| ■ | determining the compensation of the chief executive officerDetermining the compensation of our President and CEO and other executive officers; Reviewing and approving general salary and compensation policies for the rest of our senior officers; | ■ | reviewing and approving general salary and compensation policies for the rest of our senior officers; |
| ■ | overseeing the administration of our Annual Incentive Compensation Pool, equity incentive plans, and Employee Stock Purchase Plan; |
Overseeing the administration of our Annual Incentive Compensation Plan (AICP), equity incentive plans, and Employee Stock Purchase Plan; | ■ | assisting management in designing new compensation policies and plans; and |
Assisting management in designing new compensation policies and plans; | ■ | reviewingReviewing and providing guidance to management concerning succession plans and development actions for key leadership roles; Reviewing and assisting management regarding diversity and inclusion efforts across the Company; and Reviewing and discussing the Compensation Discussion and Analysis and other compensation disclosures with management. |
Delegation Authority
The Compensation Committee has delegated compensation decisions regarding nonexecutive officers, including the establishment of specific salary and incentive compensation levels and certain matters relating to stock-based compensation, to the Management Compensation Committee, a committee comprised of senior leaders of Price Group.
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Committee Procedures
Early each year, the Compensation Committee meets with members of senior management in order to discuss goals and objectives for the coming year, including goals and objectives applicable to the named executive officers listed in our Summary Compensation Table. In addition, the Compensation Committee determines eligibility for the Annual Incentive Compensation Pool and sets forth the maximum percentage that may be paid to each participant. At its meeting in December, the Compensation Committee evaluates executive performance during the year as part of its determination of appropriate incentive compensation awards.
The Compensation Committee awards equity incentive grants to employees from stockholder-approved long-term incentive plans as part of the Company’s annual compensation program. The Compensation Committee has, for a number of years, made equity grants in two tranches consisting generally of equal or nearly equal grants in February and September. In 2017, the Compensation Committee moved to an annual grant in December to more closely align our equity incentive grants to the timing of our annual bonus and other compensation decisions.
Role of Executive Officers
The Compensation Committee solicits input from the chief executive officer and the Management Compensation Committee regarding general compensation policies, including the appropriate level and mix of compensation. The Compensation Committee also consults with the chief executive officer regarding the appropriate bonus and salary levels for other executive officers.
Role of Compensation Consultants
During 2017, the Compensation Committee carefully reviewed its engagement with Frederic W. Cook & Co., Inc. (FW Cook), and sent a request for proposal to eight compensation consulting firms. After a thorough review and evaluation of the respondents, Johnson Associates was selected as the Compensation Committee’s new compensation consultant, and it began working with the Compensation Committee in September 2017. FW Cook and Johnson Associates have no relationship with Price Group other than as the Compensation Committee’s consultants. See the “Role of Independent Compensation Consultant” section of our Compensation Discussion and Analysis for additional details of their role.contained in this proxy statement and other compensation disclosures with management.
Nominating and Corporate Governance Committee | Meetings in 2020: 5 | | Chair | | Members | | | | | | The report of the Committee appears on page 20. | | | | | | | | | | | | Snowe | | Bush | | Hrabowski | Stevens | | Wilson |
Nominating and Corporate Governance Committee
Mses. Snowe, Bush, and Whittemore, and Messrs. Culp and Wilson serve on our Nominating and Corporate Governance Committee, which met on six occasions during 2017. The Nominating and Corporate Governance Committee approved one matter via unanimous written consent during 2017. The Board of Directors has determined that all Nominating and Corporate Governance Committee members meet the independence criteria of the NASDAQ Global Select Market.
Responsibilities The principal purposeNominating and goal of this committee is to maintainCorporate Governance Committee supervises and cultivatereviews the effectivenessaffairs of Price Group’sGroup in relation to the Board, of Directorsdirector nominees and oversee itscompensation, committee composition, stockholder communications, and other corporate governance policies. matters. Among the Nominating and Corporate Governance Committee’s responsibilities are Boardare: Identifying, evaluating, and committee composition,nominating director qualifications,candidates. Considering the continued membership of each director, and recommending the appropriate skills and characteristics of potential directors. Developing director orientation and education opportunities. Reviewing and Board evaluations. Members identify, evaluate, and nominate Board candidates; reviewapproving the compensation of independent directors;directors. Recommending committee and overseechair assignments. Overseeing procedures regarding stockholder nominations and other communications to the Board. In addition, they are responsible for monitoring Reviewing the effectiveness of the Board in the corporate governance process. Monitoring compliance with and recommending any changes to the Company’s Corporate Governance Guidelines.Guidelines and other governance policies. Monitoring and oversight of, in coordination with the Compensation Committee and the Board, succession planning for the Chief Executive Officer. Overseeing policies related to political expenditures and political activities. Monitoring policies related to environmental and climate matters, and recommending to the Board specific actions related thereto. Reviewing actions in furtherance of the Company’s corporate social responsibility, including the impact of the Company’s processes on employees, stockholders, citizens and communities. Reviewing key trends in legislation, regulation, litigation and public debate to determine whether the Company should consider additional corporate environmental, social responsibility or governance actions. Executive Committee | Chair | | Members | | | | | | | | Stromberg | | Wilson | | MacLellan |
During 2020, Mr. Stromberg, Mr. MacLellan and Mr. Wilson served on the Executive Committee. Responsibilities The Executive Committee functions between meetings of the Board in the event that prompt action be called for that requires formal action by or on behalf of the Board in circumstances where it is impractical to call and hold a full meeting of the Board. The Executive Committee possesses the authority to exercise all the powers of the Board except as limited by Maryland law. If the Executive Committee acts on matters requiring formal Board action, those acts are reported to the Board at its next meeting for ratification. Governance Policies and Procedures Code of Ethics Pursuant to rules promulgated under the Sarbanes-Oxley Act, the Board has adopted a Code of Ethics for Principal Executive and Senior Financial Officers. This Code is intended to deter wrongdoing and promote honest and ethical conduct; full, timely, and accurate reporting; compliance with laws; and accountability for adherence to the Code, including internal reporting of Code violations. A reportcopy of the Code of Ethics for Principal Executive and Senior Financial Officers is available on our website. We intend to satisfy the disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Ethics for Principal Executive and Senior Financial Officers by making disclosures concerning such matters available on the Investor Relations page of our website. We also have a Code of Ethics and Conduct that is applicable to all employees and directors of the Company. Our Code of Ethics and Conduct prohibits all employees and directors of the Company from (i) any short sales of our common stock, (ii) purchasing options on our common stock, or (iii) entering into any contract or purchasing any instrument designed to hedge or offset any decrease in the market value of our common stock. It is the Company’s policy for all employees to participate annually in continuing education and training relating to the Code of Ethics and Conduct. Corporate Governance Guidelines The Board represents the interests of stockholders in fostering a business that is successful in all respects. The Board is responsible for determining that the Company is managed with this objective in mind and that management is executing its responsibilities. The Board’s responsibility is to regularly monitor the effectiveness of management policies and decisions, including the execution of its strategies. In addition to fulfilling its obligations for representing the interests of stockholders, the Board has responsibility to the Company’s employees, the mutual funds and investment portfolios that the Company manages, the Company’s other customers and business constituents and the communities where the Company operates. All are essential to a successful business. Our Corporate Governance Guidelines can be found on our website, troweprice.com. Non-Employee Director Independence Determinations The Board has considered the independence of current Board members and nominees not employed by the Company and has concluded each such director qualifies as an independent director within the meaning of the applicable rules of the NASDAQ Global Select Market. To our knowledge, there are no family relationships among our directors or executive officers. In making its determination of independence, the Board applied guidelines that it has adopted concluding that the following relationships should not be considered material relationships that would impair a director’s independence: relationships where a director or an immediate family member of a director purchases or acquires investment services, investment securities, or similar products and services from the Company or one of its sponsored mutual funds and trusts (Price funds) so long as the relationship is on terms consistent with those generally available to other persons doing business with the Company, its subsidiaries, or its sponsored investment products; and relationships where a corporation, partnership, or other entity with respect to which a director or an immediate family member of a director is an officer, director, employee, partner, or member purchases services from the Company, including investment management or defined contribution retirement plan services, on terms consistent with those generally available to other entities doing business with the Company or its subsidiaries. The Board believes that this policy sets an appropriate standard for dealing with ordinary course of business relationships that may arise from time to time. Election of Directors In this proxy statement, eleven director nominees are presented pursuant to the recommendation of the Nominating and Corporate Governance Committee. All have been nominated by the Board to hold office until the next annual meeting of stockholders and until their respective successors are elected and qualify. | FOR | Recommendation of the Board of Directors | Vote Required | We recommend that you vote FOR all the director nominees under Proposal 1. | |
All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the election of the director nominees unless otherwise specified. Shares held by a bank, broker, or other nominee will not be voted on this Proposal absent specific instruction from you, which means your shares may go unvoted and not affect the outcome if you do not specify a vote. If any director nominee becomes unable or unwilling to serve between now and the Annual Meeting, proxies will be voted FOR the election of a replacement recommended by the Nominating and Corporate Governance Committee and approved by the Board. Corporate Governance Report of the Nominating and Corporate Governance Committee Our Nominating and Corporate Governance Committee has general oversight responsibility for governance of the Company, including the assessment and recruitment of new director candidates and the evaluation of director and Board performance. We monitor regulatory and other developments in the governance area with a view toward both legal compliance and maintaining governance procedures at the Company consistent with what we consider to be best practices. In this regard, we routinely receive written and verbal information relating to best governance practices for institutions such as the Company, including input and reports from members of the Company’s proxy voting group concerning relevant trends. Board Engagement In Crisis Response In response to the COVID-19 pandemic, from March through June, the Board began holding bi-weekly special meetings to ensure the Company was well positioned to protect the health and safety of our associates, meet the evolving demands of our clients, and navigate market changes. The Board empowered management to take actions to protect the Company’s associates through remote work programs, supported investments in technology updates and business continuity solutions, and maintained oversight of our balance sheet to ensure the Company’s financial strength. During these meetings the Board also advised on the firm’s internal and external communication strategy and risk mitigation efforts with a view to the long-term success of the enterprise. The Board engaged with management on identifying and addressing strategic risks and opportunities arising out of COVID-19. During the pandemic, we adjusted our planned in-person Board meetings to hold them virtually to ensure continued effective functioning of the Board. Later in the spring, in response to the social unrest which swept across the U.S., the Board and management committed to develop programs and policies supporting the Board’s view that racial injustice was a serious problem which the Company was committed to combat. Governance Highlights Overview Our Board employs practices that foster effective Board oversight of critical matters such as strategy, management succession planning, financial and other controls, risk management and compliance. The Board reviews our major governance policies and processes regularly in the context of current corporate governance trends, regulatory changes and recognized best practices. During the year, the Board determined to heighten its focus on the Company’s environmental, social and governance matters from a corporate perspective. In furtherance of this goal, the Board received various updates from management on the Company’s environmental, social and governance efforts, and ultimately determined to amend the Nominating and Corporate Governance Committee’s charter to include oversight of the Company’s environmental and corporate social responsibility activities, beginsincluding considering the impact of the Company’s policies and processes on page 20employees, stockholders, citizens and communities. In addition, the Nominating and Corporate Governance Committee’s charter was amended to include oversight of this proxy statement.the Company’s policies related to political expenditures and political activities. Of note, however, is that the Company does not contribute corporate funds to candidates, political party committees, political action committees, or any political organization exempt from federal income taxes. Further the Company does not maintain a political action committee and does not spend corporate funds directly on independent expenditures. Management Committee
The ManagementNominating and Corporate Governance Committee is responsibleworks diligently to support effective corporate governance and believes that the Company’s governance program aligns with the Investor Stewardship Group’s (ISG) Corporate Governance Framework for guiding, implementing,U.S. Listed Companies. ISG Corporate Governance Principles The following sections provide an overview of our corporate governance structure and reviewing major policyprocesses, including key aspects of our Board operations, and operating initiativeshow they align with the ISG Corporate Governance Principles for U.S. Listed Companies. PRINCIPLE | | COMPANY PRACTICE | 1. Boards are accountable to shareholders. | | • Our directors are elected annually. • Our By-Laws mandate that directors be elected under a “majority voting” standard in uncontested elections. Each director nominee must receive more votes “For” his or her election than votes “Against” in order to be elected. A director who fails to obtain the required vote in an uncontested election must submit his or her resignation to the Board. • We have clear proxy access rules. • We do not have a poison pill plan. | 2. Shareholders should be entitled to voting rights in proportion to their economic interest. | | • We have only one class of stock outstanding, and each share is entitled to one vote. | 3. Boards should be responsive to shareholders and be proactive in order to understand their perspectives. | | • Our Company actively engages with stockholders, see page 25. • Our directors participate in our stockholder outreach, both in the preparation for such meetings, and during the presentations themselves. • We have established an email address for stockholders wishing to contact the Board. | 4. Boards should have a strong, independent leadership structure. | | • We have a strong lead independent director. • Ten of our eleven board members are independent. • Our independent directors meet frequently without management. | 5. Boards should adopt structures and practices that enhance their effectiveness. | | • Our directors have a diverse mix of experience and backgrounds relevant to our industry, our stockholders, our clients, and our stakeholders. See page 7. • The average tenure on our Board is six years. • During the year, the Board receives several key industry updates, strategic topics and other education sessions conducted by both outside experts and Company executives, all designed to assist the Board in executing their duties. • Our directors attended 100% of the Board and Committee meetings, and value in person attendance at meetings. | 6. Boards should develop management incentive structures that are aligned with the long-term strategy of the company. | | • Our annual and long-term incentive programs are designed to align the interests of our management with our stockholders by focusing on long-term corporate performance and value creation. • Our executive compensation program received over 95% stockholder support in 2020. • The proxy statement clearly communicates the link between our compensation programs and the Company’s short and long-term performance. |
Board Composition Director Nomination Process Ongoing Assessment of Composition and Structure In considering the overall qualifications of our nominees and their contributions to our Board, and in determining our need for additional members of the Company. Mr. Stromberg is chairmanBoard, we seek to create a Board consisting of members with a diverse set of experiences and attributes who will be meaningfully involved in our Board activities and will facilitate a transparent and collaborative atmosphere and culture. Our Board members generally develop a long-term association with the Company, which we believe facilitates a deeper knowledge of our business and its strategies, opportunities, risks, and challenges. At the same time, we periodically look for additions to our Board to enhance our capabilities and bring new perspectives and ideas to our Board. Commitment to Diversity and Inclusion The Board has historically valued varying perspectives that individuals of differing backgrounds and experiences bring. We monitor the diversity profile of the Management Committee,Board and Mr. Bernardconsider it an important factor relevant to any particular nominee and to the overall composition of our Board. In considering diversity, we recognize a person’s background and experience as well as their ethnic, gender, sexual orientation, racial, and other senior officersfactors which we believe will inform the way they consider decisions brought before the Board. Our current Board comprises individuals with a substantial variety of skills and expertise, including with respect to executive management; financial institutions; government; accounting and finance; investment management; public company boards; academia; and not-for-profit organizations. Our Board is not just comprised of individuals knowledgeable about our business, but is also reflective of our clients, the communities we serve and our stakeholders. The Nominating and Corporate Governance Committee believes it is important to maintain a mix of experienced directors with a deep understanding of the Company and newer directors who bring a fresh perspective to the challenges of our industry. Board Replenishment The Board has eleven directors, ten of whom are also members.independent. The Managementtenure of our independent directors’ ranges from eighteen months to eleven years, with an average tenure of approximately six years. In considering Board membership, the Nominating and Corporate Governance Committee reportsfocuses on identifying candidates with the skills and backgrounds to complement the Board, in addition to seeking candidates who would bring further capabilities, experience, and diversity to our Board. Incumbent Nominations The Nominating and Corporate Governance Committee supervises the nomination process for directors. The committee considers the performance, independence, diversity, and other characteristics of our incumbent directors, including their willingness to serve for an additional term, and any change in their employment or other circumstances in considering their renomination each year. Identification and Consideration of New Nominees In the event that a vacancy exists, or we decide to increase the size of the Board, we identify, interview and examine, and make recommendations to the Board regarding appropriate candidates. We will consider Board members with diverse capabilities, and we generally look for Board members with capabilities in one or more of the following areas: accounting and financial reporting, financial services and money management, investments, general economics and industry oversight, legal, government affairs and corporate governance, general management, international, marketing and distribution, and technology and facilities management. In evaluating potential candidates, we consider independence from management, background, experience, expertise, commitment, diversity, number of other public board and related committee seats held, and potential conflicts of interest, among other factors, and take into account the composition of the Board at the time of the assessment. All candidates for nomination must: demonstrate unimpeachable character and integrity; have sufficient time to carry out their duties; have experience at senior levels in areas of expertise helpful to the Company and consistent with the objective of having a diverse and well-rounded Board; and | • | have the willingness and commitment to assume the responsibilities required of a director of the Company. |
In addition, candidates expected to serve on the managementAudit Committee must meet independence and operationfinancial literacy qualifications imposed by the NASDAQ Global Select Market and by the SEC and other applicable law. Candidates expected to serve on this committee or the Compensation Committee must meet independence qualifications set out by the NASDAQ Global Select Market, and members of the Compensation Committee must also meet additional independence tests imposed by the NASDAQ Global Select Market. Our evaluations of potential directors include, among other things, an assessment of a candidate’s background and credentials, personal interviews, and discussions with appropriate references. Once we have selected a candidate, we present him or her to the full Board for election if a vacancy occurs or is created by an increase in the size of the Board during the course of the year, or for nomination if the director is to be first elected by the Company’s stockholders. All directors serve for one-year terms and must stand for reelection annually. Identification of Candidates | The Nominating and Corporate Governance Committee identifies, interviews and examines, and makes recommendations to the Board regarding appropriate candidates. The Nominating and Corporate Governance Committee identifies potential candidates principally through the following: • Consideration of incumbent directors • Suggestions from the Company’s directors and senior management • Third parties/national search organization • Candidates recommended or suggested by stockholders | Evaluation of Candidates | The Nominating and Corporate Governance Committee’s evaluations of potential directors include the following: • An assessment of a candidate’s background and credentials • Personal interviews • Discussions with appropriate references | Election of Candidates | Once the Nominating and Corporate Governance Committee has selected a candidate, the candidate is presented to the full Board for election if a vacancy occurs or is created by an increase in the size of the Board during the course of the year, or for nomination if the director is to be first elected by the Company’s stockholders. |
Stockholder Recommendations and Nominations Recommendations A stockholder who wishes to recommend a candidate for the Board should send a letter to the chair of the Nominating and Corporate Governance Committee at the Company’s principal executive offices providing: (i) information relevant to the candidate’s satisfaction of the criteria described above under “Director Nomination Process”; and (ii) information that would be required for a director nomination under Section 1.11 of the Company’s Amended and Restated By-Laws (By-Laws). The Nominating and Corporate Governance Committee will consider and evaluate candidates recommended by stockholders in the same manner it considers candidates from other sources. Acceptance of a recommendation does not imply that the Nominating and Corporate Governance Committee will ultimately nominate the recommended candidate. Proxy Access and Nominations We have adopted a proxy access right to permit a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years, to nominate and include in the Company’s proxy materials director-nominees constituting up to two individuals or 20% of the Board (whichever is greater), provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the By-Laws. Section 1.13 of the By-Laws sets out the procedures a stockholder must follow to use proxy access. Section 1.11 of the By-Laws sets out the procedures a stockholder must follow in order to nominate a candidate for Board membership outside of the proxy access process. For these requirements, please refer to the By-Laws as of February 9, 2021, filed with the SEC on February 11, 2021, as Exhibit 3.1 to our Annual Report on Form 10-K. Majority Voting We have adopted a majority voting standard for the election of our directors. Under our By-Laws, in an uncontested election, a nominee will not be elected unless he or she receives more “FOR” votes than “AGAINST” votes. Under Maryland law, any incumbent director not so elected would continue in office as a “holdover” director until removed or replaced. As a result, the By-Laws also provide that any director who fails to obtain the required vote in an uncontested election must submit his or her resignation to the Board. The Board must decide whether to accept or decline the resignation, or decline the resignation with conditions, taking into consideration the Nominating and Corporate Governance Committee’s recommendation after consideration of all factors deemed relevant, within 90 days after the vote has been certified. Plurality voting will apply to contested elections. Board Leadership Chair of the Board and Lead Independent Director | | | | William J. Stromberg Chair of the Board | | | Alan D. Wilson Lead Independent Director | | | | | Mr. Stromberg was elected as the chair of the Board in addition to his role as our President and CEO at the April 2019 Board meeting. By serving in both positions, Mr. Stromberg has been able to draw on his detailed knowledge of the Company to provide leadership to the Board in coordination with the lead independent director. The combined role of chair and CEO reflects our confidence in the leadership of Mr. Stromberg and also ensures that the Company presents its strategy to clients, employees and stockholders with a unified voice from the person most knowledgeable about and responsible for the implementation of the Company’s strategy. | | | Mr. Wilson was elected by our independent directors as lead independent director after the 2018 Annual Meeting and is expected to be re-elected after the Annual Meeting. The lead independent director role was created in 2004 and has continually developed since that time. The lead independent director chairs Board meetings at which the chair is not present, approves Board agendas and meeting schedules, and oversees Board materials distributed in advance of Board meetings. The lead independent director also calls meetings of the independent directors, chairs all executive sessions of the independent directors, and acts as liaison between the independent directors and management. The lead independent director is available to the general counsel and corporate secretary to discuss and, as necessary, respond to stockholder communications to the Board. Mr. Wilson’s significant executive management experience, including having served as chair and chief executive officer of a publicly traded company, makes him especially qualified to serve as the lead independent director for the Board. |
Independent Leadership The Board has determined that the election of a lead independent director, together with a combined chair and CEO, serve the best interests of the Company through Messrs. Stromberg and Bernard. Asits stockholders at this time. We believe that a well-empowered lead independent director provides independent leadership to our Board. The Company has a strong independent Board, and all of March 16, 2018, currentthe members of the ManagementBoard, other than Mr. Stromberg, are independent under the NASDAQ Global Select Market standards. In addition, the Nominating and Corporate Governance Committee, include: Christopher D. Alderson, co-headthe Audit Committee, and the Compensation Committee are all composed entirely of global equity; Scott B. David, headindependent directors, and our chair and lead independent director, together with these committees, have significant and meaningful responsibilities designed to foster critical oversight and good governance practices. We believe that our structure is appropriate at this time and serves well the interests of individualthe Company and retirementits stockholders. The Board is confident that the duties and responsibilities allocated to its lead independent director, together with its other corporate governance practices and strong independent board, provides appropriate and effective independent oversight of management. Committee Leadership and Rotation In 2015, Mr. Bartlett became the chair of the Audit Committee, Mr. MacLellan became the chair of the Compensation Committee and Ms. Snowe became the chair of the Nominating and Corporate Governance Committee. Our Corporate Governance Guidelines provide that periodic rotation of committee membership and chairpersons is generally beneficial to the Company, and contributes to healthy and collaborative Board engagement. However, this rotation is not mandatory, and in some circumstances continued service on a committee or as chair by persons with particular skills may be warranted. At least every 5 years, the Nominating and Corporate Governance Committee shall do a thorough review of all Board leadership positions to make recommendations to the Board about potential changes and to suggest skills which may be needed on the committees. Board Evaluations In January 2021, we asked all Board members to reply to an anonymous evaluation questionnaire regarding the performance of the Board and its committees during 2020, which evaluation was conducted by an outside third-party in consultation with the Chair of the Nominating and Corporate Governance Committee and the Lead Independent Director. Feedback from these questionnaires was supplemented by interviews of each independent director by our Lead Independent Director. The results of the evaluations and interviews were then discussed at a meeting of the Nominating and Corporate Governance Committee and a full report was also provided to the Board. Consistent with past practice, we consider suggestions from the evaluation process for inclusion during the course of the upcoming year. We plan services; Céline S. Dufétel, chief financial officerto continue to conduct independent third-party evaluations and treasurer; Nigel K. Faulkner, headinterviews each year and to periodically modify our procedures to ensure that we receive candid feedback and are responsive to future developments and suggestions from our directors. Engagement with our Stockholders As investment professionals, we know the value of technology; Robert C.T. Higginbotham, headengaging with companies. We maintain an active and open dialogue with our stockholders, visiting them in their cities, hosting them in our offices, and inviting them to our annual meeting of globalstockholders. We proactively engage them on a range of topics including corporate governance, and our philosophy and practices relating to environmental and social responsibility. We attempt to incorporate and address the feedback we receive from our stockholders into our practices. The work-from-home environment as a result of the coronavirus pandemic created new opportunities to engage our stockholders in 2020. We held nearly 100 meetings with our stockholders in the virtual environment, including a majority of our top 40 stockholders, to discuss the Company’s performance and progress against our long-term strategy, as well as broader trends across the investment management services; David Oestreicher, chief legal counselindustry. Further, in an effort to provide greater transparency around our efforts and corporate secretary; Sebastien Page, headprogress related to our environmental, social and governance initiatives, we also published our first-ever Corporate ESG Update for Stockholders. We look forward to continuing to expand our stockholder engagement efforts. HOW | | WHAT | • Attendance at Conferences • Investor Day • Incoming stockholder calls and meetings • Annual Meeting of Stockholders • Outreach, calls and meetings with Investors’ corporate governance departments • Participation on industry panels • Universal access to an email address for stockholders wishing to contact the Board | | • Strategic and financial performance and goals • Corporate and business strategy • Board composition and leadership structure • Corporate governance and industry trends, including ESG considerations • Regulatory considerations • Respond to inquiries concerning broad range of topics |
Stockholder Proposals From time to time, we receive proposals from our stockholders intended for inclusion in our proxy statement. We typically work with Company management in reviewing these proposals and determining an appropriate course of global multi-asset; Dorothy C. “Dee” Sawyer, headaction in response, including, where necessary, a statement of human resources; Robert W. Sharps, head of investments; Eric L. Veiel, co-head of global equity; and Edward A. Wiese, head of fixed income. Each of these members brings extensive experience and wisdomour position for or in opposition to the proposal from the stockholder. Often in response the Board will ask management to engage with a stockholder on their proposal, which has led to meaningful dialogue and leadershipassisted the Board in understanding the concerns of our stockholders. Stockholder Communications with the Board of Directors Our Board members are interested in hearing the opinions of the Company.stockholders. The Nominating and Corporate Governance Committee has established the following procedures in order to facilitate communications between our stockholders and our Board: • | Stockholders may send correspondence, which should indicate that the sender is a stockholder, to our Board or to any individual director by mail to T. Rowe Price Group, Inc., c/o general counsel, P.O. Box 17134, Baltimore, MD 21297-1134, or by email to contact_the_board@troweprice.com or by Internet at troweprice.gcs-web.com/corporate-governance/contact-the-board. | | | • | Our general counsel will be responsible for the first review and logging of this correspondence. The general counsel will forward the communication to the director or directors to whom it is addressed unless it is a type of correspondence that the Nominating and Corporate Governance Committee has identified as correspondence that may be retained in our files and not sent to directors. | | | • | The Nominating and Corporate Governance Committee has authorized the general counsel to retain and not send to directors the following types of communications: |
| • | Advertising or promotional in nature (offering goods or services); | | | | | • | Complaints by clients with respect to ordinary course of business customer service and satisfaction issues; provided, however, that the general counsel will notify the chair of the Nominating and Corporate Governance Committee of any complaints that, in the opinion of the general counsel, warrant immediate committee attention by their nature or frequency; or | | | | | • | Those clearly unrelated to our business, industry, management, Board, or committee matters. |
These types of communications will be logged and filed but not circulated to directors. Except as described above, the general counsel will not screen communications sent to directors. The log of stockholder correspondence will be available to members of the Nominating and Corporate Governance Committee for inspection. At least once each year, the general counsel will provide to the Nominating and Corporate Governance Committee a summary of the communications received from stockholders, including the communications not sent to directors in accordance with screening procedures approved by the Nominating and Corporate Governance Committee. By the Nominating and Corporate Governance Committee of the Board of Directors of T. Rowe Price Group, Inc. | Olympia J. Snowe, Chair Mary K. Bush Dr. Freeman A. Hrabowski, III Robert J. Stevens Alan D. Wilson |
TABLE OF CONTENTSTable of Contents
Compensation of Directors The Nominating and Corporate Governance Committee is responsible for periodically reviewing non-employee director compensation and benefits and recommendsrecommending changes, if appropriate, to the full Board. Our non-employee director compensation program is designed to accomplish a number of objectives: | ■ | Align the interests of our non-employee directors with those of our stockholders; |
Align the interests of our non-employee directors with those of our stockholders; | ■ | Provide competitive compensation for service to the Board by our non-employee directors; |
Provide competitive compensation for service to the Board by our non-employee directors; | ■ | Maintain appropriate consistency with our approach to compensation for our executive officers and senior employees; and |
Maintain appropriate consistency with our approach to compensation for our executive officers and senior employees; and | ■ | Attract and retain a diverse mix of capable and highly qualified directors. |
Attract and retain a diverse mix of capable and highly qualified directors. We provide both cash and equity compensation to our directors and believe that, over time, cash and equity compensation should reflect approximately 40% and 60%, respectively, of the total compensation paid to our directors. The cash compensation component is based primarily on an annual retainer coupled with fees for committee attendance, lead director role, and committee chair roles. EquityThe equity compensation historically has consisted of equity awardscomponent is in the form of options or full value awards, at the election of the director.awards. We believe our total compensation package and compensation structure is comparable to and in line with other major financial service companies. The Nominating and Corporate Governance Committee periodically reviews non-employee director compensation and benefits and recommends changes, if appropriate, to the full Board based upon its review and consideration ofconsiders competitive market practices. FollowingIn 2020 there were no changes to the engagement in October 2016 of Pearl Meyer & Partners (Pearl Meyer), an independent compensation consultant, which provided a review of our compensation practices in relation to market conditions, the Committee determined that its compensation practices were generally competitive and that no significant changes were required. However, based on Pearl Meyer’s feedback, we did decide to provide a fixed dollar amount of equity compensation of $200,000 per director once a year rather than a fixed number of shares twice a year, which had been the practice in prior years, in order to better maintain consistent alignment in the relative contribution of cash and equity compensation to total director compensation. We also concluded that, consistent with our approach to equity incentivesprogram for our executive officers, we would move away from a menu-based plan that allowednon-employee directors. Fees and Other Compensation in 2020 All non-employee directors to select among options, restricted shares, and restricted stock units to a consistent awardingreceived the following in 2020: An annual retainer of full value share awards to our directors. Directors maintained the right to select between restricted shares or restricted stock units in order to provide an opportunity$100,000 for deferralall non-employee directors; A fee of income if a director so elects.$1,500 for each committee meeting attended; For Mr. Rogers’ role as a non-employee director and
A fee of $15,000 for the important Board leadership role as nonexecutivelead director; A fee of $20,000 and $5,000, for the chair of the Audit Committee decidedand each Audit Committee member, respectively; A fee of $10,000 for the chair of the Compensation Committee; A fee of $10,000 for the chair of the Nominating and Corporate Governance Committee; Directors and all U.S. employees of Price Group and its subsidiaries are eligible to pay Mr. Rogers totalhave our sponsored T. Rowe Price Foundation match personal gifts up to an annual compensationlimit to qualified charitable organizations. For 2020, non-employee directors were eligible to have up to $10,000 matched; The reimbursement of $400,000, including $100,000reasonable out-of-pocket expenses incurred in the standard annual cash retainer, $100,000 for his service as chairconnection with their travel to and from, and attendance at each meeting of the Board and a cash amountits committees and related activities, including director education courses and materials; and The reimbursement of $200,000spousal travel to and from and participation in lieu of participatingevents held in connection with the annual equity award. Mr. Rogers’joint Price Group and Price funds’ boards of directors meeting. The annual non-employee director compensation amounts wereretainer and fees noted above are prorated for the period April 2017 through December 2017, following Mr. Rogers’ retirement as an executive of time during the Company on March 31, 2017. For 2017,calendar year that each director held the Committee approvedposition. Pursuant to the Outside Directors Deferred Compensation Plan, non-employee directors can elect to defer payment of their director fees until the next calendar year or to the Federal Trade Commission for filings required to be made by Mr. Rogers under the Hart-Scott-Rodino Antitrust Improvements Actdefer payment of 1976, as amended (HSR Act), as a result of histheir director fees into vested restricted stock ownership of the Company. Mr. Rogers was responsible for any taxes due as a result of the Company paying the HSR Act filing fees and was not provided a tax gross-up payment. Equity-Based Compensation in 2017
Pursuantunits (RSUs) pursuant to the 2017 Non-Employee Director Equity Plan, as amended (2017 Director Plan) approved by. The RSUs will be settled in shares of our common stock, or cash in the stockholders on April 26,case of fractional shares, upon the director’s separation from service. Any such election needs to be received prior to the beginning of the year they wish to have their payment deferred. Dr. Hrabowski and Ms. Snowe elected to have their 2020 director fees deferred to 2021. Messrs. MacLellan, Stevens, Wilson and Ms. Wijnberg elected to have their 2020 director fees deferred into vested RSUs.
Equity-Based Compensation in 2020 Pursuant to the 2017 Director Plan, each newly elected Board member is awarded an initial grant in the form, at their election, of restricted shares or restricted stock unitsRSUs having a value on the date of grant of $300,000 that vests one-year after the grant date. In each subsequent year, each non-employee director except Mr. Rogers, is awarded, at their election, restricted shares or restricted stock units on the first business day after the Annual MeetingRSUs having a value on the date of grant of $200,000. For Mr. Rogers,$200,000 on the Committee determined that, in light of his already significant stock ownership, they would pay him a cash amount of $200,000 in lieu of participating infirst business day after the annual equity award provided to non-employee directors. Annual Meeting. Each of the award types vest upon the earliest of the non-employee director’s death or date on which the director becomes totally and permanently disabled, one year after the grant date, or the day before the annual meeting held in the calendar year after the year in which the grant is made, the non-employee director’s death or date on which the director becomes totally and permanently disabled, or the date on which a change in control occurs, provided the director continues to be a member of the Board on the applicable date. Restricted shares entitle the holder to the rights of a stockholder, including voting, dividend, and distribution rights, but are nontransferable until they vest. Vested stock units will be settled in shares of our common stock or cash, in the case of fractional shares, upon a non-employee director’s separation from service. Non-employee directors holding stock units are not TABLE OF CONTENTS
entitled to voting, dividend, distribution, or other rights until the corresponding shares of our common stock are issued upon settlement; however, if and when we pay a cash dividend to our common stockholders, we will issue dividend equivalents in the form of additional stock units. Under the 2017 Director Plan, dividends and dividend equivalents payable with respect to unvested restricted shares and unvested stock units will be subjectedsubject to the same vesting and risks of forfeiture as the restricted shares and stock units to which they are attributable. The 2017 Director Plan includes a provision that accelerates the vesting of all outstanding awards in connection with a change in control of Price Group. Upon a change in control, any outstanding stock units will be settled in cash or shares at the discretion of the Board of Directors.Board. Fees and Other Compensation in 2017
In addition to the equity-based awards, non-employee directors, except Mr. Rogers, received the following in 2017:
| ■ | An annual retainer of $100,000 for all non-employee directors; |
| ■ | A fee of $1,500 for each committee meeting attended; |
| ■ | A fee of $15,000 for the lead director; |
| ■ | A fee of $20,000 and $5,000, for the chairperson of the Audit Committee and each Audit Committee member, respectively; |
| ■ | A fee of $10,000 for the chairperson of the Compensation Committee; |
| ■ | A fee of $10,000 for the chairperson of the Nominating and Corporate Governance Committee; |
| ■ | Directors and all U.S. employees of Price Group and its subsidiaries are eligible to have our sponsored T. Rowe Price Foundation match personal gifts up to an annual limit to qualified charitable organizations. For 2017, non-employee directors were eligible to have up to $10,000 matched; |
| ■ | The reimbursement of reasonable out-of-pocket expenses incurred in connection with their travel to and from, and attendance at each meeting of the Board and its committees and related activities, including director education courses and materials; and |
| ■ | The reimbursement of spousal travel to and from and participation in events held in connection with the annual joint Price Group and Price funds’ Board of Directors meeting. |
The annual retainer and fees noted above are prorated for the period of time during the calendar year that each director held the position. Pursuant to the Outside Directors Deferred Compensation Plan, non-employee directors can elect to defer payment of their director fees until the next calendar year. Any such election needs to be received prior to the beginning of the year they wish to have their payment deferred. Dr. Hrabowski, Ms. Snowe, and Mr. Wilson elected to have their 2017 director fees deferred to 2018.
There will be no change to the cash compensation of our non-employee directors in 2018.
Ownership and Retention GuidelinesBoard Leadership
Each non-employee director is required to hold shares of our common stock having a value equal to three times his or her current cash retainer within five years
Chair of the director’s appointment to the Board. Directors added to the Board prior to 2015 have an ownership goal of $225,000, while Messrs. Culp and Wilson, and Ms. Wijnberg each have an ownership goal of $300,000. Based on changes adopted for 2017 and beyond, directors who join the Board in the future, including Mr. Verma, will have an ownership goal of five times the annual cash retainer in effect on the date they join the Board. For purposes of the calculation, unvested restricted shares and outstanding stock units are counted, but unexercised stock options are not. Once this ownership goal is achieved, the number of shares required to be held becomes fixed and must be maintained until the end of the director’s service on the Board. Until the ownership goal is achieved, the director is expected to retain “net gain shares” resulting from the exercise of stock options or vesting of restricted stock granted under the applicable director plan. Net gain shares are the shares remaining after payment of the stock option exercise price and taxes owed with respect to the exercise or vesting event. In addition, net gain shares realized under the applicable director plan after the ownership goal is achieved are expected to be held for two years prior to sale or other transfer, but not beyond the end of the director’s service on the Board. All of our incumbent directors have achieved and maintain the ownership goal as of the date of this proxy statement. 18 T. ROWE PRICE GROUP Lead Independent Director
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2017 Director Compensation1
The following table sets forth information regarding the compensation earned by, or paid to, directors who served on our Board of Directors during 2017. Directors who are also officers of Price Group do not receive separate directors’ fees and have been omitted from this table. Mr. Stromberg and Mr. Bernard appear in our Summary Compensation Table as named executive officers.
Name | Fees Earned or Paid in Cash | Stock Awards2,3 | All Other Compensation4 | Total | Mark S. Bartlett | $ | 136,500 | | $ | 200,065 | | $ | 10,000 | | $ | 346,565 | | Mary K. Bush | $ | 118,000 | | $ | 229,776 | | $ | 10,000 | | $ | 357,776 | | H. Lawrence Culp, Jr. | $ | 115,000 | | $ | 200,065 | | $ | 10,000 | | $ | 325,065 | | Dr. Freeman A. Hrabowski, III | $ | 121,500 | | $ | 215,911 | | $ | 10,000 | | $ | 347,411 | | Robert F. MacLellan | $ | 131,500 | | $ | 211,242 | | $ | 10,000 | | $ | 352,742 | | Olympia J. Snowe | $ | 128,000 | | $ | 211,039 | | $ | 10,000 | | $ | 349,039 | | Brian C. Rogers5 | $ | 300,000 | | $ | — | | $ | 248,269 | | $ | 548,269 | | Dwight S. Taylor | $ | 121,500 | | $ | 265,950 | | $ | 10,000 | | $ | 397,450 | | Anne Marie Whittemore | $ | 133,000 | | $ | 230,094 | | $ | 10,000 | | $ | 373,094 | | Sandra S. Wijnberg | $ | 121,500 | | $ | 210,171 | | $ | 10,000 | | $ | 341,671 | | Alan D. Wilson | $ | 118,000 | | $ | 221,535 | | $ | 10,000 | | $ | 349,535 | |
| 1 | Includes only those columns relating to compensation awarded to, earned by, or paid to non-employee directors for their services in 2017. All other columns have been omitted. | |
| 2 | The following table represents the equity awards granted in 2017 to certainWilliam J. Stromberg Chair of the non-employee directors named above. In accordanceBoard | | | Alan D. Wilson Lead Independent Director | | | | | Mr. Stromberg was elected as the chair of the Board in addition to his role as our President and CEO at the April 2019 Board meeting. By serving in both positions, Mr. Stromberg has been able to draw on his detailed knowledge of the Company to provide leadership to the Board in coordination with the 2017 Director Plan, each non-employee director was awarded a grant date valuelead independent director. The combined role of $200,000. The equity value was converted to awards or units, using the closing stock price ofchair and CEO reflects our common stock on the date of grant. Fractional shares were rounded up to the nearest whole share. The holders of restricted stock units also receive dividend equivalentsconfidence in the formleadership of additional vested stock units on eachMr. Stromberg and also ensures that the Company presents its strategy to clients, employees and stockholders with a unified voice from the person most knowledgeable about and responsible for the implementation of the Company’s dividend payment dates. Fractional shares earnedstrategy. | | | Mr. Wilson was elected by our independent directors as dividend equivalents have been roundedlead independent director after the 2018 Annual Meeting and is expected to be re-elected after the Annual Meeting. The lead independent director role was created in 2004 and has continually developed since that time. The lead independent director chairs Board meetings at which the chair is not present, approves Board agendas and meeting schedules, and oversees Board materials distributed in advance of Board meetings. The lead independent director also calls meetings of the independent directors, chairs all executive sessions of the independent directors, and acts as liaison between the independent directors and management. The lead independent director is available to the nearest whole share. |
Director | Grant Date | Number of Restricted Shares | Number of Restricted Units | Grant Date Fair Value of Stock and Option Awards | Mark S. Bartlett | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | Mary K. Bush | | 3/30/2017 | | | | | | 108 | | $ | 7,341 | | | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | | | 6/29/2017 | | | | | | 100 | | $ | 7,403 | | | | 9/28/2017 | | | | | | 83 | | $ | 7,460 | | | | 12/28/2017 | | | | | | 71 | | $ | 7,507 | | H. Lawrence Culp, Jr. | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | Dr. Freeman A. Hrabowski, III | | 3/30/2017 | | | | | | 40 | | $ | 2,708 | | | | 4/27/2017 | | | | | | 2,837 | | $ | 200,065 | | | | 6/29/2017 | | | | | | 59 | | $ | 4,348 | | | | 9/28/2017 | | | | | | 49 | | $ | 4,381 | | | | 12/28/2017 | | | | | | 42 | | $ | 4,409 | | Robert F. MacLellan | | 3/30/2017 | | | | | | 40 | | $ | 2,762 | | | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | | | 6/29/2017 | | | | | | 38 | | $ | 2,785 | | | | 9/28/2017 | | | | | | 31 | | $ | 2,806 | | | | 12/28/2017 | | | | | | 27 | | $ | 2,824 | | Olympia J. Snowe | | 3/30/2017 | | | | | | 22 | | $ | 1,504 | | | | 4/27/2017 | | | | | | 2,837 | | $ | 200,065 | | | | 6/29/2017 | | | | | | 42 | | $ | 3,134 | | | | 9/28/2017 | | | | | | 35 | | $ | 3,158 | | | | 12/28/2017 | | | | | | 30 | | $ | 3,178 | | Dwight S. Taylor | | 3/30/2017 | | | | | | 239 | | $ | 16,280 | | | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | | | 6/29/2017 | | | | | | 222 | | $ | 16,416 | | | | 9/28/2017 | | | | | | 184 | | $ | 16,542 | | | | 12/28/2017 | | | | | | 158 | | $ | 16,647 | |
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Director | Grant Date | Number of Restricted Shares | Number of Restricted Units | Grant Date Fair Value of Stock and Option Awards | Anne Marie Whittemore | | 3/30/2017 | | | | | | 91 | | $ | 6,213 | | | | 4/27/2017 | | | | | | 2,837 | | $ | 200,065 | | | | 6/29/2017 | | | | | | 106 | | $ | 7,882 | | | | 9/28/2017 | | | | | | 88 | | $ | 7,942 | | | | 12/28/2017 | | | | | | 76 | | $ | 7,992 | | Sandra S. Wijnberg | | 3/30/2017 | | | | | | 37 | | $ | 2,497 | | | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | | | 6/29/2017 | | | | | | 34 | | $ | 2,518 | | | | 9/28/2017 | | | | | | 28 | | $ | 2,537 | | | | 12/28/2017 | | | | | | 24 | | $ | 2,554 | | Alan D. Wilson | | 3/30/2017 | | | | | | 60 | | $ | 4,098 | | | | 4/27/2017 | | | | | | 2,837 | | $ | 200,065 | | | | 6/29/2017 | | | | | | 78 | | $ | 5,749 | | | | 9/28/2017 | | | | | | 64 | | $ | 5,793 | | | | 12/28/2017 | | | | | | 55 | | $ | 5,830 | |
| 3 | The following table representsgeneral counsel and corporate secretary to discuss and, as necessary, respond to stockholder communications to the aggregate number of equity awards outstandingBoard.Mr. Wilson’s significant executive management experience, including having served as of December 31, 2017. The outstanding equity awards held by Mr. Rogers were granted while he was anchair and chief executive officer of a publicly traded company, makes him especially qualified to serve as the Company.lead independent director for the Board. |
Director | Unvested Stock Awards | Unvested Stock Units | Unexercised Option Awards | Total | Vested Stock Units | Mark S. Bartlett | | 2,837 | | | | | | | | | 2,837 | | | | | Mary K. Bush | | 2,837 | | | | | | | | | 2,837 | | | 13,241 | | H. Lawrence Culp, Jr. | | 2,837 | | | | | | 8,700 | | | 11,537 | | | | | Dr. Freeman A. Hrabowski, III | | | | | 2,892 | | | 26,008 | | | 28,900 | | | 4,885 | | Robert F. MacLellan | | 2,837 | | | | | | 51,268 | | | 54,105 | | | 4,981 | | Brian C. Rogers | | | | | 10,830 | | | 132,462 | | | 143,292 | | | | | Olympia J. Snowe | | | | | 2,892 | | | | | | 2,892 | | | 2,713 | | Dwight S. Taylor | | 2,837 | | | | | | | | | 2,837 | | | 29,363 | | Anne Marie Whittemore | | | | | 2,892 | | | 29,141 | | | 32,033 | | | 11,205 | | Sandra S. Wijnberg | | 2,837 | | | | | | | | | 2,837 | | | 4,504 | | Alan D. Wilson | | | | | 2,892 | | | | | | 2,892 | | | 7,391 | |
Independent Leadership The Board has determined that the election of a lead independent director, together with a combined chair and CEO, serve the best interests of the Company and its stockholders at this time. We believe that a well-empowered lead independent director provides independent leadership to our Board. The Company has a strong independent Board, and all of the members of the Board, other than Mr. Stromberg, are independent under the NASDAQ Global Select Market standards. In addition, the Nominating and Corporate Governance Committee, the Audit Committee, and the Compensation Committee are all composed entirely of independent directors, and our chair and lead independent director, together with these committees, have significant and meaningful responsibilities designed to foster critical oversight and good governance practices. We believe that our structure is appropriate at this time and serves well the interests of the Company and its stockholders. 24 | 4 | Personal gifts matched by our sponsored T. Rowe Price Foundation to qualified charitable organizations. Mr. Rogers was eligible for a $25,000 match as he was an executive officer of the Company for part of the year before serving as nonexecutive chair on the Board.Group |
| 5 | All other compensation includes $98,269 for the compensation Mr. Rogers earned before his retirement as an executive officer of the Company on March 31, 2017, $125,000 paid on behalf of Mr. Rogers for individual filings submitted pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and a $25,000 match to the T. Rowe Price Foundation. |
Report
The Board is confident that the duties and responsibilities allocated to its lead independent director, together with its other corporate governance practices and strong independent board, provides appropriate and effective independent oversight of management. Committee Leadership and Rotation In 2015, Mr. Bartlett became the chair of the Audit Committee, Mr. MacLellan became the chair of the Compensation Committee and Ms. Snowe became the chair of the Nominating and Corporate Governance Committee Committee. Our Corporate Governance Guidelines provide that periodic rotation of committee membership and chairpersons is generally beneficial to the Company, and contributes to healthy and collaborative Board engagement. However, this rotation is not mandatory, and in some circumstances continued service on a committee or as chair by persons with particular skills may be warranted. At least every 5 years, the Nominating and Corporate Governance Committee has general oversight responsibility for governanceshall do a thorough review of all Board leadership positions to make recommendations to the Company, includingBoard about potential changes and to suggest skills which may be needed on the assessment and recruitment of new director candidates and the evaluation of director and committees. Board performance. We monitor regulatory and other developments in the governance area with a view toward both legal compliance and maintaining governance practices at the Company consistent with what we consider to be best practices.Evaluations Corporate Governance Developments in 2017
Management Succession
This Committee oversees ongoing management succession planning and monitors the development and evaluation of senior leaders of the firm. In 2017, the Company completed the final phase of its management succession plan for Brian C. Rogers, who served as our chief investment officer since 2004. Effective March 31, 2017, we appointed six senior investment leaders to share chief investment officer (CIO) responsibilities, which include providing investment thought leadership, partnering with
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investment division leaders to develop investment talent and capabilities, serving as mentors for the firm’s investment professionals, and visiting with clients around the world. Robert W. Sharps, our group CIO, coordinates the activities of the CIO group, which, among other things, facilitates the other CIOs’ ability to remain active as investors on behalf of our clients.
In January 2017, the Company announced that Kenneth V. Moreland, chief financial officer and treasurer of the Company, would retire from the Company. After an extensive search, the firm announced that Céline Dufétel, a managing director of Neuberger Berman and former McKinsey & Company partner, would join the firm as vice president in late 2017 and would assume the roles of chief financial officer (CFO) and treasurer in the first quarter of 2018. As CFO, Ms. Dufétel will provide global leadership and oversight for all financial activities of the firm, as well as manage the various functions within the CFO Group, including Finance, Treasury, Risk, Audit, Corporate Real Estate & Facilities, and Business Services. She also will assume responsibility for the corporate strategy team and lead the firm’s relationships with analysts and T. Rowe Price Group stockholders. While this Committee has primary responsibility for CEO and director succession, our Executive Compensation and Management Development Committee periodically receives reports from management concerning the development of leadership within the Company and the succession planning that is occurring with respect to senior leadership positions. A comprehensive report on these matters was provided to the Compensation Committee at one of its meetings during 2017, and the Compensation Committee and the Board receive periodic updates on these matters.
Board Evaluations
In January 2018,2021, we asked all Board members to reply to an anonymous evaluation questionnaire regarding the performance of the Board and its committees during 2017.2020, which evaluation was conducted by an outside third-party in consultation with the Chair of the Nominating and Corporate Governance Committee and the Lead Independent Director. Feedback from these questionnaires was supplemented by interviews of each independent director by our lead independent director. We discussed theLead Independent Director. The results of the evaluations and interviews were then discussed at oura meeting on February 13, 2018,of the Nominating and providedCorporate Governance Committee and a full report was also provided to the Board. Consistent with past practice, we will implementconsider suggestions and conclusions from the evaluation process for inclusion during the course of the upcoming year. We plan to continue to conduct independent third-party evaluations and interviews each year and to periodically modify our procedures to ensure that we receive candid feedback and are responsive to future developments and suggestions from our directors.
Charter
Engagement with our Stockholders As investment professionals, we know the value of engaging with companies. We maintain an active and Bylaw Review open dialogue with our stockholders, visiting them in their cities, hosting them in our offices, and inviting them to our annual meeting of stockholders. We routinely reviewproactively engage them on a range of topics including corporate governance, and consider our governance profilephilosophy and duringpractices relating to environmental and social responsibility. We attempt to incorporate and address the course of 2017feedback we reviewedreceive from our Charter and By-Laws to determine whether there were any updating amendments or modifications that would be appropriate. As part of that review, we reconsideredstockholders into our practices. The work-from-home environment as a provision of our Charter that provides that any stockholder holding 15% or moreresult of the outstanding shares of common stock of the Company would only be entitledcoronavirus pandemic created new opportunities to vote shares up to the 15% level. This Charter provision was adopted by usengage our stockholders in 2020. We held nearly 100 meetings with our stockholders in the 1980s at the time we originally became a public company. The Committee and the Board concluded that, as a matter of good corporate governance, the provision should be removed. In addition, it is the only portion of the Company’s Charter that requires a two-thirds vote to be amended; all other Charter provisions can be amended by the affirmative vote ofvirtual environment, including a majority of our top 40 stockholders, to discuss the outstandingCompany’s performance and progress against our long-term strategy, as well as broader trends across the investment management industry. Further, in an effort to provide greater transparency around our efforts and progress related to our environmental, social and governance initiatives, we also published our first-ever Corporate ESG Update for Stockholders. We look forward to continuing to expand our stockholder engagement efforts. HOW | | WHAT | • Attendance at Conferences • Investor Day • Incoming stockholder calls and meetings • Annual Meeting of Stockholders • Outreach, calls and meetings with Investors’ corporate governance departments • Participation on industry panels • Universal access to an email address for stockholders wishing to contact the Board | | • Strategic and financial performance and goals • Corporate and business strategy • Board composition and leadership structure • Corporate governance and industry trends, including ESG considerations • Regulatory considerations • Respond to inquiries concerning broad range of topics |
Stockholder Proposals From time to time, we receive proposals from our stockholders intended for inclusion in our proxy statement. We typically work with Company management in reviewing these proposals and determining an appropriate course of action in response, including, where necessary, a statement of our position for or in opposition to the proposal from the stockholder. Often in response the Board will ask management to engage with a stockholder on their proposal, which has led to meaningful dialogue and assisted the Board in understanding the concerns of our stockholders. Stockholder Communications with the Board of Directors Our Board members are interested in hearing the opinions of the stockholders. The Nominating and Corporate Governance Committee has established the following procedures in order to facilitate communications between our stockholders and our Board: • | Stockholders may send correspondence, which should indicate that the sender is a stockholder, to our Board or to any individual director by mail to T. Rowe Price Group, Inc., c/o general counsel, P.O. Box 17134, Baltimore, MD 21297-1134, or by email to contact_the_board@troweprice.com or by Internet at troweprice.gcs-web.com/corporate-governance/contact-the-board. | | | • | Our general counsel will be responsible for the first review and logging of this correspondence. The general counsel will forward the communication to the director or directors to whom it is addressed unless it is a type of correspondence that the Nominating and Corporate Governance Committee has identified as correspondence that may be retained in our files and not sent to directors. | | | • | The Nominating and Corporate Governance Committee has authorized the general counsel to retain and not send to directors the following types of communications: |
| • | Advertising or promotional in nature (offering goods or services); | | | | | • | Complaints by clients with respect to ordinary course of business customer service and satisfaction issues; provided, however, that the general counsel will notify the chair of the Nominating and Corporate Governance Committee of any complaints that, in the opinion of the general counsel, warrant immediate committee attention by their nature or frequency; or | | | | | • | Those clearly unrelated to our business, industry, management, Board, or committee matters. |
These types of communications will be logged and filed but not circulated to directors. Except as described above, the general counsel will not screen communications sent to directors. The log of stockholder correspondence will be available to members of the Nominating and Corporate Governance Committee for inspection. At least once each year, the general counsel will provide to the Nominating and Corporate Governance Committee a summary of the communications received from stockholders, including the communications not sent to directors in accordance with screening procedures approved by the Nominating and Corporate Governance Committee. By the Nominating and Corporate Governance Committee of the Board of Directors of T. Rowe Price Group, Inc. | Olympia J. Snowe, Chair Mary K. Bush Dr. Freeman A. Hrabowski, III Robert J. Stevens Alan D. Wilson |
Compensation of Directors The Nominating and Corporate Governance Committee is responsible for periodically reviewing non-employee director compensation and benefits and recommending changes, if appropriate, to the full Board. Our non-employee director compensation program is designed to accomplish a number of objectives: Align the interests of our non-employee directors with those of our stockholders; Provide competitive compensation for service to the Board by our non-employee directors; Maintain appropriate consistency with our approach to compensation for our executive officers and senior employees; and Attract and retain a diverse mix of capable and highly qualified directors. We provide both cash and equity compensation to our directors and believe that, over time, cash and equity compensation should reflect approximately 40% and 60%, respectively, of the total compensation paid to our directors. The cash compensation component is based primarily on an annual retainer coupled with fees for committee attendance, lead director role, and committee chair roles. The equity compensation component is in the form of full value awards. We believe our total compensation package and compensation structure is comparable to and in line with other major financial service companies. The Nominating and Corporate Governance Committee periodically reviews and considers competitive market practices. In 2020 there were no changes to the compensation program for our non-employee directors. Fees and Other Compensation in 2020 All non-employee directors received the following in 2020: An annual retainer of $100,000 for all non-employee directors; A fee of $1,500 for each committee meeting attended; A fee of $15,000 for the lead director; A fee of $20,000 and $5,000, for the chair of the Audit Committee and each Audit Committee member, respectively; A fee of $10,000 for the chair of the Compensation Committee; A fee of $10,000 for the chair of the Nominating and Corporate Governance Committee; Directors and all U.S. employees of Price Group and its subsidiaries are eligible to have our sponsored T. Rowe Price Foundation match personal gifts up to an annual limit to qualified charitable organizations. For 2020, non-employee directors were eligible to have up to $10,000 matched; The reimbursement of reasonable out-of-pocket expenses incurred in connection with their travel to and from, and attendance at each meeting of the Board and its committees and related activities, including director education courses and materials; and The reimbursement of spousal travel to and from and participation in events held in connection with the annual joint Price Group and Price funds’ boards of directors meeting. The annual retainer and fees noted above are prorated for the period of time during the calendar year that each director held the position. Pursuant to the Outside Directors Deferred Compensation Plan, non-employee directors can elect to defer payment of their director fees until the next calendar year or to defer payment of their director fees into vested restricted stock units (RSUs) pursuant to the 2017 Non-Employee Director Equity Plan, as amended (2017 Director Plan). The RSUs will be settled in shares of our common stock, or cash in the case of fractional shares, upon the director’s separation from service. Any such election needs to be received prior to the beginning of the year they wish to have their payment deferred. Dr. Hrabowski and Ms. Snowe elected to have their 2020 director fees deferred to 2021. Messrs. MacLellan, Stevens, Wilson and Ms. Wijnberg elected to have their 2020 director fees deferred into vested RSUs. Equity-Based Compensation in 2020 Pursuant to the 2017 Director Plan, each newly elected Board member is awarded an initial grant in the form, at their election, of restricted shares or RSUs having a value on the date of grant of $300,000 that vests one-year after the grant date. In each subsequent year, each non-employee director is awarded, at their election, restricted shares or RSUs having a value on the date of grant of $200,000 on the first business day after the Annual Meeting. Each of the award types vest upon the earliest of one year after the grant date, or the day before the annual meeting held in the calendar year after the year in which the grant is made, the non-employee director’s death or date on which the director becomes totally and permanently disabled, or the date on which a change in control occurs, provided the director continues to be a member of the Board on the applicable date. Restricted shares entitle the holder to the rights of a stockholder, including voting, dividend, and distribution rights, but are nontransferable until they vest. Vested stock units will be settled in shares of our common stock or cash, in the case of fractional shares, upon a non-employee director’s separation from service. Non-employee directors holding stock units are not entitled to be voted. Accordingly, removingvoting, dividend, distribution, or other rights until the 15% Charter provision also eliminates this supermajority vote provision, whichcorresponding shares of our common stock are issued upon settlement; however, if and when we also considered to be favorablepay a cash dividend to our governance profile. These changes are being recommendedcommon stockholders, we will issue dividend equivalents in the form of additional stock units. Under the 2017 Director Plan, dividends and dividend equivalents payable with respect to unvested restricted shares and unvested stock units will be subject to the stockholders elsewheresame vesting and risks of forfeiture as the restricted shares and stock units to which they are attributable. The 2017 Director Plan includes a provision that accelerates the vesting of all outstanding awards in this proxy statement.connection with a change in control of Price Group. Upon a change in control, any outstanding stock units will be settled in cash or shares at the discretion of the Board. Board Leadership Lead Independent Director Transition
The lead independent director role was created in 2004 and has continually developed since that time. The lead independent director chairs Board meetings at which the chairperson is not present, approves Board agendas and meeting schedules, and oversees Board materials distributed in advance of Board meetings. The lead independent director also calls meetings of the independent directors, chairs all executive sessions of the independent directors, and acts as liaison between the independent directors and management. The lead independent director is available to the chief legal officer to discuss and, as necessary, respond to stockholder communications to the Board.
At the upcoming Annual Meeting, Mr. Wilson will succeed Ms. Whittemore as the lead independent director. Ms. Whittemore has acted as the lead independent director since April 2016.
During 2015, Mr. Bartlett replaced Mr. MacLellan as the chairman of the Audit Committee, Mr. MacLellan replaced Mr. Taylor as the chairman of the Executive Compensation Committee, and Ms. Snowe replaced Dr. Alfred Sommer as chair of the Nominating and Corporate Governance Committee. Our Corporate Governance Guidelines provide that periodic rotation of committee membership and chairpersons is desirable and that chairpersons generally will be considered for change at least every five years. This is not an absolute rule, however, and in some circumstances continued service on a committee or as chairperson by persons with particular skills may be warranted.
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Nonexecutive Chair of the Board and Lead Independent Director
| | | | William J. Stromberg Chair of the Board | | | Alan D. Wilson Lead Independent Director | | | | | Mr. Stromberg was elected as the chair of the Board in addition to his role as our President and CEO at the April 2019 Board meeting. By serving in both positions, Mr. Stromberg has been able to draw on his detailed knowledge of the Company to provide leadership to the Board in coordination with the lead independent director. The combined role of chair and CEO reflects our confidence in the leadership of Mr. Stromberg and also ensures that the Company presents its strategy to clients, employees and stockholders with a unified voice from the person most knowledgeable about and responsible for the implementation of the Company’s strategy. | | | Mr. Wilson was elected by our independent directors as lead independent director after the 2018 Annual Meeting and is expected to be re-elected after the Annual Meeting. The lead independent director role was created in 2004 and has continually developed since that time. The lead independent director chairs Board meetings at which the chair is not present, approves Board agendas and meeting schedules, and oversees Board materials distributed in advance of Board meetings. The lead independent director also calls meetings of the independent directors, chairs all executive sessions of the independent directors, and acts as liaison between the independent directors and management. The lead independent director is available to the general counsel and corporate secretary to discuss and, as necessary, respond to stockholder communications to the Board. Mr. Wilson’s significant executive management experience, including having served as chair and chief executive officer of a publicly traded company, makes him especially qualified to serve as the lead independent director for the Board. |
Independent Leadership The Board has determined that the election of Directors In April 2017, Mr. Rogers assumed his role as the nonexecutive chair of the Board of Directors. This allows us to continue to benefit from the significant experience and leadership provided by Mr. Rogers. In his role as the non-executive chair, Mr. Rogers works closely with oura lead independent director, together with a combined chair and CEO, to provide leadership to our Boardserve the best interests of Directors.
Independent Leadership
the Company and its stockholders at this time. We believe that the current combination of a nonexecutive chairperson and a well-empowered lead independent director provides independent leadership ofto our Board of Directors. We also note that theBoard. The Company has a strong independent Board, with three-quartersand all of the members beingof the Board, other than Mr. Stromberg, are independent under the NASDAQ Global Select Market standards. In addition, thisthe Nominating and Corporate Governance Committee, the Audit Committee, and the Compensation Committee are all composed entirely of independent directors, and our chairpersonchair and lead independent director, together with these Committees,committees, have significant and meaningful responsibilities designed to foster critical oversight and good governance practices. We believe that our structure is appropriate at this time and serves well the interests of the Company and its stockholders. Director Qualifications
The Board is confident that the duties and responsibilities allocated to its lead independent director, together with its other corporate governance practices and strong independent board, provides appropriate and effective independent oversight of management. Committee Leadership and Rotation In 2015, Mr. Bartlett became the Nominations Process There have been a numberchair of Board retirements over the past few years, includingAudit Committee, Mr. MacLellan became the retirementchair of Mr. Taylorthe Compensation Committee and Ms. Whittemore, longtime membersSnowe became the chair of our Boardthe Nominating and Corporate Governance Committee. Our Corporate Governance Guidelines provide that periodic rotation of Directors, at the upcoming Annual Meeting. As a result, the Committee has been very active in recruitingcommittee membership and considering new director candidates, adding Ms. Wijnberg in 2016 and Messrs. Culp and Wilson in 2015. As indicated elsewhere in this proxy statement, Mr. Verma has been nominated for additionchairpersons is generally beneficial to the Company, and contributes to healthy and collaborative Board at the upcoming Annual Meeting. After the 2018 Annual Meeting, the Board will have 12 members, nine of whom are independent. The tenure of our independent directors will be varied, with seven of our independent directors joining the Board after 2012.
We believe that the nominees presentedengagement. However, this rotation is not mandatory, and in this proxy statement constitutesome circumstances continued service on a Board with an appropriate level and diversity of experience, education, skills, and independence. We routinely consider whether additional independent directors should be added to the Board, and may add new members in the future. In considering the need for additional independent directors, we consider any expected Board departures and retirements and factor succession planning for the Board members into our deliberations,committee or as chair by persons with particular referenceskills may be warranted. At least every 5 years, the Nominating and Corporate Governance Committee shall do a thorough review of all Board leadership positions to specific skills and capabilities of departing Board members. While we continue to look for additional directors with diverse and relevant backgrounds, we are very pleased with our current complement of directors and the varied perspectives they bring to the Board.
This committee supervises the nomination process for directors. We consider the performance, independence, diversity, and other characteristics of our incumbent directors, including their willingness to serve for an additional term, and any change in their employment or other circumstances in considering their renomination each year. In considering diversity, we consider diversity of background and experience as well as ethnic, gender, racial, and other forms of diversity. Although we do not have a formal policy regarding diversity in identifying nominees for a directorship, we monitor the diversity profile of the Board and consider it an important factor relevant to any particular nominee and to the overall composition of our Board.
In the event that a vacancy exists or we decide to increase the size of the Board, we identify, interview and examine, and make recommendations to the Board about potential changes and to suggest skills which may be needed on the committees.
Board Evaluations In January 2021, we asked all Board members to reply to an anonymous evaluation questionnaire regarding appropriate candidates. We identify potential candidates principally throughthe performance of the Board and its committees during 2020, which evaluation was conducted by an outside third-party in consultation with the Chair of the Nominating and Corporate Governance Committee and the Lead Independent Director. Feedback from these questionnaires was supplemented by interviews of each independent director by our Lead Independent Director. The results of the evaluations and interviews were then discussed at a meeting of the Nominating and Corporate Governance Committee and a full report was also provided to the Board. Consistent with past practice, we consider suggestions from the Company’s directors and senior management. The chairman and chief executive officer and other Board members may also seek candidates through informal discussions with third parties. We also consider candidates recommended or suggested by stockholders as described below. In evaluating potential candidates, we consider independence from management, background, experience, expertise, commitment, diversity, number of other public board and related committee seats held, and potential conflicts of interest, among other factors, and take into account the composition of the Board at the time of the assessment. All candidatesevaluation process for nomination must:
| ■ | demonstrate unimpeachable character and integrity; |
| ■ | have sufficient time to carry out their duties; |
| ■ | have experience at senior levels in areas of expertise helpful to the Company and consistent with the objective of having a diverse and well-rounded Board; and |
| ■ | have the willingness and commitment to assume the responsibilities required of a director of the Company. |
In addition, candidates expected to serve on the Audit Committee must meet independence and financial literacy qualifications imposed by the NASDAQ Global Select Market and by the SEC and other applicable law. Candidates expected to serve on this committee or the Compensation Committee must meet independence qualifications set out by the NASDAQ Global Select Market, and members of the Compensation Committee must also meet additional independence tests imposed by the
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NASDAQ Global Select Market. Our evaluations of potential directors include, among other things, an assessment of a candidate’s background and credentials, personal interviews, and discussions with appropriate references. Once we have selected a candidate, we present him or her to the full Board for election if a vacancy occurs or is created by an increase in the size of the Boardinclusion during the course of the upcoming year. We plan to continue to conduct independent third-party evaluations and interviews each year or for nomination ifand to periodically modify our procedures to ensure that we receive candid feedback and are responsive to future developments and suggestions from our directors.
Engagement with our Stockholders As investment professionals, we know the director isvalue of engaging with companies. We maintain an active and open dialogue with our stockholders, visiting them in their cities, hosting them in our offices, and inviting them to be first elected byour annual meeting of stockholders. All directors serve for one-year termsWe proactively engage them on a range of topics including corporate governance, and must stand for reelection annually. Director Orientationour philosophy and Continuing Educationpractices relating to environmental and Development
Whensocial responsibility. We attempt to incorporate and address the feedback we receive from our stockholders into our practices. The work-from-home environment as a new independent director joins the Board, we provide an orientation program for the purpose of providing the new director with an understandingresult of the operationscoronavirus pandemic created new opportunities to engage our stockholders in 2020. We held nearly 100 meetings with our stockholders in the virtual environment, including a majority of our top 40 stockholders, to discuss the Company’s performance and the financial condition of the Companyprogress against our long-term strategy, as well as broader trends across the Board’s expectationsinvestment management industry. Further, in an effort to provide greater transparency around
our efforts and progress related to our environmental, social and governance initiatives, we also published our first-ever Corporate ESG Update for its directors. Each director is expectedStockholders. We look forward to maintain the necessary knowledge and informationcontinuing to perform his or her responsibilities as a director. To assist the directors in understanding the Company and its industry and maintaining the level of expertise required for the director, the Company will, fromexpand our stockholder engagement efforts. HOW | | WHAT | • Attendance at Conferences • Investor Day • Incoming stockholder calls and meetings • Annual Meeting of Stockholders • Outreach, calls and meetings with Investors’ corporate governance departments • Participation on industry panels • Universal access to an email address for stockholders wishing to contact the Board | | • Strategic and financial performance and goals • Corporate and business strategy • Board composition and leadership structure • Corporate governance and industry trends, including ESG considerations • Regulatory considerations • Respond to inquiries concerning broad range of topics |
Stockholder Proposals From time to time, and at least annually, offer Company-sponsored continuing education programs or presentations in addition to briefings during Board meetings relating to the competitive and industry environment and the Company’s goals and strategies. The Board has joined the National Association of Corporate Directors, which provides resources that help directors strengthen board leadership. Each director is encouraged to participate at least once every three years in continuing education programs for public-company directors sponsored by nationally recognized educational organizations not affiliated with the Company. The cost of all such continuing education is paid for by the Company.
Shareholder Proposals
We from time to timewe receive shareholder proposals from our stockholders intended for inclusion in our proxy statement. We typically will work with Company management in reviewing these proposals and determinedetermining an appropriate course of action in response, including, where necessary, a statement of our position for or in opposition to the proposal from the stockholder. Often in response the Board will ask management to engage with a stockholder on their proposal, which has led to meaningful dialogue and assisted the Board in understanding the concerns of our stockholders.
Policy With Respect
Stockholder Communications with the Board of Directors Our Board members are interested in hearing the opinions of the stockholders. The Nominating and Corporate Governance Committee has established the following procedures in order to facilitate communications between our stockholders and our Board: • | Stockholders may send correspondence, which should indicate that the sender is a stockholder, to our Board or to any individual director by mail to T. Rowe Price Group, Inc., c/o general counsel, P.O. Box 17134, Baltimore, MD 21297-1134, or by email to contact_the_board@troweprice.com or by Internet at troweprice.gcs-web.com/corporate-governance/contact-the-board. | | | • | Our general counsel will be responsible for the first review and logging of this correspondence. The general counsel will forward the communication to the director or directors to whom it is addressed unless it is a type of correspondence that the Nominating and Corporate Governance Committee has identified as correspondence that may be retained in our files and not sent to directors. | | | • | The Nominating and Corporate Governance Committee has authorized the general counsel to retain and not send to directors the following types of communications: |
| • | Advertising or promotional in nature (offering goods or services); | | | | | • | Complaints by clients with respect to ordinary course of business customer service and satisfaction issues; provided, however, that the general counsel will notify the chair of the Nominating and Corporate Governance Committee of any complaints that, in the opinion of the general counsel, warrant immediate committee attention by their nature or frequency; or | | | | | • | Those clearly unrelated to our business, industry, management, Board, or committee matters. |
These types of communications will be logged and filed but not circulated to directors. Except as described above, the general counsel will not screen communications sent to directors. The log of stockholder correspondence will be available to members of the Nominating and Corporate Governance Committee for inspection. At least once each year, the general counsel will provide to the ConsiderationNominating and Corporate Governance Committee a summary of Director Candidates Recommended or Nominatedthe communications received from stockholders, including the communications not sent to directors in accordance with screening procedures approved by Stockholdersthe Nominating and Corporate Governance Committee. By the Nominating and Corporate Governance Committee of the Board of Directors of T. Rowe Price Group, Inc. | Olympia J. Snowe, Chair Mary K. Bush Dr. Freeman A. Hrabowski, III Robert J. Stevens Alan D. Wilson |
Compensation of Directors Recommendations
The Nominating and Corporate Governance Committee is responsible for periodically reviewing non-employee director compensation and benefits and recommending changes, if appropriate, to the full Board. Our non-employee director compensation program is designed to accomplish a number of objectives: Align the interests of our non-employee directors with those of our stockholders; Provide competitive compensation for service to the Board by our non-employee directors; Maintain appropriate consistency with our approach to compensation for our executive officers and senior employees; and Attract and retain a diverse mix of capable and highly qualified directors. We provide both cash and equity compensation to our directors and believe that, over time, cash and equity compensation should reflect approximately 40% and 60%, respectively, of the total compensation paid to our directors. The cash compensation component is based primarily on an annual retainer coupled with fees for committee attendance, lead director role, and committee chair roles. The equity compensation component is in the form of full value awards. We believe our total compensation package and compensation structure is comparable to and in line with other major financial service companies. The Nominating and Corporate Governance Committee periodically reviews and considers competitive market practices. In 2020 there were no changes to the compensation program for our non-employee directors. Fees and Other Compensation in 2020 All non-employee directors received the following in 2020: An annual retainer of $100,000 for all non-employee directors; A stockholder who wishes to recommend a candidatefee of $1,500 for each committee meeting attended; A fee of $15,000 for the Board should send a letter tolead director; A fee of $20,000 and $5,000, for the chairperson of this committee at the Company’s principal executive offices providing (i) information relevant to the candidate’s satisfactionchair of the criteria described above under “Director QualificationsAudit Committee and each Audit Committee member, respectively; A fee of $10,000 for the Nominations Process” and (ii) information that would be required for a director nomination under Section 1.11chair of the Company’s AmendedCompensation Committee; A fee of $10,000 for the chair of the Nominating and Restated By-Laws. The committee will considerCorporate Governance Committee; Directors and evaluate candidates recommended by stockholders in the same manner it considers candidates from other sources. Acceptanceall U.S. employees of a recommendation does not imply that the committee will ultimately nominate the recommended candidate.Proxy AccessPrice Group and Nominations
In late 2015, we adopted a proxy access rightits subsidiaries are eligible to permit a stockholder, or a group ofhave our sponsored T. Rowe Price Foundation match personal gifts up to 20 stockholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years,an annual limit to nominate and include in the Company’s proxy materials director-nominees constitutingqualified charitable organizations. For 2020, non-employee directors were eligible to have up to two individuals or 20%$10,000 matched;
The reimbursement of reasonable out-of-pocket expenses incurred in connection with their travel to and from, and attendance at each meeting of the Board (whichever is greater), providedand its committees and related activities, including director education courses and materials; and The reimbursement of spousal travel to and from and participation in events held in connection with the annual joint Price Group and Price funds’ boards of directors meeting. The annual retainer and fees noted above are prorated for the period of time during the calendar year that each director held the stockholder(s) andposition. Pursuant to the nominee(s) satisfyOutside Directors Deferred Compensation Plan, non-employee directors can elect to defer payment of their director fees until the requirements specifiednext calendar year or to defer payment of their director fees into vested restricted stock units (RSUs) pursuant to the 2017 Non-Employee Director Equity Plan, as amended (2017 Director Plan). The RSUs will be settled in shares of our common stock, or cash in the amended By-Laws. Section 1.13case of fractional shares, upon the director’s separation from service. Any such election needs to be received prior to the beginning of the year they wish to have their payment deferred. Dr. Hrabowski and Ms. Snowe elected to have their 2020 director fees deferred to 2021. Messrs. MacLellan, Stevens, Wilson and Ms. Wijnberg elected to have their 2020 director fees deferred into vested RSUs. Equity-Based Compensation in 2020 Pursuant to the 2017 Director Plan, each newly elected Board member is awarded an initial grant in the form, at their election, of restricted shares or RSUs having a value on the date of grant of $300,000 that vests one-year after the grant date. In each subsequent year, each non-employee director is awarded, at their election, restricted shares or RSUs having a value on the date of grant of $200,000 on the first business day after the Annual Meeting. Each of the award types vest upon the earliest of one year after the grant date, or the day before the annual meeting held in the calendar year after the year in which the grant is made, the non-employee director’s death or date on which the director becomes totally and permanently disabled, or the date on which a change in control occurs, provided the director continues to be a member of the Board on the applicable date. Restricted shares entitle the holder to the rights of a stockholder, including voting, dividend, and distribution rights, but are nontransferable until they vest. Vested stock units will be settled in shares of our common stock or cash, in the case of fractional shares, upon a non-employee director’s separation from service. Non-employee directors holding stock units are not entitled to voting, dividend, distribution, or other rights until the corresponding shares of our common stock are issued upon settlement; however, if and when we pay a cash dividend to our common stockholders, we will issue dividend equivalents in the form of additional stock units. Under the 2017 Director Plan, dividends and dividend equivalents payable with respect to unvested restricted shares and unvested stock units will be subject to the same vesting and risks of forfeiture as the restricted shares and stock units to which they are attributable. The 2017 Director Plan includes a provision that accelerates the vesting of all outstanding awards in connection with a change in control of Price Group’s Amended and Restated By-Laws sets outGroup. Upon a change in control, any outstanding stock units will be settled in cash or shares at the procedures a stockholder must follow to use proxy access. Section 1.11 of Price Group’s Amended and Restated By-Laws sets out the procedures a stockholder must follow in order to nominate a candidate for Board membership outsidediscretion of the proxy access process. For these requirements, please referBoard. Ownership and Retention Guidelines Each non-employee director added to the AmendedBoard prior to 2017 is required to hold shares of our common stock, within five years of their appointment to the Board, having a value equal to three times the applicable cash retainer at the time they joined. The cash retainer amount was $300,000 in 2015 and Restated By-Laws2016, and $225,000 prior to 2015. Directors who were new to the Board in 2017 or who will join in the future, have an ownership goal of five times the annual cash retainer in effect on the date they join the Board. For purposes of the calculation, unvested restricted shares and outstanding stock units are counted, but unexercised stock options are not. Once this ownership goal is achieved, the number of shares required to be held becomes fixed and must be maintained until the end of the director’s service on the Board. Until the ownership goal is achieved, the director is expected to retain “net gain shares” resulting from the exercise of stock options or vesting of restricted stock granted under the applicable director plan. Net gain shares are the shares remaining after payment of the stock option exercise price and taxes owed with respect to the exercise or vesting event. All of our directors have achieved and maintain the ownership goal as of December 10, 2015, filed with the SEC on December 10, 2015, as Exhibit 3(ii) to a Current Report on Form 8-K.date of this proxy statement. Olympia J. Snowe, Chair
Mary K. Bush
H. Lawrence Culp, Jr.
Anne Marie Whittemore
Alan D. Wilson
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Security OwnershipTable of Certain Beneficial Owners and ManagementContents
2020 Director Compensation1 Stock Ownership of 5% Beneficial Owners
To our knowledge, these are the following beneficial owners of more than 5% of our outstanding common stock as of February 23, 2018.
Name and Address
| Amount and Nature of
Beneficial Ownership
| Percent of Class
| BlackRock, Inc.
| | | | | | | 55 East 52nd Street
| | | | | | | New York, NY 10055
| 17,337,902 shares1
| | 7.09
| %
| | | | | | State Street Corporation
| | | | | State Street Financial Center
| | | | | One Lincoln Street
| | | | | Boston, MA 02111
| 13,314,981 shares2
| | 5.44
| %
| | | | | | The Vanguard Group
| | | | | 100 Vanguard Boulevard
| | | | | Malvern, PA 19355
| 18,340,906 shares3
| | 7.50
| %
|
| 1 | Based solely on information contained in a Schedule 13G/A filed with the SEC on January 29, 2018, by BlackRock, Inc. Of the 17,337,902 shares beneficially owned, BlackRock, Inc., has sole power to vote or direct the vote of 15,119,431 shares and sole power to dispose or to direct the disposition of 17,337,902 shares. |
| 2 | Based solely on information contained in a Schedule 13G filed with the SEC on February 14, 2018, by State Street Corporation. State Street Corporation has shared power to vote or direct the vote and shared power to dispose or direct the disposition of 13,314,981 shares. |
| 3 | Based solely on information contained in a Schedule 13G/A filed with the SEC on February 12, 2018, by The Vanguard Group. Of the 18,340,906 shares beneficially owned, The Vanguard Group has sole power to vote or direct the vote of 337,685 shares, sole power to dispose or to direct the disposition of 17,964,212 shares, shared power to vote or direct the vote of 45,545 shares, and shared power to dispose or to direct the disposition of 376,694 shares. |
Stock Ownership of Management
The following table sets forth information regarding the beneficial ownershipcompensation earned by, or paid to, directors who served on our Board during 2020. As an officer of our common stock as of the record date, February 23, 2018, by (i) each director and each nominee for director, (ii) each person namedPrice Group, Mr. Stromberg does not receive separate directors’ fees so he has been omitted from this table. Mr. Stromberg appears in theour Summary Compensation Table and (iii) all directors and executive officers as a group. Share amounts and percentages shown for each individual or group in the table assume the exercise of all stock options exercisable by such individual or group within 60 days of the record date and the settlement of restricted stock units that are vested or will vest within 60 days of the record date. Except as otherwise noted, all shares are owned individually with sole voting and dispositive power.NEO. Name of Beneficial Owner | Amount of Beneficial Ownership | Percent of Class1 | Christopher D. Alderson | | 583,016 | 2 | | | * | Mark S. Bartlett | | 19,237 | 3 | | | * | Edward C. Bernard | | 1,983,304 | 4 | | | * | Mary K. Bush | | 18,678 | 5 | | | * | H. Lawrence Culp, Jr. | | 19,958 | 6 | | | * | Dr. Freeman A. Hrabowski, III | | 64,041 | 7 | | | * | Robert F. MacLellan | | 59,086 | 8 | | | * | Kenneth V. Moreland | | 92,284 | | | | * | Brian C. Rogers | | 2,797,302 | 9 | | 1.1 | % | Robert W. Sharps | | 428,614 | 10 | | | * | Olympia J. Snowe | | 12,013 | 11 | | | * | William J. Stromberg | | 1,087,223 | 12 | | | * | Dwight S. Taylor | | 33,400 | 13 | | | * | Richard R. Verma | | — | 14 | | | * | Anne Marie Whittemore | | 51,231 | 15 | | | * | Sandra S. Wijnberg | | 7,341 | 16 | | | * | Alan D. Wilson | | 7,391 | 17 | | | * | Directors and All Executive Officers as a Group (21 persons) | | 7,692,895 | 18 | | 3.1 | % |
NAME | | FEES EARNED OR PAID IN CASH | | | STOCK AWARDS2,3 | | | ALL OTHER COMPENSATION4 | | TOTAL | | Mark S. Bartlett | | $ | 135,000 | | | | $200,013 | | | $ | 10,000 | | | $345,013 | | Mary K. Bush | | $ | 115,000 | | | | $250,939 | | | $ | 10,000 | | | $375,939 | | Dina Dublon | | $ | 120,000 | | | | $215,565 | | | $ | 10,000 | | | $345,565 | | Dr. Freeman A. Hrabowski, III | | $ | 118,583 | | | | $248,550 | | | $ | 10,000 | | | $377,133 | | Robert F. MacLellan | | $ | — | | | | $350,125 | | | $ | 10,000 | | | $360,125 | | Olympia J. Snowe | | $ | 125,000 | | | | $240,200 | | | $ | 10,000 | | | $375,200 | | Robert J. Stevens | | $ | — | | | | $331,454 | | | $ | — | | | $331,454 | | Richard R. Verma | | $ | 120,000 | | | | $221,991 | | | $ | 10,000 | | | $350,991 | | Sandra S. Wijnberg | | $ | — | | | | $338,214 | | | $ | 10,000 | | | $348,214 | | Alan D. Wilson | | $ | — | | | | $389,223 | | | $ | — | | | $389,223 | |
| 1 | Beneficial ownership of less than 1% is representedIncludes only those columns relating to compensation awarded to, earned by, an asterisk (*).or paid to non-employee directors for their services in 2020. All other columns have been omitted. |
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| | 2 | Includes 240,121 shares that may be acquired by Mr. Alderson within 60 days uponThe following table represents the exercise of stock options and 262,000 shares held by a member of Mr. Alderson’s family. |
| 3 | Includes 2,837 unvested restricted stock awards. |
| 4 | Includes (i) 163,716 shares that may be acquired by Mr. Bernard within 60 days upon the exercise of stock options, (ii) 279,463 shares heldequity awards granted in a family trust, (iii) 60,500 shares held by a member of Mr. Bernard’s family, and (iv) 846,210 shares held by trusts for which Mr. Bernard is a trustee and disclaims beneficial ownership. Neither he nor any member of his family has any economic interest in the trusts described in (iv). |
| 5 | Includes 2,837 unvested restricted stock awards and 13,241 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Bush’s separation from the Board. |
| 6 | Includes (i) 8,700 shares that may be acquired by Mr. Culp within 60 days upon the exercise of stock options, (ii) 2,837 unvested restricted stock awards, (iii) 1,123 shares held in a family trust and foundation, (iv) 884 shares held by a family member’s trust, and (v) 2,064 shares held by a limited liability company in which Mr. Culp has an interest and disclaims beneficial ownership. |
| 7 | Includes (i) 26,008 shares that may be acquired by Dr. Hrabowski within 60 days upon the exercise of stock options, (ii) 4,885 vested stock units that will be settled in shares of the Company’s common stock upon Dr. Hrabowski’s separation from the Board, and (iii) 33,148 shares held by a member of Dr. Hrabowski’s family. |
| 8 | Includes (i) 51,268 shares that may be acquired by Mr. MacLellan within 60 days upon the exercise of stock options, (ii) 2,837 unvested restricted stock awards, and (iii) 4,981 vested stock units that will be settled in shares of the Company’s common stock upon Mr. MacLellan’s separation from the Board. |
| 9 | Includes (i) 106,122 shares that may be acquired by Mr. Rogers within 60 days upon the exercise of stock options, (ii) 200,000 shares held by a member of Mr. Rogers’ family, and (iii) 150,000 shares held in a family trust in which Mr. Rogers disclaims beneficial ownership. |
| 10 | Includes 125,025 shares that may be acquired by Mr. Sharps within 60 days upon the exercise of stock options and 21,081 unvested restricted stock awards. |
| 11 | Includes 2,713 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Snowe’s separation from the Board. |
| 12 | Includes (i) 112,912 shares that may be acquired by Mr. Stromberg within 60 days upon the exercise of stock options, (ii) 400,000 shares held by a limited liability company in which Mr. Stromberg has an interest, and (iii) 66,000 shares held in a family trust for which Mr. Stromberg disclaims beneficial ownership. |
| 13 | Includes 2,837 unvested restricted stock awards and 29,363 vested stock units that will be settled in shares of the Company’s common stock upon Mr. Taylor’s separation from the Board. |
| 14 | Mr. Verma has been nominated for addition2020 to the Board at the Annual Meeting and does not own any shares of the Company’s common stock. |
| 15 | Includes 29,141 shares that may be acquired by Ms. Whittemore within 60 days upon the exercise of stock options and 11,205 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Whittemore’s separation from the Board. |
| 16 | Includes 2,837 unvested restricted stock awards and 4,504 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Wijnberg’s separation from the Board. |
| 17 | Includes 7,391 vested stock units that will be settled in shares of the Company’s common stock upon Mr. Wilson’s separation from the Board. |
| 18 | Includes (i) 953,511 shares that may be acquired by all directors and executive officers as a group within 60 days upon the exercise of stock options, (ii) 41,547 unvested restricted stock awards held by certain directors and executive officers, (iii) 78,285 stock units held by eight of the non-employee directors thatnamed above. In accordance with the 2017 Director Plan, each non-employee director was awarded a grant date value of $200,000. In addition pursuant to our 2017 Director Plan, some directors elected to have their fees, which are typically paid semi-annually, deferred into RSUs. The holders of RSUs also receive dividend equivalents in the form of additional vested and will be settled in sharesstock units on each of the Company’s quarterly dividend payment dates. The award value or dividend equivalent value was converted to awards or units, using the closing stock price of our common stock upon their separation fromon the Board, and (iv) 2,435,673date of grant. Fractional shares held by family members, held in family trusts or limited liability companies of certain executive officers and held by trusts in which certain executive officers are trustees.were rounded up to the nearest whole share. |
| | | | | | | | GRANT DATE | | | | | NUMBER OF | | NUMBER OF | | FAIR VALUE OF | | | | | RESTRICTED | | RESTRICTED | | STOCK AND | DIRECTOR | GRANT DATE | SHARES | | UNITS | | OPTION AWARDS | | | | | | | | | | | Mark S. Bartlett | | 5/13/2020 | | 1,853 | | | | $ | 200,013 | Mary K. Bush | 3/30/2020 | | | | 127 | | $ | 12,577 | | | | | | | | | | | | | 5/13/2020 | | 1,853 | | | | $ | 200,013 | | | | | | | | | | | | | 6/30/2020 | | | | 103 | | $ | 12,691 | | | | | | | | | | | | | 9/29/2020 | | | | 100 | | $ | 12,784 | | | | | | | | | | | | | 12/30/2020 | | | | 86 | | $ | 12,874 | | | | | | | | | | | Dina Dublon | 3/30/2020 | | | | 26 | | $ | 2,596 | | | 5/13/2020 | | | | 1,853 | | $ | 200,013 | | | 6/30/2020 | | | | 35 | | | 4,288 | | | 9/29/2020 | | | | 34 | | $ | 4,319 | | | 12/30/2020 | | | | 29 | | $ | 4,349 | Dr. Freeman A. Hrabowski, III | 3/30/2020 | | | | 109 | | $ | 10,742 | | | | | | | | | | | | | 5/13/2020 | | | | 1,853 | | $ | 200,013 | | | | | | | | | | | | | 6/30/2020 | | | | 101 | | $ | 12,508 | | | | | | | | | | | | | 9/29/2020 | | | | 99 | | $ | 12,599 | | | | | | | | | | | | | 12/30/2020 | | | | 85 | | $ | 12,688 | | | | | | | | | | | Robert F. MacLellan | 3/30/2020 | | | | 48 | | $ | 4,732 | | | 5/13/2020 | | 1,853 | | | | $ | 200,013 | | | 6/30/2020 | | | | 566 | | $ | 69,775 | | | 9/29/2020 | | | | 41 | | $ | 5,284 | | | 12/30/2020 | | | | 471 | | $ | 70,321 |
| | | | | | | | GRANT DATE | | | | | NUMBER OF | | NUMBER OF | | FAIR VALUE OF | | | | | RESTRICTED | | RESTRICTED | | STOCK AND | DIRECTOR | GRANT DATE | SHARES | | UNITS | | OPTION AWARDS | | | | | | | | | | | Olympia J. Snowe | 3/30/2020 | | | | 88 | | $ | 8,680 | | | | | | | | | | | | | 5/13/2020 | | | | 1,853 | | $ | 200,013 | | | | | | | | | | | | | 6/30/2020 | | | | 84 | | $ | 10,427 | | | | | | | | | | | | | 9/29/2020 | | | | 82 | | $ | 10,503 | | | | | | | | | | | | | 12/30/2020 | | | | 71 | | $ | 10,577 | | | | | | | | | | | Robert J. Stevens | 3/30/2020 | | | | 26 | | $ | 2,596 | | | 5/13/2020 | | | | 1,853 | | $ | 200,013 | | | 6/30/2020 | | | | 489 | | | 60,357 | | | 9/29/2020 | | | | 37 | | $ | 4,727 | | | 12/30/2020 | | | | 427 | | $ | 63,761 | Richard R. Verma | 3/30/2020 | | | | 42 | | $ | 4,183 | | | | | | | | | | | | | 5/13/2020 | | | | 1,853 | | $ | 200,013 | | | | | | | | | | | | | 6/30/2020 | | | | 48 | | $ | 5,889 | | | | | | | | | | | | | 9/29/2020 | | | | 46 | | $ | 5,932 | | | | | | | | | | | | | 12/30/2020 | | | | 40 | | $ | 5,974 | | | | | | | | | | | Sandra S. Wijnberg | 3/30/2020 | | | | 43 | | $ | 4,278 | | | 5/13/2020 | | 1,853 | | | | $ | 200,013 | | | 6/30/2020 | | | | 521 | | $ | 64,317 | | | 9/29/2020 | | | | 38 | | $ | 4,786 | | | 12/30/2020 | | | | 434 | | $ | 64,820 | Alan D. Wilson | 3/30/2020 | | | | 133 | | $ | 13,123 | | | | | | | | | | | | | 5/13/2020 | | | | 1,853 | | $ | 200,013 | | | | | | | | | | | | | 6/30/2020 | | | | 636 | | $ | 78,513 | | | | | | | | | | | | | 9/29/2020 | | | | 121 | | $ | 15,482 | | | | | | | | | | | | | 12/30/2020 | | | | 549 | | $ | 82,092 | | | | | | | | | | |
3 | The following table represents the aggregate number of equity awards outstanding as of December 31, 2020. |
| | UNVESTED | | UNVESTED | | UNEXERCISED | | | | VESTED | DIRECTOR | STOCK AWARDS | | STOCK UNITS | | OPTION AWARDS | | TOTAL | STOCK UNITS | | | | | | | | | | | | Mark S. Bartlett | | 1,853 | | | | | | 1,853 | | | Mary K. Bush | 1,853 | | | | | | 1,853 | | 14,391 | | | | | | | | | | | | Dina Dublon | | | | 1,891 | | | | 1,891 | | 2,971 | Dr. Freeman A. Hrabowski, III | | | 1,891 | | 26,008 | | 27,899 | | 12,292 | | | | | | | | | | | | Robert F. MacLellan | 1,853 | | | | 26,008 | | 27,861 | | 6,383 | Olympia J. Snowe | | | 1,891 | | | | 1,891 | | 9,932 | | | | | | | | | | | | Robert J. Stevens | | | | 1,891 | | | | 1,891 | | 3,826 | Richard R. Verma | | | 1,891 | | | | 1,891 | | 4,786 | | | | | | | | | | | | Sandra S. Wijnberg | | 1,853 | | | | | | 1,853 | | 5,789 | Alan D. Wilson | | | 1,891 | | | | 1,891 | | 15,982 | | | | | | | | | | | |
4 | The amounts represent personal gifts matched by our sponsored T. Rowe Price Foundation to qualified charitable organizations. |
Section 16(a) Beneficial Ownership Reporting ComplianceHuman Capital
Our People Drive Our Success At T. Rowe Price, our people set us apart. We thrive because our Company culture is based on collaboration and diversity. We believe that our culture of collaboration enables us to identify opportunities others might overlook. Our associates’ knowledge, insight, enthusiasm, and creativity are the reasons our clients succeed and our firm excels. In order to attract and retain the highest quality talent, we develop key talent and succession plans, invest in Company diversity, equity and inclusion initiatives, provide opportunities for our associates to learn and grow, and provide strong benefits. As evidence of the success of our approach the average tenure of our associates is 8 years, and the average tenure of our investment professionals is 22 years. Investing In Our People At T. Rowe Price, we seek to help our clients achieve their long-term investment goals. In order to do this, we are committed to helping our associates achieve their long-term career goals. As part of this commitment, we seek to identify new opportunities within our firm for associates to expand their experience and grow their skills. As a result of allowing our associates to develop these skills we are able to promote from within, reflected by the fact that approximately 35% of our open positions are filled by internal applicants. We are committed to the professional growth of our associates through the development of our associates’ knowledge, skills and experience, by providing them access to in person and online training programs and by offering a generous tuition reimbursement program. We believe a critical driver of our firm’s future growth is our ability to grow leaders. Pursuant to this, we have held a series of leadership speaker events and offer our associates access to virtual programs focused on leadership development led by professors at leading universities. Hiring Diverse Talent In today’s dynamic business environment, having a diverse and inclusive workforce and providing an equal opportunity to all associates is a business and cultural imperative. Our priority is to increase our hiring, retention and development of talent from groups that are underrepresented in asset management; this includes both minorities and women. In 2020, 21% of our investment professionals globally were female and firm-wide 63% of new hires were either female or ethnically diverse. For every open senior role at the firm, our goal is that at least 30% of the candidates interviewed will be ethnically diverse and/or female. We believe a key component of combating racial inequality and injustice is greater representation of minorities in all areas of society and business—including at T. Rowe Price. To increase the pipeline of diverse candidates, we have created partnerships with historically black colleges and universities, latinx-serving institutions, and other colleges and universities with which we have had success in recruiting diverse talent in the United States. Other initiatives connect with prospective and future minority and female candidates as early as high school, through college, and on into graduate school. Throughout each year, we host on-site mentoring and recruitment initiatives in all U.S. offices and London, encouraging and attracting diverse candidates to consider careers in asset management. We remain steadfast in our commitment to supporting a diverse and inclusive workplace. An Inclusive Work Environment T. Rowe Price emphasizes a positive, welcoming, and collaborative culture, where associates are encouraged to be themselves—to draw from their experiences, express their viewpoints, and take the initiative to help our clients succeed. Diversity, equity and inclusion are pillars of our business approach. Our Management Committee ensures we are setting high standards for the way we recruit, hire, mentor and develop talent and establish and maintain work environments in every one of our business units in order to achieve these pillars. To support this, our Diversity and Inclusion Steering Committee (DISC) meets bi-monthly to discuss progress on specific diversity and inclusion initiatives and related challenges and concerns. We have developed a plan to provide additional programs to strengthen the experience and support for underrepresented minorities. How We Support Our Diverse Perspectives Business Resource Groups provide important perspectives that help shape our company culture, especially in recruitment, talent acquisition and retention. Our business resource groups are open to all filing requirementsassociates and provide valuable insight and programs to complystrengthen our inclusive culture, support career development of associates, extend our brand in the community and provide insight on delivering our services in the marketplace. T. Rowe Price business resource groups include: MOSAIC—Providing guidance and leadership to strengthen the attraction, retention and experience of ethnically diverse personnel. VALOR—Providing guidance and leadership to strengthen attraction, retention and experience of veterans, active reservists and their families. PRIDE—Providing guidance and leadership to strengthen attraction, retention and experience of LGBTQ+ personnel and allies. WAVE—Providing guidance and leadership to strengthen the attraction, retention and experience of women. Black Leadership Council—We formed a Black Leadership Council empowered to recommend to the Management Committee improvements to our black associate advancement strategy. At the end of 2020, forty-one percent (41%) of associates were members of at least one business resource group. Offering Benefits to Further Our Commitment In all of our global locations, we offer employee benefit solutions, including both healthcare and retirement benefits, where applicable, fitness club reimbursement, life insurance, and an Employee Assistance Program to support well-being. Benefit competitiveness and design is assessed within the relevant market for a given country, and offerings are aligned with Section 16(a)our global principles and local market practice. For example, retirement programs are uniquely designed to support associates in meeting retirement goals while also reflecting regional and country-specific practices in Asia, Europe, and the U.S. Focus on Family We have always emphasized the importance of spending quality time away from work. In addition to generous vacation time, the Securities Exchange Act were metfirm offers fully paid maternity leave for birth mothers, in addition to fully paid parental leave to all new mothers and fathers. We also provide adoption assistance to associates looking to expand their families. In the U.S., the UK, and Canada, we offer our associates backup child-care and eldercare. Managing Our Employee’s Safety and Well-being Through a Pandemic During 2020, our firm mobilized to ensure the safety of all our associates globally. Beginning first in the APAC region, and then worldwide, we migrated to a work from home environment for approximately 97% of our associates. We expanded our offerings for child and elder care assistance for our associates, and ensured that our health care coverage included COVID-19 testing and treatment. In response to the challenging situation, we offered our associates five additional wellness days along with free counseling through our Employee Assistance Program. Our Efforts in Reaction to Racial Inequity and Social Unrest As a Baltimore-based company, we have witnessed racial inequity firsthand as a systemic issue. Over the years, our associates have generously supported programs that address structural racism and disinvestment in our communities. The T. Rowe Price Foundation has partnered with local and national experts to learn about inequity and to incorporate these insights into its grant-making strategy. Together, our firm and our associates have quietly but consistently worked to bring about change. As a step toward furthering progress, our company donated $2 million toward racial justice causes. In addition, we enhanced internal programs that increased awareness of racial injustice, allowed our associates to have constructive conversations with each other about it, with the goal of having our Company become more inclusive and more diverse. For example, during the calendar year 2017, except for the late filingwe held numerous diversity dialogues where associates in small settings were able to share their experiences in an effort to make all our associates aware of SEC Form 4how systemic racism, gender discrimination or homophobia impacts their colleagues’ lives in September 2017 for certaina direct and personal way. Executive Compensation COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion & Analysis
The Compensation Discussion and Analysis (CD&A) provides an overview and analysis of our executive compensation philosophy, and addresses the principal elements used to compensate our executive officers. In this section, weofficers and explains how our executive compensation design aligns with the Company’s strategic objectives. We also address the 20172020 compensation determinationsdecisions and the rationale for those determinations for our named executive officers (NEOs).NEOs. This CD&A should be read together with the compensation tables that follow this section. Our NEOs for 2017 are2020 were as follows: Name
| Title
| | | | | | | | William J. Stromberg | President
| Céline S. Dufétel | | Robert W. Sharps | | Christopher D. Alderson(1) | | Eric L. Veiel | Chair and Chief Executive Officer | Kenneth V. Moreland
| | Chief Operating Officer, Chief Financial Officer and Treasurer | Edward C. Bernard
| Vice Chairman
| Christopher D. Alderson
| Co-headPresident, Head of Investments, and Group Chief Investment Officer
| | Co-Head of Global Equity | Robert W. Sharps
| Co-head
| Co-Head of Global Equity1 |
| 1 | Effective March 1, 2018, Mr. Sharps became the head of Investments. |
Executive Summary Our compensation programs recognize and reward performance, with a focus on rewarding the intermediate- and long-term achievements of our NEOs, as measured by a number of factors including:over the short-term and long-term. Those factors include: | ■ | financial performance and financial stability of Price Group; |
the financial performance and financial stability of Price Group; | ■ | relative investment performance of our investment products; and |
relative investment performance of our investment products; and | ■ | performance of our NEOs against corporate and individual goals established at the beginning of the year. |
performance of our NEOs against pre-determined corporate and individual goals. Our compensation programs are also designed to reward NEOs for other importanttheir contributions such as ourto the Company’s culture, service quality, customer retention, risk management, corporate reputation, and to the quality and collaboration of our team of associates and collaboration within those teams. The majorityassociates. A significant portion of NEO compensation is performance-based and includes a material equitylong-term incentive component tied to Company stock performance, thereby ensuring compensation is dependent on the Company’s annualshort-term and longer-term performance. Overall, 2017we were pleased with our results during 2020. We continued to perform well for our clients while achieving strong financial results for the Company. Below is a summary of results for key measures that the Compensation Committee considers when NEO performance and making annual and long-term incentive compensation decisions. | (1) | Mr. Alderson ceased being an executive officer and retired from the Company effective December 31, 2020. |
2020 Financial Performance Highlights Our net revenues and earnings per share grew significantly over the last five years. Results for 2020 in comparison to the prior two years and 2015 (five years) are as follows: Our AUM increased by $263.7 billion from December 31, 2019, to $1,470.5 billion as of December 31, 2020 and our average AUM for 2020 increased 12.5% over the 2019 period. Clients added $5.6 billion, while market appreciation and income increased AUM by $256.9 billion. The firm also acquired client contracts from PNC Bank in September 2020 that added $1.2 billion of stable value assets under management Organic AUM growth of 0.5% was adriven primarily by strong flows from both institutional and intermediary clients in APAC and EMEA, including success in our local Japanese funds and SICAV funds. The flows in APAC and EMEA were mostly offset by ongoing pressure from passive in U.S. Equity, and headwinds in our Target Date franchise, in part driven by the CARES Act. Our net revenues increased 10.5% over 2019, while our average AUM increased 12.5%, due primarily to client transfers to lower fee share classes and vehicles and money market fee waivers, which the firm began implementing in the second quarter of 2020, in order to maintain positive yield for investors. Our overall financial condition remains very goodstrong, as we finished the year forwith $7.7 billion of stockholders’ equity, $4.2 billion of cash and discretionary investments, and no debt. We also had redeemable seed capital investments in T. Rowe Price investment products of $1.2 billion at December 31, 2020. Our strong balance sheet and operating results enabled us to return $2.0 billion, or 86% of 2020 net income, to stockholders through dividends and share repurchases. In 2020, we increased our clients,annual recurring dividend for the 34th consecutive year, by 18.4%. In 2020, we expended $1.2 billion to repurchase 10.9 million shares, or 4.6% of our outstanding common stock at an average price of $109.30 per share. Dividends and stock repurchases vary depending upon our stockholders. We delivered strong relativefinancial performance, liquidity, market conditions, and other relevant factors. 2020 Strategic Performance Highlights Investment Performance Strong investment performance and brand awareness are key drivers in attracting and retaining assets—and to our long-term success. The table below presents investment performance for specific asset classes and AUM weighted performance, of the Price funds performance against passive peers, and composite performance against benchmarks for the one-, three-, five-, and 10-years ended December 31, 2020. Past performance is no guarantee of future results. | | 1 YEAR | | 3 YEARS | | 5 YEARS | | 10 YEARS | % of U.S. mutual funds that outperformed Morningstar median1, 2 | | | | | | | | | Equity | | 65% | | 71% | | 66% | | 85% | Fixed Income | | 54% | | 55% | | 58% | | 57% | Multi-Asset | | 94% | | 94% | | 85% | | 90% | All Funds | | 70% | | 72% | | 69% | | 77% | | | | | | | | | | % of U.S. mutual funds that outperformed passive peer median1, 3 | | | | | | | | | Equity | | 52% | | 67% | | 64% | | 68% | Fixed Income | | 72% | | 59% | | 54% | | 47% | Multi-Asset | | 91% | | 82% | | 70% | | 86% | All Funds | | 69% | | 69% | | 63% | | 67% | | | | | | | | | | % of composites that outperformed benchmarks4 | | | | | | | | | Equity | | 60% | | 65% | | 70% | | 77% | Fixed Income | | 66% | | 56% | | 67% | | 68% | All Composites | | 62% | | 62% | | 68% | | 74% |
AUM-Weighted Performance | | 1 YEAR | | 3 YEARS | | 5 YEARS | | 10 YEARS | % of U.S. mutual funds that outperformed Morningstar median1, 2 | | | | | | | | | Equity | | 76% | | 79% | | 84% | | 92% | Fixed Income | | 43% | | 51% | | 57% | | 59% | Multi-Asset | | 100% | | 97% | | 96% | | 97% | All Funds | | 79% | | 81% | | 85% | | 90% | | | | | | | | | | % of U.S. mutual funds that outperformed passive peer median1, 3 | | | | | | | | | Equity | | 39% | | 81% | | 77% | | 73% | Fixed Income | | 58% | | 50% | | 37% | | 43% | Multi-Asset | | 95% | | 96% | | 95% | | 96% | All Funds | | 54% | | 83% | | 79% | | 77% | | | | | | | | | | % of composites that outperformed benchmarks4 | | | | | | | | | Equity | | 70% | | 71% | | 73% | | 73% | Fixed Income | | 53% | | 47% | | 49% | | 72% | All Composites | | 67% | | 67% | | 69% | | 73% |
• | As of December 31, 2020, 73 of 123 (59%) of our rated U.S. mutual funds (across primary share classes) received an overall rating of 4 or 5 stars. By comparison, 32.5% of Morningstar’s fund population is given a rate of four or five stars5. In addition, 84% of AUM in our rated U.S. mutual funds (across primary share classes) ended 2020 with an overall rating of four or five stars. | | | 1 | Source: © 2020 Morningstar, Inc. All rights reserved. The information contained herein: 1) is proprietary to Morningstar and/or its content providers; 2) may not be copied or distributed; and 3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
| 2 | Source: Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. The top chart reflects the percentage of T. Rowe Price funds with 1 year, 3 year, 5 year, and 10 year track record that are outperforming the Morningstar category median. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total Fund AUM included for this analysis includes $493B for 1 year, $493B for 3 years, $493B for 5 years, and $484B for 10 years. |
| 3 | Passive Peer Median was created by T. Rowe Price using data from Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, funds with fewer than three peers, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. This analysis compares T. Rowe Price active funds to the applicable universe of passive/index open-end funds and ETFs of peer firms. The top chart reflects the percentage of T. Rowe Price funds with 1 year, 3 year, 5 year, and 10 year track record that are outperforming the passive peer universe. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $475B for 1 year, $473B for 3 years, $432B for 5 years, and $411B for 10 years. |
| 4 | Composite net returns are calculated using the highest applicable separate account fee schedule. Excludes money market composites. All composites compared to official GIPS composite primary benchmark. The top chart reflects the percentage of T. Rowe Price composites with 1 year, 3 year, 5 year, and 10 year track record that are outperforming their benchmarks. The bottom chart reflects the percentage of T. Rowe Price composite AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $1,355B for 1 year, $1,353B for 3 years, $1,328B for 5 years, and $1,290B for 10 years. |
| 5 | The Morningstar RatingTM for funds is calculated for funds with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. Morningstar gives its best ratings of 5 or 4 stars to the top 32.5% of all funds (of the 32.5%, 10% get 5 stars and 22.5% get 4 stars). The Overall Morningstar RatingTM is derived from a weighted average of the performance figures associated with a fund’s 3, 5, and 10 year (if applicable) Morningstar RatingTM metrics. |
Investment, Product and Distribution Capabilities We were pleased with execution on our clients, experienced diversified organic growthstrategic initiatives across geographiesinvestment capabilities, products, distribution, and distribution channels, deliveredtechnology, including creating operational efficiency gains. Highlights from the year include: We increased our global investment professional staff nearly 10% in 2020 to 724, and announced our plan to establish T. Rowe Price Investment Management, a separate SEC-registered investment advisor, to support the firm’s continued focus on generating strong financialinvestment results while investing for growth,clients. We advanced our corporate access, ESG and continuedequity data insight capabilities. Expanded the firm’s product strategy with the launch of four active ETFs, our track recordfirst sustainable funds range, and two new Japanese Investment Trust Management Companies. Successfully navigated shift to virtual client engagement model as a result of strong returnsthe coronavirus pandemic. We expanded our derivatives coverage and enhanced our complex product support model. Enterprise Capabilities and Talent We made progress toward our long-tern plan to make our operating and technology platforms more secure, efficient, and scalable. We maintained compliance with significant regulations that had broad reaching impact on the firm’s operations. We announced a new headquarters location. Successfully navigated pandemic crisis including managing remote working arrangements for 97% of capitalour associates, and communications to our stockholders. These results, which are further detailed below, were considered byglobal work force to ensure coordination of our response. Advanced diversity and inclusion efforts and the creation of the Black Leadership Council and the MOSAIC Heritage Communities. We welcomed Stephon Jackson and Justin Thomson, to the Management Committee, effective January 1, 2021. 2020 Compensation Committee in setting 2017 payDecisions for our NEOs.Chief Executive Officer and Other NEOs For 2017, performance-based incentives awarded to William J. Stromberg, our president and chief executive officer (CEO) increased 25% over the prior year, with the majority of the increase in performance-based restricted stock units. This increase reflects both the Committee’s assessment of Mr. Stromberg’s performance in his second year as CEO and an evaluation of competitive levels of compensation among peers. We expect that long-term equity incentives will play an important part of future increases in CEO pay. Mr. Moreland retired in early 2018 and received a retirement payment in lieu of a 2017 bonus or long-term equity award. The terms of his arrangement are discussed under the Post-Employment Payments section of this CD&A on page 41.
TABLE OF CONTENTS
The mix of compensation elements awarded this year to our CEO and other continuing NEOs, as illustrated below, reflects our compensation philosophy. Fixed base salary composesis a small portionpart of overall compensation, whereaswith performance-based pay, in annual cash incentives and long-term equity awards, representsrepresenting the mostsubstantial majority of compensation. The compensation mix awarded this year to our CEO and other NEOs, as illustrated below, reflects our performance-based compensation philosophy.
For 2020, Mr. Stromberg’s total compensation increased 5.1% over the prior year, which is driven by an increase in both the value of his annual bonus and long-term equity award. The higher total compensation reflects the Compensation Committee’s assessment of Mr. Stromberg’s overall performance as CEO and aligns with the Company’s achievement of financial and strategic results previously discussed. Consideration was also given to Mr. Stromberg’s pay relative to his industry peers. Annual compensation for our other NEO’s also increased in 2020, consistent with Company performance and results in each of the NEO’s areas of responsibility. For Ms. Dufétel, her total compensation increase of 21% in 2020 also reflects a competitive adjustment following significant portion.expansion of her responsibilities since becoming CFO in 2018, in addition to the Compensation Committee’s assessment of her performance and contributions to our financial and strategic results. In addition to her role as our CFO and Treasurer, Ms. Dufétel has also assumed firm-wide responsibilities for risk management, enterprise change management, investment operations and strategic initiatives, and in 2021 she was appointed as the Company’s Chief Operating Officer, in addition to her duties as CFO and treasurer.
2017 PERFORMANCE HIGHLIGHTS
Each year, we identify bothOur AICP is funded as a percentage of net operating income, and long-term equity awards to NEOs were split equally between performance-based RSUs subject to a three-year performance goal followed by two-year time based vesting, and short-term goals that are designedtime-based RSUs subject to promote a team-oriented structure that operates in the best interests of our clients, associates, and stockholders. Our performance against our 2017 goals and objectives, which are described on page 36, was as follows:three-year vesting schedule.
| ■ | Investment performance relative to our peers has been strong over a long period. The percentage of our Price funds across their share classes and our asset allocation funds that outperformed their comparable Lipper averages on a total return basis and percentage in top Lipper quartile for the one-, three-, five-, and 10-years ended December 31, 2017, were: |
| One year | Three years | Five years | 10 years | Outperformed Lipper averages | | | | | | | | | | | | | All Price funds (across their share classes) | | 72 | % | | 84 | % | | 82 | % | | 81 | % | Asset allocation | | 86 | % | | 97 | % | | 93 | % | | 93 | % | | | | | | | | | | | | | | Top Lipper quartile | | | | | | | | | | | | | All Price funds (across their share classes) | | 38 | % | | 50 | % | | 55 | % | | 57 | % | Asset allocation | | 59 | % | | 60 | % | | 82 | % | | 86 | % |
| ■ | 88% of our rated Price funds’ assets under management ended the year with an overall rating of four or five stars from Morningstar. |
| ■ | The performance of our funds and institutional strategies against benchmarks remains competitive over longer periods. |
| ■ | Our strong investment performance, combined with our growing distribution reach, helped us extend our leadership position in a number of core businesses. |
PROXY STATEMENT 2018 27 2021 Proxy Statement
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| ■ | Our operating results have increased significantly over the last five years. Results for 2017 in comparison to the prior two years, and to 2012, are as follows: |
| | Assets Under Management (in billions) | | Net Revenue (in billions) | | Net Operating Income (in billions) | | Operating Margin | | Net Income Attributable to TRPG (in billions) | | Diluted Earnings per Share | | Non-GAAP Diluted Earnings per Share
| | Cash Returned to Stockholders (in billions) | 2017
| | $991.1
| | $4.8
| | $2.1
| | 44%
| | $1.5
| | $5.97
| | $5.43
| | $1.0
| | | | | | | | | | 2016
| | $810.8
| | $4.2
| | $1.7
| | 41%
| | $1.2
| | $4.75
| | $4.49
| | $1.2
| | | | | | | | | | 2015
| | $763.1
| | $4.2
| | $1.9
| | 45%
| | $1.2
| | $4.63
| | $4.39
| | $2.0
| | | | | | | | | | 2012
| | $489.5
| | $3.0
| | $1.4
| | 45%
| | $.8
| | $3.36
| | $3.20
| | $.7
|
| ■ | In 2017, strong relative investment performance, robust markets, and solid organic growth increased our assets under management by $180.3 billion to $991.1 billion at December 31, 2017. During 2017, clients added $14.0 billion while market appreciation and income, net of distributions not reinvested, added $166.3 billion. As a result, our net revenue increased 13.5% over 2016, as average assets under management increased 16.8%. |
| ■ | Our overall financial condition remains very strong, as we finished the year with $5.8 billion of stockholders’ equity, $2.7 billion of cash and discretionary investments in T. Rowe Price investment products, and no debt. We also had redeemable seed capital investments in T. Rowe Price investment products of $1.2 billion at December 31, 2017. |
| ■ | We increased our annual recurring dividend for the 31st consecutive year, by 5.6%. The average increase in our annual recurring dividend has been 12.0% over the last 10 years. We expended $458.1 million to repurchase 6.6 million shares, or 2.7% of our outstanding common stock, in 2017. Dividends and stock repurchases will vary depending upon our financial performance and liquidity, market conditions, and other relevant factors.37 |
| ■ | We have seen early, but encouraging, signs of success in the execution of our strategic initiatives to strengthen and extend our core businesses across products, distribution, and technology. Some successes include: |
| ■ | We have more than doubled our multi-asset team over the last two years in order to broaden our global product suite and build consultative solutions in Asia Pacific and Europe, the Middle East, and Africa. Our multi-asset products now make up 29.5% of our assets under management. |
| ■ | A number of the new investment strategies and vehicles we launched from 2015 through 2017 have gained traction, including the Active Plus Portfolios and the I Classes of our Price fund offerings. |
| ■ | We expanded our distribution reach by making our Price funds available to retail investors and advisors on no-transaction-fee platforms at Fidelity and Charles Schwab. |
| ■ | We opened our Maryland Innovation Center, which has introduced a variety of new digital capabilities across our Individual Investors and Retirement Plan Services channels. |
| ■ | We launched our New York Technology Development Center, where a growing team of specialized technology professionals and data scientists are focused on improving client experiences, enhancing client segmentation, and augmenting our investment process. |
| ■ | We completed the acquisition of the Henderson High Yield Opportunities Fund in May 2017, providing additional high yield capacity. Performance remains strong, and assets under management has grown significantly since the acquisition. |
Executive Compensation Practices | ■ | We successfully completed key phases of the fund accounting and portfolio recordkeeping systems transition to BNY Mellon, which will enable us to finalize fund accounting transition in the third quarter of 2018. |
| ■ | We have added several key new leaders into the Company, with an emphasis in investments, distribution, and technology; the high-priority areas of our strategic investments. |
EXECUTIVE COMPENSATION PRACTICES
At the 20172020 annual meeting of stockholders, our stockholders cast a non-binding advisory vote on the compensation of the NEOs. Nearly 96% of the shares voted approved the compensation paid to our NEOs. The Compensation Committee welcomed this feedback and considers itthis outcome supportive of our approach to provide a significant portion of the compensation of our executive officers, including our NEOs, as restricted stock units that vest over time and for our NEOs to be subject to preestablished performance goals based on relative operating margin so that their interests are effectively aligned with the future performance of the Company.compensation. The Compensation Committee continues to implement and maintain practices in our compensation programs and related areas that reflect responsible corporate governance and compensation practices. These practices include the following:include: | What We Do
| | What We Don’t Do
| WHAT WE DO | | WHAT WE DON’T DO | Include all independent directors on the Compensation Committee. | | Allow executives or independent directors to short-sell the Company stock or hedge to offset a possible decrease in the market value of Company stock held by them.
| | | | | | Impose significant stock ownership and retention requirements on our independent directors, NEOs, and other select members of senior management. | | Enter into change-in-control agreements with any of our executive officers.
| | | | | | Emphasize variable compensation, including long-term equity incentive compensation. | | Provide excise tax gross-ups.
| | | | | | Award restricted stock units that are subject to Grant 50% of each NEOs long-term equity award value as performance- based RSUs, with a 12-monththree-year objective performance-based earning periodperformance goal and a five-year ratable vesting schedule. | | Enter into broad-based employment agreements with our United States-based executive officers.
| | | | | | two additional years of time-based vesting. Impose double-trigger vesting on acceleration of awards granted under our 20122020 Long-Term Incentive Plan (2012 Incentive(2020 Plan) in the event we are acquired or taken over by another company. | | Pay dividends on unearned performance-based restricted stock units.
| | | | | | Engage an independent compensation consultant who provides services only to the Compensation CommitteeBoard and provides no other services to the Company or its management. | | Accelerate the vesting of equity awards on an executive officer’s retirement.
| | | | | | Use a comprehensive risk management program designed to identify, evaluate, and control risks and our compensation and stock ownership programs work within this risk management system. | | Permit the repricing or exchange of equity awards in any scenario without stockholder approval.
| | | | | | framework. Have a recoupment policy for both cash and equity incentive compensation in place for executive officers in the event of a material restatement of our financial results within three years of the original reporting. | | Allow executives or independent directors to short-sell the Company stock or hedge to offset a possible decrease in the market value of Company stock held by them. Enter into change-in-control agreements with any of our executive officers. Provide excise tax gross-ups. Pay dividends on unearned performance-based RSUs. Enter into broad-based employment agreements with our U.S.-based executive officers. Accelerate the vesting of equity awards on an executive officer’s retirement. Permit the repricing or exchange of equity awards in any scenario without stockholder approval. Sponsor any supplemental executive retirement plans or provide significant perquisites and other personal benefits to our executive officers. | | | | |
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Executive Compensation Philosophy and Objectives Our NEO and overall compensation programs are designed to satisfy two core objectives: | ■ | attract and retain talented and highly skilled management professionals with deep experience in investments, business leadership and client service; and |
attract and retain talented and highly skilled management professionals with deep experience in investments, business leadership and client service; and | ■ | maintain alignment of interests between our management professionals and our stockholders by focusing on long-term corporate performance and value creation, emphasizing appropriate enterprise risk-taking, reinforcing a “client-focused” and collaborative culture, and reward associates for the achievement of strategic goals. |
maintain alignment of interests between our management professionals and our stockholders by focusing on long-term corporate performance and value creation, emphasizing appropriate enterprise risk-taking, reinforcing a “client-focused” and collaborative culture, and rewarding associates for the achievement of strategic goals. We believe NEO compensation should be straight-forward, goal-oriented, longer-term focused, transparent, and consistent with stockholder interests. In addition, NEO compensation should be linked directly to our overall corporate performance, as well as to our success in achieving our long-term strategic goals. KEY ELEMENTS OF 2017
Key Elements of 2020 NEO COMPENSATIONCompensation
Our compensation program consists primarily of three elements: base salary, annual cash incentives, and long-term equity awards. By design, a significant portion ofMost NEO compensation is performance-based, which aligns payaligned to Company performance and to their individual performance against goals. There is no preestablished formula for the allocationpre-established mix between cash and noncashnon-cash compensation or between short-term and long-term compensation.awards. Instead, each year the Compensation Committee determines in its discretion, the appropriate level and mix of short-term and long-term awards tofor our NEOs to rewardrecognize annual performance and to encourage meeting our long-term strategic goals. The key features and purpose of the primary compensation elements are detailed in the table below. Element ELEMENT | Key Features
| Purpose KEY FEATURES | | PURPOSE | Salary | ■
| • Fixed annual cash amount.
•
■Salary paid to our most senior personnel in the U.S. has been capped at $350,000 since 2005.
•
■ Mr. Alderson’s salary has beenSalaries for personnel outside the U.S. are also capped at comparable levels of local currency. | | • £240,000 since January 1, 2017. | ■Represents a smallersmall component of total compensation, so that the substantial majority of NEO compensation is dependent on performance-based annual incentivesincentive compensation as well as long-term equity incentives.
|
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Element
| Key Features
| Purpose
| Annual Incentive CompensationPool Plan (AICP) | ■
| Represents• Performance based and represents a material portion of the NEO’s total compensation.
• ■Administered by the Compensation Committee.
• Committee.
■The AICP is part of the Company’s overall bonus pool, in which nearly all employees participate. • participate.
■The AICP representssets an aggregate maximum bonus pool available to thefor NEOs and other
executive officers that is based solely on the Company financial performance ofin the Company in the current fiscal year. The Compensation Committee annually determines the maximum percentage of the total bonusAICP pool
set by the AICP that can be awarded to each NEO.
■ Actual bonus amounts This is a meaningful limit on the amount that can be awarded to each NEO that is tied to actual financial performance. • Actual bonus amounts for each NEO are based on Companythe Company’s financial and operating performance relative to annual goals and objectives plus individual performance and contributions of each NEO contributions. • toward those results.
■Actual bonus amounts for each NEO are typically
significantly less lower than the maximum amount determined under the plan. | ■
| • Provides structure for incentive compensation and, coupled with the use of discretionjudgement by the Compensation Committee, aligns cash compensation of the NEOs and other senior management to the Company’s annual performanceperformance. • Rewards NEOs for achievement of
the Company.
■ Motivates our NEOs and other senior
management to achieve annual Company goals and objectives
that are consistent with our long-term strategy. • strategy.
■Provides competitive cash compensation to attract and retain diverse high-quality talent. | Long-Term Long-Term Equity Incentives Awards | ■
| • Represents a materialsignificant portion of the NEO’s total compensation and are earned over five-years. • total compensation.
■The grant value of the grant for each NEO is based on the NEO’s relative level of corporate management and functional responsibility, competitive assessment of similar roles within the marketplace, individual performance, and expected future long-term contributions.
•
■For 2017, all2020, 50% of the long-term equity award values
granted tofor NEOs were in performance-based RSUs tied to the attainment of a three-year objective performance goal. A NEO can earn from 0-100% of the performance RSUs based on the Company’s operating margin relative to the average operating margin for peers over the same period. If the Company achieves the three-year objective performance goal for the period 2021 through 2023, these awards would vest 50% per year starting in December 2024. • restricted stock units. The remaining 50% of the long-term equity award for NEOs were in time-based RSUs that vest at a rate of 33 1/3% per year starting in December 2021. •
■Grants are awarded at the regularly scheduled December meeting of the Compensation Committee. | | • Compensation Committee.
■ The performance-based restricted stock units
anCreates a strong link between NEO can earn can range from 0-100% of
the total units granted based on an operating
margin performance relative to peers.
■ For the 2017 annual grant, earned units will
vest at a rate of 20% per year starting in
February of the year following the end of the
performance period. | ■ Creates strong alignment of the financial
interests of our NEOs directly to long-term
performance, as measured by our relative
profitabilityrealized compensation and stock price. performance.•
■Provides a significant incentive to our NEOs and other senior management to protect and enhance long-term stockholder value.
■ Motivates our NEOs and other senior
management to focus on long-term
performancevalue and profitability.
•
■Enhances the link between compensation and companylong-term Company performance through the granting of performance-based restricted performance- based RSUs. • stock units.
■Provides competitive compensation to attract and retain diverse high-quality talent. |
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Annual Incentive Compensation Plan Bonus Pool The Annual Incentive Compensation Pool is determinedAICP provides that, unless approved by the annual performance ofCompensation Committee otherwise, the Company and is intended to permit bonuses paid to our NEOs to qualify for a federal income tax deduction under Section 162(m) of the Internal Revenue Code. The maximum bonus pool under the AICP is an amount equal to 6%5% of the first $50 million of “adjusted earnings,” plus 8% of the amount by which “adjusted earnings” exceed $50 million. Adjusted earnings is defined as income before taxes as reflected in our audited consolidated statements ofCompany’s net operating income adjusted to exclude, certain extraordinary, unusual, or nonrecurring items;if any, charge relating to goodwill; and(i) the effects of goodwill impairment, (ii) the cumulative effect of changes in accounting policy. policies or principles, (iii) gains or losses from discontinued operations, and (iv) unusual or nonrecurring gains, losses, or expenses. The Compensation Committee also established maximum individual bonuses as a percentage of the AICP formula, however, they retained the right to award an amount that was less than each NEO’s maximum. The amounts awarded under the AICP are considered to be part of the overallCompany’s annual bonus program. The Company’s annual bonus program, inunder which nearly all of the employees of the Company are eligible to participate. The size of the Company’s total annual bonus poolparticipate, is determinedmanaged by the Compensation Committee and Management Compensation and Development Committee and is funded based on the Company’s financial reputational, and operational success over time, with a focus on valuing performance that serves the needs of our clients and the best long-term interests of our stockholders. In addition, we also considerresults. Additional considerations include the Company’s investment performance, and service quality for clients and progress toward stated objectives relating to the Company’s long-term strategies, and the need to remain competitive to retain our key personnel.strategies. Compensation Committee’s Use of DiscretionJudgment in Incentive Compensation The Compensation Committee has exercised negative discretion to pay significantly less than the maximum amount available to each NEO under the AICP.
The Compensation Committee believes that discretionjudgment and thoughtful consideration of qualitative performance is a critical feature of the Company’s executive compensation program. While the Compensation Committee uses financial and other metrics to set the maximum amount of the bonus pool and as a factor in the evaluation ofevaluate the performance of our senior executives, our business is dynamic and requires us to respond rapidly to changes in market conditions and other factors outside our control that impact our financial performance. The Compensation Committee believes that a rigid, formulaic program based strictly on quantitative metrics could have unintended consequences, such as encouraging executives to place undue focus on achieving specific metricsshorter-term results at the expense of others.longer-term success of the company. In addition, solely formulaic compensation would not permit adjustments based on factors beyond the control of our executives as well as relative performance in relation to shifting market conditions and less quantifiable factors such as recognition of keystrategic developments and individual achievements. Discretion alsoTherefore, thoughtful consideration of these additional factors allows the Compensation Committee to fully consider the overall performance of our executives over time, and it allowshas been a key ingredient in ensuring the Compensation Committee to maintain alignment between the bonus amounts paid to the NEOs and the bonus amounts paid to other senior personnel of the Company.Company’s positive long-term financial results. Long-Term Equity IncentivesAwards We believe our long-term equity award program is a significant factor in maintaining a strong correlation between the compensation of our top managers and professionals, including our NEOs, and the long-term interests of our clients and stockholders. Given the importance of this factor, the Compensation Committee increased the percentage of each NEO’s compensation as long-term equity incentives in 2017, excluding Mr. Moreland who had a special retirement arrangement. This is most prevalent for the CEO. Our approach to long-term equity compensation for our NEOs has incorporated different award vehicles (e.g., stock options, restricted stock, or restricted stock units)RSUs) and has varied over time. Starting in 2016,Currently we moved away from stock options to granting restricted stock unitsuse RSUs and, in the case of our NEOs, we split the RSUs equally between performance-based restricted stock units.RSUs and time-based RSUs. The usemix of time-based and performance-based RSUs emphasizes long-term stockholder alignment for our NEOs. The performance-based RSUs awarded to our NEOs are subject to a three-year performance period that begins on January 1st of the year following the grant and ends on December 31st of the third year following the grant. The performance goal for the performance-based RSUs is the Company’s operating margin relative to peers. The number of performance-based equity compensation is prevalent amongRSUs earned, if any, will be determined by comparing the Company’s operating margin to the average operating margin of a peer group of companies for the same period. Any performance-based RSUs earned after the three-year performance period will vest in equal annual installments beginning in December of the year following the end of the performance period (years four and five after the grant). The time-based RSUs awarded to our competitors as it offers a more stable long-term incentive while still maintaining stockholder alignment. We will continue to monitor our usage and mix of specificNEOs vest in equal annual installments over three years beginning in December in the year following the grant. The individual equity award types and make adjustments as long-term business needs or market practice changes. Additionally, prior to 2017, we made our equity grants in two tranches in February and September. For 2017, we changed tois a single annual grant in December to more closely align our equity incentive grants to the timing of our annual bonus and other compensation decisions.
Over time, equity compensation is intended to represent a material portion of an NEO’s total realized compensation. As mentioned, the equity award value is meant to be a long-term reflection of the long-term value added by the individual as well as their potential for future contributions to the Company.contributions. The total equity award value granted to an NEO from year to year is based on an evaluation of the individual’sreflects individual performance and an assessment of the NEO’s relevant compensation positioning versus market peers in similar roles. The ultimate value realized from an equity award fluctuates with the Company’s marketstock price, thus aligning NEO pay with stockholder interests.
2020 Compensation Decisions Given our shared and collaborative leadership structure, when setting the compensation in 2020, the Compensation Committee considered the collective contribution of the NEOs to the Company’s strategic imperatives as highlighted in the executive summary to this CD&A as well as their contributions to the related annual goals described below. The Compensation Committee considered each NEO’s individual contributions to the achievement of these and longer-term goals and the NEO’s individual performance in their functional responsibilities. These broader goals included overall Company financial results, investment performance and progress on product goals, net flows and progress on distribution goals, major program execution and progress on shared services goals, and governance and talent development. The Compensation Committee also looked to maintain reasonable alignment between the compensation of the NEOs and other senior personnel in order to retain talent and maintain an internally consistent compensation environment. TABLE OF CONTENTSTable of Contents
RISK MANAGEMENT AND THE ALIGNMENT OF MANAGEMENT WITH OUR STOCKHOLDERS
In keeping with the Company’s commitment to pay for performance, the maximum base salary of $350,000 for NEOs in the U.S., has remained unchanged since 2005 and is consistent with the base salaries paid to our most senior personnel. The Compensation Committee did not make any changes to base salaries for the NEOs in 2020. Incentive Compensation At the end of 2019, the Board approved senior management goals for 2020, which the Compensation Committee then used for evaluation of NEO performance at the end of the year. These goals were designed to promote a team-oriented structure that operates in the best long-term interests of clients, associates, and stockholders. Long-term goals that apply every year include the objective to recruit, develop, and retain diverse associates of the highest quality while creating an environment of collaboration and appropriately rewarding individual achievements and initiatives. This focus on our associates is intended to create a combination of talent, culture, and processes that will allow us to achieve superior investment results, market our products effectively, and deliver outstanding service on a global basis. When evaluating performance and determining the structure ofincentive compensation awards for our executive compensation program and the appropriate levels of incentive opportunities,NEOs, the Compensation Committee considers whetherboth annual and longer-term results against these goals in order to reinforce our long-term management philosophy. Specific goals established for 2020 consisted of the program rewards reasonable risk-takingfollowing: Investment Performance and Capabilities | | Product Capabilities | | | | • Sustain strong overall investment results and competitiveness of our investment strategies. • Grow investment management talent and leadership and extend investment capabilities. • Evolve global investment management and trading operating processes and systems to meet growing complexity. | | • Maintain and support a strong product range that meets evolving client needs through vehicle choices, pricing strategy, seed management, insightful content, long-term product roadmaps and consistent health checks. | Net Flows and Distribution Capabilities | | Shared Services and Talent | | | | • Deliver on distribution performance targets for gross sales, net flows, diversification and operating/efficiency metrics. • Enhance sales, client service, and marketing capabilities across intermediary, institutional and U.S. direct channels in support of our clients and to position the firm for long-term growth, diversification and efficiency. | | • Modernize technology infrastructure and architecture across the firm to simplify our environment and reduce risk. • Build effective and efficient shared service capabilities to support the enterprise and ensure regulatory compliance. • Attract, develop, and retain a diverse and collaborative workforce. | | | Enterprise Strategy, Governance and Financial Results | | | • Ensure the right strategy, allocation of resources, oversight, and governance models are in place to execute. • Manage our financial performance and position to protect/benefit our clients, associates, and stockholders, balancing short-term results with longer-term investment. |
Individual Performance Considerations In addition to contributions to the 2020 priorities summarized above, and whether the incentive opportunities achieveCompany’s financial and strategic performance highlighted in the properexecutive summary on page 33, the Compensation Committee considered the following individual contributions when setting 2020 compensation for our NEOs. William J. Stromberg | Chair and Chief Executive Officer | ROLE CONSIDERATIONS • Leadership, responsibility, and performance as Chair, President and CEO and chair of our Management Committee and Management Compensation and Development Committee. INDIVIDUAL ACHIEVEMENTS • Clear leader for the delivery of the firm’s strategic plan; driver of important change throughout the firm while preserving a collaborative and client-centered culture. • Led firm’s response to the pandemic, including transition to work from home, putting associate safety first. Also led successful shift to a virtual annual stockholders’ meeting and virtual Board meetings. • Integrated new head of Global Human Resources. • Committed to the development of T. Rowe Price Investment Management (TRPIM) and acted as a senior advisor to its leadership team. Added TRPIM CEO Stephon Jackson to the Management Committee effective January 1, 2021. • Continued progress on diversity & inclusion strategy, including formation of the Black Leadership Council, a team of senior leaders that will advise the Management Committee on diversity matters and also guided firm’s response to racial injustice issues. • Overall investment performance remained strong for five-, and 10-year periods against active peers and was solid against benchmarks. • Revenues grew 10.5%, diluted non-GAAP earnings per share increased 18.7%, and dividends per share rose 18.4%. Return on equity was consistent with 2019 at a healthy 32% for 2020. • The Company returned $2.0 billion to stockholders in 2020 through dividends and active opportunistic share repurchases during the pandemic-induced bear market, while maintaining a very strong balance sheet. |
42 T. Rowe Price Group Céline S. Dufétel | | Chief Operating Officer, Chief Financial Officer and Treasurer | ROLE CONSIDERATIONS • Leadership, responsibility and performance as CFO and Treasurer, and chair of the Risk and Operational Steering Committee. Expanded role and responsibilities in 2020 to include leadership of global investment operations and enterprise change management in addition to existing responsibilities for risk management and strategic initiatives. Responsibilities expanded again in 2021 when she was appointed as the Company’s Chief Operating Officer. INDIVIDUAL ACHIEVEMENTS • Led quarterly reviews of each business unit with a keen focus on critical success metrics; oversaw deep-dive strategic reviews of key business units and important strategic initiatives, including two business transformation and several growth revitalization initiatives across the firm. • As chair of the Risk and Operational Steering Committee, strengthened oversight of the firm’s change agenda and led reviews of audit, risk, cyber, compliance and operations; improved accountability and execution focus across the firm. • Continued enhancing strategic planning and approach to evaluation of opportunities, including the acquisition and integration of $1.2 billion of stable value assets from PNC. • Further strengthened the talent across the CFO Group while improving diversity; integrated new leaders of Global Investment Operations, Enterprise Change Office and Procurement functions. • Key contributor on Management and Management Compensation and Development Committees and on a variety of steering committees, including the Investment Management, Product Strategy, Service Agreement Oversight Committees. Serves an integral role at Price Group board meetings. • As owner of the business continuity function, worked with head of Global Human Resources and CEO to lead the firm’s pandemic response, preparing our facilities, and communicating to associates. • Managed multi-year evaluation of sites for corporate headquarters, culminating in signing letter of intent to construct a new headquarters complex to be ready in 2024. • Advanced stockholder engagement efforts and maintained strong relationships with the analyst community in both the U.S. and Europe. |
2021 Proxy Statement 43 Robert W. Sharps | | President, Head of Investments, and Group Chief Investment Officer | ROLE CONSIDERATIONS • Leadership, responsibility, and performance as Head of Investments (including global trading), Group Chief Investment Officer, and chair of the Investment Management Steering Committee. In 2021, the Board appointed Mr. Sharps as the Company’s President. INDIVIDUAL ACHIEVEMENTS • Strong investment performance over five- and 10-years against active peers, particularly across multi-asset, with further broadening of the investment teams and their capabilities. • Committed to and advised on the development of our new investment management subsidiary, TRPIM, including selection of leadership team. Recruited and onboarded the leader of our ETF business and oversaw the planning and launch of our active ETF product. Oversaw successful leadership transition for International Equity. • Oversaw ESG function and its broad integration within Investments with outstanding ratings from industry services. Launched our first Responsible portfolios and prepared to launch first Impact strategy. • Outstanding work as chair of the Investment Management Steering Committee, which focuses on long term product evolution at the firm. Oversaw significant number of new product launches across Investments. Key thought leader on investment pricing decisions across the firm. • Led the five-person chief investment officer group that continues to represent our investment divisions with distinction. Co-chaired the firm’s Asset Allocation Committee with successful market shifts during the pandemic-driven bear market in the first quarter. • Served as executive sponsor of our Black Leadership Council. Also served as a director of the Price funds’ board and as integral presenter at Price Group board meetings. • Key contributor on the Management, Management Compensation and Development and Product Strategy Committees. Serves in an important leadership role on the U.S. Equity, International Equity, and Fixed Income Steering Committees. |
Christopher D. Alderson | Co-Head of Global Equity | ROLE CONSIDERATIONS • Leadership, responsibility, and performance as Co-Head of Global Equity, Head of International Equity, and chair of the International Equity Steering Committee. INDIVIDUAL ACHIEVEMENTS • Investment performance for international equity remained strong over three-, five-, and 10-years against active peers and against benchmarks. • Effective chair of the International Equity Steering Committee. Central leadership role in developing the talent and culture of the team to deliver the division’s excellent results at increasing scale; executed an effective transition of leadership responsibilities to next head of International Equity, Justin Thomson. • Partnered successfully with Product team to progress the three-year product road map for International Equity. Successful launch of China Innovation Equity and planned 2021 launches of China Growth, Global Impact, Global Select, and UK Responsible Equity. • Key contributor on the Management, Management Compensation and Development Investment Management Steering, and Product Strategy Committees. • Led the firm’s initiative to establish an office in Shanghai, China, which opened in 2021. |
44 T. Rowe Price Group Eric L. Veiel | | Co-Head of Global Equity | ROLE CONSIDERATIONS • Leadership, responsibility, and performance as Co-Head of Global Equity, Head of U.S. Equity, and chair of the U.S. Equity Steering Committee. INDIVIDUAL ACHIEVEMENTS • Investment performance for U.S. equity remained strong across the five- and 10-years against peers and solid against benchmarks. • Chaired the U.S. Equity Steering Committee, which oversees our largest investment division. Developed several new leaders that are taking on additional responsibilities. Significantly enhanced diversity programs to access and develop diverse talent within Equity. Served as executive sponsor of WAVE, our business resource group for women. • Advocated for and led day-to-day development of new investment management subsidiary, TRPIM, to be launched in the second quarter of 2022; work included development of organizational structure and operating plans, appointment of leadership team, recruitment and appointment of investment staff. • Continued progress on integration of ESG into investment process and collaborated on development of Global Impact and Global Select equity strategies. • Led the design and implementation of the plan to pay for third-party investment research in the U.S. and consulted on international implementation. • Hired new head of Quantitative Investing and successfully onboarded and integrated him during the pandemic. • Key contributor on the Management, Investment Management Steering, Multi-Asset Steering, and Product Strategy Committees. |
Annual Incentive Compensation At the beginning of the year, the Compensation Committee established each NEO’s maximum payout percentage from the AICP bonus pool. The established payout percentages reflect the Compensation Committee’s decision to impose a financially based limit on the maximum payout to each NEO and the Compensation Committee’s expectation of each NEO’s relative contribution to the Company’s performance. The Compensation Committee has the discretion to reduce or eliminate the share of the bonus pool payable to any NEO. The table below sets forth the maximum payout (in millions) allocated to our NEOs and the actual bonus awards (in millions) made by the Compensation Committee to our NEOs for 2020 and 2019. NAME | | 2020 MAXIMUM PAYOUT BASED ON THE TOTAL POOL | | 2020 ANNUAL INCENTIVE PAYMENT | | 2019 ANNUAL INCENTIVE PAYMENT | | 2020 PAYMENT PERCENTAGE CHANGE OVER 2019 | William J. Stromberg | | $16.5 | | $9.0 | | $8.5 | | 5.9% | Céline S. Dufétel | | $ 8.2 | | $4.5 | | $3.6 | | 25.4% | Robert W. Sharps | | $16.5 | | $9.0 | | $8.7 | | 3.4% | Christopher D. Alderson1 | | $13.7 | | $7.3 | | $7.1 | | 2.4% | Eric L. Veiel | | $13.7 | | $7.4 | | $7.0 | | 5.0% |
| 1 | Bonus amounts received in 2020 and 2019 by Mr. Alderson were HKD 56.8 million and HKD 57.8 million, respectively. |
Consistent with past practice, the Compensation Committee exercised negative discretion and awarded less than the maximum payout amount to the NEOs. Exercising such negative discretion maintains alignment between the needbonus amounts paid to reward employeesthe NEOs and the needexpected range of bonuses paid to manage riskpeers with similar roles at our competitors. The significant increase in the annual incentive payment for Ms. Dufétel from 2019 to 2020 is a reflection of both her very strong performance as the CFO and protect stockholder returns. WhileTreasurer and her significantly expanded roles and responsibilities in 2020 as described above. The Compensation Committee has the designpower to authorize additional incentive compensation or bonuses outside the AICP but did not do so in 2020. 2021 Proxy Statement 45 Long-Term Equity Awards Pursuant to our long-term equity award program award values are split equally in the form of performance-based RSUs and time-based RSUs to our NEOs. Each long-term equity award value was converted to units using the closing stock price of our executive compensation programcommon stock on the date of grant ($153.17 for 2020). The NEOs were granted the following long-term incentive values (in millions) and resulting mix of performance-based and time-based RSUs in 2020. NAME | | 2020 EQUITY INCENTIVE VALUE | | 2020 PERFORMANCE- BASED RESTRICTED STOCK UNITS | | 2020 TIME- BASED RESTRICTED STOCK UNITS1 | | 2019 EQUITY INCENTIVE VALUE | | 2020 LTI AWARD VALUE CHANGE OVER 2019 | William J. Stromberg | | $5.9 | | 19,260 | | 19,260 | | $5.7 | | 4.4% | Céline S. Dufétel | | $2.5 | | 8,161 | | 8,161 | | $2.1 | | 19.0% | Robert W. Sharps | | $5.6 | | 18,118 | | 18,118 | | $5.0 | | 12.1% | Christopher D. Alderson | | $2.5 | | 8,161 | | 8,161 | | $2.5 | | —% | Eric L. Veiel | | $3.5 | | 11,426 | | 11,426 | | $3.2 | | 11.1% | | | | | | | | | | | |
| 1 | Time-based RSU’s vest in equal installments over the three years beginning in December in the year after the grant date. |
Performance-Based RSUs—Performance Thresholds and Vesting The performance thresholds established by the Compensation Committee for the performance-based RSUs granted in 2020 to our NEOs were based on the Company’s operating margin for the three-year performance period compared with the average operating margin of a designated group of public company peers (Industry Average Margin) that was composed of: Affiliated Managers Group, Inc. | Janus Henderson Group | Invesco Ltd. | AllianceBernstein L.P. | Federated Investors | | BlackRock, Inc. | Franklin Resources | |
The peer group listed above is primarily performance-based, we believe that it does not encourage excessive risk-taking. Ongoing and active discussions with management regarding progress on short-term and long-term goals enables informed decisions while avoidinga subset of the risks that can be associated with managing short-term results to achieve predetermined formulaic outcomes. Our compensation programs are designed to provide executive officers with appropriate incentives to create long-term value for stockholders while taking thoughtful and prudent risks to grow value over time. We believe that our equity program, our stock ownership guidelines, andpeer group used in evaluating the very significant stock ownershipcompetitive positioning of our NEOs create important links betweencompensation program. The Compensation Committee selected operating margin as the sole performance metric because it is a key indicator of profitability and relative financial interests of our executives and long-term performance and mitigate any incentive to disregard risks in returnthe asset management industry. Operating margin is determined by dividing net operating income by total revenues for potential short-term gains. In addition, the Company hasperformance period, as reported in place a robust risk management program designed to identify, evaluate, and control risks. Through this program, we take a companywide view of risks and have a network of systems and oversight to ensure that risksthe consolidated financial statements filed with the SEC or, if such financial statements are not viewedavailable for a peer company at the time of determination, as otherwise disclosed in isolationa press release by such peer company. In each case, net operating income is adjusted to exclude the effects of goodwill impairment, the cumulative effect of changes in accounting policies or principles, and are appropriately controlled and reported, including a systemgains or losses from discontinued operations, as each is reflected on the face of reportingor in the notes to the chief executive officer,relevant financial statements. For performance-based RSUs awards made in 2020, the Auditnumber of RSU’s earned will be determined by comparing the Company’s operating margin for the three-year performance period to the average operating margin of the peer group of companies for the same period, and thereafter vest over the following two years (years four and five after the grant date).
The following table sets forth the performance thresholds and related percentage of RSUs eligible to be earned that were established by the Compensation Committee for the 2020 awards. TROW Operating Margin as Percent of Industry Average Margin | | >=100% | | 90%-99% | | 80%-89% | | 70%-79% | | 60%-69% | | 50%-59% | | <50% | Amount of Restricted Stock Units Eligible to be Earned | | 100% | | 90% | | 80% | | 70% | | 60% | | 50% | | 0% |
GRANT DATE | | PERFORMANCE PERIOD | | TROW OPERATING MARGIN AS PERCENT OF INDUSTRY AVERAGE MARGIN | | AMOUNT EARNED AND SUBJECT TO STANDARD VESTING SCHEDULE | | VESTING START MONTH/YEAR | December 2020 | | January 1, 2021 to December 31, 2023 | | Not determinable at this time | | December 2024 |
Performance-based RSUs earned by each NEO following the completion of the relevant performance period vest at a rate of 50% per year beginning in the month and year specified in the full Boardchart above once the Compensation Committee certifies the number of Directors. We believe that our compensation and stock ownership programs work within this risk management system.RSUs earned. 46 T. Rowe Price Group TABLE OF CONTENTSTable of Contents
Process for Determining Executive Compensation The Compensation Committee has established a comprehensive process for: | ■ | reviewing our executive compensation program designs to ensure that they are aligned to our philosophy and objectives, |
reviewing our executive compensation program designs to ensure that they are aligned to our philosophy and objectives, | ■ | establishing goals to assess performance against, and |
evaluating performance by our NEOs against goals and objectives established or reviewed by the Compensation Committee, and | ■ | setting compensation for the NEOs and other senior executives. |
setting compensation for the NEOs and other senior executives. The table below summarizes the actions taken by the Compensation Committee throughout 2017.2020. First Quarter
|
| Second Quarter
| ■ Discuss the Company’s strategic imperatives and
related goals and objectives for the year.
■ Designate participants in AICP and set each NEO’s
maximum payout percentage.
■ Certify prior-year financial results for payout of the
AICP and determine whether performance thresholds
on prior-year restricted stock units had been met.
| | ■ Review our compensation governance practices.
■ Assess progress against the Company’s strategic
imperatives and related goals and objectives for the
year.
■ Review the Company’s current year-to-date
performance, including financial, investment, and
client service performance.
■ Consider with members of the Management
Compensation Committee the potential funding size
of the overall annual bonus pool.
|
2021 Proxy Statement 47 Third Quarter
|
| Fourth Quarter
| ■ Review with management and our independent
compensation consultant the external trends in both
the investment management industry and more
broadly, regulatory and other developments affecting
executive compensation.
■ Assess progress against the Company’s strategic
imperatives and related goals and objectives for
the year.
■ Review the Company’s current year-to-date
performance, including financial, investment, and
client service performance.
■ Consider with members of the Management
Compensation Committee the potential funding size
of the overall annual bonus pool.
■ Consider stockholder and proxy advisor feedback in
connection with our say-on-pay vote results.
| | ■ Review projected peer compensation data provided
by our independent compensation consultant and
McLagan Partners survey data.
■ Evaluate the Company’s performance against its
goals.
■ Evaluate executive officer performance against goals
of their respective roles, with input from the CEO for
certain other executive officers.
■ Approve the size of the Company’s overall annual
bonus pool and determine the annual incentive cash
pool payout to each NEO and other AICP
participants.
■ Consider with the members of the Management
Compensation Committee the size and parameters of
the year’s equity incentive program.
■ Define the performance metric and performance
period for restricted stock units granted to our
executive officers as part of the annual equity
incentive program.
|
ROLE OF INDEPENDENT COMPENSATION CONSULTANTDelegation Authority
The Compensation Committee has delegated compensation decisions regarding nonexecutive officers, including the establishment of specific salary and incentive compensation levels and certain matters relating to stock-based compensation, to the Management Compensation and Development Committee, a committee comprised of members of the Management Committee. Committee Procedures Early each year, the Compensation Committee meets with the President and CEO and members of senior management in order to discuss goals and objectives for the coming year, including goals and objectives applicable to the NEOs listed in our Summary Compensation Table. In addition, the Compensation Committee determines eligibility for the AICP bonus pool and sets forth the maximum percentage that may be paid to each participant. At its meeting in December, the Compensation Committee evaluates executive performance during the year as part of its determination of appropriate incentive compensation awards. The Compensation Committee awards annual equity incentive grants to employees from stockholder-approved long-term incentive plans as part of the Company’s annual compensation program. Role of Executive Officers The Compensation Committee solicits input from the President and CEO and the Management Compensation and Development Committee regarding general compensation policies, including the appropriate level and mix of compensation. The Compensation Committee also consults with the President and CEO regarding the appropriate bonus and salary levels for other executive officers. Role of Independent Compensation Consultant Johnson Associates served as the Compensation Committee’s independent compensation consultant in 2020 and attended all Compensation Committee meetings during the year, and regularly meets with the Compensation Committee in executive session. The Compensation Committee benefited from the consultant’s broad experience in advising other compensation committees, in-depth understanding of investor perspectives on compensation, and familiarity with our compensation programs and policies and those of peer companies in the asset management and financial services industry. Johnson Associates provides the Compensation Committee with information about the competitive market for senior management in the investment management and financial services industries and compensation trends across industries generally. A representative fromindustries. Specifically in 2020, Johnson Associates attendedreviewed, evaluated and presentedrecommended changes to the competitive market peer group to be used in evaluating NEO compensation, and periodically advised the Compensation Committee on trends and projected implications on executive compensation practices in response to the global pandemic. The consultant also provided competitive guidance to the Compensation Committee on these matters at their meeting in September 2017. regarding 2020 incentive compensation decisions for the President and CEO, and for the other NEOs. Johnson Associates alsohas no relationship with Price Group other than as the Board’s compensation consultant. Johnson Associates has not provided guidance and assistanceany services to the Company other than those provided to the Compensation Committee in their role as it made its 2017 incentive compensation decisions at its December 2017 meeting. TABLE OF CONTENTS
Frederic W. Cook & Co., Inc. served as the Compensation Committee’s independent compensation consultant through August 2017. After conducting a process to review its compensation consulting relationship, in September 2017, the Compensation Committee replaced FW Cook and engaged Johnson Associates as their independent compensation consultant. The Compensation Committee benefited from each consultant’s broad experience in advising compensation committees, in-depth understandinghas assessed the independence of investor perspectives on compensation,Johnson Associates pursuant to SEC rules and familiarity with our compensation programs and policies and those inconcluded that the financial services industry.work performed by the advisor does not raise any conflicts of interest. The Compensation Committee will continue to periodically review its relationship with Johnson Associates and their continued appointment as the Compensation Committee’s independent consultant.
Many of our key competitors are not publicly traded or are subsidiaries of larger companies. These competitors generally do not make publicpublicly disclose the compensation data of their top executive officers. AtDuring the October 2017 Compensation Committee meeting,year, Johnson Associates presented a report of expected competitive pay for each NEO based on current industry trends and their market evaluation of each NEO’s role. This data, along with competitive market data provided to management by McLagan Partners (McLagan) and input from the CEO and other senior executive officers of the Company, provided guidance to the Compensation Committee in their compensation decisions for each NEO.NEO for 2020. McLagan has an extensive database on compensation for most investment management companies, including private companies for which information is not otherwise generally available. McLagan summarizes data by role across multiple companies without specifically identifying information for a particular company. Management uses the summary information from McLagan for a reasonable estimation of compensation levels in the industry for persons with specific roles relevant to our business (e.g., portfolio manager, analyst, client service manager, etc.). Relevant portions of this information are shared by executive management with the Compensation Committee. McLagan works with management and does not act as a compensation consultant to the Compensation Committee. Neither FW Cook nor Johnson Associates has provided any services to the Company other than those provided to the Compensation Committee in their role as independent consultant. The Compensation Committee has assessed the independence
48 T. Rowe Price Group Competitive Positioning COMPETITIVE POSITIONING
The Compensation Committee annually reviews competitive data regarding compensation at peer companies in the investment management industry with their independent compensation consultant and management. We do not set compensation levels to fall within specific ranges compared with benchmark data. Instead, we use the information developedprovided by management usingJohnson Associates, proxy data for peer group companies listed below, and survey data provided by McLagan and others about the competitive market for senior management to gain a general understanding of current compensation practices and to assist in the development of compensation programs and setting compensation levels for our senior executives. In this regard,2020, the Compensation Committee reviewedasked Johnson Associates, in partnership with management, to review and assess the existing compensation datapeer group and, if warranted propose potential changes. The assessment was conducted in an effort to better reflect our size, complexity of offerings, scope of domestic and global capabilities, and diversified client base (retail and institutional), and the evolving competitive landscape, including the merger of several of former peer group comparators. Based on the review Johnson Associates suggested that for 2020 TIAA be added to the peer group for all executives, and that J.P. Morgan Asset Management, Morgan Stanley Asset Management and Goldman Sachs Asset Management, be included with the other firms when considering a competitivepeer group comprisingfor the CEO. Below is the list of the nine asset management companies listed below:final 2020 peer group recommended by Johnson Associates and approved by the Compensation Committee: •Affiliated Managers Group, Inc. • AllianceBernstein L.P. • Ameriprise Financial, Inc. | • BlackRock Inc. • Charles Schwab Corporation • Eaton Vance Corp. | Invesco Ltd.
| AllianceBernstein L.P.
| Federated Investors, Inc.
| Janus Capital Group, Inc.
| BlackRock, Inc.
| • Invesco Ltd. • Northern Trust • TIAA | Legg Mason, Inc.
• CEO Only: • J.P. Morgan Asset Management • Morgan Stanley Asset Management • Goldman Sachs Asset Management |
The companies making up the peer group listed above were selected because they are public company traditional asset managers, as well as comparable financial services and brokerage companies given their assets and scale, or in the case of the CEO Only firms listed above, because they are significant asset management subsidiaries of publicly-traded firms with significant assets under management.AUM. The Compensation Committee continuously reviewswill continue to review the composition of this peer group to analyze our executive compensation program and determine whether any changes should be made.made in the future. In addition to specific information on these companies, the Compensation Committee reviewed aggregated summary compensation data based on information from surveys that include some of the peer companies listed above as well as other public and nonpublic companies with which we compete for executive talent, including the Capital Group Companies Inc., Fidelity Investments, Goldman Sachs Group Inc., JPMorgan Chase,Asset Management, Janus Henderson Investors, J.P. Morgan Asset Management, MFS Investment Management, Oppenheimer & Co. Inc., Pacific Investment Management Company LLC., Putnam Investments,LLC, The Vanguard Group Inc., Wellington Management Company LLP, and Western Asset Management Co. In light of our overall performance in 2017,2020, the Compensation Committee believes that the compensation paid to our CEO and other NEOs is reasonable in relation to the compensation paid by our peer companies both on an absolute basis and in comparison to relevant financial performance metrics. TABLE OF CONTENTS
2017 Compensation Decisions
Given our shared and collaborative leadership structure, when setting the compensation in 2017, the Compensation Committee considered the collective contribution of the NEOs to the Company’s strategic imperatives as highlighted in the executive summary to this CD&A as well as their contributions to the related annual goals described below. The Compensation Committee considered each NEO’s individual contributions to the achievement of these and longer-term goalsRisk Management and the NEO’s individual performance in their functional responsibilities. The Compensation Committee also looked to maintain reasonable alignment between the compensationAlignment of the NEOs and other senior personnel in order to retain talent and maintain an internally consistent compensation environment.Management with our Stockholders
BASE SALARY
Each of our NEOs based in the U.S. had a base salary of $350,000 for 2017. This level of base salary is consistent with the base salary paid to our most senior personnel and has not changed since 2005. Mr. Alderson is based in the U.K. and was paid a base salary of £240,000 in 2017.
INCENTIVE COMPENSATION
At the beginning of 2017, the Compensation Committee identified goals for the NEOs and other senior management. Performance relative to these goals guides our cash and equity incentive program decisions for each NEO. Some of the objectives are relatively consistent from year to year, while others will vary depending upon the strategic initiatives for that year. Accordingly, some of the goals are longer term in nature and others are specifically focused on annual or other short-term objectives. All are designed to promote a team-oriented structure that operates in the best interests of clients, associates, and stockholders. Taking into account the unique challenges of an investment management firm, goals are intended to optimize management’s effectiveness in managing factors within its control, while positioning the Company to successfully navigate market volatility and other external factors beyond management’s control.
Long-term goals that apply every year include the objective to recruit, develop, and retain diverse associates of the highest quality while creating an environment of collaboration and appropriately rewarding individual achievements and initiatives. This focus on our associates is intended to create a combination of talent, culture, and processes that will allow us to achieve superior investment results, market our products effectively, and deliver outstanding service on a global basis. Specific goals established for 2017, and against which performance of our NEOs was judged at year-end, consisted of the following:
Perform for Our Clients
| ■ | Sustain strong long-term investment results and competitiveness of our investment strategies. |
| ■ | Expand and enhance our investment capabilities and products to meet evolving client demands, while managing investment capacity. |
| ■ | Maintain our reputation for integrity, as well as our positive brand image and competitive name awareness. |
Invest in Our People
| ■ | Attract, develop, and retain top senior leadership and investment talent and plan for management succession. |
| ■ | Continue to develop human talent capabilities, attract and retain a collaborative and diverse workforce, and enhance internal communications. |
Enhance Our Global Capabilities and Infrastructure
| ■ | Evolve our enterprise culture, workplace, and organizational capabilities to position us for long-term success. |
| ■ | Ensure that our global investment operating model, capabilities, and processes continue to evolve to be successful on a larger scale. |
| ■ | Sustain and enhance our diversified distribution strategy and capabilities to support long-term organic growth. |
| ■ | Continue appropriate investment to enhance our organizational, systems, and risk management capabilities to effectively manage the increasing scope and complexity of our business in a global context. |
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Deliver and Grow Operating Results and Maintain Financial Strength
| ■ | Manage our financial position and financial performance to protect and benefit our clients, associates, and stockholders, striking a balance between short-term financial results and the need to continuously invest in long-term capabilities. |
Individual Performance Considerations
In addition to the Company’s performance highlighted in the executive summary on page 26, the Compensation Committee considered the following individual contributions when setting 2017 compensation, with the exception of Kenneth V. Moreland who was compensated for 2017 under a separate retirement agreement.
Name
| Compensation Committee Considerations
| William J. Stromberg
President and Chief
Executive Officer
| Role Considerations
| ■
| Leadership, responsibility, and performance in second year as president and chief executive officer, and chair of our Management Committee and Management Compensation Committee.
| | | | | Individual Achievements
| | ■
| Led the ongoing execution of our integrated enterprise strategy. This included significant enhancements to the Company’s governance of enterprise change programs and continued evolution of our organizational structure.
| | ■
| Broadened the Management Committee with several new appointments, and transitioned new leaders into the Investments and Finance functions.
| | ■
| Overall investment performance remained very strong for three-, five-, and 10- year periods against peers and benchmarks; investment performance was very competitive in 2017.
| | ■
| Annual net revenues grew 14% and diluted earnings per share on a non-GAAP basis increased 21%, despite significant reinvestment back into the business to grow and diversify the Company. Return on equity was a healthy 28% for 2017, compared with 25% in 2016. The Company returned $1.0 billion to stockholders in 2017 through dividends and share repurchases, and the balance sheet strengthened further with $2.7 billion of cash and discretionary investments.
| Edward C. Bernard
Vice Chairman
| Role Considerations
| ■
| Leadership, responsibility, and performance as chair of the Price funds’ Boards and as leader of the marketing, distribution, operations, technology and legal functions.
| | | | | Individual Achievements
| | ■
| Lead support role to chief executive officer in development and implementation of a new integrated strategy. Managed the continuing implementation of a new operating model aligning operations with its related distribution function, and reorganized distribution channels.
| | ■
| Key contributor on a variety of committees including Management, Management Compensation, and the Product Steering Committee, which he chairs.
| | ■
| Oversaw creation of our client experience and delivery transformation work. This capability will enhance the client experience of our individual investor and retirement plan participants while improving our effectiveness and efficiency.
| | ■
| Guided the distribution and service groups which contributed to the Company’s increase in organic growth to 1.7% while also maintaining high customer satisfaction.
| | ■
| Oversaw a significant increase in productivity of our technology efforts - increasing functionality while improving controls and efficiency.
|
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Name
| Compensation Committee Considerations
| Christopher D. Alderson
Co-head of Global Equity
| Role Considerations
| ■
| Leadership, responsibility, and performance as co-head of global equity, head of international equity, and chair of the International Steering Committee.
| | | | | Individual Achievements
| | ■
| Investment performance for international equity continued to be strong for one-, three-, and five-years against peers and benchmarks. Central leadership role in developing the talent and culture of the team to deliver excellent results at scale.
| | ■
| Developed a three-year product road map for international equity products and led its early implementation.
| | ■
| Significant succession planning contributions and a key leader of our Brexit planning efforts. Key contributor on a variety of committees including, Management, Asset Allocation, and the Product Steering Committee.
| | ■
| Outstanding client development contributions across U.S., Europe, and Asia.
| Robert W. Sharps
Co-head of Global Equity
| Role Considerations
| ■
| Leadership, responsibility, and performance in first year as co-head of global equity and group chief investment officer.
| | | | | Individual Achievements
| | ■
| Excellent global equity investment performance over one-, three-, five- and 10-years with continued strengthening of the investment teams and collaboration between them.
| | ■
| Coordinated activities of our newly formed six-person chief investment officer group. Excellent representation of the Company as group CIO.
| | ■
| Influential oversight of global trading including successfully transitioning to a new global head of trading.
| | ■
| Key contributions as director of certain Price funds’ boards and as contributor to our Price Group board meetings.
| | ■
| Key contributor on a variety of committees, including Management, U.S. Equity, International Equity, Fixed Income, Asset Allocation, and the Product Steering Committee.
| | ■
| Leadership role in preparing the Company for implementation of MiFID II regulation.
|
Annual Incentive Compensation
The AICP for 2017 was $195.4 million, compared with $161.1 million for 2016. In calculating the AICP for 2017, the Company’s 2017 audited income before taxes of $2,455.1 million was adjusted in accordance with the terms of the AICP for the nonrecurring insurance recoveries related to the Dell appraisal rights matter to determine adjusted earnings as defined under the AICP. The Compensation Committee approved, at the beginning of the year for each of the NEOs and certain other executive officers of the Company, the maximum percentage of the AICP that could be paid to each participant. The percentages assigned reflect an expectation of relative participation in the pool by the NEOs and certain other executive officers largely due to their respective roles and contribution to the Company rather than a prediction of the likely amount that ultimately will be awarded.
In 2017, the Committee elected to allocate only 50% of the AICP to our CEO and five other executive officers with the expectation that actual awards would be significantly less than the maximum amounts allocated to each officer. Accordingly, $97.7 million of the pool was not available for bonus allocations.
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The table below sets forth the maximum payout (in millions) based on the total bonus pool allocated to each NEO, with the exception of Kenneth V. Moreland who was compensated for 2017 under a separate retirement agreement, and the actual bonus determinations (in millions) made by the Compensation Committee for our NEOs for the years 2017 and 2016.
Name | 2017 Maximum Payout Based on Total Pool | 2017 Payout | 2016 Payout | Percentage Change Over 2016 Payout | William J. Stromberg | $ | 21.9 | | $ | 7.6 | | $ | 6.9 | | 10.9% | Edward C. Bernard | $ | 19.9 | | $ | 6.0 | | $ | 5.3 | | 13.2% | Christopher D. Alderson | $ | 19.9 | | $ | 5.8 | 1 | $ | 5.4 | 1 | 6.9% | Robert W. Sharps | $ | 19.9 | | $ | 7.3 | | | n/a | | n/a |
| 1 | Bonus amounts received by Mr. Alderson pursuant to his employment agreement are paid in British pounds. In 2017, Mr. Alderson received a bonus of GBP 4.5 million, an increase of 12.5% over his GBP 4.0 million bonus payout in 2016. |
The Compensation Committee considers whether the executive compensation program rewards reasonable risk-taking and if incentive opportunities achieve the proper balance between rewarding employees and managing risk and protecting stockholder returns. While the design of our executive compensation program is primarily performance-based, we believe that it does not use a formulaic approach in determiningencourage inappropriate risk-taking. Ongoing and active discussions with management regarding progress on short-term and long-term goals enables informed decisions while avoiding the maximum percentage of the poolrisks that can be paid out orassociated with managing short-term results to achieve predetermined formulaic outcomes. Our compensation programs are designed to provide executive officers with appropriate incentives to create long-term value for stockholders while taking thoughtful and prudent risks to grow value over time. We believe that our equity program, our stock ownership guidelines, and the actual amount paidvery significant stock ownership of our most tenured NEOs create important links between the financial interests of our executives and long-term performance and mitigate any incentive to eachdisregard risks in return for potential short-term gains. In addition, we have a robust risk management program designed to identify, evaluate, and control risks. Through this program, we take a company-wide view of the NEOs. In this regard, the Compensation Committee considered it likelyrisks and have a network of systems and oversight to ensure that it would exercise negative discretion consistent with past practice to pay significantly less than the maximum amountrisks are not viewed in isolation and are appropriately controlled and reported, including a system of reporting to the NEOs. Among other things, exercising such negative discretion allowschief executive officer, the Company to spread more of the total available annual bonus pool to a broader group of contributors within the Company and maintains alignment between the bonus amounts paid to the NEOs and expected bonuses paid to peers with similar roles at our competitors. The CompensationAudit Committee, has the power to authorize additional incentive compensation or bonuses outside the AICP, but did not do so in 2017 other than in connection with the retirement agreement for Mr. Moreland. Equity Incentive Compensation
Beginning in 2017, the Compensation Committee approved a change from twice-a-year grants made in February and September to a once-a-year grant made in December. The change was made to consolidate the equity grant awards into the Company’s year-end compensation process. By doing so, all elements of year-end compensation could be communicated at one time. Also as a result of the grant timing change, dividend equivalents on unvested units that would have accrued if the grant had been made earlier in the year were lost. The Compensation Committee approved a one-time supplemental cash payment in 2017 to continuing equity incentive compensation recipients, including certain NEOs, equivalent to the value of cash dividend equivalents lost as a result of the change in the award timing. The amount of this payment is referenced in the bonus column of the Summary Compensation Table on page 43.
As part of our annual equity incentive program, the Compensation Committee recommended to the Board of Directors, and the full Board approved, the granting of an equity award value in restrictedBoard. We believe that our compensation and stock units and performance-based restricted stock units to employees, including our NEOs, at the regularly scheduled committee meeting in December 2017. Mr. Moreland, who retired in early 2018, did not receive a 2017 equity award as he was being compensated under a separate retirement agreement. Each equity award value was converted to units using the closing stock price of our common stock on the date of grant. The NEOs were granted the following equity incentive value (in millions) and resulting performance-based restricted stock units in 2017.ownership programs work effectively within this risk management program.
Name | Equity Incentive Value | Performance- Based Restricted Stock Units | William J. Stromberg | $ | 3.6 | | | 34,876 | | Edward C. Bernard | $ | 1.6 | | | 15,719 | | Christopher D. Alderson | $ | 2.0 | | | 19,649 | | Robert W. Sharps | $ | 3.1 | | | 29,964 | | Total Granted to NEOs | $ | 10.3 | | | 100,208 | |
The NEOs’ grants represent 5% of the total equity awards we awarded to our employees in 2017 under our annual equity incentive program. The NEOs’ grants over the previous five years have represented on average 4% of the total equity awards we granted in each year. The Compensation Committee has emphasized the need to provide a greater percentage of executive officer compensation in the form of equity awards for 2017 and has thus increased grant sizes.
2021 Proxy Statement 49 TABLE OF CONTENTS
Performance-Based Restricted Stock Units - Performance Thresholds and Vesting
Similar to prior years, the performance thresholds established by the Compensation Committee for the performance-based restricted stock units granted in 2017 to our NEOs were based on the Company’s operating margin for the performance period compared with the average operating marginTable of a designated group of public company peers (Industry Average Margin) that was composed of: Affiliated Managers Group, Inc., AllianceBernstein L.P., BlackRock, Inc., Eaton Vance Corp., Federated Investors, Inc., Franklin Resources, Inc., Invesco Ltd., and Legg Mason, Inc. This is the same proxy peer group listed above that is used in evaluating the competitive positioning of our compensation program, excluding Janus Capital Group, Inc., which was removed as a peer due to its acquisition in 2017. The Compensation Committee selected operating margin as the sole performance metric because it is a key indicator of profitability and relative financial performance in the asset management industry. Operating margin was determined by dividing net operating income by total revenues for the performance period, as reported in the consolidated financial statements filed with the SEC or, if such financial statements are not available for a peer company at the time of determination, as otherwise disclosed in a press release by such peer company; in each case, net operating income is adjusted to exclude the effects of goodwill impairment, the cumulative effect of changes in accounting policies or principles, and gains or losses from discontinued operations, as each is reflected on the face of or in the notes to the relevant financial statements.Contents
The following table sets forth the performance thresholds and related percentage of restricted stock units eligible to be earned that were established by the Compensation Committee for the 2017 awards.
TROW Operating Margin as Percent of Industry Average Margin | >=100% | 90%-99% | 80%-89% | 70%-79% | 60%-69% | 50%-59% | <50% | Amount of Restricted Stock Units Eligible to be Earned | 100% | 90% | 80% | 70% | 60% | 50% | 0% |
As detailed in the table below, the NEOs earned the full number of eligible restricted stock units in 2017 that were granted in February 2016 and September 2016.
Grant Date
| Performance Period
| TROW Operating Margin
as Percent of Industry
Average Margin
| Amount Earned and
Subject to Standard
Vesting Schedule
| Vesting Start
Month/Year
| February 2016
| January 1, 2016 to December 31, 2016
| Greater than 100%
| 100% Granted
| December 2017
| September 2016
| July 1, 2016 to June 30, 2017
| Greater than 100%
| 100% Granted
| December 2017
| December 2017
| January 1, 2018 to December 31, 2018
| Indeterminable at this time
| February 2019
|
Restricted stock units earned by each NEO following the completion of the relevant 12-month performance period vests at a rate of 20% per year beginning in the month and year specified in the chart above once the Compensation Committee certifies the number of awards earned.
Other Compensation Policies and Practices DEFINED CONTRIBUTION PLAN
Defined Contribution Plan Our U.S. retirement program provides retirement benefits based on participant elective deferrals, Company contributions, and the investment performance of each participant’s account. For 2017,2020, we contributed $148,176$150,000 to this program for our U.S.-based NEOs as a group. We provide this program to all U.S. employees in order to assist them in their retirement planning. The contribution amounts are based on plan formulas that apply to all employees. Since relocating to our Hong Kong office in early 2020, Mr. Alderson is locatedparticipates in the U.K.mandatory retirement benefit program offered to all associates in Hong Kong. For 2020, we contributed $34,811 to this program on his behalf. Perquisites and we pay him cash in lieu of a contribution to the U.K. pension program as a result of a Fixed Protection election made with the U.K. tax authorities, which required him to opt out of the U.K. pension program. In 2017, we paid him $28,934, which is based on the contribution formula in the program and is equal to the amount he would have received had he stayed in the program.Other Personal Benefits TABLE OF CONTENTS
PERQUISITES AND OTHER PERSONAL BENEFITS
We do not provide significant perquisites and other personal benefits to our executive officers. We make available to all senior officers programs related to executive health benefits and parking.parking available to all senior officers. We also cover certain costs associated with the NEOs’ spouses’ participation in events held in connection with the annual joint Price Group and Price funds joint Boardfunds’ boards of Directorsdirectors meeting as well as other Board and business-related functions. Mr. Alderson also receives, along with other senior personnel outside the United States,U.S., a minor travel insurance allowance. Additionally, Supplemental Savings Plan For 2020, the Compensation Committee has approved the payment of fees to the Federal Trade Commission for any filings required to be made by our executive officers under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended as a result of their stock ownership of the Company. The executive officer is responsible for any taxes due as a result of the Company paying the HSR Act filing fees and are not provided a tax gross-up payment. SUPPLEMENTAL SAVINGS PLAN
The Supplemental Savings Plan providesprovided certain senior officers including the NEOs, the opportunity to defer receipt of up to 100% ofa portion their cash incentive compensation earned for a year during which services are provided. The amounts deferred are adjusted in accordance with the hypothetical investments chosen by the officer from athe list of products offered under our U.S. retirement program. Any amounts so deferred must be deferred for a period of at least two years but may be deferred for a longer period or until termination of employment. Distributions from the Supplemental Savings Plan are made in a lump-sum payment upon termination or as installment payments for up to 15 years. For 2017, each of the NEOs2020, no NEO elected to have a portion of their AICP payout deferred. See our Nonqualified Deferred Compensation Table on page 5057 for more information.
POST-EMPLOYMENT PAYMENTS
The Company entered into an agreement (Agreement) with Mr. Moreland, its chief financial officer and treasurer, related toIn 2020, the retention of his services during a transition period preceding his retirement. Pursuant to the Agreement, and its subsequent amendment, the Company retained the services of Mr. Moreland as the chief financial officer and treasurer of the Company through the filing of the Form 10-K for the Company’s 2017 fiscal year on February 16, 2018. In addition to the continuation of his current $350,000 base salary during the period in 2017 and 2018 in which heSupplemental Savings Plan was employed, he received additional compensation at the time of his retirement from the Company in an amount equal to $1,725,000.
As a condition to receipt of this payment, Mr. Moreland agreed, among other things, to remainamended, with the Company as provided above,changes beginning with deferrals of 2021 compensation. The changes include reducing limits on the maximum permitted deferral to be the lesser of 50% of cash incentive compensation, or $2 million, increasing the minimum deferral period to at least five years, reducing the maximum number of installment payments to 10-years, and to fully comply with the terms of the Agreement, including confidentiality and non-solicitation of employees.provide for an automatic lump-sum payment upon termination prior to age 58.
Except as described above, we
Post-Employment Payments We have not entered into severance or other post-employment agreements with any of our other NEOs. Consequently, we generally do not have any commitments to make post-employment payments to them. All agreements for stock option and stock awards granted to employees from our equity plans prior to February 2012 include provisions that may accelerate the vesting of outstanding equity awards upon the grantee’s death or in connection with a change in control of Price Group or, at the administrator’s discretion, upon disability of the grantee. We changed these acceleration provisions for stock options and stock awards granted on and after February 23, 2012, in the following ways: We(1) aligned the treatment of the awards in the event of a grantee’s death or termination of employment due to total disability so that vesting acceleration will occur in both events. In addition, weevents; and (2) provided for “double-trigger” vesting acceleration in the event the equity incentive awards are not terminated as part of the change-in-control transaction. This means that in such a circumstance, accelerated vesting only occurs if, at the time of or within 18 months after the change-in-control transaction, a participant’s employment is terminated involuntarily without cause or the participant resigns with good reason (generally requiring a material diminution in authority or duties, material reduction in compensation, or relocation by a substantial distance). If the acquiring entity requires that we terminate outstanding equity incentive awards as part of the change-in-control transaction, vesting also will accelerate and award holders will be given an opportunity to exercise outstanding stock options before such termination. The Compensation Committee can modify or rescind these provisions or adopt other acceleration provisions. See our Potential Payments on Termination or Change in Control on page 5058 for further details. RECOUPMENT POLICY
Recoupment Policy Our Board of Directors has adopted a Policy for Recoupment of Incentive Compensation for executive officers of the Company. This policy provides that in the event of a determination of a need for a material restatement of the Company’s financial results within three years of the original reporting, the Board will review the facts and circumstances that led to the requirement for the restatement 50 T. Rowe Price Group and will take actions it deems necessary and appropriate. The Board will consider whether any executive officer received incentive compensation, including equity awards, based on the original financial statements that TABLE OF CONTENTS
in fact was not warranted based on the restatement. The Board will also consider the accountability of any executive officer whose acts or omissions were responsible in whole or in part for the events that led to the restatement. The actions the Board could elect to take against a particular executive officer include: the recoupment of all or part of any bonus or other incentive compensation paid to the executive officer, including recoupment in whole or in part of equity awards; disciplinary actions, up to and including termination; and/or the pursuit of other available remedies, at the Board’s discretion. STOCK OWNERSHIP GUIDELINES
Stock Ownership Guidelines We have a stock ownership policy forcovering our executive officers. This policy provides that our NEOs, and our other executive officers, and the members of our Management Committee are expected to reach levels of ownership determined as a stated multiple of an executive’s base salary within five years from the date when the executive assumed his or her position. The stated ownership multiples are 10 times base salary for the CEOChair and vice chairman,CEO, five times base salary for those executive officers onmembers of our Management Committee, and three times base salary for the remaining executive officers. For purposes of the guidelines, unvested RSUs are counted in an officer’s total ownership, but unexercised stock options, both vested and unvested, are not counted. Once the executive officer reaches the ownership target, the number of shares needed to reach the level is expected to be retained. All of our NEOs’ ownership levels are substantially above their requiredNEOs, have satisfied the applicable stock ownership guideline.multiple. TAX DEDUCTIBILITY OF COMPENSATION
Prior to January 1, 2018, Section 162(m)Tax Deductibility of the Internal Revenue Code generally disallowed a tax deduction to public corporations for compensation greater than $1.0 million paid for any fiscal year to certain “covered employees,” defined under Section 162(m) as the corporation’s chief executive officer and to the three most highly compensated executive officers other than the chief executive officer and the chief financial officer. Certain forms of performance-based compensation, however, were excluded from the $1.0 million deduction limit if certain requirements were met.Compensation
In connection with making compensation decisions, the Compensation Committee has always considered the potential tax deductibility of executive compensation under Section 162(m) and sought to qualify certain elements of these applicable executives’ compensation as performance-based. Tax deductibility, however, is not the sole factor used by the Compensation Committee in setting compensation. Corporate objectives may not necessarily align with the requirements for full deductibility under Section 162(m). Accordingly, the Compensation Committee reserves the right to make payments or awards that are not deductible under Section 162(m) if the Compensation Committee determines that such nondeductible payments or awards are otherwise in the best interests of the Company and our stockholders.
Effective January 1, 2018 Section 162(m) was amended by the 2017 U.S. tax reform, originally known as the Tax Cuts and Jobs Act of 2017 (Tax Reform), to disallow a tax deduction for all compensation, including performance-based compensation,Compensation in excess of $1.0 million paid to any NEO that is also a public corporation pays to its covered employees, as defined under Section 162(m) as amended by the Tax Reform,employee will not be deductible for tax purposes unless the compensation(i) it qualifies for transition relief applicable to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017. Guidance defining the scope2017 and that was not materially modified after that date, or (ii) satisfies an exception under any other section of the transition relief hasCode to the limitation on deductibility under section 162(m).
While the Compensation Committee will continue to consider the tax deductibility of compensation as one of many factors, the Compensation Committee believes stockholder interests are best served by not yet been issued. Notwithstandingrestricting the Compensation Committee’s effortsdiscretion and flexibility in structuring compensation programs to structure theattract, retain, and motivate key executives, even though such programs may result in non-deductible compensation paid or payable to the Company’s covered employees in a manner intended to be exempt from the Section 162(m) deduction limits, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief in connection with the Tax Reform’s repealing the deduction limit exemption under Section 162(m), no assurance can be given that compensation intended to satisfy the requirementsexpense.
Accounting for exemption from Section 162(m) will satisfy the exception or fall within the transition relief.Stock-Based Compensation ACCOUNTING FOR STOCK-BASED COMPENSATION
We account for stock-based compensation in accordance with generally accepted accounting principles. Pursuant to the guidance, stock-based compensation expense is measured on the grant date based on the fair value of the award. We recognize stock-based compensation expense ratably over the requisite service period of each award and we consider, in the case of performance-based restricted shares and units, the probability of the performance thresholds being met. TABLE OF CONTENTS
Report of the Executive Compensation and Management Development Committee As part of our responsibilities, we have reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, which begins on page 2633 of this proxy statement. Based on such review and discussions, we have recommended to the Board of Directors the inclusion of the Compensation Discussion and Analysis in this proxy statement and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.2020. Robert F. MacLellan, Chairman
Mark S. Bartlett
Mary K. Bush
H. Lawrence Culp, Jr.
Dr. Freeman A. Hrabowski, III
Olympia J. Snowe
Dwight S. Taylor
Anne Marie Whittemore
| | Robert F. MacLellan, Chair Mark S. Bartlett Mary K. Bush Dina Dublon Dr. Freeman A. Hrabowski, III Olympia J. Snowe Robert J. Stevens Richard R. Verma Sandra S. Wijnberg Alan D. Wilson |
2021 Proxy Statement 51 Executive Compensation of Named Executive OfficersTables SUMMARY COMPENSATION TABLESummary Compensation Table1
The following table summarizes the total compensation of our NEOs, who are the chief executive officer, the chief financial officer, and our three other most highly compensated executive officers. Name and Principal Position | Year | Salary | Bonus3 | Stock Awards4 | Option Awards5 | Non-Equity Incentive Plan Compensation6 | All Other Compensation7 | Total | William J. Stromberg President and Chief Executive Officer | | 2017 | | $ | 350,000 | | $ | 39,759 | | $ | 3,550,028 | | $ | — | | $ | 7,600,000 | | $ | 130,182 | | $ | 11,669,969 | | | 2016 | | $ | 350,000 | | $ | — | | $ | 1,800,045 | | $ | — | | $ | 6,850,000 | | $ | 82,350 | | $ | 9,082,395 | | | 2015 | | $ | 350,000 | | $ | — | | $ | 807,923 | | $ | 609,650 | | $ | 6,600,000 | | $ | 79,700 | | $ | 8,447,273 | | Kenneth V. Moreland Chief Financial Officer and Treasurer | | 2017 | | $ | 350,000 | | $ | 1,725,000 | | $ | — | | $ | — | | $ | — | | $ | 69,176 | | $ | 2,144,176 | | | 2016 | | $ | 350,000 | | $ | — | | $ | 485,061 | | $ | — | | $ | 1,000,000 | | $ | 80,742 | | $ | 1,915,803 | | | 2015 | | $ | 350,000 | | $ | — | | $ | 265,460 | | $ | 200,290 | | $ | 900,000 | | $ | 80,412 | | $ | 1,796,162 | | Edward C. Bernard Vice Chairman | | 2017 | | $ | 350,000 | | $ | 17,920 | | $ | 1,600,037 | | $ | — | | $ | 6,000,000 | | $ | 81,095 | | $ | 8,049,052 | | | 2016 | | $ | 350,000 | | $ | — | | $ | 1,450,036 | | $ | — | | $ | 5,300,000 | | $ | 79,836 | | $ | 7,179,872 | | | 2015 | | $ | 350,000 | | $ | — | | $ | 692,505 | | $ | 522,568 | | $ | 5,300,000 | | $ | 78,969 | | $ | 6,944,042 | | Christopher D. Alderson2 Co-head of Global Equity | | 2017 | | $ | 309,300 | | $ | 21,345 | | $ | 2,000,072 | | $ | — | | $ | 5,799,200 | | $ | 32,800 | | $ | 8,162,717 | | | 2016 | | $ | 305,057 | | $ | — | | $ | 1,700,041 | | $ | — | | $ | 5,423,240 | | $ | 57,999 | | $ | 7,486,337 | | | 2015 | | $ | 343,970 | | $ | — | | $ | 923,340 | | $ | 696,762 | | $ | 5,732,835 | | $ | 65,405 | | $ | 7,762,312 | | Robert W. Sharps Co-head of Global Equity | | 2017 | | $ | 350,000 | | $ | 34,159 | | $ | 3,050,036 | | $ | — | | $ | 7,300,000 | | $ | 84,169 | | $ | 10,818,364 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NON-EQUITY | | | | | | | | | | | | | | | | STOCK | | | INCENTIVE PLAN | | | ALL OTHER | | | | | NAME AND PRINCIPAL POSITION | | YEAR | | | SALARY | | | AWARDS3 | | | COMPENSATION4 | | | COMPENSATION5 | | | TOTAL | | William J. Stromberg | | | 2020 | | | $ | 350,000 | | | $ | 5,900,108 | | | $ | 9,000,000 | | | $ | 87,166 | | | $ | 15,337,274 | | Chair and Chief | | | 2019 | | | $ | 350,000 | | | $ | 5,650,073 | | | $ | 8,500,000 | | | $ | 88,273 | | | $ | 14,588,346 | | Executive Officer | | | 2018 | | | $ | 350,000 | | | $ | 4,450,019 | | | $ | 8,200,000 | | | $ | 86,734 | | | $ | 13,086,753 | | Céline S. Dufétel | | | 2020 | | | $ | 350,000 | | | $ | 2,500,041 | | | $ | 4,450,000 | | | $ | 79,764 | | | $ | 7,379,805 | | Chief Operating Officer, Chief Financial | | | 2019 | | | $ | 350,000 | | | $ | 2,100,055 | | | $ | 3,550,000 | | | $ | 79,798 | | | $ | 6,079,853 | | Officer and Treasurer | | | 2018 | | | $ | 350,000 | | | $ | 1,200,071 | | | $ | 2,000,000 | | | $ | 204,718 | | | $ | 3,754,789 | | Robert W. Sharps | | | 2020 | | | $ | 350,000 | | | $ | 5,550,268 | | | $ | 9,000,000 | | | $ | 87,165 | | | $ | 14,987,433 | | President, Head of Investments, and | | | 2019 | | | $ | 350,000 | | | $ | 4,950,216 | | | $ | 8,700,000 | | | $ | 86,696 | | | $ | 14,086,912 | | Group Chief Investment Officer | | | 2018 | | | $ | 350,000 | | | $ | 4,100,029 | | | $ | 8,100,000 | | | $ | 85,670 | | | $ | 12,635,699 | | Christopher D. Alderson2 | | | 2020 | | | $ | 348,100 | | | $ | 2,500,041 | | | $ | 7,316,800 | | | $ | 60,054 | | | $ | 10,224,995 | | Co-Head of Global Equity | | | 2019 | | | $ | 344,600 | | | $ | 2,500,111 | | | $ | 7,147,200 | | | $ | 48,769 | | | $ | 10,040,680 | | | | | 2018 | | | $ | 320,400 | | | $ | 2,450,023 | | | $ | 6,674,800 | | | $ | 54,973 | | | $ | 9,500,196 | | Eric L. Veiel | | | 2020 | | | $ | 350,000 | | | $ | 3,500,241 | | | $ | 7,350,000 | | | $ | 87,072 | | | $ | 11,287,313 | | Co-Head of Global Equity | | | 2019 | | | $ | 350,000 | | | $ | 3,150,203 | | | $ | 7,000,000 | | | $ | 86,449 | | | $ | 10,586,652 | |
| 1 | Includes only those columns relating to compensation awarded to, earned by, or paid to the NEOs in 2017, 2016,2020, 2019, and 2015.2018. All other columns have been omitted. We have excluded Mr. Sharps’ compensation for 2016 and 2015, as he was notVeiel became a named executive officer in these years.2019, therefore the amounts for 2018 have been omitted. |
| 2 | Cash amounts received by Mr. Alderson pursuant to his employment agreement arewere paid in Hong Kong dollars (HKD) in 2020 and 2019 and British pounds.pounds (GBP) in 2018. In calculating the U.S. equivalent for amounts that are not denominated in U.S. dollars (USD), the Company converts each payment to Mr. Alderson into U.S. dollars based on an average daily exchange rate during the applicable year. The average exchange ratesrate for 2017, 2016,2020 was 1 HKD to 0.12893 USD; 2019 was 1 HKD to 0.12763 USD; and 2015 were 1.28870, 1.35581 and 1.52876 U.S. dollars per British pound, respectively. Mr. Alderson’s 2016 cash compensation2018 was lower compared with 2015 in U.S. dollar terms as a result of the significant decline in British pounds against the U.S. dollar. In British pounds,1 GBP to 1.33496 USD. Mr. Alderson’s cash compensation for each year in local currency was £4,740,000HKD 57,020,000 in 2017 (12.2% increase), £4,225,0002020, HKD 58,700,000 in 2016 (6.3% increase),2019 and £3,975,000£5,240,000 in 2015.2018. |
| 3 | Messrs. Stromberg, Bernard, Alderson, and Sharps, along with other equity incentive participants, were paid a one-time supplemental cash bonus in 2017 for the cash dividend equivalents lost as a result of changing from a semiannual equity grant to |
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an annual equity grant. For Mr. Moreland, the 2017 amount was earned under a retirement agreement and paid out at the time of his retirement from the Company in 2018. This retirement amount was earned in lieu of a 2017 bonus under the annual incentive compensation pool and an equity award. See the Post-Employment Payments section of the Compensation Discussion and Analysis on page 41 for further details.
| 43 | Represents the full grant date fair value of performance-based restricted stock unitsRSUs granted. The fair value was computed using the market price per share of T. Rowe Price Group common stock on the date of grant multiplied by the target number of units, as this was considered the probable outcome. See the Grants of Plan-Based Awards Table for the target number of units for 2017.2020. |
| 54 | As discussed in our Compensation Discussion and Analysis, we did not utilize options in our 2017 and 2016 equity compensation program. Rather, we granted all performance-based restricted stock units. For 2015, the amounts represent the full grant date fair value computed using the Black-Scholes option-pricing model. A description of the assumptions used for volatility, risk-free interest rate, dividend yield, and expected life in the option-pricing model is included in the Significant Accounting Policies for Stock-Based Compensation of the 2017 Annual Report to Stockholders. |
| 6 | Represents cash amounts awarded by the Compensation Committee and paid to NEOs under the 2017 Annual Incentive Compensation Pool.2020 AICP. See our Compensation Discussion and AnalysisCD&A and the Grants of Plan-Based Awards Table for more details regarding the workings of this plan. The 2017These amounts include amounts elected to be deferred by all NEOs under the Supplemental Savings Plan. See the Nonqualified Deferred Compensation Table for further details. |
| 75 | The following types of compensation are included in the “All Other Compensation” column for 2017:2020: |
Name | Contributions to Retirement Program | Retirement Program Limit Bonusa | Matching Contributions to Stock Purchase Planb | Matching Gifts to Charitable Organizationsc | Hart-Scott- Rodino Feesd | Perquisites and Other Personal Benefitse | Total | William J. Stromberg | $ | 36,000 | | $ | 4,176 | | $ | 4,000 | | $ | 25,000 | | $ | 45,000 | | $ | 16,006 | | $ | 130,182 | | Kenneth V. Moreland | $ | 40,176 | | $ | — | | $ | 4,000 | | $ | 25,000 | | $ | — | | $ | — | | $ | 69,176 | | Edward C. Bernard | $ | 36,000 | | $ | 4,176 | | $ | 4,000 | | $ | 25,000 | | $ | — | | $ | 11,919 | | $ | 81,095 | | Christopher D. Alderson | $ | — | | $ | 28,934 | | $ | — | | $ | 3,866 | | $ | — | | $ | — | | $ | 32,800 | | Robert W. Sharps | $ | 36,000 | | $ | 4,176 | | $ | 4,000 | | $ | 25,000 | | $ | — | | $ | 14,993 | | $ | 84,169 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | MATCHING | | | | | | PERQUISITES | | | | | | | CONTRIBUTIONS | | | RETIREMENT | | | CONTRIBUTIONS | | | MATCHING GIFTS | | | AND OTHER | | | | | | | TO RETIREMENT | | | PROGRAM | | | TO STOCK | | | TO CHARITABLE | | | PERSONAL | | | | | NAME | | PROGRAM | | | LIMIT BONUSa | | | PURCHASE PLANb | | | ORGANIZATIONSc | | | BENEFITSd | | | TOTAL | | William J. Stromberg | | $ | 37,500 | | | $ | 4,754 | | | $ | 4,000 | | | $ | 25,000 | | | $ | 15,912 | | | $ | 87,166 | | Céline S. Dufétel | | $ | 37,500 | | | $ | 4,754 | | | $ | — | | | $ | 25,000 | | | $ | 12,510 | | | $ | 79,764 | | Robert W. Sharps | | $ | 37,500 | | | $ | 4,754 | | | $ | 4,000 | | | $ | 25,000 | | | $ | 15,911 | | | $ | 87,165 | | Christopher D. Alderson | | $ | 34,811 | | | $ | — | | | $ | — | | | $ | 25,000 | | | $ | 243 | | | $ | 60,054 | | Eric L. Veiel | | $ | 37,500 | | | $ | 4,754 | | | $ | 4,000 | | | $ | 25,000 | | | $ | 15,818 | | | $ | 87,072 | |
| a | Cash compensation for the amount calculated under the U.S. retirement program that could not be credited to their retirement accounts in 20172020 due to the contribution limits imposed under Section 415 of the Internal Revenue Code. ForSince relocating to our Hong Kong office in early 2019, Mr. Alderson the amount represents cash paid in lieu of a contribution to the U.K. pension program as result of a Fixed Protection election he made with the U.K. tax authorities which required him to opt out of the U.K. pension program. The amount is based on the contribution formulaparticipates in the pensionmandatory retirement benefit program and is equaloffered to the amount he would have received had he stayedall associates in the pension program.Hong Kong. For 2020, we contributed $34,811 to this program on his behalf. |
| b | Matching contributions paid under our Employee Stock Purchase Plan offered to all employees of Price Group and its subsidiaries. |
| c | NEOs, directors, and all employees of Price Group and its subsidiaries are eligible to have personal gifts up to an annual limit to qualified charitable organizations matched by our sponsored T. Rowe Price Foundation, in the case of U.S. employees, and Price Group, in the case of employees outside the U.S. For 2017,2020, all of the NEOs were eligible to have up to $25,000 matched. |
| d | Fees associated with Hart-Scott-Rodino antitrust filings. See our Compensation Discussion and Analysis for further details. |
| e | Costs incurred by Price Group under programs available to all senior officers, including the NEOs, for executive health benefits and parking, as well as certain costs covered by Price Group relating to spousal participation in events held in connection with the Price Group and Price funds annual joint Board of Directors meeting as well as other business-related functions.meetings. |
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2017 GRANTS OF PLAN-BASED AWARDS TABLE2020 Grants of Plan-Based Awards Table1
The following table provides information concerning each plan-based award granted in 20172020 to the executive officers named in the Summary Compensation Table and other information regarding their grants. | Grant Date | Date of Compensation Committee Meeting at Which Grant Was Approved | Estimated Possible Payouts under Non-Equity Incentive Plan Awards2 | Estimated Possible Payouts Under Equity Incentive Plan Awards | Grant Date Fair Value of Stock Awards4 | Name | Threshold ($) | Maximum ($) | Target (#) | Maximum (#) | William J. Stromberg | | 2/15/20172 | | | | | $ | — | | $ | 21,934,880 | | | | | | | | | | | | | 12/6/20173 | | 12/5/2017 | | | | | | | 34,876 | 34,876 | $ | 3,550,028 | | Kenneth V. Moreland | | 2/15/20172 | | | $ | — | | $ | 3,988,160 | | | | | | | Edward C. Bernard | | 2/15/20172 | | | $ | — | | $ | 19,940,800 | | | | | | | | | 12/6/20173 | | 12/5/2017 | | | | | | | 15,719 | 15,719 | $ | 1,600,037 | | Christopher D. Alderson | | 2/15/20172 | | | $ | — | | $ | 19,940,800 | | | | | | | | | 12/6/20173 | | 12/5/2017 | | | | | | | 19,649 | 19,649 | $ | 2,000,072 | | Robert W. Sharps | | 2/15/20172 | | | $ | — | | $ | 19,940,800 | | | | | | | | | 12/6/20173 | | 12/5/2017 | | | | | | | 29,964 | 29,964 | $ | 3,050,036 | |
| | | | | | | | | | | | ESTIMATED | | | | | | | | | | | DATE OF | | | POSSIBLE PAYOUTS | | | | | | | | | COMPENSATION | | ESTIMATED POSSIBLE | | | UNDER EQUITY | | | | | | | | | COMMITTEE | | PAYOUTS UNDER NON-EQUITY | | | INCENTIVE | | | | | | | | | MEETING AT | | INCENTIVE PLAN AWARDS2 | | | PLAN AWARDS3 | | | GRANT DATE | | | | | | WHICH GRANT | | THRESHOLD | | | MAXIMUM | | | TARGET | | | MAXIMUM | | | FAIR VALUE OF | | NAME | | GRANT DATE | | WAS APPROVED | | ($) | | | ($) | | | (#) | | | (#) | | | STOCK AWARDS4 | | William J. Stromberg | | 2/12/2020 | | | | $ | — | | | $ | 16,474,002 | | | | | | | | | | | | | | | | 12/8/2020 | | 12/7/2020 | | | | | | | | | | | 38,520 | | | | 38,520 | | | $ | 5,900,108 | | Céline S. Dufétel | | 2/12/2020 | | | | $ | — | | | $ | 8,237,001 | | | | | | | | | | | | | | | | 12/8/2020 | | 12/7/2020 | | | | | | | | | | | 16,322 | | | | 16,322 | | | $ | 2,500,041 | | Robert W. Sharps | | 2/12/2020 | | | | $ | — | | | $ | 16,474,002 | | | | | | | | | | | | | | | | 12/8/2020 | | 12/7/2020 | | | | | | | | | | | 36,236 | | | | 36,236 | | | $ | 5,550,268 | | Christopher D. Alderson | | 2/12/2020 | | | | $ | — | | | $ | 13,728,335 | | | | | | | | | | | | | | | | 12/8/2020 | | 12/7/2020 | | | | | | | | | | | 16,322 | | | | 16,322 | | | $ | 2,500,041 | | Eric L. Veiel | | 2/12/2020 | | | | $ | — | | | $ | 13,728,335 | | | | | | | | | | | | | | | | 12/8/2020 | | 12/7/2020 | | | | | | | | | | | 22,852 | | | | 22,852 | | | $ | 3,500,241 | |
| 1 | Includes only those columns relating to plan-based awards granted during 2017.2020. All other columns have been omitted. |
| 2 | The maximum represents the highest possible amount that could have been paid to each of these individuals under the 2017 Annual Incentive Compensation Pool2020 AICP based on our 20172020 audited financial statements. The Compensation Committee has discretion to award no bonus under this program, or to award up to the maximum bonus. As a result, there is no minimum amount payable even if performance goals are met. For 2017,2020, the Compensation Committee awarded significantly less than the maximum amount to the NEOs and the actual amount awarded has been disclosed in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” See our Compensation Discussion and AnalysisCD&A for additional information regarding the Annual Incentive Compensation Pool.AICP. |
| 3 | Represents both time-based RSUs and performance-based restricted stock unitsRSUs granted as part of the Company’s annual equity incentive program from its 2012 Long-Term Incentive2020 Plan. TheseThe annual grant value awarded is equally split between time-based RSUs and performance-based restricted stock unitsRSUs. The time-based RSUs vesting occurs 33% on each of December 10, 2021, December 9, 2022, and December 8, 2023. The performance-based RSUs are subject to a performance-based vesting threshold with a 12-monththree-year performance period. The performance period, which for the December 20172020 grant, will run from January 1, 2018,2021 to December 31, 2018.2023. For each grant,performance-based RSU, the target payout represents the number of restricted stock unitsRSUs to be earned by the NEO if the Company’s operating margin for the performance period is at least 100% of the average operating margin of a designated peer group. The Company’s operating margin performance below this target threshold results in forfeiture of some or all of the restricted stock units.performance-based RSUs. The number of restricted stock unitsperformance-based RSUs earned by the NEO following the performance period is alsoare then subject to time-based vesting, before they are settled in shares of our common stock. Vestingwhich occurs 20%50% on each of 2/28/2019, 2/28/2020, 2/26/2021, 2/28/2022,December 10, 2024 and 2/28/2023.December 10, 2025. These grant agreements include a provision that allows for the continued vesting of the remainder of the grant, from the date of separation if certain age and service criteria are met for the U.S.-based NEOs and a service criteria is met for Mr. Alderson. Dividends on these performance-based restricted stock unitsRSUs are accrued during the performance period and are only paid on those units earned.earned units. Additional information related to these performance-based restricted stock units,RSUs, including a listing of companies in the designated peer group, are included in our Compensation Discussion and Analysis.CD&A. |
| 4 | Represents the grant date fair value of the time-based RSUs and performance-based restricted stock unitsRSUs granted in 2017.2020. The grant date fair value of the performance-based restricted stock unitsawards was measured using the market price per share of T. Rowe Price Group common stock on the date of grant multiplied by the target number of units noted in the table, as this was considered the probable outcome. |
TABLE OF CONTENTSTable of Contents
OUTSTANDING EQUITY AWARDS TABLE AT DECEMBEROutstanding Equity Awards Table at December 31, 201720201
The following table shows information concerning equity incentive awards outstanding at December 31, 2017,2020, for each NEO. The grant agreements for all unexercisable option awards and unvested stock awards include a provision that allows for continued vesting for a period of 36 months from the date of separation for awards granted before 2017, and for the remaining unvested portion for awards granted in 2017, from the date of separation if certain age and service criteria are met for the U.S.-based NEOs and a service criteria is met for Mr. Alderson. In 2018, the provision that allows for continued vesting for all associates was modified for 2018 grants and thereafter to a tiered approach with three different age and service criteria, each having separate periods of continued vesting. | | Option Awards | Stock Awards | Name | Grant Date | Number of Securities Underlying Unexercised Options: Exercisable | Number of Securities Underlying Unexercised Options: Unexercisable | Option Exercise Price | 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 ($)2 | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($)2 | William J. Stromberg | | 2/17/2011 | | | 44,240 | | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 9/8/2011 | | | 44,241 | | | | | $ | 48.560 | | | 9/8/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | | 22,119 | | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | | 20,819 | | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | | 16,399 | | | 4,0993a | | $ | 69.671 | | | 2/21/2023 | | | 1,2004a | | $ | 125,9164a | | | | | | | | | | 9/10/2013 | | | 16,399 | | | 4,1003a | | $ | 70.285 | | | 9/10/2023 | | | 1,2004b | | $ | 125,9164b | | | | | | | | | | 2/19/2014 | | | 10,762 | | | 7,1743b | | $ | 77.944 | | | 2/19/2024 | | | 2,1004c | | $ | 220,3534c | | | | | | | | | | 9/9/2014 | | | 10,761 | | | 7,1753b | | $ | 78.442 | | | 9/9/2024 | | | 2,1004d | | $ | 220,3534d | | | | | | | | | | 2/19/2015 | | | 7,174 | | | 10,7623c | | $ | 80.949 | | | 2/19/2025 | | | 3,1504e | | $ | 330,5304e | | | | | | | | | | 9/10/2015 | | | 7,000 | | | 10,5003c | | $ | 70.920 | | | 9/10/2025 | | | 3,1504f | | $ | 330,5304f | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | 10,2484g | | $ | 1,075,3234g | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | 10,4604h | | $ | 1,097,5684h | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | | | | | | 34,8765 | | $ | 3,659,5395 | | Kenneth V. Moreland | | 2/17/2011 | | | 1,479 | | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | | 1,300 | | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | | 1,300 | | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | | 1,230 | | | 1,2293a | | $ | 69.671 | | | 2/21/2023 | | | 3604a | | $ | 37,7754a | | | | | | | | | | 9/10/2013 | | | 1,231 | | | 1,2293a | | $ | 70.285 | | | 9/10/2023 | | | 3604b | | $ | 37,7754b | | | | | | | | | | 2/19/2014 | | | 1,179 | | | 2,3563b | | $ | 77.944 | | | 2/19/2024 | | | 6904c | | $ | 72,4024c | | | | | | | | | | 9/9/2014 | | | 1,179 | | | 2,3573b | | $ | 78.442 | | | 9/9/2024 | | | 6904d | | $ | 72,4024d | | | | | | | | | | 2/19/2015 | | | 1,179 | | | 3,5353c | | $ | 80.949 | | | 2/19/2025 | | | 1,0354e | | $ | 108,6034e | | | | | | | | | | 9/10/2015 | | | 1,150 | | | 3,4503c | | $ | 70.920 | | | 9/10/2025 | | | 1,0354f | | $ | 108,6034f | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | 2,7624g | | $ | 289,8174g | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | 2,8194h | | $ | 295,7984h | | | | | | | |
TABLE OF CONTENTS
| | Option Awards | Stock Awards | Name | Grant Date | Number of Securities Underlying Unexercised Options: Exercisable | Number of Securities Underlying Unexercised Options: Unexercisable | Option Exercise Price | 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 ($)2 | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($)2 | Edward C. Bernard | | 2/17/2011 | | | 50,569 | | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | | 26,023 | | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | | 23,421 | | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | | 18,449 | | | 4,6113a | | $ | 69.671 | | | 2/21/2023 | | | 1,3504a | | $ | 141,6564a | | | | | | | | | | 9/10/2013 | | | 13,119 | | | 3,2803a | | $ | 70.285 | | | 9/10/2023 | | | 9604b | | $ | 100,7334b | | | | | | | | | | 2/19/2014 | | | 10,762 | | | 7,1743b | | $ | 77.944 | | | 2/19/2024 | | | 2,1004c | | $ | 220,3534c | | | | | | | | | | 9/9/2014 | | | 9,224 | | | 6,1503b | | $ | 78.442 | | | 9/9/2024 | | | 1,8004d | | $ | 188,8744d | | | | | | | | | | 2/19/2015 | | | 6,149 | | | 9,2253c | | $ | 80.949 | | | 2/19/2025 | | | 2,7004e | | $ | 283,3114e | | | | | | | | | | 9/10/2015 | | | 6,000 | | | 9,0003c | | $ | 70.920 | | | 9/10/2025 | | | 2,7004f | | $ | 283,3114f | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | 8,2564g | | $ | 866,3024g | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | 8,4264h | | $ | 884,1404h | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | | | | | | 15,7195 | | $ | 1,649,3955 | | Christopher D. Alderson | | 9/8/2010 | | | 41,639 | | | | | $ | 45.793 | | | 9/8/2020 | | | | | | | | | | | | | | | | 2/17/2011 | | | 40,921 | | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 2/17/2011 | | | 689 | | | | | $ | 70.330 | | | 2/17/2021 | | | | | | | | | | | | | | | | 9/8/2011 | | | 41,639 | | | | | $ | 48.560 | | | 9/8/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | | 20,819 | | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | | 20,819 | | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | | 16,399 | | | 4,1003a | | $ | 69.671 | | | 2/21/2023 | | | 1,2004a | | $ | 125,9164a | | | | | | | | | | 9/10/2013 | | | 16,399 | | | 4,1003a | | $ | 70.285 | | | 9/10/2023 | | | 1,2004b | | $ | 125,9164b | | | | | | | | | | 2/19/2014 | | | 12,299 | | | 8,2003b | | $ | 77.944 | | | 2/19/2024 | | | 2,4004c | | $ | 251,8324c | | | | | | | | | | 9/9/2014 | | | 12,299 | | | 8,2003b | | $ | 78.442 | | | 9/9/2024 | | | 2,4004d | | $ | 251,8324d | | | | | | | | | | 2/19/2015 | | | 8,199 | | | 12,3003c | | $ | 80.949 | | | 2/19/2025 | | | 3,6004e | | $ | 377,7484e | | | | | | | | | | 9/10/2015 | | | 8,000 | | | 12,0003c | | $ | 70.920 | | | 9/10/2025 | | | 3,6004f | | $ | 377,7484f | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | 9,6794g | | $ | 1,015,6174g | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | 9,8794h | | $ | 1,036,6034h | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | | | | | | 19,6495 | | $ | 2,061,7705 | |
TABLE OF CONTENTS
| | Option Awards | Stock Awards | Name | Grant Date | Number of Securities Underlying Unexercised Options: Exercisable | Number of Securities Underlying Unexercised Options: Unexercisable | Option Exercise Price | 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 ($)2 | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($)2 | Robert W. Sharps | | 2/17/2011 | | 41,638 | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | 4,163 | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | 20,819 | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | 16,399 | | 4,0993a | | $ | 69.671 | | | 2/21/2023 | | | 1,2006a | | $ | 125,9166a | | | | | | | | | | 9/10/2013 | | 16,399 | | 4,1003a | | $ | 70.285 | | | 9/10/2023 | | | 15,0816a | | $ | 1,582,4496a | | | | | | | | | | 2/19/2014 | | 12,299 | | 8,2003b | | $ | 77.944 | | | 2/19/2024 | | | 2,4006b | | $ | 251,8326b | | | | | | | | | | 9/9/2014 | | 12,299 | | 8,2003b | | $ | 78.442 | | | 9/9/2024 | | | 2,4006b | | $ | 251,8326b | | | | | | | | | | 2/19/2015 | | 12,299 | | 18,4493c | | $ | 80.949 | | | 2/19/2025 | | | 5,4006c | | $ | 566,6226c | | | | | | | | | | 9/10/2015 | | 12,000 | | 18,0003c | | $ | 70.920 | | | 9/10/2025 | | | 5,4006c | | $ | 566,6226c | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | 113,8644g | | $ | 11,947,7504g | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | 15,0886d | | $ | 1,583,1846d | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | 15,3996d | | $ | 1,615,8176d | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | | | | 29,9645 | | $ | 3,144,1235 | |
| | | | | | | OPTION AWARDS | | | | STOCK AWARDS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | MARKET | | | INCENTIVE | | | | | | | | | | | | | | | | | | | | | | | | | NUMBER | | | VALUE OF | | | | PLAN | | | EQUITY | | | | | | | | | | | | | | | | | | | | | OF SHARES | | | SHARES | | | | AWARDS: | | | INCENTIVE | | | | | | | | | NUMBER OF | | | | | | | | | | | | OR UNITS | | | OR UNITS | | | | NUMBER OF | | | PLAN AWARDS: | | | | | | | | | SECURITIES | | | | | | | | | | | | OF STOCK | | | OF STOCK | | | | UNEARNED | | | MARKET VALUE | | | | | | | | | UNDERLYING | | | | | | | | | | | | THAT | | | THAT | | | | UNITS | | | OF UNEARNED | | | | | | | | | UNEXERCISED | | | OPTION | | | | OPTION | | | HAVE NOT | | | HAVE NOT | | | | THAT HAVE | | | UNITS THAT | | | | | GRANT | | | | OPTIONS: | | | EXERCISE | | | | EXPIRATION | | | VESTED | | | VESTED | | | | NOT VESTED | | | HAVE NOT | | NAME | | | DATE | | | | EXERCISABLE | | | PRICE | | | | DATE | | | | (#) | | | ($) | 2 | | | (#) | | | VESTED ($)2 | | William J. Stromberg | | | 2/19/2015 | | | | 1,235 | | | $ | 80.949 | | | | 2/19/2025 | | | | | | | | | | | | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | | 2,562 | 3a | | $ | 387,861 | 3a | | | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | | 2,615 | 3b | | $ | 395,885 | 3b | | | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | 20,926 | 3c | | $ | 3,167,987 | 3c | | | | | | | | | | | | 12/11/2018 | | | | | | | | | | | | | | | | 38,684 | 3d | | $ | 5,856,371 | 3d | | | | | | | | | | | | 12/3/2019 | | | | | | | | | | | | | | | | 15,592 | 5d | | $ | 2,360,473 | 5d | | | 23,388 | 4a | | $ | 3,540,709 | 4a | | | | 12/8/2020 | | | | | | | | | | | | | | | | 19,260 | 5e | | $ | 2,915,771 | 5e | | | 19,260 | 4b | | $ | 2,915,771 | 4b | Céline S. Dufétel | | | 12/6/2017 | | | | | | | | | | | | | | | | 2,653 | 3c | | $ | 401,638 | 3c | | | | | | | | | | | | 12/11/2018 | | | | | | | | | | | | | | | | 10,432 | 3d | | $ | 1,579,300 | 3d | | | | | | | | | | | | 12/3/2019 | | | | | | | | | | | | | | | | 5,795 | 5d | | $ | 877,305 | 5d | | | 8,693 | 4a | | $ | 1,316,033 | 4a | | | | 12/8/2020 | | | | | | | | | | | | | | | | 8,161 | 5e | | $ | 1,235,494 | 5e | | | 8,161 | 4b | | $ | 1,235,494 | 4b | Robert W. Sharps | | | 2/21/2013 | | | | 1,434 | | | $ | 69.671 | | | | 2/21/2023 | | | | | | | | | | | | | | | | | | | | | 2/19/2014 | | | | 1,282 | | | $ | 77.944 | | | | 2/19/2024 | | | | | | | | | | | | | | | | | | | | | 2/19/2015 | | | | 15,748 | | | $ | 80.949 | | | | 2/19/2025 | | | | | | | | | | | | | | | | | | | | | 9/10/2015 | | | | 6,000 | | | $ | 70.920 | | | | 9/10/2025 | | | | | | | | | | | | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | | 28,466 | 3a | | $ | 4,309,468 | 3a | | | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | | 3,772 | 5a | | $ | 571,043 | 5a | | | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | | 3,850 | 5a | | $ | 582,852 | 5a | | | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | 17,979 | 3c | | $ | 2,721,841 | 3c | | | | | | | | | | | | 12/11/2018 | | | | | | | | | | | | | | | | 35,641 | 3d | | $ | 5,395,691 | 3d | | | | | | | | | | | | 12/3/2019 | | | | | | | | | | | | | | | | 13,661 | 5d | | $ | 2,068,139 | 5d | | | 20,491 | 4a | | $ | 3,102,132 | 4a | | | | 12/8/2020 | | | | | | | | | | | | | | | | 18,118 | 5e | | $ | 2,742,884 | 5e | | | 18,118 | 4b | | $ | 2,742,884 | 4b | Christopher D. Alderson | | | 2/17/2016 | | | | | | | | | | | | | | | | 2,420 | 3a | | | 366,364 | 3a | | | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | | 2,470 | 3b | | | 373,933 | 3b | | | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | 11,790 | 3c | | $ | 1,784,888 | 3c | | | | | | | | | | | | 12/11/2018 | | | | | | | | | | | | | | | | 21,298 | 3d | | $ | 3,224,304 | 3d | | | | | | | | | | | | 12/3/2019 | | | | | | | | | | | | | | | | 6,899 | 5d | | | 1,044,440 | 5d | | | 10,349 | 4a | | $ | 1,566,735 | 4a | | | | 12/8/2020 | | | | | | | | | | | | | | | | 8,161 | 5e | | $ | 1,235,494 | 5e | | | 8,161 | 4b | | $ | 1,235,494 | 4b | Eric L. Veiel | | | 2/19/2015 | | | | 17,936 | | | $ | 80.949 | | | | 2/19/2025 | | | | | | | | | | | | | | | | | | | | | 9/10/2015 | | | | 17,500 | | | $ | 70.920 | | | | 9/10/2025 | | | | | | | | | | | | | | | | | | | | | 12/10/2015 | | | | | | | | | | | | | | | | 5,455 | 3a | | $ | 825,832 | 3a | | | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | | 2,420 | 3a | | $ | 366,364 | 3a | | | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | | 2,470 | 3b | | $ | 373,933 | 3b | | | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | 7,860 | 5b | | $ | 1,189,925 | 5b | | | | | | | | | | | | 12/11/2018 | | | | | | | | | | | | | | | | 16,300 | 5c | | $ | 2,467,657 | 5c | | | | | | | | | | | | 12/12/2018 | | | | | | | | | | | | | | | | 1,915 | 5c | | $ | 289,912 | 5c | | | | | | | | | | | | 12/3/2019 | | | | | | | | | | | | | | | | 8,693 | 5d | | $ | 1,316,033 | 5d | | | 13,040 | 4a | | $ | 1,974,126 | 4a | | | | 12/8/2020 | | | | | | | | | | | | | | | | 11,426 | 5e | | $ | 1,729,782 | 5e | | | 11,426 | 4b | | $ | 1,729,782 | 4b | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 1 | Includes only those columns that related to outstanding equity awards at 2017.December 31, 2020. All other columns have been omitted. |
| 2 | The market value of these stock awards was calculated using the closing market price per share of Price Group’s common stock on December 31, 2017.2020. |
| 3 | The following table represents the vesting schedules of the unexercisable outstanding option awards at December 31, 2017. |
Footnote
| Percentage of Outstanding
| | Vest Dates
| | 3a
| 100%
| 12/10/2018
| | | 3b
| 50%
| 12/10/2018
| 12/10/2019
| | 3c
| 33%
| 12/10/2018
| 12/10/2019
| 12/10/2020
|
| 4 | For each performance-based restricted stock unitRSU award outstandingearned and not vested at December 31, 2017,2020, the following table includes the date of the meeting or unanimous consent at which the Compensation Committee certified that the performance threshold was met, the awards’ performance period, and the awards remaining vesting schedule. |
| | | | | | PERFORMANCE | | PERFORMANCE | | | | | | | | | | | | | | | | | | DATE | | | PERIOD | | PERIOD | | REMAINING | | | | | | | | | | | | | FOOTNOTE | | | CERTIFIED | | | START DATE | | END DATE | | PERCENTAGE VESTING | | | VEST DATES | | 3a | | | | Feb-2017 | | | 1/1/2016 | | 12/31/2016 | | | 100 | % | | | 12/10/2021 | | | | | | | | | | | | 3b | | | | Sep-2017 | | | 7/1/2016 | | 6/30/2017 | | | 100 | % | | | 12/10/2021 | | | | | | | | | | | | 3c | | | | Feb-2019 | | | 1/1/2018 | | 12/31/2018 | | | 33 | % | | | 2/26/2021 | | | 2/28/2022 | | | 2/28/2023 | | �� | | | | 3d | | | | Feb-2020 | | | 1/1/2019 | | 12/31/2019 | | | 25 | % | | | 2/26/2021 | | | 2/28/2022 | | | 2/28/2023 | | | | 2/28/2024 | |
| 4 | For each performance-based RSU award unearned and not vested at December 31, 2020, the following table includes the award’s performance period, and the award’s remaining vesting schedule. In 2020, all our NEOs received 50% of their equity award value in performance-based RSUs with a three-year performance period, which if earned, would vest in 2024 and 2025. |
Footnote
| Meeting/
Unanimous
Written
Consent
| Performance
Period Start
Date
| Performance
Period End Date
| Percentage
of
Outstanding
| Vest Dates
| PERFORMANCE | | PERFORMANCE | | | | | | | | | 4a
| | Feb-2014
| DATE | January 1, 2013
| December 31, 2013
| 100% PERIOD | 12/10/2018
| PERIOD | | REMAINING | | | | | | | 4b FOOTNOTE | | Sep-2014
| CERTIFIED | July 1, 2013
| June 30, 2014
| 100% START DATE | 12/10/2018
| END DATE | | PERCENTAGE VESTING | | | VEST DATES | | 4c 4a | | Feb-2015
| | January 1, 2014
| December 31, 2014
| 50% 1/1/2020 | | 12/31/2022 | | | 50% | | | 12/8/2023 | | | 12/10/20182024 | 12/10/2019
| | | 4d 4b | | Sep-2015
| | July 1, 2014
| June 30, 2015
| 50% 1/1/2021 | | 12/31/2023 | | | 50% | | | 12/10/20182024 | | | 12/10/20192025 | | | 4e
| | Feb-2016
| | January 1, 2015
| December 31, 2015
| 33%
| 12/10/2018
| 12/10/2019
| 12/10/2020
| | 4f
| | Sep-2016
| | July 1, 2015
| June 30, 2016
| 33%
| 12/10/2018
| 12/10/2019
| 12/10/2020
| | 4g
| | Feb-2017
| | January 1, 2016
| December 31, 2016
| 25%
| 12/10/2018
| 12/10/2019
| 12/10/2020
| 12/10/2021
| 4h
| | Sep-2017
| | July 1, 2016
| June 30, 2017
| 25%
| 12/10/2018
| 12/10/2019
| 12/10/2020
| 12/10/2021
|
| 5 | If the Company’s operating margin for the 12-month performance period January 1, 2018 to December 31, 2018, is at least 100% of the average operating margin of a designated peer group, all of these restricted stock units will vest 20% on each of 2/28/2019, 2/28/2020, 2/26/2021, 2/28/2022, and 2/28/2023. |
| 6 | Mr. Sharps and Mr. Veiel received time-based restricted stock awards and restricted stock unit awards through September 2016.that were not vested at December 31, 2020. Additionally, all our NEOs received 50% of their 2020 annual equity award value in time-based RSUs that vest over three years beginning in 2021. The following table represents the vesting schedules of the outstanding stock awards at December 31, 2017.2020. |
| | | REMAINING | | | | | | | | | | | | | FOOTNOTE | | | PERCENTAGE VESTING | | | VEST DATES | | 5a | | | | 100% | | | 12/10/2021 | | | | | | | | | | | | | 5b | | | | 50% | | | 12/10/2021 | | | 12/9/2022 | | | | | | | | | | 5c | | | | 33% | | | 12/10/2021 | | | 12/9/2022 | | | | 12/8/2023 | | | | | | 5d | | | | 50% | | | 12/10/2021 | | | 12/9/2022 | | | | | | | | | | 5e | | | | 33% | | | 12/10/2021 | | | 12/9/2022 | | | | 12/8/2023 | | | | | |
TABLE OF CONTENTSTable of Contents
Footnote
| Remaining Percentage Vesting
| Vest Dates
| 6a
| 100%
| 12/10/2018
| | | | 6b
| 50%
| 12/10/2018
| 12/10/2019
| | | 6c
| 33%
| 12/10/2018
| 12/10/2019
| 12/10/2020
| | 6d
| 25%
| 12/10/2018
| 12/10/2019
| 12/10/2020
| 12/10/2021
|
2017 OPTION EXERCISES AND STOCK VESTED TABLE2020 Options Exercises and Stock Vested Table
The following table shows aggregate stock option exercises and restricted stock awards vesting in 20172020 and the related value realized on those events for each of the NEOs. | Option Awards | Stock Awards | Name | Number of Shares Acquired on Exercise1,5 | Value Realized on Exercise2 | Number of Shares Acquired on Vesting5 | Value Realized on Vesting | William J. Stromberg | | 143,508 | | $ | 5,852,140 | | | 14,251 | 3 | $ | 1,464,290 | 3 | Kenneth V. Moreland | | 194,054 | | $ | 5,507,517 | | | 4,244 | 3 | $ | 436,071 | 3 | Edward C. Bernard | | — | | $ | — | | | 13,079 | 3 | $ | 1,343,867 | 3 | Christopher D. Alderson | | 91,605 | | $ | 5,309,572 | | | 14,488 | 3 | $ | 1,489,771 | 3 | Robert W. Sharps | | 196,275 | | $ | 7,279,683 | | | 60,766 | 3,4 | $ | 6,243,707 | 3, 4 |
| | OPTION AWARDS | | | | STOCK AWARDS | | | | | NUMBER OF SHARES | | | VALUE REALIZED | | | NUMBER OF SHARES | | | VALUE REALIZED | | NAME | | ACQUIRED ON EXERCISE1,6 | | | ON EXERCISE2 | | | ACQUIRED ON VESTING3,6 | | | ON VESTING3 | | William J. Stromberg | | | 71,507 | | | $ | 4,296,067 | | | | 31,718 | | | $ | 4,215,278 | | Céline S. Dufétel | | | — | | | $ | — | | | | 6,390 | | | $ | 844,878 | | Robert W. Sharps | | | 102,386 | | | $ | 6,624,958 | | | | 61,421 | 4 | | $ | 8,705,701 | 4 | Christopher D. Alderson | | | 65,098 | | | $ | 4,044,522 | | | | 19,994 | | | $ | 2,695,976 | | Eric L. Veiel | | | 53,295 | | | $ | 3,507,329 | | | | 26,792 | 5 | | $ | 4,001,117 | 5 |
| 1 | Represents the total number of shares underlying the exercised stock options. |
| 2 | Computed using the difference between the market price of Price Group’s common stock on the date of exercise and the exercise price, multiplied by the number of shares acquired. |
| 3 | Reflects the number of shares underlying the performance-based restricted stock unitsRSUs earned and vested. The value realized on vesting is computed using the closing market price per share of Price Group’s common stock on the vest date (December 8, 2017)10, 2020) multiplied by the number of restricted stock unitsRSUs vesting. The following table shows the aggregate restricted stock units forRSUs by NEOs listed in the NEOstable above by date of award: |
Date of Award | Performance Period Completion Date | Number of Shares Acquired on Vesting | Market Price on Vest Date | Value Realized on Vesting | 2/23/2012 | | 12/31/2012 | | | 4,350 | | $ | 102.75 | | $ | 447,056 | | 9/6/2012 | | 6/30/2013 | | | 4,125 | | $ | 102.75 | | $ | 423,937 | | 2/21/2013 | | 12/31/2013 | | | 4,110 | | $ | 102.75 | | $ | 422,396 | | 9/10/2013 | | 6/30/2014 | | | 3,720 | | $ | 102.75 | | $ | 382,323 | | 2/19/2014 | | 12/31/2014 | | | 3,645 | | $ | 102.75 | | $ | 374,617 | | 9/9/2014 | | 6/30/2015 | | | 3,495 | | $ | 102.75 | | $ | 359,205 | | 2/19/2015 | | 12/31/2015 | | | 3,495 | | $ | 102.75 | | $ | 359,205 | | 9/10/2015 | | 6/30/2016 | | | 3,495 | | $ | 102.75 | | $ | 359,205 | | 2/17/2016 | | 12/31/2016 | | | 36,199 | | $ | 102.75 | | $ | 3,719,636 | | 9/8/2016 | | 6/30/2017 | | | 7,893 | | $ | 102.75 | | $ | 811,198 | |
| | | PERFORMANCE PERIOD | | NUMBER OF SHARES | | | MARKET PRICE | | | VALUE REALIZED | | DATE OF AWARD | | | COMPLETION DATE | | ACQUIRED ON VESTING | | | ON VEST DATE | | | ON VESTING | | 2/19/2015 | | | 12/31/2015 | | | 2,250 | | | $ | 149.34 | | | $ | 336,015 | | 9/10/2015 | | | 6/30/2016 | | | 2,250 | | | $ | 149.34 | | | $ | 336,015 | | 12/10/2015 | | | 12/31/2016 | | | 5,454 | | | $ | 149.34 | | | $ | 814,500 | | 2/17/2016 | | | 12/31/2016 | | | 35,868 | | | $ | 149.34 | | | $ | 5,356,527 | | 9/8/2016 | | | 6/30/2017 | | | 7,555 | | | $ | 149.34 | | | $ | 1,128,264 | | 12/6/2017 | | | 12/31/2018 | | | 17,782 | | | $ | 118.01 | | | $ | 2,098,454 | | 12/11/2018 | | | 12/31/2019 | | | 26,512 | | | $ | 118.01 | | | $ | 3,128,681 | |
| 4 | Mr. Sharps was also awarded restricted shares and restricted stock units untilRSUs prior to September 2016.2016, that vested in 2020. The table below shows, by date of the award, the number of restricted stock awards vested and value realized that are included in the table above. The value realized was computed using the closing market price per share of Price Group’s common stock on the vest date multiplied by the number of restricted stock awards vesting. |
Date of Award | Vesting Date | Number of Shares Acquired on Vesting | Market Price on Vest Date | Value Realized on Vesting | 2/23/2012 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 9/6/2012 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 2/21/2013 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 9/10/2013 | | 12/8/2017 | | | 15,081 | | $ | 102.75 | | $ | 1,549,573 | | 2/19/2014 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 9/9/2014 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 2/19/2015 | | 12/8/2017 | | | 1,800 | | $ | 102.75 | | $ | 184,950 | | 9/10/2015 | | 12/8/2017 | | | 1,800 | | $ | 102.75 | | $ | 184,950 | | 2/17/2016 | | 12/8/2017 | | | 3,771 | | $ | 102.75 | | $ | 387,470 | | 9/8/2016 | | 12/8/2017 | | | 3,849 | | $ | 102.75 | | $ | 395,485 | |
| | | | | NUMBER OF SHARES | | | MARKET PRICE | | | VALUE REALIZED | | DATE OF AWARD | | | VESTING DATE | | ACQUIRED ON VESTING | | | ON VEST DATE | | | ON VESTING | | 2/19/2015 | | | 12/10/2020 | | | 1,800 | | | $ | 149.34 | | | $ | 268,812 | | 9/10/2015 | | | 12/10/2020 | | | 1,800 | | | $ | 149.34 | | | $ | 268,812 | | 2/17/2016 | | | 12/10/2020 | | | 3,772 | | | $ | 149.34 | | | $ | 563,310 | | 9/8/2016 | | | 12/10/2020 | | | 3,850 | | | $ | 149.34 | | | $ | 574,959 | | 12/3/2019 | | | 12/10/2020 | | | 6,830 | | | $ | 149.34 | | | $ | 1,019,992 | |
PROXY STATEMENT 2018 49
TABLE OF CONTENTS
| 5 | Mr. Veiel was awarded restricted shares and RSUs prior to becoming an NEO in 2019, that vested in 2020. The table below shows, by date of the award, the number of awards vested and value realized that are included in the table above. The value realized was computed using the closing market price per share of Price Group’s common stock on the vest date multiplied by the number of restricted stock awards vesting. |
| | | | | NUMBER OF SHARES | | | MARKET PRICE | | | VALUE REALIZED | | DATE OF AWARD | | | VESTING DATE | | ACQUIRED ON VESTING | | | ON VEST DATE | | | ON VESTING | | 2/19/2015 | | | 12/10/2020 | | | 1,050 | | | $ | 149.34 | | | $ | 156,807 | | 9/10/2015 | | | 12/10/2020 | | | 1,050 | | | $ | 149.34 | | | $ | 156,807 | | 12/6/2017 | | | 12/10/2020 | | | 3,930 | | | $ | 149.34 | | | $ | 586,906 | | 12/11/2018 | | | 12/10/2020 | | | 5,433 | | | $ | 149.34 | | | $ | 811,364 | | 12/12/2018 | | | 12/10/2020 | | | 638 | | | $ | 149.34 | | | $ | 95,279 | | 12/3/2019 | | | 12/10/2020 | | | 4,347 | | | $ | 149.34 | | | $ | 649,181 | |
| 6 | The number of shares actually acquired was less than the number presented in the tables above as a result of tendering shares for payment of the exercise price and the withholding of shares to pay taxes. The total net shares received by each NEO listed in the table is as follows: |
Name | Net Shares Acquired on Exercise | Net Shares Acquired on Vesting | William J. Stromberg | | 33,411 | | | 7,043 | | Kenneth V. Moreland | | 51,801 | | | 2,145 | | Edward C. Bernard | | — | | | 6,674 | | Christopher D. Alderson | | 91,605 | | | 7,680 | | Robert W. Sharps | | 44,768 | | | 30,044 | |
| | NET SHARES ACQUIRED | | | NET SHARES ACQUIRED | | NAME | | ON EXERCISE | | | ON VESTING | | William J. Stromberg | | | 17,807 | | | | 16,804 | | Céline Dufétel | | | — | | | | 3,303 | | Robert W. Sharps | | | 26,417 | | | | 31,751 | | Christopher D. Alderson | | | 65,098 | | | | 18,988 | | Eric L. Veiel | | | 14,718 | | | | 13,940 | |
2017 NONQUALIFIED DEFERRED COMPENSATION TABLE2020 Nonqualified Deferred Compensation Table
The amounts in the following table represent each NEO’s account activity under the Supplemental Savings Plan, which was effective on January 1, 2015. Name | Executive’s Contributions in Last FY1 | Registrants Contributions in Last FY | Aggregate Earnings in Last FY2 | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE3 | William J. Stromberg | $ | 2,600,000 | | $ | — | | $ | 163,016 | | $ | — | | $ | 6,665,594 | | Kenneth V. Moreland | $ | — | | $ | — | | $ | 215,522 | | $ | — | | $ | 1,171,776 | | Edward C. Bernard | $ | 3,000,000 | | $ | — | | $ | 577,905 | | $ | — | | $ | 6,700,479 | | Christopher D. Alderson4 | $ | 5,355,600 | | $ | — | | $ | 260,072 | | $ | — | | $ | 2,623,741 | | Robert W. Sharps | $ | 3,300,000 | | $ | — | | $ | 928,280 | | $ | — | | $ | 8,629,519 | |
| | EXECUTIVE’S | | | REGISTRANTS | | | AGGREGATE | | | AGGREGATE | | | AGGREGATE | | | | CONTRIBUTIONS | | | CONTRIBUTIONS | | | EARNINGS IN | | | WITHDRAWALS/ | | | BALANCE AT | | NAME | | IN LAST FY1 | | | IN LAST FY | | | LAST FY2 | | | DISTRIBUTIONS | | | LAST FYE3 | | William J. Stromberg | | $ | — | | | $ | — | | | $ | 4,247,728 | | | $ | — | | | $ | 20,760,789 | | Céline Dufétel | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Robert W. Sharps | | $ | — | | | $ | — | | | $ | 6,638,701 | | | $ | — | | | $ | 28,142,959 | | Christopher D. Alderson | | $ | — | | | $ | — | | | $ | 7,886,587 | | | $ | — | | | $ | 20,615,796 | | Eric L. Veiel | | $ | — | | | $ | — | | | $ | 6,442,720 | | | $ | — | | | $ | 31,264,314 | |
| 1 | These amounts represent a portion of the bonus awarded to each NEO under the 2017 Annual Incentive Compensation Pool2020 AICP and are reported as Non-Equity Incentive Plan Compensation in the Summary Compensation Table. Under the Supplemental Savings Plan, certain senior officers including the NEOs, have the opportunity to defer receipt of up to 100% of their cash incentive compensation earned for a respective calendar year during which services are provided. |
| 2 | Each participant has the ability to allocate their account balance across a number of Price funds and the flexibility to rebalance their account as often as they would like. The amounts deferred are adjusted daily based on the investments chosen by the participant and, therefore, are not above market or preferential. As such, the earnings reported in this column are not included in the Summary Compensation Table. |
| 3 | These amounts represent the aggregate balances in each NEO’s account at December 31, 2017. A portion or all of each NEO’s, except Mr. Moreland’s, 2017 deferral election was not contributed to their account until 2018, as the bonus awarded under the 2017 Annual Incentive Compensation Pool was not certified by the Compensation Committee until then. Additionally, the2020. The aggregate balance for Messrs. Stromberg, Moreland, Bernard, and Alderson includeeach NEO at last FYE includes amounts previously reported as Non-Equity Incentive Plan Compensation in a prior year Summary Compensation Table.table. |
2021 Proxy Statement | 4 | Mr. Alderson elected to defer £4,000,000 of his annual bonus in 2017. The Company converted this deferral into U.S. dollars based on the exchange rate of 1.3389, which is the rate on the day all employee bonuses were paid.57 |
POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROLPotential Payments on Termination or Change in Control
All agreements for stock options and stock awards granted to employeesassociates from our equity incentive plans include provisions that may result in vesting acceleration of outstanding equity awards in connection with a change in control of Price Group or upon the grantee’s death or termination of employment due to total disability. See the “Post-Employment Payments” section of the Compensation Discussion and AnalysisCD&A for more details on these vesting acceleration provisions. Assuming that an event caused the vesting of all outstanding unvested stock options and stock awards on December 31, 2017,2020, to accelerate, the amount that would be realized upon the exercise of these stock options and vesting of restricted stock awards and units held by our NEOs would be $23,415,810are shown in the case of Mr. Sharps; $7,053,161 in the case of Mr. Alderson; $8,471,437 in the case of Mr. Stromberg; $5,778,103 in the case of Mr. Bernard, and $1,437,206 in the case of Mr. Moreland. These amounts are calculated using the closing price of our common stock on December 31, 2017, for outstanding restricted stock awards and units and the difference between the closing price of our common stock on December 31, 2017, and the exercise price of each unexercisable stock option.table below. In addition, all agreements for stock options and stock awards granted on and after February 23, 2012, and through December 5, 2017, included a provision that allows for continued vesting for a period of 36 months from the grantee’s date of TABLE OF CONTENTS
termination if certain age and service criteria or, for certain grantees outside the United States, a specified service criteria, are met. All agreementsAgreements for stock awards granted on or after December 6, 2017, includeand through December 10, 2018, included a provision that allows for continued vesting post-separationfor a period of 60 months from the grantee’s date of termination so long as the same criteria described above are met. Agreements for awards granted to associates on or after December 11, 2018, include a provision that allows for continued vesting following the grantee’s date of termination for a period of 24, 36, or 60 months based on one of three different combinations of age and service requirements. As of December 31, 2017, Mr. Moreland2020, Messrs. Alderson and Mr. BernardStromberg have met such criteria.each satisfied the age and service criteria that allows for continued vesting for all of their outstanding awards, if they were to separate from the Company. The table below shows the value as of December 31, 2020, for those awards held by Messrs. Alderson and Stromberg that will continue to vest following termination of employment according to the above described provisions. The amounts in the table below are calculated using the closing price of our common stock on December 31, 2020, for outstanding restricted stock awards and units, and the difference between the closing price of our common stock on December 31, 2020 and the exercise price for outstanding stock options. | | CHANGE IN | | | | | | | CONTROL OR | | | POST-SEPARATION | | NAME | | DEATH/DISABILITY | | | VESTING | | William J. Stromberg | | $ | 21,540,828 | | | $ | 21,540,828 | | Céline S. Dufétel | | $ | 6,645,264 | | | $ | — | | Robert W. Sharps | | $ | 24,236,934 | | | $ | — | | Christopher D. Alderson | | $ | 10,831,652 | | | $ | 10,831,652 | | Eric L. Veiel | | $ | 12,263,346 | | | $ | — | |
CEO PAY RATIOChief Executive Officer Pay Ratio
Our CEO pay ratio is calculated in accordance with Item 402(u) of Regulation S-K. We identified the median employee by examining the 20172020 salary and annual cash bonus paid to all associates, excluding our CEO, who were employed on December 31, 2017.2020. All active associates were included in the sample. This includes associates working on a full-time, part-time, or interim basis.basis were included in the sample. To facilitate comparison of all associates in U.S. dollars, compensation paid in foreign currencies was converted to U.S. dollars. We applied a local currency to U.S. dollar exchange rate on the monthly pay date. Each converted monthly salary was combined to determine the cumulative 2020 salary. With respect to annual cash bonuses paid to our non-U.S. associates, we applied a local currency to U.S. dollar exchange rate as of December 31, 2020. We did not make any adjustments or estimates with respect to salary, nor did we annualize the compensation for associates who began employment after the start of the fiscal year. We applied the local currency to U.S. dollar exchange spot rate as of December 31, 2017, to the compensation paid to our non-U.S. associates to facilitate comparison of all associates in U.S. dollars. Upon identifying the median associate, total compensation was calculated for this individual using the same methodology we use for our NEOs as set forth in the 20172020 Summary Compensation Table on page 43.Table. For 2017,2020, Mr. Stromberg had an annual total compensation of $11,669,969$15,337,274 as reflected in the Summary Compensation Table. Our median associates’ 2017associate’s 2020 annual total compensation was $96,190.$114,473. Thus, Mr. Stromberg’s 20172020 annual total compensation was approximately 121134 times that of our median associate. Equity Compensation Plan Information
The following table sets forth information regarding outstanding stock options and restricted stock units and shares reserved for future issuance under our equity compensation plans as of December 31, 2017. None of the plans have outstanding warrants or rights other than stock options and restricted stock units. All plans have been approved by our stockholders.
Plan Category | Number of Securities to Be Issued Upon Exercise of Outstanding Options and Settlement of Restricted Stock Units (a) | Weighted-Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) | Equity compensation plans approved by stockholders | | 20,856,3201 | | $ | 66.98 | 1 | | 21,139,0762 | | Equity compensation plans not approved by stockholders | | — | | | — | | | — | | Total | | 20,856,320 | | $ | 66.98 | | | 21,139,076 | |
| 1 | Includes 5,635,197 shares that may be issued upon settlement of outstanding restricted stock units. The weighted-average exercise price pertains only to the 15,221,123 outstanding stock options. |
| 258 | Includes shares that may be issued under our 2007 Plan and 2012 Incentive Plan and 2,693,679 shares that may be issued under our Employee Stock Purchase Plan. No shares have been issued under the Employee Stock Purchase Plan since its inception; all plan shares have been purchased in the open market. The number of shares available for future issuance under the 2012 Incentive Plan will increase under the terms of the plan as a result of all common stock repurchases that we make from proceeds generated by stock option exercises that occur after the inception of the 2012 Incentive Plan. The 2012 Incentive Plan allows for the grant of stock options, stock appreciation rights, and full-value awards.T. Rowe Price Group |
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Proposal 2
Advisory Vote on the Compensation Paid to OurOur Named Executive Officers INTRODUCTION
We believeINTRODUCTION
In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our stockholders have the opportunity to cast an annual advisory vote to approve the compensation of our NEOs as disclosed pursuant to the SEC’s compensation disclosure rules, which disclosure includes the CD&A, the compensation tables, and the narrative disclosures that ouraccompany the compensation tables (a “say-on-pay” vote). Our NEO compensation is straight-forward, goal-oriented, long-term focused, transparent, and consistentaligned with the interests of our stockholders. Our incentive compensation programs recognizeare designed to motivate and reward performance, with a focus on rewarding the intermediate- and long-term achievements of our NEOs, as measured by a number of factors, including (i) the financial performance and financial stability of Price Group, (ii) the relative investment performance of our mutual funds and other investment portfolios, and (iii) the performance of our NEOs against the corporate and individual goals established at the beginning of the year. TheseOur executive compensation programs are also designed to reward our NEOs for other important contributions to our success, including corporate integrity, service quality, customer loyalty, risk management, corporate reputation, and the quality of our team of professionals and collaboration within that team. Our equity awards create a strong alignment of the financial interests of our NEOs directly to the long-term performance of our Company, as measured by our stock price. NEO compensation in 20172020 was aligned with our financial and operational performance for 2017.2020. The structure of the compensation for our CEO and other NEOs reflects our performance-based compensation philosophy, which ties a significant portion of their pay to the success of the Company and to their individual performance goals. We urge you to read the Compensation Discussion and AnalysisCD&A section of this proxy statement for additional details on our executive compensation policies and practices, including our compensation philosophy, and2020 objectives, and the 20172020 compensation decisions for our NEOs. We believe that, viewed as a whole, our compensation practices and policies are appropriate and fair to both the Company and its executives and to our stockholders. We value the feedback provided by our stockholders. At the 2020 annual meeting of stockholders, nearly 96% of votes cast supported our executive compensation program. We have discussions with certain of our stockholders regarding various corporate governance topics, including executive compensation, and take into account the views of stockholders regarding the design and effectiveness of our executive compensation program. PROPOSAL
We are asking you to vote on the adoption of the following resolution:
BE IT RESOLVED by the stockholders of Price Group, that the stockholders approve the compensation of the Company’s Named Executive Officers as disclosed pursuant to Item 402 of Regulation S-K in the Company’s proxy statement for the 20182021 Annual Meeting of Stockholders. As an advisory vote, this Proposal is non-binding. Although the vote is non-binding, the Board of Directors and the Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when designing and administering our compensation programs and when making future compensation decisions for our NEOs. RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED
| Recommendation of the Board of Directors | Vote Required | | FOR | We recommend that you vote FOR Proposal 2, the approval of the compensation of our NEOs as disclosed in the proxy statement pursuant to the SEC’s compensation disclosure rules. | |
We recommend that you vote FOR Proposal 2, the approval of the compensation of our NEOs as disclosed in the proxy statement pursuant to the SEC’s compensation disclosure rules. All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the approval of the compensation of our named executive officersNEOs as disclosed in this proxy statement pursuant to the SEC’s compensation disclosure rules unless otherwise specified. specified.In order to be adopted at the Annual Meeting, Proposal 2 must be approved by the affirmative vote of a majority of the total votes cast at the Annual Meeting. Abstentions and broker non-votes are not considered votes cast and will have no effect on the outcome of the vote.
Audit Matters Proposal 3
Charter Amendment to Eliminate the Provision That Limits VotingDisclosure of ShareOwnership to 15% of the Outstanding Shares
INTRODUCTION
Article EIGHTH, Section (3) of the Charter of the Company restricts the rights of any person or “group” that is a beneficial owner of more than 15% of the common stock of the Company from voting any shares of common stock of the Company held in excess of the 15% threshold. This Charter provision was adoptedFees Charged by the Company when it went public as a protection against market accumulators who might seek to take control of the Company.
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The Board has reviewed the advantages and disadvantages of maintaining a Charter provision restricting the rights of persons or “groups” beneficially owning more than 15% of the outstanding shares of common stock of the Company to vote their shares of common stock held in excess of the 15% threshold under Article EIGHTH, Section (3) of the Charter. The Board recognizes that this Charter provision provides protection for the Company by reducing the vulnerability of the Company to hostile and potentially abusive takeover practices. However, the Board also understands that, in general, it is not a common charter provision, and is not the exclusive means that the Company may protect itself from hostile and potentially abusive takeover practices.
After evaluating the various considerations in favor of and against maintaining a Charter provision restricting the rights of persons or “groups” beneficially owning more than 15% of the outstanding shares of common stock of the Company to vote their shares of common stock held in excess of the 15% threshold, the Board resolved to eliminate this provision from the Charter of the Company and to make conforming amendments to remove the relevant portions of Article SIXITH, Section (2), and Article EIGHTH Section (5) of the Charter that reference the eliminated provision and to renumber the remaining Sections in Article EIGHTH of the Charter, by adoption of the Articles of Amendment included in the Appendix to this proxy statement (Charter Amendment), which the Board determined was advisable and in the best interests of the stockholders. The Board further resolved that the Charter Amendment be submitted to the stockholders of the Company for approval at the 2018 Annual Meeting.
As required by Article EIGHTH, Section (5) of the Charter, the Charter Amendment must be approved by the affirmative vote of stockholders holding two-thirds of the total number of shares of all classes outstanding and entitled to vote on the Charter Amendment. Article EIGHTH, Section (3) is the only provision of the Charter that requires a supermajority vote to be amended. Accordingly, if this Proposal 3 is approved by the stockholders, then any subsequent amendments to the Charter would only require approval by stockholders holding a majority of the outstanding shares of common stock of the Company.
If this Proposal 3 is approved by the stockholders, the Charter Amendment will become effective on the filing of the Articles of Amendment in the form included in the Appendix with the Maryland State Department of Assessments and Taxation (SDAT). The Company would make the filing with the SDAT promptly after approval of the proposal at the 2018 Annual Meeting.
If this Proposal 3 is not approved by our stockholders, then no amendments to the Charter will be made and the restrictions on the rights of any person or “group” that is a beneficial owner of more than 15% of the common stock of the Corporation from voting any shares of common stock of the Corporation held in excess of 15% under Article EIGHTH, Section (3) of the Charter will remain in effect.
RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED
The Board recommends that the stockholders vote FOR Proposal 3, the Amendment to the Charter of the Company to eliminate the provision restricting any person or “group” that beneficially owns more than 15% of the outstanding shares of common stock of the Company from voting any shares held in excess of the 15% threshold. All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the approval of the Amendment of the Articles of Incorporation unless otherwise specified. Proposal 3 requires an affirmative vote of the holders of two-thirds of the total number of shares of all classes outstanding and entitled to vote on such matters. A broker non-vote with respect to Proposal 3 will have the same effect as a vote against.
Proposal 4
Ratification of the Appointment of KPMG LLP as Our Independent Registered Public Accounting Firm for 2018
INTRODUCTION
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit Price Group’s consolidated financial statements. To execute this responsibility, the Audit Committee engages in an evaluation of the independent auditor’s qualifications, performance, and independence and periodically considers whether the independent registered public accounting firm should be rotated and the advisability and potential impact of selecting a different independent registered public accounting firm.
The Audit Committee has reappointed KPMG LLP to serve as our independent registered public accounting firm for 2018. KPMG was first appointed to serve as our independent registered public accounting firm on September 6, 2001. In accordance
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with SEC rules and KPMG policies, lead and reviewing audit partners are subject to rotation requirements that limit the number of consecutive years they may provide service in that capacity to five years. The process for selection of the lead audit partner pursuant to this rotation policy has included a discussion between the chair of the Audit Committee and the candidate for the role, as well as discussion of the selection by the full Committee with management.
The Audit Committee and the Board of Directors believe that the continued retention of KPMG as our independent registered public accounting firm is in the best interest of Price Group and our stockholders, and we are asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm for 2018.
Representatives of KPMG are expected to be present at the Annual Meeting and will have the opportunity to make a statement and respond to appropriate questions from stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED
We recommend that you vote FOR Proposal 4, the ratification of the appointment of KPMG as our independent registered public accounting firm for 2018. All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the ratification of the appointment of KPMG as our independent registered public accounting firm for 2018 unless otherwise specified. In order to be adopted at the Annual Meeting, Proposal 4 must be approved by the affirmative vote of a majority of the total votes cast at the Annual Meeting. In the event Proposal 4 does not obtain the requisite number of affirmative votes, the Audit Committee will reconsider the appointment of KPMG. Abstentions are not considered votes cast and will have no effect on the outcome of the vote.
DISCLOSURE OF FEES CHARGED BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table summarizes the fees charged by KPMG for services rendered to Price Group and its subsidiaries during 20162020 and 2017.2019. All services were approved by the Audit Committee pursuant to the preapproval procedures described below. Type of Fee | 2016 | 2017 | Audit Fees1 | $ | 2,565,468 | | $ | 3,054,532 | | Audit-Related Fees2 | | 84,303 | | | 120,444 | | Tax Fees3 | | 920,662 | | | 881,072 | | All Other Fees4 | | 65,250 | | | 82,088 | | | $ | 3,635,683 | | $ | 4,138,136 | |
TYPE OF FEE | | 2020 | | 2019 | Audit Fees1 | | $4,106,552 | | $3,628,632 | Audit-Related Fees2 | | 260,755 | | 180,335 | Tax Fees3 | | 1,149,823 | | 1,495,917 | All Other Fees4 | | 102,800 | | 76,500 | | | $5,619,930 | | $5,381,384 |
| 1 | Aggregate fees charged for annual audits, quarterly reviews, and the reports of the independent registered public accounting firm on internal control over financial reporting as of December 31, 20162020 and 2017.2019. |
| 2 | Aggregate fees charged for assurance and related services that are reasonably related to the performance of the audit and are not reported as Audit Fees. In 20162020 and 2017,2019, these services included audits of several affiliated entities, including the corporate retirement plans and the T. Rowe Price Foundation, Inc., and fees for consultations concerning financial accounting and reporting matters, and fees associated with KPMG’s consents related to registration filings.matters. |
| 3 | Aggregate fees charged for tax compliance, planning, and consulting. Of the $881,072$1,149,823 in 2017, $664,5222020, $947,661 is related to tax compliance and preparation and $216,550$202,162 is related to tax planning.planning and consulting. |
| 4 | Both 20162020 and 20172019 include fees for KPMG’s performance of attestation engagements related to our compliance with the Global Investment Performance Standards and fees related to executive education. The 2020 fees also include services provided in relation to the filing of Form S-8 to register securities under 2020 Long-term Incentive Plan. |
AUDIT COMMITTEE PREAPPROVAL POLICIESAudit Committee Preapproval Policies
The Audit Committee has adopted policies and procedures which set forth the manner in which the committee will review and approve all audit and non-audit services to be provided by the independent registered public accounting firm before that firm is retained for such services. The preapproval policies and procedures are as follows: Any audit or non-audit service to be provided to Price Group by the independent registered public accounting firm must be submitted to the Audit Committee for review and approval. The proposed services are submitted on the Audit Committee’s “Independent Registered Public Accounting Firm Audit and Non-audit Services Request Form” with a description of the services to be performed, fees to be charged, and affirmation that the services are not prohibited under Section 201 of the Sarbanes-Oxley Act of 2002. The form must be approved by Price Group’s CEO, chief financial officer, or the principal accounting officer prior to the submission to the Audit Committee. The Audit Committee in its sole discretion then approves or disapproves the proposed services and documents such approval, if given, by signing the approval form. Preapproval actions taken during Audit Committee meetings are recorded in the minutes of the meetings. Any audit or non-audit service to be provided to Price Group that is proposed between meetings of the Audit Committee will be submitted to the Audit Committee chair on a properly completed “Independent Registered Public Accounting Firm Audit and Non-Audit Services Request Form” for the chair’s review and preapproval and will be included as an agenda item at the next scheduled Audit Committee meeting. | ■60 | Any audit or non-audit service to be provided toT. Rowe Price Group by the independent registered public accounting firm must be submitted to the Audit Committee for review and approval. The proposed services are submitted on the Audit Committee’s “Independent Registered Public Accounting Firm Audit and Non-audit Services Request Form” with a description of the services to be performed, fees to be charged, and affirmation that the services are not prohibited under Section 201 of the Sarbanes-Oxley Act of 2002. The form must be approved by Price Group’s chief executive officer, chief financial officer, or director of internal audit prior to submission to the Audit Committee. |
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| ■ | The Audit Committee in its sole discretion then approves or disapproves the proposed services and documents such approval, if given, by signing the approval form. Preapproval actions taken during Audit Committee meetings are recorded in the minutes of the meetings. |
| ■ | Any audit or non-audit service to be provided to Price Group that is proposed between meetings of the Audit Committee will be submitted to the Audit Committee chairman on a properly completed “Independent Registered Public Accounting Firm Audit and Non-audit Services Request Form” for the chairman’s review and preapproval and will be included as an agenda item at the next scheduled Audit Committee meeting. |
Report of the Audit Committee The Audit Committee oversees Price Group’s financial reporting process on behalf of the Board of Directors.Board. Our committee held five meetings during 2017.2020. Management has the primary responsibility for the financial statements and the reporting process, including internal controls over financial reporting. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of Price Group’s audited financial statements with generally accepted accounting principles and an opinion on the effectiveness of Price Group’s internal controls over financial reporting. We appointed KPMG as Price Group’s independent registered public accounting firm for 20172020 after reviewing that the firm’s performance and independence from management and that appointment was ratified by our stockholders at the 20172020 annual meeting.meeting of stockholders. We reappointed KPMG as Price Group’s independent registered public accounting firm for fiscal year 20182021 at our January 20182021 meeting, after conducting the same set of reviews. In fulfilling our oversight responsibilities, we reviewed and discussed with management the audited financial statements prior to their issuance and publication in the 20172020 Annual Report on Form 10-K and in the 20172020 Annual Report to Stockholders. We reviewed with KPMG its judgments as to the quality, not just the acceptability, of Price Group’s accounting principles and discussed with its representatives other matters required to be discussed under generally accepted auditing standards, including matters required to be discussed by Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16-Communications with Audit Committees. We also discussed with KPMG its independence from management and Price Group and received its written disclosures pursuant to applicable requirements of the PCAOB regarding the independent accountant’s communication with the audit committeeAudit Committee concerning independence. We further considered whether the non-audit services described elsewhere in this proxy statement provided by KPMG are compatible with maintaining its independence. We also discussed with management their evaluation of the effectiveness of Price Group’s internal controls over financial reporting as of December 31, 2017.2020. We discussed with KPMG its evaluation of the effectiveness of Price Group’s internal controls over financial reporting. We further discussed with Price Group’s internal auditors and KPMG the overall scope and plans for their respective audits. We met with the internal auditors and KPMG, with and without management present, to discuss the results of their examinations and their evaluations of Price Group’s internal controls. Lastly, as part of our responsibilities for oversight of the Price Group’s risk management process, we reviewed and discussed with the chief risk officer the Company’s framework with respect to the risk assessment, including discussions of individual risk areas, as well as an annual summary of the overall process. In reliance upon the reviews and discussions referred to above, we recommended to the Board, of Directors, and the Board approved, the inclusion of the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 2017,2020, for filing with the SEC. Mark S. Bartlett, Chairman
Dr. Freeman A. Hrabowski, III
Robert F. MacLellan
Dwight S. Taylor
Sandra S. Wijnberg
| Mark S. Bartlett, Chair | | Dina Dublon | | Robert F. MacLellan | | Richard R. Verma | | Sandra S. Wijnberg |
Ratification of the Appointment of KPMG LLP as our Independent Registered Public Accounting Firm for 2021 The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit Price Group’s consolidated financial statements. To execute this responsibility, the Audit Committee engages in an evaluation of the independent auditor’s qualifications, performance, and independence and periodically considers whether the independent registered public accounting firm should be rotated and the advisability and potential impact of selecting a different independent registered public accounting firm. The Audit Committee has reappointed KPMG LLP to serve as our independent registered public accounting firm for 2021. KPMG was first appointed to serve as our independent registered public accounting firm on September 6, 2001. In accordance with SEC rules and KPMG’s policies, lead and reviewing audit partners are subject to rotation requirements that limit the number of consecutive years they may provide service in that capacity to five years. The process for selection of the lead audit partner pursuant to this rotation policy has included a discussion between the chair of the Audit Committee and the candidate for the role, as well as discussion of the selection by the full Audit Committee with management. The Audit Committee and the Board believe that the continued retention of KPMG as our independent registered public accounting firm is in the best interest of Price Group and our stockholders, and we are asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm for 2021. Representatives of KPMG are expected to be present at the Annual Meeting and will have the opportunity to make a statement and respond to appropriate questions from stockholders. | Recommendation of the Board of Directors | Vote Required | | FOR | We recommend that you vote FOR Proposal 3, the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2021. | |
All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the ratification of the appointment of KPMG as our independent registered public accounting firm for 2021 unless otherwise specified. In order to be adopted at the Annual Meeting, Proposal 3 must be approved by the affirmative vote of a majority of the total votes cast at the Annual Meeting. In the event Proposal 3 does not obtain the requisite number of affirmative votes, the Audit Committee will reconsider the appointment of KPMG. Abstentions are not considered votes cast and will have no effect on the outcome of the vote. Stockholder Proposal For a Report on Voting by Our Funds and Portfolios on Matters Relating to Climate Change INTRODUCTION Zevin Asset Management, LLC, on behalf of Janet Axelrod 1997 Revocable Trust, has submitted the following proposal for our stockholders, which is co-sponsored by Boston Trust Walden Company and Friends Fiduciary Corporation (the address and number of shares of the Company’s common stock held by each of these stockholders will be provided upon request): PROPOSAL Whereas: T. Rowe Price Group is a respected leader in the financial services industry with several policies and practices addressing environmental, social and governance (ESG) topics. TROW’s “Policy Statement on Environmental, Social, and Governance Issues” describes how “ESG risk considerations” are incorporated into investment decisions. That policy expresses TROW’s belief that ESG issues can influence investment risk and return, thus affirming that such issues must be addressed carefully by investors. In its “Guidelines for Incorporating Environmental and Social Factors,” TROW acknowledges the importance of climate change risk: “We believe that speaking with company managements and other stakeholders about climate change is a good way to gather valuable investment insights as to the management’s process for assessing long-term risks and helps reinforce the notion that climate-related risk assessment should remain a priority.” TROW seems knowledgeable about the risks of climate change and the need for action by companies. TROW’s subsidiaries, which vote proxies, are guided by clients’ economic interests and support certain governance reforms proposed by shareholders who believe that these issues affect shareholder value. We believe ESG issues such as climate change risk also have a profound impact on shareholder value. TROW is a member of the Principles for Responsible Investment, a global network of investors and asset owners representing more than $100 trillion in assets. One of the Principles encourages investors to vote conscientiously on ESG issues. Yet the 2020 publicly reported proxy voting records for TROW’s subsidiaries reveal consistent votes against the vast majority of climate-focused shareholder proposals, such as requests for enhanced disclosure or adoption of greenhouse gas reduction goals, even when independent experts advance a strong business and economic case for support. In contrast, funds managed by investment firms such as JPMorgan, Columbia and State Street supported the majority of climate-related resolutions in 2020. TROW’s own “2020 Aggregate Proxy Voting Proxy Summary” reports on 17 percent support for resolutions on environmental topics. The voting practices of subsidiaries appear inconsistent with our Company’s statements about ESG and climate change. This contradiction poses reputational risk with both clients and investors. Moreover, proxy voting practices that do not properly take account of climate change seem to ignore significant company-specific and economy-wide risks associated with negative impacts of climate change. Investors seek information on whether the practices of TROW and its subsidiaries are suited to address material ESG considerations in proxy voting. Resolved: Shareowners request that the Board of Directors initiate a review and issue a report on the proxy voting policies and practices of its subsidiaries related to climate change, prepared at reasonable cost and omitting proprietary information, and including an assessment of any incongruities between the Company’s public statements and pledges regarding climate change (including ESG risk considerations associated with climate change), and the voting policies and practices of its subsidiaries. RECOMMENDATION OF CONTENTSTHE BOARD OF DIRECTORS; VOTE REQUIRED After careful consideration of this proposal, the Board has concluded that it is not in the best interest of our stockholders. Accordingly, the Board recommends a vote “AGAINST” this proposal for the following reasons: This proposal inappropriately connects the Company’s general position and actions on climate change with the separate voting practices of our subsidiaries that act as investment advisers (Price Advisers). The Board must act in what it believes to be the best interests of the Company and its stockholders, including appropriately addressing issues related to climate change. In this regard, the Company has a number of initiatives in place to reduce the Company’s environmental impact, including the installation of solar panels at its Maryland operations campus to minimize energy consumption and mitigate GHG emissions; efforts to recycle and reuse natural resources; and efforts to ensure that new buildings and substantial renovations of existing facilities qualify for LEED certification. The Company offers significant disclosure about these initiatives through its annual Sustainability Report, which can be found on our Investor Relations page at https://troweprice.gcs-web.com/, under the Corporate Responsibility tab. Such initiatives are important to the Company. However, the Company and its Board do not have direct responsibility for proxy voting conducted by the Price Advisers on behalf of its clients. The Company and the Board defer to the Price Advisers on these voting matters as Price Advisers has fiduciary responsibility under applicable law. Proxy voting is governed by the proxy voting policies of the Price Advisers (Proxy Voting Policies). It is the duty of the Price Advisers to vote shares in portfolio companies solely in the best interests of their clients, taking into account factors relevant to an investor. Consistent with these duties, Price Advisers have established an ESG Committee, which serves an independent function to oversee and guide the voting process to ensure that votes are cast in the long-term economic interests of Price Advisers’ clients. These advisory clients may or may not have the same interests as the stockholders of Company. The suggestion that the Board should intervene in oversight of the Price Advisers’ proxy voting is inappropriate and conflicts with the fiduciary principles applicable to the Price Advisers. The proxy votes of the Price Advisers on resolutions relating to climate change clearly reflect an analytical, case-by-case approach that is consistent with their Proxy Voting Policies and fiduciary duties. These policies state: “It is T. Rowe Price policy to analyze every shareholder proposal of a social or environmental nature on a CASE-BY-CASE basis. To do this, we utilize research reports from our external proxy advisor, company filings and sustainability reports, research from other investors and non-governmental organizations, our internal Responsible Investment team, and our internal industry research analysts. Generally speaking, we will consider supporting well targeted proposals addressing concerns that are particularly relevant for a company’s business but have not yet been adequately addressed by management.” The Price Advisers’ voting policies relating to climate change and other ESG issues are well articulated in the Proxy Voting Policies and other disclosures such as the Price Advisers’ Responsible Investment Guidelines. The specific voting record of the Price Advisers with regard to Price funds is publicly disclosed annually on the SEC’s website and on the Company’s website. By way of example, in 2020, Price funds, voted on 81 proposals related to environmental issues. Price funds voted in favor of 30% of these proposals and abstained from voting on 7% of these proposals because of conflict of interest or share blocking. Further, Price funds voted against 32% of the proposals because Price Advisers believed that the requested disclosure had already been provided, and did not think additional reporting was necessary. Price funds voted against 27% of these proposals, as we deemed they were too prescriptive for the entities involved following the analysis by both our Responsible Investment and Governance teams. Lastly, Price funds voted against 4% because we disagreed with the proponents’ objectives. We believe this voting record demonstrates that Price Advisers carefully considered these proposals and evaluated them on a case by case basis, considering not just the merits of the proposal, but also the its applicability to the company involved. We continue to believe that by utilizing this analytical approach, Price Advisors makes independent decisions in the best interests of the Price funds. No benefit would be realized from the resources that would have to be deployed for the Company to conduct a comprehensive review of the individual proxy voting policies and voting decisions made by the Price Advisers and determine whether they were consistent with any statement of the Company regarding climate change. Further, any such evaluation would be inappropriate and misaligned with each party’s responsibility. The Company’s stockholders voted on substantially the same proposal in 2020, and it was not approved, with only approximately 14.3% of the stockholders voting in favor of the proposal. The Company believes that the Price Advisers are best suited to determine the manner in which they vote proxies and that continued adherence to their disclosed voting and investment policies relating to ESG issues best serves the interests of our investment clients. | Recommendation of the Board of Directors | Vote Required | | AGAINST | We recommend that you vote AGAINST Proposal 4, Stockholder Proposal for a Report on Voting by our Funds and Portfolios on Matters Relating to Climate Change. | |
In order to be adopted at the Annual Meeting, Proposal 4 must be approved by the affirmative vote of a majority of the total votes cast at the Meeting. Shares held by a bank, broker or other intermediary will not be voted on this Proposal 4 absent specific instruction from you, which means your shares may go unvoted and not affect the outcome if you do not specify a vote. Abstentions and broker non-votes are not considered votes cast and will have no effect on the outcome of the vote. All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted AGAINST Proposal 4 unless otherwise specified. Stock Ownership and Related Transactions Equity Compensation Plan Information The following table sets forth information regarding outstanding stock options and RSUs and shares reserved for future issuance under our equity compensation plans as of December 31, 2020. None of the plans have outstanding warrants or rights other than stock options and RSUs. All plans have been approved by our stockholders. PLAN CATEGORY | | NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS AND SETTLEMENT OF RESTRICTED STOCK UNITS (A) | | WEIGHTED-AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS | | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A)) | Equity compensation plans approved by stockholders | | 10,772,4661 | | 72.521 | | 12,688,2202 | Equity compensation plans not approved by stockholders | | — | | | | — | Total | | 10,772,466 | | 72.52 | | 12,688,220 |
| 1 | Includes 6,443,410 shares that may be issued upon settlement of outstanding RSUs. The weighted-average exercise price pertains only to the 4,329,056 outstanding stock options. |
| 2 | Includes 306,485 shares that may be issued under our 2017 Director Plan and 10,779,068 shares that may be issued under our 2020 Plan and 1,602,666 shares that may be issued under our Employee Stock Purchase Plan. No shares have been issued under the Employee Stock Purchase Plan since its inception; all plan shares have been purchased in the open market. The number of shares available for future issuance under the 2020 Plan will increase under the terms of the plan as a result of all common stock repurchases that we make from proceeds generated by stock option exercises. The 2020 Plan allows for the grant of stock options, stock appreciation rights, and full-value awards. |
Security Ownership of Certain Beneficial Owners and Management Stock Ownership of 5% Beneficial Owners To our knowledge, these are the following beneficial owners of more than 5% of our outstanding common stock as of March 11, 2021. NAME AND ADDRESS | | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP | | PERCENT OF CLASS | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | 17,971,561 shares1 | | 7.70% | State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111 | | 11,462,942 shares2 | | 4.91% | The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 | | 19,720,005 shares3 | | 8.45% |
| 1 | Based solely on information contained in a Schedule 13G/A filed with the SEC on February 1, 2021, by BlackRock, Inc. Of the 17,971,561 shares beneficially owned, BlackRock, Inc., has sole power to vote or direct the vote of 15,571,797 shares and sole power to dispose or to direct the disposition of 17,971,561 shares. |
| 2 | Based solely on information contained in a Schedule 13G filed with the SEC on February 11, 2021, by State Street Corporation. Of the 11,462,942 shares beneficially owned, State Street Corporation has sole power to vote or direct the vote of no shares, sole power to dispose or to direct the disposition of no shares, shared power to vote or direct the vote of 10,298,115 shares, and shared power to dispose or direct the disposition of 11,451,607 shares. |
| 3 | Based solely on information contained in a Schedule 13G/A filed with the SEC on February 10, 2021, by The Vanguard Group. Of the 19,720,005 shares beneficially owned, The Vanguard Group has sole power to vote or direct the vote of no shares, sole power to dispose or to direct the disposition of 18,713,083 shares, shared power to vote or direct the vote of 371,859 shares, and shared power to dispose or to direct the disposition of 1,006,922 shares. |
Stock Ownership of Management The following table sets forth information regarding the beneficial ownership of the Company’s common stock as of the record date, March 11, 2021, by (i) each director and each nominee for director, (ii) each person named in the Summary Compensation Table, and (iii) all directors and executive officers as a group. Share amounts and percentages shown for each individual or group in the table assume the exercise of all stock options exercisable by such individual or group within 60 days of the record date and the settlement of RSUs that are vested or will vest within 60 days of the record date. Except as otherwise noted, all shares are owned individually with sole voting and dispositive power. NAME OF BENEFICIAL OWNER | | AMOUNT OF BENEFICIAL OWNERSHIP | | PERCENT OF CLASS1 | Christopher D. Alderson | | | 220,525 | | | * | Mark S. Bartlett | | | 24,696 | 2 | | * | Mary K. Bush | | | 16,244 | 3 | | * | Dina Dublon | | | 2,971 | 4 | | * | Céline S. Dufétel | | | 5,565 | | | * | Dr. Freeman A. Hrabowski, III | | | 63,628 | 5 | | * | Robert F. MacLellan | | | 50,447 | 6 | | * | Robert W. Sharps | | | 375,505 | 7 | | * | Olympia J. Snowe | | | 19,232 | 8 | | * | Robert J. Stevens | | | 3,826 | 9 | | * | William J. Stromberg | | | 936,631 | 10 | | * | Eric L. Veiel | | | 160,731 | 11 | | * | Richard R. Verma | | | 4,786 | 12 | | * | Sandra S. Wijnberg | | | 14,085 | 13 | | * | Alan D. Wilson | | | 15,982 | 14 | | * | Directors and All Executive Officers as a Group (22 persons) | | | 2,420,612 | 15 | | 1.0% |
| 1 | Beneficial ownership of less than 1% is represented by an asterisk (*). |
| 2 | Includes 1,853 unvested restricted stock awards. |
| 3 | Includes (i) 1,853 unvested restricted stock awards and 14,391 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Bush’s separation from the Board. |
| 4 | Includes 2,971 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Dublon’s separation from the Board. |
| 5 | Includes (i) 26,008 shares that may be acquired by Dr. Hrabowski within 60 days upon the exercise of stock options, (ii) 12,292 vested stock units that will be settled in shares of the Company’s common stock upon Dr. Hrabowski’s separation from the Board, and (iii) 25,328 shares held by a member of Dr. Hrabowski’s family. |
| 6 | Includes (i) 26,008 shares that may be acquired by Mr. MacLellan within 60 days upon the exercise of stock options, (ii) 1,853 unvested restricted stock awards, and (iii) 6,383 vested stock units that will be settled in shares of the Company’s common stock upon Mr. MacLellan’s separation from the Board. |
| 7 | Includes 3,951 shares that may be acquired by Mr. Sharps within 60 days upon the exercise of stock options. |
| 8 | Includes 9,932 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Snowe’s separation from the Board. |
| 9 | Includes 3,826 vested stock units that will be settled in shares of the Company’s common stock upon Mr. Stevens’ separation from the Board. |
| 10 | Includes (i) 1,235 shares that may be acquired by Mr. Stromberg within 60 days upon the exercise of stock options, (ii) 400,000 shares held by a limited liability company in which Mr. Stromberg has an interest, and (iii) 15,000 shares held in a family trust for which Mr. Stromberg disclaims beneficial ownership. |
11 | Includes (i) 35,436 shares that may be acquired by Mr. Veiel within 60 days upon the exercise of stock options and (ii) 46,000 shares held by a member of Mr. Veiel’s family. |
| 12 | Includes 4,786 vested stock units that will be settled in shares of the Company’s common stock upon Mr. Verma’s separation from the Board. |
| 13 | Includes 1,853 unvested restricted stock awards and 5,789 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Wijnberg’s separation from the Board. |
| 14 | Includes 15,982 vested stock units that will be settled in shares of the Company’s common stock upon Mr. Wilson’s separation from the Board. |
| 15 | Includes (i) 321,136 shares that may be acquired by all directors and executive officers as a group within 60 days upon the exercise of stock options, (ii) 7,412 unvested restricted stock awards held by certain directors and executive officers, (iii) 76,352 stock units held by nine of the non-employee directors that are vested and will be settled in shares of the Company’s common stock upon their separation from the Board, and (iv) 486,328 shares held by family members, held in family trusts or limited liability companies of certain directors and executive officers, and held by trusts in which certain executive officers are trustees. |
Section 16(a) Beneficial Ownership Reporting Compliance We believe that all filing requirements to comply with Section 16(a) of the Securities Exchange Act were met during the calendar year 2020, except for the late filing of SEC Form 4 in May 2020 for all of our independent directors as a result of an administrative error on part of the Company. The original filing for these director’s transactions were due on May 15, 2020, but were not filed until May 20, 2020. Each late Form 4 reported one transaction for each of Mses. Bush, Dublon, Snowe and Wijnberg, Messrs. Bartlett, MacLellan, Stevens, Verma and Wilson and Dr. Hrabowski. Certain Relationships and Related Transactions Since 2014, the Company has been a party to a software license agreement with Diligent Corporation (Diligent) to provide online access to board and committee materials to the Company’s officers and directors. The chief executive officer and president of Diligent, Brian Stafford, is the spouse of our COO/CFO and Treasurer, Céline S. Dufétel. Pursuant to the agreement, the Company paid Diligent approximately $351,000 in 2020. Questions and Answers About the Proxy Materials and the Annual Meeting Why did I receive a Notice of the Internet Availability of Proxy Materials in the mail? You received in the mail either a notice of the Internet availability of proxy materials or a printed proxy statement and 2020 Annual Report to Stockholders because you owned Price Group common stock at the close of business on March 11, 2021, which we refer to as the “Record Date,” and that entitles you to vote at the Annual Meeting. This proxy statement, the proxy card, and our 2020 Annual Report to Stockholders containing our consolidated financial statements and other financial information for the year ended December 31, 2020, constitute the “Proxy Materials.” The Board is soliciting your proxy to vote at the Annual Meeting or at any later meeting if the Annual Meeting is adjourned or postponed for any reason. Your proxy will authorize each of David Oestreicher and Jean-Marc Corredor as proxies to vote on your behalf at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting. This proxy statement describes the matters to be acted upon at the Annual Meeting, provides information on those matters, and provides information about Price Group that we must disclose when we solicit your proxy. Pursuant to rules adopted by the SEC, we have elected to provide access to our Proxy Materials over the Internet. We believe that Internet delivery of our Proxy Materials allows us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, which we refer to as the “Notice,” to many of our stockholders (including beneficial owners) as of the Record Date. Our stockholders who receive the Notice will have the ability to access the Proxy Materials on a website referred to in the Notice or request to receive a printed set of the Proxy Materials. The Notice contains instructions on how to access the Proxy Materials over the Internet or to request a printed copy. In addition, stockholders may request to receive Proxy Materials in printed form by mail or electronically by email on an ongoing basis by calling Broadridge Financial Solutions, Inc. (Broadridge) at 1-800-579-1639. Please note that you may not vote using the Notice. The Notice identifies the items to be voted on at the Annual Meeting and describes how to vote, but you cannot vote by marking the Notice and returning it. Can I view the Proxy Materials on the Internet? Yes. As described in more detail in response to the prior question, most stockholders will receive the proxy statement online. If you received a paper copy, you can also view these documents on the Internet by accessing our website at troweprice.gcs-web.com/financial-information. The SEC also maintains a website at sec.gov that contains reports, proxy statements, and other information regarding Price Group. Who is entitled to vote at the Annual Meeting? Holders of our common stock at the close of business on the Record Date are entitled to vote their shares at the Annual Meeting. As of the Record Date, there were 227,453,209 shares outstanding. Each share outstanding on the Record Date is entitled to one vote on each proposal presented at the Annual Meeting. What am I voting on, and what are the Board voting recommendations? Our stockholders will be voting on the following proposals: VOTING ITEM | | | BOARD VOTING RECOMMENDATION | 1 | | Election of Directors | | | | FOR | | | | All Director-Nominees | 2 | | Advisory Vote on the Compensation Paid to Our Named Executive Officers | | | | FOR | 3 | | Ratification of the Appointment of KPMG LLP as Our Independent Registered Public Accounting Firm for 2021 | | | | FOR | 4 | | Stockholder proposal requesting the preparation of a report on voting by our funds and portfolios on matters related to climate change | | | | AGAINST |
Can other matters be decided at the Annual Meeting? At the time this proxy statement was completed we were not aware of any other matters to be presented at the Annual Meeting. If other matters are properly presented for consideration at the Annual Meeting, the proxy holders appointed by our Board (i.e., David Oestreicher and Jean-Marc Corredor) will have the discretion to vote on those matters in accordance with their best judgment on behalf of stockholders who provide a valid proxy by Internet, by telephone, or by mail. What is the procedure for voting? Whether you hold shares directly as the stockholder of record or beneficially in street name, you may vote before the Annual Meeting by granting a proxy to each of David Oestreicher and Jean-Marc Corredor or, for shares you beneficially own, by submitting voting instructions to your broker, bank, or other nominee. Stockholders have a choice of voting by using the Internet, by calling a toll-free telephone number within the United States or Puerto Rico, or by completing a proxy or voting instruction card and mailing it in the postage-paid envelope provided. Please refer to the summary instructions below and carefully follow the instructions included on your Notice; your proxy card; or, for shares you beneficially own, the voting instruction card provided by your broker, bank, or other nominee. The Notice identifies the items to be voted on at the Annual Meeting and provides instructions on how to vote, but you cannot vote by marking the Notice and returning it. If you hold shares in multiple accounts, you may receive multiple Proxy Materials packages. If you hold shares in multiple accounts, please be sure to vote all of your Price Group shares in each of your accounts in accordance with the voting instructions you receive for each such account. | By Internet or Telephone |
You can vote your shares via the Internet at proxyvote.com. You can vote your shares by telephone by calling, toll-free 1-800-690-6903. Internet and telephone voting facilities for registered stockholders will be available 24 hours a day until 11:59 p.m., eastern daylight time, on May 10, 2021. If you vote your shares on the Internet or by telephone, you do not have to return your proxy card. Please have your proxy card (or the Notice or the email message you receive with instructions on how to vote) in hand when you go online. You will have an opportunity to confirm your voting selections before your vote is recorded. The availability of Internet and telephone voting for beneficial owners will depend on the voting processes of your broker, bank, or other nominee. You should follow the voting instructions in the materials that you received from your nominee. | By Mail |
If you’d like to vote by mail, please request a paper proxy card in accordance with the instructions contained in the Notice and then complete, sign, and date the proxy card and return it in the postage-paid envelope provided. If voting instructions are provided, shares represented by the proxy card will be voted in accordance with the voting instructions. For shares held in street name, please use the voting instruction card provided by your broker, bank, or other nominee and mark, sign, date, and mail it back to your broker, bank, or other nominee in accordance with their instructions. | In Person at the Annual Meeting |
All registered stockholders can vote in person at the Annual Meeting virtually. The Annual Meeting will be held through a live webcast. Voting your proxy electronically via the Internet, by telephone, or by mail does not limit your right to vote at the Annual Meeting. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/TROW2021, you must enter the 16-digit control number found next to the label “Control Number” on your Notice of Internet Availability, proxy card, or voting instruction form. If you are a beneficial shareholder, you may contact the bank, broker or other institution where you hold your account if you have questions about obtaining your control number. Whether or not you participate in the Annual Meeting, it is important that your shares be part of the voting process. You may log on to proxyvote.com and enter your Control Number. What is the difference between holding shares as a registered stockholder and as a beneficial owner? If your shares are registered directly in your name with our transfer agent, you are considered the “registered stockholder” (also known as a “record holder”) of those shares. We mail the Notice or Proxy Materials directly to you. Equiniti Trust Company (EQ) serves as the transfer agent and registrar for Price Group. If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the beneficial owner of shares held in “street name,” and these Proxy Materials or the Notice are being forwarded to you by your broker, bank, or other nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote your shares, and you also are invited to attend the Annual Meeting. Your broker, bank, or other nominee also is obligated to provide you with a voting instruction card for you to use to direct them as to how to vote your shares. What must I do to participate in the Annual Meeting? You are entitled to participate in the Annual Meeting if you were a shareholder as of the close of business on March 11, 2021, the record date, or hold a valid proxy for the meeting. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/TROW2021, you must enter the 16-digit control number found next to the label “Control Number” on your Notice of Internet Availability, proxy card, or voting instruction form, or in the email sending you the Proxy Statement. If you are a beneficial shareholder, you may contact the bank, broker or other institution where you hold your account if you have questions about obtaining your control number. The question and answer session will include questions submitted in advance of, and questions submitted live during, the Annual Meeting. You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your Control Number. Questions may be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/TROW2021. We encourage you to access the Annual Meeting before it begins. Online check-in will start approximately fifteen minutes before the meeting on May 11, 2021. Can I change my proxy vote? Yes. If you are a registered stockholder, you can change your proxy vote or revoke your proxy no later than the day before the Annual Meeting by: Authorizing a new vote electronically through the Internet or by telephone. Returning a signed proxy card with a later date. Delivering a written revocation of your proxy to the general counsel and corporate secretary at T. Rowe Price Group, Inc., 100 East Pratt Street, Mail Code BA-1950, Baltimore, MD 21202. In addition, a registered stockholder may change their vote by voting in person at the Annual Meeting through the virtual meeting website. If you are a beneficial owner of shares, you can submit new voting instructions by contacting your broker, bank, or other nominee. You also can vote in person at the Annual Meeting if you obtain a legal proxy from your bank, broker, or other nominee (the registered stockholder) as described in the answer to the question “What is the procedure for voting?” on page 70. Your virtual attendance at the Annual Meeting does not revoke your proxy. Unless you vote at the Annual Meeting, your last valid proxy prior to or at the Annual Meeting will be used to cast your vote. What if I return my proxy card but do not provide voting instructions? Proxies that are signed and returned but do not contain voting instructions will be voted: FOR the election of all director-nominees listed in Proposal 1. FOR the advisory vote on the compensation paid by the Company to its Named Executive Officers (Proposal 2). FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2021 (Proposal 3). AGAINST the stockholder proposal requesting the preparation of a report on voting by our funds and portfolios on matters related to climate change (Proposal 4). In the best judgment of the named proxy holders if any other matters are properly presented at the Annual Meeting. How many shares must be present to hold the Annual Meeting? In order for us to lawfully conduct business at our Annual Meeting, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting is required. This is referred to as a quorum. Your shares are counted as present at the Annual Meeting if you attend the Annual Meeting and either vote in person or abstain from voting, or if you properly return a proxy by Internet, by telephone, or by mail in advance of the Annual Meeting and do not revoke the proxy. Will my shares be voted if I don’t provide my proxy or instruction card? Registered Stockholders If your shares are registered in your name, your shares will not be voted unless you provide a proxy by Internet, by telephone, or by mail or vote in person at the Annual Meeting. Beneficial Owners If you hold shares through an account with a broker, bank, or other nominee and you do not provide voting instructions, under the NASDAQ Global Select Market rules, your broker may vote your shares on routine matters only. The ratification of the appointment of KPMG (Proposal 3) is considered a routine matter, and your nominee can therefore vote your shares on that proposal even if you do not provide voting instructions. No other proposal is considered a routine matter, and your nominee cannot vote your shares on those proposals unless you provide voting instructions. Votes withheld by brokers, banks, and other nominees in the absence of voting instructions from a beneficial owner are referred to as “broker non-votes.” Multiple Forms of Ownership The Company cannot provide a single proxy or instruction card for stockholders who own shares as registered stockholders or beneficial owners in multiple accounts. As a result, if your shares are held in multiple types of accounts, you must submit your votes for each type of account in accordance with the instructions you receive for that account. What is the vote required for each proposal? For Proposal 1, the votes that stockholders cast “FOR” a director-nominee must exceed the votes that stockholders cast “AGAINST” a director-nominee to approve the election of each director-nominee. Please also see the discussion of our “Majority Voting” provisions within the Report of the Nominating and Corporate Governance Committee on page 20. For each of Proposals 2, 3 and 4 the affirmative vote of a majority of the votes cast is required to approve the proposal. Proposal 2 is advisory and non-binding, so the Board will review the voting results on this proposal and take the results into account when making future decisions regarding these matters. “Votes cast” exclude abstentions and broker non-votes. What is the effect of an abstention? A stockholder who abstains on some or all matters is considered present for purposes of determining if a quorum is present at the Annual Meeting, but an abstention is not counted as a vote cast. An abstention has no effect on the vote on any other proposal. What is the effect of a broker non-vote? If a broker casts a vote on Proposal 3 (ratification of the appointment of KPMG LLP as our independent registered public accounting firm), the vote will be included in determining whether a quorum exists for holding the Annual Meeting. The broker does not have authority to vote on the other proposals absent directions from the beneficial owner. As a result, if the beneficial owner does not vote on Proposals 1, 2 or 4, so that there is a “broker non-vote” on those items, the broker non-votes do not count as votes cast for those proposals. Thus, a broker non-vote on Proposals 1, 2 and 4 will not impact the following: our ability to obtain a quorum (unless a broker also does not cast a vote on Proposal 3 as described in the preceding paragraph), the outcome with respect to the election of directors (Proposal 1), the outcome of the vote on a proposal that requires the affirmative vote of a majority of the votes cast on the proposal (Proposal 2 and 4). Who will count the votes? Representatives of our proxy tabulator, Broadridge, will tabulate the votes and act as inspectors of election for the Annual Meeting. Where can I find the voting results of the Annual Meeting? The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspectors of election and disclosed by the Company in a Current Report on Form 8-K filed with the SEC within four business days following the Annual Meeting. Is my vote confidential? Yes. The vote of each stockholder is held in confidence from Price Group’s directors, officers, and employees. We do not know how any person or entity votes unless this information is voluntarily disclosed. What is “householding” and how does it affect me? Some banks, brokers, and other nominees engage in the practice of “householding” our Proxy Materials. This means that only one copy of our Proxy Materials may be sent to multiple stockholders in your household unless you request otherwise. If requested, we will promptly deliver a separate copy of Proxy Materials to you if you share an address subject to householding. Please contact our general counsel and corporate secretary at 100 East Pratt Street, Mail Code BA-1950, Baltimore, MD 21202, or by telephone at 410-345-2000. Please contact your bank, broker, or other nominees if you wish to receive individual copies of our Proxy Materials in the future. Please contact your bank, broker, or other nominee or our general counsel and corporate secretary at 100 East Pratt Street, Mail Code BA-1950, Baltimore, MD 21202, or by telephone at 410-345-2000, if members of your household are currently receiving individual copies and you would like to receive a single household copy for future meetings. Can I choose to receive the proxy statement and the 2020 Annual Report to Stockholders on the Internet instead of receiving them by mail? Yes. If you are a registered stockholder or beneficial owner, you can elect to receive all future Proxy Materials on the Internet only and not receive notices or copies in the mail by visiting proxyvote.com. You will need to have your proxy card (or the Notice or the email message you receive with instructions on how to vote) in hand when you access the website. Your request for electronic transmission will remain in effect for all future annual reports and proxy statements, unless withdrawn. Withdrawal procedures also are at this website. If you hold Price Group shares in your own name and received more than one copy of our Proxy Materials at your address and wish to reduce the number of reports you receive and save the Company the cost of producing and mailing these reports, you should contact Price Group’s mailing agent Broadridge, at 1-866-540-7095 to discontinue the mailing of reports on the accounts you select. The mailing of dividend checks, dividend reinvestment statements, and special notices will not be affected by your election to discontinue duplicate mailings of proxy statements and annual reports. Registered stockholders may resume the mailing of our Proxy Materials to an account by calling Broadridge at 1-866-540-7095. If you own shares through a broker, bank, or other nominee and received more than one set of our Proxy Materials, please contact the holder of record to eliminate duplicate mailings. Who pays the cost of this proxy solicitation? We will pay for the costs of preparing materials for the Annual Meeting and soliciting proxies. Our solicitation may occur through the mail, but proxies also may be solicited personally or by telephone, email, letter, or facsimile. To assist in soliciting proxies, we have retained Morrow Sodali LLC, 470 West Avenue, Stamford, CT 06902 for a fee of $7,000, plus reimbursement of out-of-pocket expenses. We ask brokers, banks, and other nominees to forward materials for the Annual Meeting to our beneficial stockholders as of the Record Date, and we will reimburse them for the reasonable out-of-pocket expenses they incur. Directors, officers, and employees of Price Group and our subsidiaries may solicit proxies personally or by other means, but will not receive additional compensation. Stockholders are requested to return their proxies without delay. Are stockholders entitled to call a special meeting? Yes. Pursuant to Section 2-502 of the Maryland Corporations and Associations Code, the secretary of a corporation shall call a special meeting of the stockholders on the written request of stockholders entitled to cast at least 25 percent of all the votes entitled to be cast at the meeting. A request for a special meeting shall state the purpose of the meeting and the matters proposed to be acted on at the meeting. This is the current standard applicable for Price Group. Can I find additional information on the Company’s website? Yes. Although the information contained on our website is not part of the Proxy Materials, you will find information about the Company and our corporate governance practices at troweprice.gcs-web.com/corporate-governance/policies. Our website contains information about our Board, Board committees, Corporate Governance Guidelines, and other matters. Stockholder Proposals for the 20192022 Annual Meeting Any stockholder who wishes to submit a proposal or nominate a director for consideration at the 2019 Annual Meeting2022 annual meeting of stockholders and include that proposal or nomination in the 20192022 proxy statement should send their proposal to T. Rowe Price Group, Inc., c/o chief legal officergeneral counsel and corporate secretary, 100 East Pratt Street, Mail Code BA-1360,BA-1950, Baltimore, MD 21202, and comply with the notice and other requirements described below. Proposals must be received no later than November 16, 2018,24, 2021, and satisfy the requirements under applicable SEC rules (including SEC Rule 14a-8) to be included in the proxy statement and on the proxy card that will be used for solicitation of proxies by the Board for the 2019 Annual Meeting.2022 annual meeting of stockholders. We have adopted a proxy access right to permit a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years to nominate and include in the Company’s proxy materials directors constituting up to two individuals or 20% of the Board (whichever is greater), provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the amended By-Laws. To be considered timely under our proxy access provisions, stockholder nominations must be received on or after October 17, 201825, 2021, and on or before November 16, 2018,24, 2021, inclusive. Our By-Laws also require advance notice of any proposal by a stockholder to be presented at the 2019 Annual Meeting2022 annual meeting of stockholders that is not included in our proxy statement and on the proxy card, including any proposal for the nomination of a director for election. To be properly brought before the 2019 Annual Meeting,2022 annual meeting of stockholders, written nominations for directors or other business to be introduced by a stockholder must be received on or after December 27, 2018,January 11, 2022, and on or before January 26, 2019.February 10, 2022. A notice of a stockholder proposal must contain the information required by our By-Laws about the matter to be brought before the Annual Meetingannual meeting of stockholders and about the stockholder proponent and persons associated with the stockholder through control, ownership of the shares, agreement, or coordinated activity. We reserve the right to reject proposals that do not comply with these requirements. Pursuant to Maryland law and our Amended and Restated By-Laws, a special meeting of our stockholders can generally be called by the chairmanchair of the Board, our president, our Board, of Directors, or upon the written request of stockholders entitled to cast at least 25% of all votes entitled to be cast at the special meeting. Stockholder Communications With
T. Rowe Price is an asset management firm focused on delivering global investment management excellence and retirement services that investors can rely on—now and over the Boardlong term. We provide an array of Directors commingled funds, subadvisory services, separate account management, retirement recordkeeping, and related services for individuals, advisors, institutions, and/or retirement plan sponsors. Our Board members are interested in hearingintellectual rigor helps us seek the opinions of the stockholders. The Nominating and Corporate Governance Committee has established the following procedures in order to facilitate communications betweenbest ideas for our stockholdersclients, our integrity ensures that we always put their interests first, and our Boardstability lets us stay focused on their goals as we pursue better investment outcomes. For more information, visit troweprice.com. © 2020 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/or apart, trademarks of Directors:T. Rowe Price Group, Inc. T. Rowe Price Group, Inc. 100 East Pratt Street Baltimore, Maryland 21202 (410) 345-2000 | troweprice.com VIEW OUR PROXY STATEMENT ONLINE AT: trow.client.shareholder.com/financials.cfm Table of Contents | ■ | Stockholders may send correspondence, which shouldSignature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. HOUSEHOLDING ELECTION - Please indicate that the sender isif you consent to receive certain future investor communications in a stockholder, to oursingle package per household. 1a. Mark S. Bartlett 1b. Mary K. Bush 1d. Dr. Freeman A. Hrabowski, III 1c. Dina Dublon 1e. Robert F. MacLellan 1f. Olympia J. Snowe 1g. Robert J. Stevens 1h. William J. Stromberg 1i. Richard R. Verma 1j. Sandra S. Wijnberg 1. Election of Directors: The Board of Directors orRecommends a Vote FOR All Nominees Listed in Item 1. 1k. Alan D. Wilson 2. To approve, by a non-binding advisory vote, the compensation paid by the Company to any individual director by mail to T. Rowe Price Group, Inc., c/o Chief Legal Officer, P.O. Box 17134, Baltimore, MD 21297-1134, or by email to contact_the_board@troweprice.com or by Internet at trow.client.shareholder.com/contactBoard.cfm.
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| ■ | Our chief legal officer will be responsible for the first review and loggingits Named Executive Officers. The Board of this correspondence. The officer will forward the communication to the director or directors to whom it is addressed unless it isDirectors Recommends a type of correspondence that the Nominating and Corporate Governance Committee has identified as correspondence that may be retained in our files and not sent to directors. |
| ■ | The Nominating and Corporate Governance Committee has authorized the chief legal officer to retain and not send to directors the following types of communications: |
| ■ | Advertising or promotional in nature (offering goods or services); |
| ■ | Complaints by clients with respect to ordinary course of business customer service and satisfaction issues; provided, however, that the chief legal officer will notify the chairVote FOR Item 2. 3. Ratification of the Nominatingappointment of KPMG LLP as our independent registered public accounting firm for 2021. 4. Stockholder proposal for a report on voting by our funds and Corporate Governance Committeeportfolios on matters related to climate change. The Board of any complaints that,Directors Recommends a Vote FOR Item 3. The Board of Directors Recommends a Vote AGAINST Item 4. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, AS RECOMMENDED BY THE BOARD OF DIRECTORS. Please sign exactly as your name(s) appear(s) on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide the opinionfull name of the chief legal officer, warrant immediate committee attention by their nature or frequency; or |
| ■ | Those clearly unrelated to our business, industry, management, Board, or committee matters. |
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These types of communications will be logged and filed but not circulated to directors. Except as set forth in the preceding sentence, the chief legal officer will not screen communications sent to directors.
| ■ | The log of stockholder correspondence will be available to memberscorporation and the title of the Nominating and Corporate Governance Committee for inspection. At least once each year,authorized officer signing the chief legal officer will provide to the Nominating and Corporate Governance Committee a summary of the communications received from stockholders, including the communications not sent to directors in accordance with screening procedures approved by the Nominating and Corporate Governance Committee. |
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Appendix
T. ROWE PRICE GROUP, INC.
ARTICLES OF AMENDMENT
T. ROWE PRICE GROUP, INC., a Maryland corporation, having its principal office in Baltimore City, Maryland (which is hereinafter called the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended as follows:
(a) Article SIXTH of the Charter is hereby amended by amending and restating subsection (b)(2) in its entirety to read as follows:
“(2) Each share of Common Stock shall have one vote, and, except as otherwise provided in respect of any Preferred Stock, the exclusive voting power for all purposes shall be vested in the holders of the Common Stock.”
(b) Article EIGHTH of the Charter is hereby amended by deleting subsection (3) in its entirety and renumbering the subsequent subsections (4) through (7), inclusive, as subsections (3) through (6), inclusive.
(c) Article EIGHTH of the Charter is hereby amended by amending and restating newly renumbered subsection (4) in its entirety to read as follows:
“(4) Notwithstanding any provision of law requiring the authorization of any action by a greater proportion of the total number of shares of all classes of capital stock, such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon.”
SECOND: The foregoing amendment does not increase the authorized stock of the Corporation.
THIRD: The foregoing amendment to the Charter of the Corporation has been advised by the Board of Directors and approved by the stockholders of the Corporation as required by law.
FOURTH: The foregoing amendment to the Charter of the Corporation shall become effective upon acceptance for record by the Maryland State Department of Assessments and Taxation.
FIFTH: The undersigned acknowledges these Articles of Amendment to be the act and deed of the Corporation, and further, as to all matters or facts required to be verified under oath, the undersigned acknowledges that to the best of her or his knowledge, information and belief, these matters and facts relating to the Corporation are true in all material respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, T. ROWE PRICE GROUP, INC., has caused these presents to be signed in its name and on its behalf by its President and witnessed by its Secretary on this day of , 2018.
WITNESS:
| Proxy. T. ROWE PRICE GROUP, INC. | | | | | | | | David Oestreicher,
Chief Legal Officer D31910-P49628 Yes No ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! For Against Abstain ! ! T. ROWE PRICE GROUP, INC. 100 EAST PRATT STREET BALTIMORE, MD 21202-1009 For Against Abstain VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and Corporate Secretary
| William J. Stromberg,
Presidentfor electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and Chief Executive Officer
| follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/TROW2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
58 T. ROWE PRICE GROUP
| D31911-P49628 Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. T. ROWE PRICE GROUP, INC. ANNUAL MEETING OF STOCKHOLDERS Tuesday, May 11, 2021, at 8:00 a.m. www.virtualshareholdermeeting.com/TROW2021 T. ROWE PRICE GROUP, INC. 2021 Proxy Revocable Proxy Solicited on Behalf of the Board of Directors I hereby appoint David Oestreicher and Jean-Marc Corredor, together and separately, as proxies to vote all shares of common stock which I have power to vote at the annual meeting of stockholders to be held on Tuesday, May 11, 2021, at 8:00 a.m., via a virtual format, and at any adjournments or postponements thereof, in accordance with the instructions on the reverse side of this proxy card and as if I were present in person and voting such shares. The proxies are authorized in their discretion to name others to take their place. I also hereby acknowledge receipt of the Notice of Annual Meeting and Proxy Statement, dated March 24, 2021, and Price Group’s 2020 Annual Report to Stockholders. This proxy, when properly completed and returned, will be voted in the manner directed herein by the stockholder named on the reverse side, or IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS. Vote by Internet, Telephone or Mail 24 Hours a Day, 7 Days a Week Your phone or Internet vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card. Continued and to be signed on reverse side |
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