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.     )

Filed by the Registrant  x              

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 20182019 ANNUAL MEETING OF SHAREHOLDERS

 

Dated: March 14, 20182019

PROXY STATEMENT

for the

20182019 ANNUAL MEETING OF SHAREHOLDERS

  

VOTING INFORMATION

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

Because 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 majority of the votes cast as to such nominee by shareholders in order to be elected. Abstentions 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 vote for this proposal.

The ratification of the selection of the Company’s independent 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 vote for this proposal.

We are first sending this Proxy Statement and the accompanying materials to shareholders on or about March 14, 2018.2019.

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.

ANNUAL REPORT

All shareholders of record are being sent a copy of the Company’s 20172018 Annual Report to Shareholders and the Annual Report on Form 10-K for the fiscal year ended December 31, 20172018 (which contains audited financial statements of the Company for the fiscal years ended December 31, 2018, 2017 2016 and 2015)2016), as filed with the Securities and Exchange Commission (“SEC”) on February 28, 2018.27, 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 he joined in August 2010, and is also the Chief Executive Officer of the Bank. He joined the Company and was elected to the Board in November 2018. Mr. Deutsch is a member of the Company’s Leadership Team andDeChellis has over 4030 years of experience in the financial services industry. He began his career in banking in the 1970s at Society Corporation, the predecessor to KeyCorp. 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, mergers and acquisitions 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’s boardand 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 directors) and ChairInternational Private Banking for Merrill Lynch Europe. Mr. DeChellis is a member of the Professional Standards Committee. Mr. DeutschBoard 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 of each of the Company’sCompany'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. Mr. Deutsch’s extensive experience in the financial services industry and deep strategic expertise makedirection, making him an excellent nominee for the Board.

Mr. Furlong retired as President and Chief Executive Officer of BMO Harris Bank, N.A. in 2015, a role he assumed upon the close of 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 ChairmanChair 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 Antares Capital.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 One Hope United, a social services organization focused on

from under-served communities to become future leaders; Chicago Board of Education; Chicago Teachers’ Pension Fund; Northwestern Memorial Hospital Finance Committee; and the Northwestern Memorial Foundation.  He is the founding and immediate past-Chair of LEAP Innovations.  During his tenure in Milwaukee, heMr. Furlong was involved in numerous civic activities, including the roles of Chair of both Junior Achievement of Wisconsin and Schools That Can Milwaukee, and a member of the boards of directors of United Way of Greater Milwaukee, Wisconsin Manufacturers and Commerce, Froedtert Health, and the United Performing Arts Fund. Mr. Furlong brings unique insight to the Board concerning capital allocation strategies and banking issues, in addition to his overall management, auditing and financial expertise. With his significant experience in the banking industry, as well as his background as a Chief Executive Officer,chief executive officer, the Company believes heMr. Furlong is a highly qualified candidate for the Board of Directors.Board.

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 chairmanChair of the boards of directors of DQE Holdings, LLC, Duquesne Light Company and Highmark Health, Inc.  He is also is a lead directorLead Director of Highmark, Inc. and a memberdirector of the boardAHN Health Network and Visionworks, Inc., each a subsidiary of Visionworks of AmericaHighmark 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 his risk management expertise make him an excellent nominee for the Board of Directors.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, 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 and a director, until becoming a co-opted director. Ms. Kuenstner brings to the Board valuable experience and knowledge about the financial services industry generally and, in particular, the investment management arena. Along with this experience, herMs. Kuenstner's economic and risk management expertise make her an excellent nominee for the Board.

Ms. Larson hascurrently serves as President in Residence of the Harvard Graduate School of Education. Until her retirement in 2018, 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. 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. 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 Massachusetts. Ms.

Mr. Ubiñas was elected to the Board in September 2017. Mr. Ubiñas is currently President of the Board of Trustees of the Pan American Development Foundation, which invests nearly $100 million annually in development projects in Central and South America and the Caribbean. He also serves on several multilateral, governmental and nonprofit boards and advisory committees, including the Advisory Board of the United Nations Fund for International Partnerships. Mr. Ubiñas is a Trustee and Executive Committee member of the New York Public Library and Vice ChairmanChair of the Statue of Liberty-Ellis Island Foundation. In the private sector, Mr. Ubiñas is Lead Director at Electronic Arts, and serves on the boards of CommerceHub, the publicly-traded ecommerce backbone company;directors of GFR Media, the largest media company in Puerto Rico;Rico, and Shorelight Education. Mr. Ubiñas previously served as president of the Ford Foundation from 2008 through 2013. The Ford Foundation is the second largest foundation in the United States with an endowment of approximately $12 billion and operates worldwide, with offices in Asia, Africa, and Central and South America. While at the Ford Foundation, he led a broad-based restructuring of the organization, including a strategic resetting of its programs, reinvestment of over 80% of the endowment, and a rebuilding of facilities and systems. Prior to leading the Ford Foundation, Mr. Ubiñas was a Director at McKinsey & Company, leading the firm’s media practice on the West Coast, where he helped technology, telecommunications and media companies develop and implement strategies and improve operations. Much of his work focused on the opportunities and

Mr. Waters is Chairmanthe Chair of the BoardsBoard 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. He founded Compass Partners in 1996. Previously, Mr. Waters spent over 20 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 board of directors of Valero Energy Corporation, where he sits on the audit committee. Mr. Waters brings over 40 years of specific and relevant financial services experience to the Board, along with a deep understanding and practical knowledge of the investment management business. His background as a chief executive officer and director, as well as his extensive experience in investment management, economics, and mergers and acquisitions, make himMr. 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 separation of the roles of ChairmanChair of the Board and CEO.

The Compensation, Governance and Executive Committee conducts a periodic review of the role and responsibilities of the non-executive Chair 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 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 reviews risk assessments and other risk reporting for all of the Company’s subsidiaries, participates directly in the risk management committee meetings of the Bank, which is the Company’s largest subsidiary,business segments and operations, and adopts and directs the implementation of risk management policies that relate to both the Company and its subsidiaries, and analyzes reporting regardingincluding the same.Bank.

Risk Review and Analysis of Incentive Compensation Arrangements

The following table lists persons known by the Company to own beneficially more than five percent of the Company’s outstanding shares of common stock as of December 31, 2017.2018.

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) describes the Company’s executive compensation program, 20172018 total compensation for the Company’s named executive officers (“NEOs”), and how the Compensation, Governance and Executive Committee of the Company’s Board of Directors (the predecessor to the current Compensation Committee which was established in January 2019) (the “Committee”) determined 20172018 compensation for the Company’s NEOs listed below.

The Company’s executive compensation program and related actions are intended to reward sustained, long-term performance and returns for shareholders consistent with the Company’s overall risk profile and disciplined growth strategy. All compensation actions taken in 20172018 reflect the Committee’s commitment to shareholder-aligned governance and compensation arrangements.

The Company continued to make progressCompany's primary strategic objective in 2017 with respect to implementing itsrecent years has been the pursuit of a “One Boston Private” strategy for delivering integrated wealth management, trust, and commercial and private banking solutions to its clients while increasing shareholder value. Certain 2016clients. Management believes that a Company focused on providing holistic financial advice, combined with balance sheet solutions, will deliver higher risk adjusted returns and create long-term value for its shareholders.

The proceeds from these divestitures contributed to higher levels of capital, creating flexibility for future investments and growth in the fourth quartercore wealth management, trust, and commercial and private banking businesses and for capital return to shareholders.

Management believes the sales of the Divested Affiliates were in the best long-term interests of shareholders. The sales resulted in notable gains, losses, and tax effects of these adjustments, if any, as well as theexpense in 2017 one-time non-cash items relatedand 2018 GAAP earnings and created a near-term earnings headwind due to the Tax Cuts and Jobs Act.lost earnings from the Divested Affiliates.

Disciplined balance sheet risk management is a central element of our strategy. The Company targets top quartile credit metrics relative to the KBW Regional Banking Index (“KRX”("KRX").

The Company’sCompany delivered a TSR of (29)% during 2018, under-performing the KRX median of (18)%. The Committee took into consideration this under-performance when determining management compensation in 2018, as discussed below.

The Company's cumulative stock price appreciation (i.e., stock price growth excluding the reinvestment of dividends) from August of 2010, when Mr. Deutsch joined the Company as CEO, through December 201731, 2018, the end of the year in which he retired, was 133.7%60%, outperformingunder-performing the KRX which gained 129.2%return of 85% and the S&P 500 return of 128% in the same period, while the S&P 500 gained 142.7% in the same time period.

Source: S&P Market Intelligence

Despite outperformancethe operational and financial outcomes described above that better position the Company for future success, 2018 was a challenging year for us and our shareholders, and our compensation outcomes reflect those challenges.

In 2018, the Company underperformed on theits core financial performance metrics (ROACE Revenue Growth, Pre-Tax Pre-Provisionand PTPP Income Growth), which resulted in initial STI funding of 143%69% of target, thetarget. The Committee took into consideration additional factors to assess holistic Company performance.performance and progress toward strategic objectives. Among the additional factors considered were top quartile performance related to credit quality aboveand targeted BPW EBITDA margin growth, offset by below plan loan and deposit growth, below plan net flows but positive foroperating leverage, and TSR below the 50th percentile of the KRX.

Similar to last year, and below median TSR relative to the KBW Regional Bank Index. In addition,when the Committee took note of disappointing execution of certain strategic initiatives.

The following chart illustrates the actual STI and performance share payouts (percent of target awards) relative to the target and maximum payouts that could have been earned based on limits defined in the executive compensation program.

Despite strong shareholder returns since 2015 of 44%, Mr. Deutsch’sThe realizable pay fromof Mr. Deutsch, the three-yearCompany's retired CEO, for the period from

________

The Company made minimalmodest compensation program changes in 2017, and is anticipating minimal changes in 2018. Any changesChanges made were to simplify and enhance the performance orientation and alignment of executive compensation programs with the Company’s business strategy and shareholders. In particular:

The Company continues to promote best practice standards with respect to compensation design and governance:

The Company’s shareholders approved the “say on pay” resolution included in the Company’s 20172018 Proxy Statement with 94%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 included in the Company’s 2018 Proxy Statement. The Chair of the Committee and the following 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.

The Company believes this vote strongly affirmsthe 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 supportexperience in 2018. The Compensation Committee will continue to monitor and assess the plan design of its approach tothe STI and all other executive compensation.compensation plans.

 

The following charts illustrate the targeted 20172018 mix of fixed (base salary) versus variable (bonus and equity incentives) pay and short-term (annual STI bonus) versus long-term (equity) incentives for the Company’s CEOMr. Deutsch and other NEOs:

The peer group listed below, includeswhich the Company used to make 2018 pay decisions, included 18 banks and financial services companies selected based on their size (approximately 1/3 to 3 times the Company’s primary size indicators, with total assets of $2 billion to $30 billion and market capscapitalizations of $300 million to $3 billion) and fees as a percent of revenue of at least 20% to reflect the Company’s wealth management, trust and commercial and private banking business orientation. Other criteria used for peer company selection included companies headquartered in major metropolitan areas and companies with which the Company competes for executive talent. The peer group is a market frame of reference for compensation and performance comparisons and will also be used in 2018.

In addition, the KRX was added to measure the Company’s ROACE relative performance in the 2016, 2017, 2018 and 20172019 long-term incentive matrices. The Compensation Committee believes the KRX provides a more consistent benchmark for

purposes of measuring performance over a three-year time horizon given the larger number of peer banks in the IndexKRX to normalize any anomalies.

The Company’s independent compensation consultant, Frederic W. Cook & Co. (“FW Cook”), provides other relevant market reference points such as broader financial services and general industry compensation survey data covering companies of similar size to augment this peer group data, when appropriate.

The lastA market compensation review was conducted by FW Cook in October of 2017 for the Company’s 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 20162017 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.

In 2017,2018, the Company granted equity awards to its NEOs, other than Mr. DeChellis. consisting of both PSUs and RSUs 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, 75%Deutsch; 100% each for Mr.Messrs. Kaye and Griffin and Ms. ChambersShoback; and 100%75% for Mr. Griffin and Mr. Schwartz.Gaven.

The total long-term incentive award values set forth below were approved by the Board for the CEO on February 9, 2017 and by the Committee for the other NEOs on April 25, 2017 for a future grant date of May 15, 2017. For 2017,2018, 60% of the grant date fair value of the award was delivered in the form of PSUs and 40% of the grant date fair value of the award was delivered in the form of RSUs. The approved values converted to a fixed number of RSUs and PSUs using the average daily stockadjusted closing price foron the 30 days prior to the conversiongrant date of $16.37$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 units was determined based on the values previously approved by the Committee, units were granted at the closing price of $15.60 on May 15, 2017, 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 20172018 PSUs will be earned or forfeited based on the Company’s performance for the January 1, 20172018 to December 31, 20192020 period, following the conclusion of such performance period, with 0% to 200% of the units earned tied to the Company’s ROACE performance utilizing a matrix approach, as follows:

Actual equity grants awarded in 2018 to the Company’s NEOs, in 2017other 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 200% of the target performance restricted units awarded.

In connection with his hire, Mr. DeChellis received equity-based inducement awards in order to recruit him to the Committee approvedCompany 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. DeChellis’ 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, both of which vest in four equal annual installments beginning on November 26, 2019. The inducement equity value for the awards granted to be granted on May 15, 2018 at 100% of target awards levels. On February 8, 2018, the Board approved the CEO’s target equity award at 100% of target. Mr. Kaye’s long-term incentive target was increased from 75% in 2017 to 100%DeChellis in 2018 (offset by a decreaseare set forth in his 2018 base salary to betterthe table below.

The Company maintains an Equity Grant Policy to ensure that its equity grant practices are administered in strict compliance with the Company’s equity plans, policies and all applicable laws, and specifically to prevent backdating of any equity grant, or changing of the timing of equity grants in relation to public release of material information with the intent of benefiting a grantee under an equity award. The Company’s policy is that equity grants occur on a pre-established day during each calendar quarter after the Company’s financial results for the prior quarter have been publicly disclosed. Accordingly, the grant date for all equity grants is generally the 15th day of the month (or the last business day before the 15th day of the month) following the quarterly Board meeting, unless approved otherwise by the Compensation Committee. The grant date shall not precede the date the grant was authorized by the Compensation Committee, and the grant date for any new hire shall not precede the employee’s date of hire. In addition, the Policy provides that all awards and award terms are approved by the Compensation Committee in advance of the grant date. The Company executives do not have an ability to select a grant date, and the option exercise price is the closing price of the underlying stock on the date of grant. The Company has not granted stock options to Company executives since 2011.

TheIn April 2018, the Committee implemented executive stock ownership guidelines in July 2008revised its Board and has periodically revised these guidelines, including in July of 2017Executive Officer Stock Ownership Policy based upon a comprehensive review and recommendation by FW Cook. The requirementsrequired ownership levels in the guidelinespolicy are expressed as a multiple of an executive’s base salary. The Company and theCompensation Committee reviewreviews executive officer stock holdings against the ownership guidelinespolicy at least annually. The Company has established ownership guidelinelevel multiples of six times base salary for the Company’s CEO and three times base salary for the other NEOs. Executives mustare expected to 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 guidelineslevels are met, subject to the Committee’s approval of hardship exceptionsmet. The Compensation Committee reviews hardships on an individual basis.basis, if needed.

The following table shows the continuing NEOs’ required stock ownership relative to the guidelineslevels as of December 31, 2017.2018.

The Compensation Committee, pursuant to its charter, provides management and the Board with guidance on matters of executive and director compensation and related benefits. The Compensation Committee meets in executive sessions when discussing both CEO and executive officer performance and specific actions related to CEO and executive officer compensation. The Compensation Committee approves all compensation actions with respect to the Company’s CEO, and recommends these actions to the Board of Directors. The Board of Directors then reviews and approves such compensation actions. The Compensation Committee approves all compensation actions for the Company’s other executive officers after reviewing the recommendations of the CEO. The Compensation Committee relies on management and outside advisers for staff work and technical guidance in conducting its affairs. It retains full authority to engage independent third party advisers, and currently retains FW Cook to conduct independent studies and provide objective advice on executive and director compensation. FW Cook’s primary role with the Company is as adviser to the Compensation Committee on executive compensation matters, although it is possible that FW Cook could provide certain advice to the Company generally. In 2017,2018, FW Cook’s services wholly related to Committee mattersmatters. The Committee assessed the independence of FW Cook consistent with NASDAQ listing standards and no conflicts of interest were noted.

The Company also retains Goodwin Procter LLP for legal services on executive compensation matters, including drafting of legal plan documents. The Company may use other firms from time to time in the normal course of business.

NEOs are entitled to a flexible benefit amount to be used for financial products and services including life insurance, financial planning, long-term care insurance and other health and wellness benefits that enable the executives to manage better and balance their personal lives given the amount of time spent at work. The flexible amount is a fixed maximum annual benefit of $65,000 for the CEO, and $20,000 for other NEOs.$20,000. NEOs are also eligible for an annual physical examination. The full value of all perquisites is reported as income to the individuals and, accordingly, is taxable. The flexible benefit may not be used for any type of personal luxury or entertainment expenditures.

NEOs are also eligible for Company-sponsored benefit programs available broadly to Company employees, including health care, dental and vision benefits, short-term and long-term disability, life insurance, a 401(k) profit sharing plan and the Company’s Employee Stock Purchase Plan.

The Company offers a deferred compensation plan that enables certain executives, including each of the NEOs, to defer a portion of their income. Amounts deferred are excluded from an executive’s taxable income and are not deductible by the Company until paid. Executives select from a number of mutual funds and the deferred amounts are increased or decreased to correspond to changes in market value of these underlying mutual fund investments. Any increase in value is recognized as compensation expense. The Company maintains a rabbi trust with respect to these obligations. During 2017,2018, no NEOs participated in the deferred compensation plan, but Mr. Schwartz had an outstanding deferred compensation balance of $1.549 million from prior years’ participation as of December 31, 2017.

The Company believes it complies with all tax, regulatory and accounting standards. Furthermore, the Compensation Committee will continue to review each element of compensation and take appropriate steps to ensure tax deductibility to the extent permitted under applicable law and to the extent this can be accomplished without sacrificing flexibility and other important objectives of the overall compensation program for its executives.

The Compensation Governance and Executive Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K promulgated under the Securities Act of 1933, as amended (“Regulation S-K”), with management and, based on this review and these discussions, the Compensation Committee recommended to the Board that the CD&A be included in the Company’s Proxy Statement.

SUMMARY COMPENSATION TABLE