restricted stock units vested on January 31, 2022, reflecting true earned shares of 120% of target.

  (6)

Performance-based restricted stock units vested on January 31, 2022, reflecting true earned shares of 150% of target.

  (7)

Performance-based restricted stock units scheduled to vest on January 31, 2023, assuming maximum award at 150% of target.

  (8)

Performance-based restricted stock units scheduled to vest on January 31, 2024, assuming maximum award at 150% of target.

 

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Option Exercises and Stock Vested

The following table sets forth the number of securities underlying equity awards that vested (in the case of restricted stock units) or were exercised (in the case of stock options) by the NEOs during the year ended December 31, 2021, and the value realized upon such vesting or exercise.

 

    OPTION AWARDS           STOCK AWARDS  
Name   Number of Shares
Acquired on Exercise
    Value Realized on
Exercise ($)
          Number of Shares
Acquired on Vesting
    Value Realized on Vesting
($)
 
           

Greg Becker

    40,737       19,061,185         14,005       6,757,748  

Dan Beck

    5,505       1,830,177         5,321       2,631,184  

Michael Descheneaux

    7,158       2,878,310         6,117       2,951,516  

Philip Cox

    2,913       909,808         2,852       1,421,916  

Michael Zuckert

    7,316       2,497,416         2,190       1,064,277  

John China

    6,813       3,161,311         3,646       1,793,343  

Marc Cadieux

    4,479       1,599,540         2,973       1,468,616  

Pension Benefits

We do not maintain any defined benefit pension plans in which any of our executive officers participate.

Non-Qualified Deferred Compensation

The following table sets forth information about executive contributions to, earnings from, and distributions of non-qualified deferred compensation under our Deferred Compensation Plan. There were no above-market or preferential earnings on any compensation that was deferred. We do not maintain any other non-qualified deferred compensation program for our NEOs.

 

Name    Executive
Contributions
in Last FY ($)
     Registrant
Contributions
in Last FY ($)
     Aggregate Earnings
in Last FY ($)
    

Aggregate

Withdrawals/

Distributions ($)

    Aggregate Balance at Last
December 31, 2021 ($)
 
           

Greg Becker (1)

                   173,411        (67,165     1,235,394  

Dan Beck

                                 

MichaeI Descheneaux

                                 

Philip Cox

                                 

Michael Zuckert

                                 

John China

                                 

Marc Cadieux

                                 

 

  (1)

Certain amounts in the above table attributable to Mr. Becker’s 2019 Deferred Compensation Plan contributions are also reflected in the Summary Compensation Table above. Mr. Becker elected to participate in the Deferred Compensation Plan in 2005.

Other Post-Employment Payments

There are certain circumstances in which our NEOs may be entitled to post-employment payments, which are discussed in further detail below:

Change in Control Severance Plan

Our Change in Control Severance Plan (the “Change in Control Plan”), as adopted in 2006 and amended from time to time, provides a specified severance benefit to our executives, including each of our NEOs, in the event their employment is involuntarily terminated, or they resign from such employment for “good reason” following a change in control of the Company. Under the plan, “cause” is generally defined as a dismissal or discharge for one of the following reasons: (a) the commission of an act of deliberately criminal or fraudulent misconduct, including the willful violation of any material law, or cease and desist order, a deliberate act that constitutes a conflict of interest, or a breach of fiduciary duty; (b) habitual absence from work, intentional failure to perform stated duties, gross negligence; (c) chronic alcohol or drug abuse that results in material impairment to perform duties after reasonable accommodation; (d) the rendering of a verdict of guilty for any felony (other than a law relating to traffic violation or similar offense), whether or not in the line of duty; or (e) removal from office pursuant to an effective order under Section 8(e) of the Federal Deposit Insurance Act 12 U.S.C. Section 1818(e); provided that termination due to death or permanent disability will also be deemed for “cause.” Generally

 

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under the plan, “good reason” is defined as the occurrence of any of the following events without the covered employee’s express written consent: (i) a material, involuntary reduction in responsibilities, authorities or functions as in effect immediately prior to the change in control, except in connection with a termination of employment for death, disability, retirement, fraud, misappropriation, embezzlement and other exclusions; (ii) a material reduction in base salary; (iii) a reduction in total compensation to less than 85% of the amount provided for the last full calendar year preceding the change in control; or (iv) a relocation of more than 50 miles. We adopted this plan in order to ensure that our executives remain incentivized to consider and, if it is determined by the Board or stockholders (as appropriate) to be in our best interests, to act diligently to promote a change in the control of the Company. The plan does not provide for any 280G excise tax gross-up provisions; however, in the event the severance benefit received by an executive would be subject to an excise tax under Section 4999 of the Code, the executive will receive either the full amount of the severance benefit or a reduced amount such that no portion of the severance benefit is subject to the excise tax, whichever results in the greater after-tax benefit to the executive.

The plan provides for a cash severance payment equal to 300% of base salary and target ICP incentive for the CEO, 200% of base salary and target ICP incentive for certain executive officers, including the Chief Financial Officer and the Bank’s President, and 100% of base salary and target ICP incentive for other executives. In addition, it provides for up to 12 months of Company-paid COBRA medical, dental and vision coverage, and certain outplacement services.

The circumstances that constitute a “change in control” are set forth in the Change in Control Plan. Generally, a change in control includes a merger or consolidation, other than a merger or consolidation in which the owners of our voting securities own 50% or more of the voting securities of the surviving entity; a liquidation or dissolution or the closing of the sale or other disposition of all or substantially all of our assets; an acquisition by any person, directly or indirectly, of 50% or more of our voting securities; and an acquisition by any person, directly or indirectly, of 25% or more of our voting securities and, within 12 months of the occurrence of such event, a change in the composition of the Board occurs as a result of which 60% or fewer of the directors are incumbent directors.

Our Change in Control Plan includes a number of restrictive covenants, and the executives’ rights to receive benefits under the plan are subject to compliance with such covenants. Generally, unless we provide otherwise in writing, the executive must not directly or indirectly engage in, have any ownership in or participate in the financing, operation, management or control of any person, firm, corporation or business that competes with us or our affiliates, or any of our customers or our affiliates for a period of (i) 18 months, in the case of the CEO (ii) 12 months, in the case of the Chief Financial Officer and the Bank’s President and (iii) six months, in the case of most other covered executives. In addition, unless we provide otherwise in writing, the executive may not directly or indirectly solicit, recruit, otherwise hire or attempt to hire any of our employees or cause any such person to leave his or her employment during the periods described in the previous sentence. Finally, the executive must execute a general release of claims in our favor covering all claims arising out of the executive’s involuntary termination of employment (as defined in the Change in Control Plan) and employment with us and our affiliates.

Any benefits payable to an executive under this plan are reduced by any severance benefits we may pay to that executive under any other policy, plan, program or arrangement, including our Severance Benefit Policy.

Severance Benefit Policy

Our Severance Benefit Policy provides severance pay and benefits to eligible employees who are involuntarily terminated from employment due to staff reduction, position elimination, closure of a business unit, organization restructuring or such other circumstances, as we deem appropriate for the payment of severance benefits. The policy is intended to promote our ability to modify our workforce and structure, while providing a reasonable level of certainty and job security to our employees. The policy covers regular full-time and part-time U.S. employees, including the NEOs.

The Severance Benefit Policy provides for a cash severance payment based on job-level. For NEOs, this benefit is equal to six weeks’ pay per year of service including a pro-rata amount for each partial year worked, with a minimum benefit of six months’ pay and a maximum benefit of one year’s pay. In addition, under the policy, we continue to make co-payments for COBRA medical, dental, and vision coverage during the severance pay period and pay designated outplacement services provided by a Company-selected external vendor. Any benefits payable to an executive under this policy are reduced by any severance benefits we pay to that executive under any other policy, plan, program, or arrangement, including our Change in Control Plan discussed above.

2006 Equity Incentive Plan

Our 2006 Equity Incentive Plan, in which the NEOs participate, provides for full vesting of outstanding awards in the event of a change in control (as defined in the plan) of the Company only in the event that a successor corporation does not assume or substitute an

 

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equivalent option or right for the original equity awards under the plan. In addition, the equity awards granted under the plan described herein are generally subject to vesting upon the termination of a participant’s employment due to death or disability, with any outstanding restricted stock unit awards subject to performance conditions based on the actual level of achievement of the applicable performance conditions vesting as of the end of the applicable performance period for any company performance metrics and as of the date of termination for any individual performance metrics, pro-rated based on the number of calendar days that have elapsed between the commencement date of the applicable performance period and the termination date. Beginning May 2021, annual awards (including options and restricted stock units (subject to both time-based and performance-based vesting conditions)) granted under the plan to our NEOs, executives and certain other senior leaders are eligible for continued vesting upon retirement and any outstanding restricted stock unit awards subject to performance conditions will vest based on the actual level of achievement of the applicable performance conditions as of the date of termination (for individual performance conditions) or as of the end of the applicable performance period (for Company performance conditions); provided that, the grantee is at least 55 years of age, has provided at least ten years of continuous service and is a good leaver upon retirement and is in good standing (in each case, as defined in the applicable award agreement) through the applicable vesting date. With respect to 2021 annual awards, Messrs. Cox, China and Cadieux met the age and service requirements for continued vesting upon a qualifying retirement. In all cases, with respect to performance-based awards, the level of achievement will be determined by the Company in its sole discretion.

Payments upon Termination of Employment

The following tables summarize the payments that would be payable to our NEOs, as of December 31, 2021, in the event of various termination scenarios, including voluntary resignation, involuntary termination for cause, involuntary termination (not for cause), involuntary termination for good reason or after a change in control, death and disability. For each of the tables below, where applicable, the market value of unvested equity that would vest is calculated assuming a market value of $678.24 per share (the closing stock price as of December 31, 2021).

 

     GREG BECKER, PRESIDENT & CHIEF EXECUTIVE OFFICER  
 Compensation and Benefits    Voluntary
Resignation
(including
Retirement)
($)
          Involuntary
Termination
(Not for Cause)
($)(1)
           Involuntary or for
Good Reason After
Change in Control
($)(2)
          Death ($)           Disability ($)        
                     

 Cash severance pay

             1,050,000          7,875,000                    

 Market value of unvested stock options which would vest

                      16,532,574         16,532,574         16,532,574    

 Market value of unvested restricted stock which would vest

                      33,696,998       (3)       28,485,402       (4)       28,485,402       (4)  

 Company-paid health benefits

             15,518          21,046                    

 Accelerated retirement plan vesting

                                         

 Company-paid outplacement benefits

             25,000          25,000                    
  

 

 

     

 

 

      

 

 

   

 

 

   

 

 

 

 TOTAL (5)

                   1,090,518                58,150,619               45,017,976               45,017,976    
  

 

 

     

 

 

      

 

 

   

 

 

   

 

 

 

 

  (1)

Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary Termination (Not for Cause)” are calculated based on the terms of our U.S. Severance Benefit Policy.

  (2)

Cash severance pay, Company-paid health benefits and Company-paid outplacement benefits reported under “Involuntary or for Good Reason After Change in Control” are calculated based on the terms of our Change in Control Severance Plan for executives. Consistent with that plan, amounts reported are calculated assuming no tax adjustment. Under our 2006 Equity Incentive Plan, if outstanding equity awards are not assumed or substituted by the successor of the Company upon a change in control event, all such awards will fully vest and all restrictions thereon will lapse. The amounts reported in this table assume that such equity awards are not assumed or substituted.

  (3)

The amount reported is comprised of (i) the market value of unvested restricted stock units of $9,953,850 and (ii) the market value of performance-based restricted stock unit awards of $23,743,148 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2021 are deemed to be achieved at target level for purposes of this calculation). See “Other Post-Employment Payments – 2006 Equity Incentive Plan”.

  (4)

The amount reported is comprised of (i) the market value of unvested restricted stock units of $9,953,850 and (ii) the market value of performance-based restricted stock unit awards of $18,531,552 (performance-based restricted stock unit awards for which final performance has not been determined as of December 31, 2021 are deemed to be achieved at target level for purposes of this calculation). Amounts for performance-based restricted stock unit awards are pro-rated for the period elapsed (measured in days) through December 31, 2021. See “Other Post-Employment Payments – 2006 Equity Incentive Plan”.

  (5)

Excludes the Deferred Compensation Plan balance for Mr. Becker in the amount of $1,235,394 as of December 31, 2021. Mr. Becker is entitled to receive his account balance under each of the termination scenarios, to be paid in accordance with the Deferred Compensation Plan and Mr. Becker’s payment elections.

 

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     DAN BECK, CHIEF FINANCIAL OFFICER  
 Compensation and Benefits    Voluntary
Resignation
(including
Retirement)
($)
          Involuntary
Termination
(Not for Cause)
($)(1)
          Involuntary or for
Good Reason After
Change in Control
($)(2)
          Death ($)           Disability ($)        
                     

 Cash severance pay

             350,000         2,800,000                    

 Market value of unvested stock options which would vest

                     4,367,773         4,367,773         4,367,773    

 Market value of unvested restricted stock which would vest

                     9,125,041       (3)       7,665,468       (4)       7,665,468       (4)  

 Company-paid health benefits

             23,955         31,150                    

 Accelerated retirement plan vesting

                     6,242       (5)       6,242       (5)       6,242       (5)  

 Company-paid outplacement benefits

             7,500         7,500                    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 TOTAL

                        –                   381,455               16,337,706               12,039,484               12,039,484  </