UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Check the appropriate box:

Boston Private Financial Holdings, Inc.

(Name of Registrant as Specified In Its Charter)

Ten Post Office Square

Boston, Massachusetts 02109

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Ten Post Office Square

Boston, Massachusetts 02109

NOTICE OF 20162019 ANNUAL MEETING OF SHAREHOLDERS

 

Dated: March 17, 201614, 2019

PROXY STATEMENT

for the

20162019 ANNUAL MEETING OF SHAREHOLDERS

  

VOTING INFORMATION

shareholders of record. There are no other outstanding shares that are eligible to vote.

DirectorBecause the number of director nominees is not greater than the number of directors that shareholders will be asked to elect, each director nominee must receive the affirmative vote of a pluralitymajority of the votes cast as to such nominee by shareholders in order to be elected. A proxy vote that withholds authority to vote for a particular nominee or nomineesAbstentions and broker non-votes will have no effect on the outcome of the election of the nominees.

The approval of the advisory, non-binding resolution on executive compensation requires the affirmative vote of a majority of the votes cast at the Meeting. Abstentions and broker non-votes will have no effect on the outcome of the votesvote for this proposal.

The approvalratification of the selection of the Company’s Annual Executive Incentive Planindependent registered public accounting firm requires the affirmative vote of a majority of the votes cast at the Meeting. Abstentions and broker non-votes will have no effect on the outcome of the votesvote for this proposal. The ratification of the selection of the Company’s registered independent public accounting firm requires the affirmative vote of a majority of the votes cast at the Meeting.

We are first sending this Proxy Statement and the accompanying materials to shareholders on or about March 17, 2016.14, 2019.

OTHER MATTERS

As of the date of this Proxy Statement, the Board of Directors is not aware of any other matters to be considered at the Meeting. If any other matters properly come before the Meeting, the proxies will be voted at the discretion of the proxy holders.Proxy Holders.

ANNUAL REPORT

All shareholders of record are being sent a copy of the Company’s 20152018 Annual Report to Shareholders and the Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which2018 (which contains audited financial statements of the Company for the fiscal years ended December 31, 2015, 20142018, 2017 and 2013,2016), as filed with the Securities and Exchange Commission (“SEC”) on February 26, 2016.27, 2019. These reports, however, are not part of the proxy soliciting material.

PROPOSAL 1

ELECTION OF DIRECTORS

Mr. DeutschDeChellis is the Chief Executive Officer and President of the Company which heand the Bank. He joined the Company and was elected to the Board in August 2010.November 2018. Mr. Deutsch is a member of the Company’s Leadership Team andDeChellis has over 30 years of experience in the financial services industry. He began his career in banking in the 1970s at Society Corporation, the predecessor to Key Corp. Prior to joining the Company, he was the President of OurCrowd Venture Capital from 2014 to 2016, where he developed the firm’s business strategy for an equity capital crowdfunding platform, established a director at McKinseydeal flow process to review hundreds of company investment opportunities each year and initiated the development of a new website to engage and manage client relationships. From 2006 to 2013, Mr. DeChellis was the CEO of Credit Suisse Private Banking - Americas. In this role, he provided executive leadership for Credit Suisse’s Private Banking & Company, which he joinedWealth Management businesses in 1980,North and South America and served as Global Leader of that firm’s Merger Management Practice. During his time at McKinsey, he developed deep experience working with many leading financial institutions, with a particular focus in the private banking, wealth advisory, and wealth management sectors, as he helped establish and build McKinsey’s Financial Services practice globally. As a senior leader at McKinsey, Mr. Deutsch managed the Midwest complex of McKinsey offices including Chicago, Pittsburgh, Minneapolis, Cleveland and Detroit, and founded and led the Great Lakes Financial Services practice. Throughout his career with McKinsey, he consulted with financial services providers and other businesses on global strategy development, performance improvement, M&A strategy and corporate governance, among other areas. Mr. Deutsch also served as Chairman of McKinsey’s Principal Review Committee, a member of the Director ReviewCS Global Private Banking Management Committee, the Board of Directors for Credit Suisse Securities USA, LLC, the firm's Private Banking Global Risk Management Committee, the firm’s Global Diversity Committee and the CS Global Investment Banking Management Committee. From 2003 to 2006, Mr. DeChellis was the Head of UBS Private Wealth Management. During his tenure at UBS, Mr. DeChellis launched the Private Wealth Management business for UBS in the United States and oversaw the expansion of services catering to ultra-high net worth clients. He was a long-time member of the ShareholdersUBS Americas Management Council (McKinsey’sand the UBS Global Private Banking Leadership Group. Prior to joining UBS, from 1987 to 2003, Mr. DeChellis held various positions at Merrill Lynch, including Head of International Private Banking for Merrill Lynch Europe. Mr. DeChellis is a member of the Board of Trustees of The Berkshire School, the Board of Directors of The Open Door Homeless Shelter and the President’s Leadership Council of Rollins College. He serves as a member of the board of directors) and Chairdirectors of each of the Professional Standards Committee.Company's operating subsidiaries. In addition to Mr. Deutsch’sDeChellis’ management expertise, he brings to our Board extensive knowledge of financial services strategies. His skills at directing corporate strategy provide our Board with a valuable resourceprivate banking and wealth management strategies as the Company expands its strategic direction. direction, making him an excellent nominee for the Board.

Mr. Deutsch’sFurlong retired as President and Chief Executive Officer of BMO Harris Bank, N.A. in 2015, a role he assumed upon the acquisition of Marshall & Ilsley Corporation by BMO Financial Group in 2011. He joined Marshall & Ilsley in 2001 as Chief Financial Officer, was elected President in 2004, Chief Executive Officer in 2007, and Chair in 2010. Prior to joining Marshall & Ilsley, he was Chief Financial Officer of Old Kent Financial Corp.; First Vice President, Corporate Development, for H. F. Ahmanson & Company; a partner for Deloitte; and a manager for KPMG LLP. Mr. Furlong also is a member of the boards of directors of Kforce Inc., Antares Capital and Heska Corporation.  Mr. Furlong is the immediate past-Chair of Chicago United, the largest Chicago-based organization focused solely on businesses, addressing diversity in boards of directors, management, and supplier relationships. He is a board member of Common Ground Foundation, a group that works with high school students

Mr. Guyaux retired in 2016 from PNC Financial Services Group, Inc., where he worked for 44 years and served as President from 2002 to 2012. In this role, Mr. Guyaux was head of Retail Banking, responsible for leading all of PNC Bank’s (a subsidiary of PNC Financial Services Group) consumer businesses, including consumer and business banking, wealth management and brokerage. Mr. Guyaux held several other senior leadership positions at PNC Financial Services Group, including Chief Risk Officer from 2012 to 2015.  Most recently, Mr. Guyaux served as President and CEO of PNC Mortgage, a division of PNC Bank, from 2015 to 2016. Mr. Guyaux is Chair of the boards of directors of DQE Holdings, LLC, Duquesne Light Company and Highmark Health, Inc.  He is also Lead Director of Highmark, Inc. and a director of AHN Health Network and Visionworks, Inc., each a subsidiary of Highmark Health, Inc.  He serves as a Life Trustee for Carnegie Museums of Pittsburgh and as a director emeritus for the Civic Light Opera and Duquesne University. The Company believes that Mr. Guyaux’s extensive experience in the financial services industry and deep strategichis risk management expertise make him an excellent nominee for the Board.

Ms. Kuenstner is the Chief Investment Officer of Wellesley College. Before joining Wellesley College in February of 2009, Ms. Kuenstner was Chief Investment Officer and Vice President of Investment Management at Brandeis University from 2007 to January 2009. Prior to working at Brandeis, Ms. Kuenstner was Managing Director of Research for Fidelity Management & Research Company, the investment management organization of Fidelity Investments.Investments, from 2005 to 2006. Ms. Kuenstner was the Chief Investment Officer, Global Value, at Putnam Investments from 2000 to 2004. Her other roles at Putnam included Chief Investment Officer, International Value, and Senior Portfolio Manager, International Equities. Prior to that, she worked at DuPont Pension Fund Investment in Wilmington, Delaware as a Senior Portfolio Manager, International Equities. Ms. Kuenstner has also been a Vice President, International Investment Strategist, at Merrill Lynch, in addition to an Economist at the Federal Reserve Bank of New York. Ms. Kuenstner was actively involved in the Board of Pensions of the Presbyterian Church USA from 1996-2004 as Investment Committee Chair Director, and most recently, Co-opted Director.a director, until becoming a co-opted director. Ms. Kuenstner brings to the Board valuable

Ms. Larson was elected tocurrently serves as President in Residence of the BoardHarvard Graduate School of Education. Until her retirement in January 2015. She has2018, Ms. Larson served as the President of Bentley University since July 2007 and iswas the first woman to hold this position. Ms. Larson formerly served as the Co-Chair of the Government Strategies Group at the law firm of Foley Hoag LLP and from 1996 until 2007 and managed a practice that covered a broad array of federal, state and local regulatory and business development issues. Widely influential in economic policy, Ms. Larson was Secretary of Economic Affairs for The Commonwealth of Massachusetts from 1993 to 1996 and was responsible for developing and promoting economic growth policies and fostering employment opportunities. She served as The Commonwealth of Massachusetts Secretary of Consumer Affairs and Business Regulation from 1991 to 1993, where she was responsible for regulatory oversight of banking, insurance and energy, as well as consumer protection. Prior to her state service, she oversaw business and regulatory issues at the federal level as a senior official with the Federal Trade Commission (FTC), where she served as Deputy Director of Consumer Protection from 1990 to 1991 and as Attorney Advisor to Commissioner Patricia P. Bailey from 1981 to 1988. Ms. Larson has been honored and recognized by many groups for her contributions to state economic development policy and her commitment to civic engagement. Ms. Larson previously served as a member of the Council of Economic Advisors, as well as the Massachusetts Clean Energy Center and the Commonwealth’s Successful Women, Successful Families Task Force. Ms. Larson has served as a member of the Liberal Education and America’s Promise (LEAP) Presidents’ Trust and is a former member of the Executive Committee of the American College and University Presidents Climate Commitment and a member of the Liberal Education and America’s Promise (LEAP) Presidents’ Trust.Commitment. She served for more than a decade as ChairmanChair of the Massachusetts Convention Center Authority (MCCA), and was the first woman to serve as ChairmanChair of the Greater Boston Chamber of Commerce, where she continues to serve on the Chamber’s Executive Committee. Ms. Larson presently holds the post of President of the Massachusetts Conference for Women. In addition, she is a board or advisory council member of several prominent professional, charitable and civic organizations. In addition to serving on the Company’s Board of Directors, Ms. Larson currently serves as a Directoron the board of Unum

Group, chairing Unum’s Regulatory ComplianceGovernance Committee. She was recently elected to the McLean Hospital Board of Trustees. Ms. Larson previously served as a director on the boards of KeySpan Energy and RSA Security, as well as a member of the board of Blue Cross Blue Shield of MA.Massachusetts. Ms. Larson’s deep ties in the BostonMassachusetts community, as well as her expertise in public company matters, and in the regulatory oversight of banking and the financial sector experience, are ofservices industry bring great value to the Board’s oversight and guidance of the Company as it continues to focus on its strategic goal of becoming a premier nationalbanking, wealth management and private bankingtrust company. We believe that Ms. Larson’s expertise in the regulatory oversight of banking and the financial services industry, and her experience managing regulatory and business development issues qualify her as an excellent nominee for the Board.

Mr. Waters is Chairmanthe Chair of the Board of the Company and the board of directors of the Bank, and is Managing Partner of Compass Partners Advisors LLPCapital LLC and its advisory and investment subsidiaries, which hesubsidiaries. He founded Compass Partners in 1996. Prior to this,Previously, Mr. Waters spent over twenty20 years advising corporate and financial entities both in the U.S.United States and internationally. Mr. Waters served from 1992 to 1996 as Co-Chief Executive Officer of Morgan Stanley, Europe, and was a member of Morgan Stanley’s worldwide 12-person Operating Committee. Mr. Waters joined Morgan Stanley as a Managing Director in the Mergers and Acquisitions Department in June 1988 and was Co-Director of that department from January 1990 to early 1992. Mr. Waters was Co-Director of the Mergers and Acquisition Department at Shearson Lehman Brothers from 1985 to 1988. He serves on the Boardboard of Directorsdirectors of Valero Energy Corporation, where he sits on the audit committee. Mr. Waters brings over 3540 years of specific and relevant financial services experience to the Board, along with a deep understanding and practical knowledge of the investment management business. Mr. Waters’His background as a chief executive officer and director, as well as his extensive experience in investment management, economics, and mergers and acquisitions, makes himmake Mr. Waters an excellent nominee for the Board.

Corporate Governance Guidelines

The Board of Directors has a particular focus on corporate governance, developing the strategic direction of the Company, and seeking to ensure the success of the Company’s business through the appointment and retention of qualified executive management. The Board has documented its commitment to serve the best interests of the Company and its shareholders in its Corporate Governance Guidelines which, among other things, describe our most important corporate governance practices and address issues such as director qualification standards, director responsibilities, board composition and structure, performance evaluation and succession planning. Under the Company’s Corporate Governance Guidelines, a director who reaches the age of 74 or a term of 20 years while serving as director is required to offer his or her resignation from the Board of Directors as of the next annual meeting of shareholders.

Board Leadership Structure

In accordance with the Company’s by-laws,Bylaws, the Board of Directors elects the ChairmanChair of the Board and appoints the President, who also serves as Chief Executive Officer (“CEO”). The Board of Directors has adopted a policy that provides for the separation of the roles of ChairmanChair of the Board and Chief Executive Officer.CEO.

The Compensation, Governance and Executive Committee conducts a periodic review of the role and responsibilities of the non-executive ChairmanChair and this review is then presented to the full Board of Directors.

Risk Oversight

The Board of Directors playsand its committees play an important role in the risk oversight of the Company and is involved in risk oversight throughits management, and exercise direct decision-making authority with respect to significant matters, including the development of limits and specific risk tolerances, and the oversight of management by the Board of Directors and its committees.tolerances. The Board of Directors and its committees also are each directly responsible for considering and overseeing risks and the oversight of risks relating to decisions that each committee is responsible for making.in specified areas. In light of the Company’s overall business and market, the extensive regulatory schemes under which the Company and all of its affiliates operate, and the complexities of the Company’s operations as a whole, the Board has established a Risk Management Committee that is tasked with specific responsibility for direct oversight of all of the risks inherent in the Company’s business, along with management of the enterprise-wide risk management program. The Risk Management Committee consults with each of the other committees of the Board of Directors for an analysis of their areas of risk, as well as with management and outside experts, and provides regular, detailed reporting and recommendations on risk-related actions to the full Board. The Risk Management Committee also monitors the risk management function, and conducts

Risk Review and Analysis of Incentive Compensation Arrangements

Committees of the Board and Related Matters

The following table sets forth membership on the committees that were in place during 2018 and the number of meetings held during 2015.2018.

The Board of Directors held eight11 meetings of the full Board during 2015. Each incumbent Director who was a Director in 20152018. In 2018, each of the directors attended at least 75% of the aggregate number of meetings of the full Board of Directors and relevant committees.committees held during the time such person was a director. The Company does not have a policy of requiring Directorsdirectors to attend the annual meeting of shareholders. The Company does, however, typically schedule a meeting of its Board of Directors the day before or close to the annual meeting of shareholders to facilitate each Director’sdirector’s attendance at the annual meetingmeeting. Six of shareholders. Of the ten members then on the Board, nineCompany’s non-executive directors attended the Company’s 20152018 annual meeting.

To promote opencandid discussion among the non-management Directors,directors, the Board of Directors schedules regular executive sessions in which the non-management Directorsdirectors meet without management’s participation. Such sessions are scheduled totypically occur at every regularly scheduled Board and committee meeting. The ChairmanChair of the Board or the respective committee chairperson is the presiding Directordirector at suchthese executive sessions.

The Company’s shareholders approved the “say on pay” resolution included in the Company’s 20152018 Proxy Statement with 98%82% of the votes cast in favor of the resolution. Following the 2018 annual meeting of shareholders, the Company engaged Alliance Advisors to reach out to the governance teams of the Company’s top 30 shareholders, representing approximately 79% of the outstanding shares, to ask if those shareholders would participate in meetings or calls with the Company to discuss the voting on the “say on pay” resolution. Three of these shareholders, representing approximately 14% of the Company’s outstanding shares, accepted meetings or calls. Two of these shareholders had voted “for” and one of these shareholders had voted “against” the Company’s “say on pay” resolution compared to 95%included in 2014.the Company’s 2018 Proxy Statement. The Company believes these votes strongly affirm shareholder supportChair of its approach to executive compensation and, as a result, the Committee made minimal changes toand the executive compensation programfollowing members from the Company's management team participated on these calls during the fourth quarter of 2018: the Chief Financial Officer, the Chief Human Resources Officer, the General Counsel and the Director of Investor Relations.

During the calls, the Company reviewed in 2015. The Company also believes thatgreater detail its executive compensation program is appropriately structured with a strongdesign and philosophy and answered questions from the shareholders. The Company asked the shareholder that previously voted "against" the Company's "say on pay" resolution to identify any specific concerns that led it to vote against the proposal. The shareholder inquired about the appropriateness of the design of the STI in light of the Committee's decision to exercise negative discretion in 2018. Specifically, despite outperformance on the core financial performance orientation, a balanced risk-reward profilemetrics of the STI (ROACE, Revenue Growth, and is well aligned with shareholder interests.

The Company produced unevenbelieves the STI plan strikes an appropriate balance between strong financial results (against the internally developed plan and relative to the prior year) and the returns experienced by our shareholders. The Company further believes the issues that resulted in the Committee exercising negative discretion to reduce by 18 percentage points STI funding for 2017 from a 143% STI scorecard level were isolated. Apart from 2017, the STI scorecard has funded at a 56%, 86% and 69% level for each of 2015, 2016 and 2018, respectively, reflecting the rigor of the goal setting approach and further demonstrating the alignment between pay outcomes and performance over an extended period. As noted above, the Compensation Committee exercised negative discretion to reduce the 2018 STI payout by an additional four percentage points to acknowledge the particularly challenging shareholder experience in 2015, primarily resulting from challenges2018. The Compensation Committee will continue to monitor and assess the plan design of the STI and all other executive compensation plans.

The following charts illustrate the targeted 2018 mix of fixed (base salary) versus variable (bonus and 40% in time-based restricted stock with a three-year cliff vesting period. Given the team-performance orientation to managing the Company,equity incentives) pay and the strong historical performance of individuals on the team, equity awards were allocated in a consistent manner across the NEO positions. 2016 equity awards will not be granted until May of 2016; however, on February 9, 2016, the Committee approved the equity valueshort-term (annual STI bonus) versus long-term (equity) incentives for May 15, 2016 awards at 100% of target awards levels. 2016 equity awards granted in May 2016 will be reported in next year’s CD&A.Mr. Deutsch and other NEOs:

The following charts illustrate the targeted 2018 mix of fixed (base salary) versus variable (incentives/equity)(bonus and equity incentives) pay and also performance-basedshort-term (annual STI bonus) versus service-basedlong-term (equity) incentives for Mr. Deutsch and other NEOs:

A market compensation review was conducted by FW Cook in October of 2017 for the Company’s NEOs as a group:CEO and other select executive positions. Based on the market comparative data used, the Company’s overall target compensation position for executive positions was determined to be competitive with market, largely attributable to strong variable, performance-based pay opportunities that are aligned with stretch goals that, if attained, produce top quartile performance. Base salaries, in aggregate, were positioned close to median. Actual 2017 compensation was determined to be, on average, within 10% of median. Actual compensation versus market and versus target opportunities will vary year-to-year based on overall Company performance, individual contributions and cost considerations.

 Base Salary

The Compensation Committee reviews the base salaries of its NEOs each year, with salary increases, if any, typically taking effect on January 1.1st. Salary increases are generally based on an executive’s performance within specific areas of accountability, external market competitiveness and/or internal budget considerations. There were no base salary increases for NEOs in either 2015 or 2016 based on the Company’s philosophy of de-emphasizing base salaries in the total compensation mix.

Following its usual practice, the Committee established ana 2018 annual incentive target for 2015under the STI for each NEOof the NEOs stated as a percentage of base salary. Incentive target levels are based on each executive’s role, organization level, impact on annual performance and competitive considerations. Executives can earn from 0% up to 200% of target based on performance against pre-defined metrics. Targets are reviewed annually by the Compensation Committee and adjusted as appropriate to consider market competitiveness and desired mix of annual and long-term incentives. There were no increases to annual incentive plan targets for any NEO for 2018. In 2015,2018, the Board and Committee established a performance scorecard framework for compensation actions in 20152018 that weighted both primary and secondaryconsidered financial goals important to the Company’s profitability and sustainable growth. Details of this performance-based framework, associated financial metrics, the Company’s achievement of these metrics and the Committee’s determination with respect to overall performance for the consolidated Company are described in the scorecard below.

The following table outlines the annual incentive targets for 20152018 and the actual bonus received by each NEO:NEO.

The Compensation Committee considers long-term equity-based compensation to be an integral part of the Company’s compensation program and grants equity each year, typically in May. The Company’s primary grant forms for its executives under the LTI are:

The Compensation Committee reviews thethis mix of grant forms annually. Performance sharesPSUs are earned and vest at the end of the three-year performance period only if and to the extent targeted results are achieved within the acceptable performance range (threshold to significant over-achievement) as determined by the Compensation Committee. Performance sharesPSUs are forfeitedsubject to forfeiture in the event that targeted resultspre-established performance goals are not achieved. Time-based restricted stock willRSUs vest in full three years from the date of grant, subject to the executive’s continued employment through the vesting date.

The Company’s NEOs earned 0%110% of the targeted performance shares based on ROACE performance for the 2013-20152016 to 2018 performance period. As a result, all of thethere will be an incremental increase in shares scheduled tothat vest on May 15, 2016 were forfeited.2019. The Company’s three-year average ROACE in 2015for the 2016 to 2018 performance period was 9%9.88% versus a target goal of 12%,11% and a threshold goal of 10%4.2% for the performance period. This three-year average ROACE was adjusted to neutralize the impact of the Tax Cuts and Jobs Act. The funding reflects the Company’s performance relative to the constituents in the KBW Regional Index. The Company’s three-year average Operating Return on Average Equity ranked in the 63rd percentile of the peer data set. The 110% earn-out is the result of interpolation between a 100% payout at the target performance level and a 200% payout at the maximum performance level. The following table outlines the awards forfeited:earned:

In 2015,2018, the Company granted equity awards to its NEOs, other than Mr. DeChellis. consisting of performance sharesboth PSUs and time-based restricted stockRSUs under the Company’s 2009 Amended and Restated Stock Option and Incentive Plan.Plan (the "2009 Plan"). Each NEO has an established long-term incentive award target as follows (expressed as a percentage of each executive’s base salary): 150% for Mr. Deutsch, 68%Deutsch; 100% each for Messrs. Kaye and Griffin and Ms. Shoback; and 75% for Mr. Thompson (or 100% of his incentive eligible base salary of $500,000), 75% each for Mr. Kaye, Mr. Griffin and Mr. MacDonald. On February 9, 2016, the Committee approved an increase to Mr. Griffin’s long-term incentive target, from 75% to 100% of base salary.Gaven.

The total long-term incentive award values set forth below were approved by the Committee on April 13, 2015, and on April 14, 2015 by the Board for the CEO. For 2015,2018, 60% of the grant date fair value of the award was delivered in the form of performance sharesPSUs and 40% of the grant date fair value of the award was delivered in the form of time-based restricted stock. The approved values were approved slightly below the target long-term incentive award levels for each NEO in order to fund additional equity awards below the executive level.RSUs. The approved values converted to a fixed number of time-based restricted sharesRSUs and performance sharesPSUs using the average daily stockadjusted closing price foron the 30 days prior to the conversiongrant date of $12.33$16.60 per share. This methodology is used to provide an equity award that takes into account the share price of the Company over the prior 30-day period, as opposed to a single trading day. Once the number of shares was determined based on the values approved by the Committee, shares were granted at the closing price of $12.43 on May 15, 2015, the approved grant date under the Company’s equity grant policy. Awards were determined based on each executive’s performance, criticality of position and relevant employment agreement terms, as applicable.

The 2015 performance shares2018 PSUs will be earned or forfeited based on the Company’s performance for the January 1, 20152018 to December 31, 20172020 period, following the conclusion of such performance period, with 0-150% (0-180% with +/-20% adjustment described below)0% to 200% of the sharesunits earned tied to the Company’s achievement of the following metrics:ROACE performance utilizing a matrix approach, as follows:

Actual equity grants awarded in 2018 to the Company’s NEOs, in 2015other than Mr. DeChellis, are set forth in the table below. As described further in the footnotes below, a significant portion of the stock awards (60% of the total) must beare earned based on performance with the potential for an earn-out of 0% to 180%200% of the target performance sharesrestricted units awarded.

In connection with his hire, Mr. Deutsch’sDeChellis received equity-based inducement awards in order to recruit him to the Company and strengthen alignment with shareholders from the beginning of his tenure. Reflecting the Committee’s commitment to aligning pay with shareholder outcomes, half of the value of Mr. Thompson’s employment agreements included one-time matchingDeChellis’ inducement awards consists of stock options that will only vest if (1) the closing price of Company's common stock is at or above $18.00 per share for 20 consecutive trading days prior to November 26, 2022, and (2) at the time that the foregoing condition is met, the Company's Tier 1 risk-based capital ratio is at least 6.0%, or such other level as may be required by any governmental agency or other governmental entity. Time-based stock options and restricted stock units made up the remaining portion of the inducement awards, tiedboth of which vest in four equal annual installments beginning on November 26, 2019. The inducement equity awards granted to each executive’s personal investmentMr. DeChellis in 2018 are set forth in the Company’s stock. These grants were intended to enhance the Company’s ability to retain Mr. Deutsch and Mr. Thompson by vesting shares in three equal installments on each of the third, fourth and fifth anniversaries of the grant date. Terms of the awards stipulate that the grants are forfeited if Mr. Deutsch and Mr. Thompson do not purchase an equivalent number of shares of Company stock before, in the case of Mr. Deutsch, the second anniversary of his commencement date, and in the case of Mr. Thompson, the third anniversary of the effective date of his employment agreement, and hold such stock through certain vesting dates. Mr. Deutsch’s matching restricted stock award was granted on July 31, 2010 (called the “inducement award” and described in the Company’s 2011 proxy statement) with a grant date fair value of $2 million (302,572 shares). Mr. Deutsch’s award fully vested as of July 31, 2015. As of December 31, 2010 (five

TheIn April 2018, the Committee implemented executive stock ownership guidelines in July 2008revised its Board and revised these guidelines in July of 2014 to increase the guidelinesExecutive Officer Stock Ownership Policy based upon a comprehensive review and recommendation by W.T. Haigh & Company, the Company’s compensation consultant at the time.FW Cook. The requirementsrequired ownership levels in the guidelinespolicy are expressed as the lesser of a multiple of an executive’s base salary or a fixed number of shares.salary. The Company and theCompensation Committee reviewreviews executive officer stock holdings versusagainst the ownership guidelinespolicy at least annually. Ownership guidelineThe Company has established ownership level multiples were increased from five times base salary toof six times base salary for the Company’s CEO and increased from one to three times base salary to two to four times base salary for other NEO positions. NEOs must meet the lesser of the fixed share guideline (350,000 for the Company’s CEO and 54,000other NEOs. Executives are expected to 225,000 for other NEO positions) or the salary multiple guideline. In 2015, the Committee replaced the holding requirement equal to 50% of profit shares (net shares after cost of purchase, if any, and tax liability) until the minimum threshold is attained with a new requirement that executives (and Board members) attain their respective ownership guidelineslevel within a five-year period. However, consideration will be given if an executive has a significant change in role and/or compensation that impacts their ownership level.  In addition, executives must hold all of their shares (excluding shares withheld or sold to cover exercise costs, such as exercise prices and income taxes) following the exercise of options or the vesting of equity awards until the ownership levels are met. The Compensation Committee reviews hardships on an individual basis, if needed.

The following table shows the NEO’scontinuing NEOs’ required stock ownership relative to the guidelineslevels as of December 31, 2015.2018.