TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | 2020 Business Overview / Impact on Executive Compensation
2020 BUSINESS OVERVIEW / IMPACT ON EXECUTIVE COMPENSATION Performance At-A-Glance The Corporation achieved strong results in 2020, notwithstanding the impact of the devastating COVID-19 pandemic and the challenging fiscal and economic situation in its main market of Puerto Rico. Our NEOs showed exceptional performance and leadership in managing the Corporation in the face of the COVID-19 pandemic and in driving a transformation of our operations. The Corporation altered its strategic focus for the year to address the impact of the pandemic and the economy on our employees, customers, communities and stockholders Our NEOs and employees across the entire organization tackled numerous unanticipated challenges and adapted quickly to the shift in priorities. In the face of these challenges, the Corporation took action to support our stakeholders, while simultaneously pivoting our business to maximize long-term value for our stockholders. 2020 was a transformative year for the Corporation. During the second half of the year, the Corporation completed the acquisition of Santander, which marked an important milestone in our capital deployment plan that we believe delivers outstanding value to stockholders by showing our ability to execute on attractive and accretive non-organic growth opportunities. The acquisition of Santander empowers the Corporation to become a stronger competitor in the Puerto Rico market with the scale and breadth to better serve retail and commercial customers. The acquisition expands the Corporation’s talent bench and will aid in maximizing our financial investments in innovation and talent development. Some of the Corporation’s key corporate accomplishments during 2020 included the following: | First Bancorp, Inc. | Proxy Statement for the 2020 Annual Meeting of Stockholders
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| Reported overall net income of $102.3 million or $0.46 per diluted share; despite the higher provisioning for expected credit losses resulting from the pandemic impact on economic activity, as well as Day 1 reserves required by CECL accounting standards for the Santander acquired loan portfolio. |
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| Completed the acquisition of Santander on September 1, 2020, which expanded our market share and solidified our market position in Puerto Rico. |
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| Achieved non-GAAP pre-tax pre-provision net income of $299.8 million during 2020, a 4% increase when compared to 2019 ($284 million), with only four (4) months of the Acquired Operations. |
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| Improved NPA down to 1.56% of total assets from 2.52% in 2019, the Corporation’s lowest NPA ratio recorded over the last 10 years. |
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| Capital ratios remained strong even with the balance sheet increasing $6.2 billion or 49% to $18.8 billion; at year end, our total capital, common equity Tier 1 capital, Tier 1 capital, and leverage ratios were 20.37%, 17.31%, 17.61%, and 11.26%, respectively, and our tangible common equity ratio reached 11.54% |
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| In response to COVID-19, provided a safe work environment for front-line employees and adopted a Remote Work Policy. |
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| Did not make any COVID-19 pandemic-related layoffs in 2020. |
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| Supported clients and communities through a challenging economic backdrop by providing extensive moratorium programs to borrowers and generating over $450 million of Small Business Administration PPP loans. |
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| Organic core deposits (excluding brokered deposits) grew by a record $2.0 billion during the year and the Acquired Operations contributed an additional $4.1 billion, reaching a total of $14.9 billion as of December 31, 2020. |
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| Reduced brokered certificate of deposits by $218.9 million to $216.2 million, from $435.1 million as of December 31, 2019. |
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| Achieved non-interest-bearing deposit ratio of 29.7%. |
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| Total loan originations of $4.2 billion, mainly driven by increases in residential mortgage loan originations, offset by decreases in commercial and construction loan originations, as well as consumer loan originations, reflecting the effect of disruptions in economic activity affected by the COVID-19 pandemic. |
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| Improved our clients’ adoption of digital channels during 2020 which drove our technological transformation with login activity up over 33% and digital transactions increased over 55% for the year. |
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| Grew customer base by 30%, to approximately 675,000 banking customers. |
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Compensation Discussion & Analysis (CD&A) First Bancorp, Inc.| The 2019 Executive Compensation Program in Detail
The following table reflects the NEOs’ short-term incentive opportunity at target-level performance as a percentage of base cash salary.
| Corporate Profitability
| | | | | | | | | | | | | | | | | | Adjusted Net Income | | | 20.0% | | | 10.0% | | | 10.0% | | | 7.5% | | | 7.5% | | | Pretax, Pre-Provision Net Income | | | 20.0 | | | 10.0 | | | 10.0 | | | 7.5 | | | 7.5 | | | Asset Quality & Risk Management
| | | | | | | | | | | | | | | | | | Non-Performing Asset Ratio | | | 12.0 | | | 5.0 | | | 5.0 | | | 5.0 | | | 5.0 | | | Classified Asset Ratio | | | 12.0 | | | 5.0 | | | 5.0 | | | 5.0 | | | 5.0 | | | Individual Performance | | | 16.0 | | | 20.0 | | | 20.0 | | | 25.0 | | | 25.0 | | | Total Target Incentive Opportunity as a percent of Cash Base Salary | | | 80.0 | | | 50.0 | | | 50.0 | | | 50.0 | | | 50.0 | |
The balanced scorecard measures corporate results through profitability, asset quality and risk management performance metrics. The balanced scorecard also measures individual performance through quantitative, milestone-based goals and an assessment of the executives’ leadership and core competencies. NEOs may earn 50% of their target opportunity for threshold-level performance (80% performance) and up to 150% of their target opportunity for superior-level performance (up to 120% performance). Amounts between threshold and superior are interpolated to reward incremental achievement and no amounts are paid for results on a particular performance metric if actual results are below threshold.
Corporate Results. Consistent with the extraordinary event definition included in the short-term incentive program, the Compensation Committee has the ability to approve adjustments to take into account certain extraordinary or nonrecurring items that impacted the Corporation’s operations and results during 2019. The financial resultsProxy Statement for the year 2019 include significant items that the Compensation Committee believes are not reflective2021 Annual Meeting of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts. Stockholders
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TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | 2020 Business Overview / Impact on Executive Compensation
Following are certain operational results achieved during 2020, which include non-GAAP financial metrics that exclude the effect of certain extraordinary or nonrecurring items in order to help investors to better assess the Corporation’s year-over-year operational results: | Non-GAAP Pre-tax, Pre-provision Net Income | | | $284.00M* | | | N/A | | | $299.8M* | | | N/A | | | Net Income | | | $167.4M | | | $167.0M | | | $102.3M | | | $161.3M | | | Return on Average Assets (ROAA) | | | 1.34% | | | 1.34% | | | 0.67% | | | 1.06% | | | Return on Average Equity (ROAE) | | | 7.75% | | | 7.73% | | | 4.59% | | | 7.23% | | | Efficiency Ratio | | | 57.55% | | | 56.41% | | | 59.62% | | | 56.76% | | | Total Capital | | | 25.22% | | | N/A | | | 20.37% | | | N/A | | | Tier 1 Capital | | | 22.00% | | | N/A | | | 17.61% | | | N/A | | | Non-GAAP Tangible Book Value | | | $9.92 | | | N/A | | | $9.90 | | | N/A | |
*
| See Appendix A table titled “Non-GAAP Adjusted Net Income and Adjusted Return on Average Assets and Adjusted Return on Average Equity for a reconciliation to the year ended December 31, 2019” which reconciles for the year ended December 31, 2019 the Corporation’s reported net income to adjusted net income,most directly comparable GAAP financial measures of these non-GAAP financial measures, as well as income before income taxes to adjusted pre-tax, pre-provision income.other non-GAAP financial measures discussed in this Proxy Statement |
Effects of COVID-19 Pandemic The COVID-19 pandemic impacted the Corporation’s operations and performance during 2020. Our Corporation came together in new ways to continue delivering to our clients, communities, stockholders and each other the same level of commitment and services expected from us. In evaluating performance and making compensation decisions, the Compensation Committee considered these impacts, as well as the extraordinary response of our executives and other employees in this unprecedented environment. The Compensation Committee reviewed the overall operating results of the Corporation for 2020, evaluating our NEOs against the short-term incentive metrics developed by the Board early in the year. As defined in the Corporation’s Short-Term Incentive program, in determining the level of performance achieved, the Compensation Committee may permit certain adjustments to the program’s performance metrics based on nonrecurring events. Therefore, and as contemplated by the program, the Compensation Committee made the adjustments to net income detailed in Appendix A of this Proxy Statement to exclude certain non-recurring items that affected the Corporation’s overall business performance during 2020. The most significant impacts were the decrease in net income resulting from an increase in the provision for credit losses, in large part driven by the uncertainty around the long-term impact of the COVID-19 pandemic on the economic environment and the CECL day one impact of the Santander acquired portfolio. The Compensation Committee considered these adjustments appropriate given the unbudgeted actions taken by the Corporation that properly addressed defending long-term value creation during very challenging and uncontrollable circumstances. These adjustments impacted the performance results for the NEOs Short-Term Incentive payouts for 2020 which payouts are described in the “Short-Term Incentive” section on page 52 of this Proxy Statement. As explained above, programs metrics are adjusted for non-recurring items, hence, any future reversal related to these non-recurring items will be similarly adjusted to net income in future period for the determination of then applicable short-term incentive payouts. Proxy Statement for the 2021 Annual Meeting of Stockholders | First Bancorp, Inc. | Using this approach, the table below provides the percentage of achievement on the following corporate metrics:49
| Corporate Profitability | | | | | | | | | | | | Adjusted Net Income | | | $148.4 million | | | $165.6 million | | | 112% | | | Pre-tax, Pre-Provision Net Income | | | $282.8 million | | | $284.3 million | | | 101% | | | Asset Quality & Risk Management | | | | | | | | | | | | Non-Performing Asset Ratio | | | 3.01% | | | 2.52% | | | 116% | | | Classified Asset Ratio | | | 25.30% | | | 22.80% | | | 110% | |
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TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | What Guides Our Program
Total Stockholder Return The chart below depicts the hypothetical gain or loss on a $100 investment from 01/01/2020 to 12/31/2020 for the Corporation (“FBP”), POPULAR, Inc. (“BPOP”) and OFG Bancorp (“OFG”). The table also provides a comparison to SNL U.S. Financial Institutions, which is primarily comprised of financial institutions in the contiguous United States. Our Decision-Making Process The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of independent, non-employee members of the Board. The Compensation Committee works closely with its independent consultant and management to examine the effectiveness of the Corporation’s executive compensation program throughout the year. Details of the Compensation Committee’s authority and responsibilities are specified in the Committee’s charter, which was most recently ratified on January 28, 2021. The charter is available on the Corporation’s website at https://www.1firstbank.com/pr/en/help-center/investor-relations. The Role of the Compensation Committee The Compensation Committee typically reviews and makes compensation recommendations to the independent Board members for the CEO, the other NEOs, and other select senior executives in the first quarter of each year based on an evaluation of compensation paid by peers and the Corporation’s performance results for the preceding year. The Corporation’s President and CEO, following the compensation structure approved by the Board, makes recommendations concerning the amount of compensation to be awarded to executive officers, excluding himself. The CEO does not participate in the Compensation Committee’s deliberations or decisions. The Compensation Committee reviews and considers the CEO’s recommendations and makes final recommendations to the non-management members of the Board. In making its recommendations, the Compensation Committee reviews the Corporation’s performance as a whole and the performance of each executive as it relates to the accomplishment of the goals and performance objectives set forth for each executive for the year, together with any such goals that have been established for the relevant lines of business of the Corporation. The Role of CEO The CEO does not provide recommendations concerning his own compensation, nor is he present when his compensation is discussed by the Compensation Committee and the non-management members of the Board. The Compensation Committee, with input from its independent compensation consultant, discusses the elements of the CEO’s compensation in executive session and makes a recommendation to all of the non-management members of the Board for discussion and final approval. The CEO, with input from the Compensation Committee’s independent compensation consultant, assists in setting compensation for the other NEOs. Proxy Statement for the 202050 | First Bancorp, Inc. | Proxy Statement for the 2021 Annual Meeting of Stockholders | First Bancorp, Inc. |
TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | The 2020 Executive Compensation Program in Detail
The Role of the Independent Compensation Consultant The role of the outside independent compensation consultant is to assist the Compensation Committee in analyzing executive pay packages and contracts, perform executive and director compensation reviews, including market competition assessments, and develop executive and director compensation recommendations for the Compensation Committee’s consideration. The compensation consultant communicates directly, and is available to participate in executive sessions with, the Compensation Committee. In that regard, a representative of the executive compensation consultant attends selected meetings of the Compensation Committee during which the representative assists the Compensation Committee in making specific executive compensation decisions. Pearl Meyer has been the Compensation Committee’s executive compensation consultant since February 2013. Pearl Meyer reports directly to the Compensation Committee and does not provide any other services to the Corporation. The Compensation Committee has analyzed whether the work of Pearl Meyer as a compensation consultant has raised any conflict of interest, taking into consideration the following factors: (i) any other services provided to the Corporation by Pearl Meyer; (ii) the amount of fees paid by the Corporation to Pearl Meyer as a percentage of Pearl Meyer’s total revenue; (iii) Pearl Meyer’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of Pearl Meyer or the individual compensation advisors employed by Pearl Meyer with an executive officer of the Corporation; (v) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (vi) any stock of the Corporation owned by Pearl Meyer or the individual compensation advisors employed by Pearl Meyer. The Compensation Committee has determined, based on its analysis of the above factors, that the work of Pearl Meyer and the individual compensation advisors employed by Pearl Meyer as compensation consultants to the Compensation Committee has not created any conflict of interest. The Role of Peer Companies The Compensation Committee strives to set a competitive level of total compensation for each NEO as compared with executives in similar positions at peer companies. For purposes of setting 2020 compensation levels, consistent with the recommendation of Pearl Meyer, the Compensation Committee took into account publicly-available data from industry compensation surveys and proxy statements from the group of peer companies listed below. Data was compiled from proxy statements for publicly-traded commercial banks with assets generally between approximately $10 billion and $38 billion; however, one bank outside this asset range (larger) was included because it is a known competitor for executive talent in the Puerto Rico market (Popular, Inc.). | 49 | Ameris Bancorp, ABCB | | | OFG Bancorp, OFG | | Atlantic Union Bankshares Corporation, AUB | | | Old National Bancorp, ONB | | BancorpSouth Bank, BXS | | | Popular Inc., BPOP | | BankUnited, Inc., BKU | | | Renasant Corporation, RNST | | Berkshire Hills Bancorp, Inc., BHLB | | | South State Corporation, SSB | | Community Bank System, Inc., CBU | | | TowneBank, TOWN | | First Financial Bancorp., FFBC | | | Trustmark Corporation, TRMK | | First Merchants Corporation, FRME | | | United Bankshares, Inc., UBSI | | First Midwest Bancorp, Inc., FMBI | | | United Community Banks, Inc., UCBI | | Fulton Financial Corporation, FULT | | | WesBanco, Inc., WSBC |
Market data was not the sole determinant in setting executive pay levels. The Compensation Committee also considers corporate and individual performance, the nature of an individual’s role within the Corporation, as well as his or her experience and contributions, when making its compensation-related decisions. THE 2020 EXECUTIVE COMPENSATION PROGRAM IN DETAIL Base Salary Base salary is designed to reward an individual’s performance and level of experience in his or her role. In setting base salary amounts, the Compensation Committee takes into consideration the experience, skills, knowledge and responsibilities required for each of the NEOs’ respective position and balances this assessment with marketplace salary data to ensure that the NEOs’ base salary levels are competitive with those of comparable executive officers in peer group companies. Base salaries also reflect the individuals’ achievement of pre-determined goals and objectives, and the Corporation’s performance. No adjustments were made to the NEOs’ base salaries in 2020. Proxy Statement for the 2021 Annual Meeting of Stockholders | First Bancorp, Inc. | 51 |
TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | The 2020 Executive Compensation Program in Detail
The short-term incentive program rewards executives for key financial, strategic and operational results, and individual goals and competencies. The program uses a balanced scorecard approach, which tailors the weightings for various performance metrics to an executive’s role and scope of responsibility. This approach also reduces compensation risk by using a complementary set of measures, both financial and qualitative, to encourage performance over both a short- and long-term horizon. The program includes a clawback provision pursuant to which the Corporation may recoup from an executive officer previously awarded incentive payments based on financial statements that were later restated as a result of material non-compliance with any financial reporting requirements if the executive officer engaged in intentional fraud or gross misconduct or was otherwise directly or indirectly responsible for the restatement. The following table reflects the NEOs’ short-term incentive opportunity at target-level performance as a percentage of base salary. | Corporate Profitability | | | | | | | | | | | | | | | | | | Adjusted Net Income | | | 20.0% | | | 10.0% | | | 10.0% | | | 7.5% | | | 7.5% | | | Pretax, Pre-Provision Net Income | | | 20.0 | | | 10.0 | | | 10.0 | | | 7.5 | | | 7.5 | | | Asset Quality & Risk Management
| | | | | | | | | | | | | | | | | | Non-Performing Asset Ratio | | | 12.0 | | | 5.0 | | | 5.0 | | | 5.0 | | | 5.0 | | | Classified Asset Ratio | | | 12.0 | | | 5.0 | | | 5.0 | | | 5.0 | | | 5.0 | | | Individual Performance | | | 16.0 | | | 20.0 | | | 20.0 | | | 25.0 | | | 25.0 | | | Total Target Incentive Opportunity as a percentage of Base Salary | | | 80.0 | | | 50.0 | | | 50.0 | | | 50.0 | | | 50.0 | |
The balanced scorecard measures corporate results through profitability, asset quality and risk management performance metrics. The balanced scorecard also measures individual performance through quantitative, milestone-based goals and an assessment of the executives’ leadership and core competencies. NEOs may earn 50% of their target opportunity for threshold-level performance (80% performance) and up to 150% of their target opportunity for superior-level performance (up to 120% performance). Amounts between threshold and superior are interpolated to reward incremental achievement and no amounts are paid for results on a particular performance metric if actual results are below threshold. Corporate Results. Consistent with the extraordinary event definition stated in the short-term incentive program, the Compensation Committee has the ability to approve adjustments to take into account certain extraordinary or nonrecurring items that impacted the Corporation’s operations and results during 2020. The financial results for the year 2020 include extraordinary items that the Compensation Committee believes are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts. See Appendix A, table titled “Non-GAAP Adjusted Net Income and Adjusted Return on Average Assets and Adjusted Return on Average Equity for the year ended December 31, 2020” which reconciles for the year ended December 31, 2020 the Corporation’s reported net income to adjusted net income, as well as income before income taxes to adjusted pre-tax, pre-provision income. Using this approach, the table below provides the percentage of achievement on the following corporate metrics: | Corporate Profitability | | | | | | | | | | | | Adjusted Net Income | | | $161.6 million | | | $161.3 million | | | 100% | | | Pre-tax, Pre-Provision Net Income | | | $286.7 million | | | $299.8 million | | | 105% | | | Asset Quality & Risk Management | | | | | | | | | | | | Non-Performing Asset Ratio | | | 1.82% | | | 1.56% | | | 114% | | | Classified Asset Ratio | | | 15.20% | | | 16.70% | | | 90% | |
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52 | Compensation Discussion & Analysis (CD&A) First Bancorp, Inc.| The 2019Proxy Statement for the 2021 Annual Meeting of Stockholders
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TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | The 2020 Executive Compensation Program in Detail
Individual Performance. The individual performance component of the NEOs’ compensation is based on the achievement of a combination of predetermined quantitative and qualitative milestone-based goals and the ability to lead the Corporation in their particular roles and expertise. The following considerations were taken into account by the Committee in determining each NEOs achievement of the individual performance component of the short-term incentive award: | Aurelio Alemán
President & CEO
18.80% of Base Salary | | | Main Goals:
| | | | | | • | | | Lead efforts to successfully complete the acquisition of Santander | | | | | | • | | | Lead efforts to support clients and communities during the COVID-19 pandemic. | | | | | | • | | | Improve asset quality by proactively reducing non-performing and adversely classified assets and applying sound risk management practices | | | | | | • | | | Achieve business results in line or above geographic peers by improving core bank profitability | | | | | | • | | | Grow core deposit franchise and increase client market share | | | | | | • | | | Oversee compliance with regulatory and internal audit requirements | | | | | | • | | | Effectively manage relations with all stakeholders | | | | | | • | | | Oversee the implementation of core IT projects in order to close actual or perceived competitive technology gaps | | | | | | • | | | Maintain an adequate corporate governance and talent engaging culture | | | Considerations: | | | | | | • | | | Under the CEO’s leadership, the Corporation registered continued improvement in key financial performance metrics | | | | | | • | | | Significantly grew core deposit franchise while reducing brokered deposits and optimizing funding structure | | | | | | • | | | Complied with regulatory requirements and improved the Corporation’s regulatory position | | | | | | • | | | Actively participated in online investor conferences and roadshows in order to strengthen and diversify investor base | | | | | | • | | | Completed the financial closing of the NEOs is basedSantander transaction and oversaw transition and integration process | | | | | | • | | | Led efforts to continue improving the Corporation’s technology offerings which provided the necessary framework to support customers during the pandemic | | | | | | • | | | Executed on capital deployment activities, including post - merger increase in quarterly cash dividends on outstanding common stock | | | | | | • | | | Developed an adequate framework to support employees throughout the achievement of a combination of predetermined quantitative and qualitative milestone-based goalspandemic and the ability to lead the Corporation in their particular roles and expertise. The following considerations were taken into account by the Committee in determining each NEOs achievement of the individual performance component of the short-term incentive award: | Aurelio Alemán
President & CEO
21.20% of Base Cash Salary
| | | Main Goals:
| | | | | | •
| | | Improve asset quality by proactively reducing non-performing and adversely classified assets and applying sound risk management practices
| | | | | | •
| | | Achieve business results in line or above geographic peers by improving core bank profitability
| | | | | | •
| | | Grow core deposit franchise and increase client market share
| | | | | | •
| | | Oversee compliance with regulatory and internal audit requirements
| | | | | | •
| | | Effectively manage relations with stockholders and other external stakeholders
| | | | | | •
| | | Oversee the implementation of core IT projects in order to close actual or perceived competitive technology gaps
| | | | | | •
| | | Execute on capital deployment activities while complying with minimum operating capital targets (as established in the Corporation’s Capital Plan) and regulatory requirements
| | | | | | •
| | | Maintain adequate succession planning practices and promote employee engagement
| | | Considerations:
| | | | | | •
| | | Under the CEO’s leadership, the Corporation registered continued improvement in key financial performance and asset quality metrics
| | | | | | •
| | | Executed on asset quality improvement by reducing non-performing and adversely classified assets
| | | | | | •
| | | Achieved core Return on Assets (ROA) in line with geographic peers
| | | | | | •
| | | Grew core deposit franchise while reducing brokered deposits
| | | | | | •
| | | Complied with regulatory requirements and improved the Corporation’s regulatory position
| | | | | | •
| | | Actively participated in investor conferences and roadshows in order to strengthen and diversify investor base
| | | | | | •
| | | Led efforts to continue improving the Corporation’s technology and innovation offerings to strengthen the Corporation’s innovation equity and improve overall efficiency
| | | | | | •
| | | Executed on several capital deployment activities, including the increase in quarterly cash dividends on outstanding common stock and signed an agreement to purchase Santander operations in Puerto Rico after a thorough due diligenceSantander integration process
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TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | The 2020 Executive Compensation Program in Detail
•
| | | Completed talent management review | Orlando Berges
EVP, CFO and Interim Chief
Accounting Officer
19.00% of Base Salary | | | Main Goals:
| | | | | | • | | | Manage the Corporation’s finance function, including financial planning and reporting, treasury and investments, asset-liability management, record-keeping, investor relations, and capital planning | | | | | | • | | | Proactively manage balance sheet strategy to maintain adequate liquidity and capital position, while optimizing funding structure | | | | | | • | | | Develop and maintain the Corporation’s Capital Plan and evaluate potential execution of capital deployment activities, including post-merger capital actions | | | | | | • | | | Complete financial closing of the Santander acquisition | | | Considerations:
| | | | | | • | | | Strategically reduced brokered deposit balances and optimized funding structure | | | | | | • | | | Participated in online investor conferences and roadshows in order to strengthen and diversify investor base, while participating in other outreach efforts with bank analysts, regulators, and rating agencies | | | | | | • | | | Co-led the timely implementation of CECL accounting model and subsequent quarterly assessments | | | | | | • | | | Oversaw valuation and CECL calculation for the acquired deposit and loan portfolio | | | | | | • | | | Supported the successful implementation of key IT projects | | | | | | • | | | Led the financial due diligence process and financial closing negotiation for the Santander transaction | | | | | | • | | | Executed on post-merger capital actions such as the increase of cash dividends in common stock | | | Donald Kafka
EVP and Chief Operating Officer
19.00% of Base Salary | | | Main Goals: | | | | | | • | | | Manage the Corporation’s operational framework, including IT, facilities, banking operations, corporate security, human resources, and enterprise architecture | | | | | | • | | | Oversee the effective and efficient execution of the various technology initiatives to support the Corporation’s growth and improve overall efficiency | | | | | | • | | | Supervise talent management efforts, maintain adequate succession planning practices, and promote employee engagement | | | | | | • | | | Complete the financial closing of the Santander acquisition and execute on established IT conversion deadlines | | | Considerations: | | | | | | • | | | Supported the implementation of key IT core and business-related capital projects | | | | | | • | | | Actively participated in the operations aspect of the Santander acquisition | | | | | | • | | | Oversaw Santander- related IT conversions and operational integration efforts | | | | | | • | | | Oversaw the implementation of effective policies that provided a safe work environment for all employees during the pandemic | | | | | | • | | | Executed on upgrading IT infrastructure | |
54 | First Bancorp, Inc. | Proxy Statement for the 2021 Annual Meeting of Stockholders |
TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | The 2020 Executive Compensation Program in Detail
| Nayda Rivera
EVP and Chief Risk Officer
25.00% of Base Salary | | | Main Goals: | | | | | | • | | | Manage the Corporation’s Enterprise Risk Management framework and actively monitor risk tolerance levels | | | | | | • | | | Reduce non-performing and adversely classified assets by proactively managing asset quality | | | | | | • | | | Oversee the Corporation’s Compliance, Special Assets, Credit Administration, Credit Risk Management, and Operational Risk functions | | | | | | • | | | Lead action plans to comply with regulatory requirements | | | Considerations: | | | | | | • | | | Actively participated in leading efforts to drive an enterprise-wide approach to the Corporation's operational response plan to COVID-19 | | | | | | • | | | Proactively monitored emerging risks and overall asset quality at the onset of the COVID-19 pandemic | | | | | | • | | | Oversaw implementation of debt relief moratorium programs and led the performance of the Small Business Administration PPP framework and MainStreet Lending Program to support commercial clients during the COVID-19 pandemic | | | | | | • | | | Co-led the timely implementation of the CECL accounting model and subsequent quarterly assessments | | | | | | • | | | Served as the primary liaison with regulators and kept ongoing discussions of emerging risks and action plans in response to COVID-19 | | | | | | • | | | Contributed to the Corporation's achievement of the critical capital plan and regulatory milestones | | | | | | • | | | Completed the credit and compliance evaluation process required to achieve the financial closing of the Santander acquisition, oversaw valuation and CECL calculation for the acquired loan portfolio, and co-led efforts for employees onboarding and design of integration plans to achieve customer retention and financial synergies | | | Calixto García-Vélez
EVP and Florida Region Executive
23.75% of Base Salary | | | Main Goals: | | | | | | • | | | Oversee Florida region operations | | | | | | • | | | Achieve business results in line or above geographic peers by improving core bank profitability | | | | | | • | | | Execute regional core deposit and loan growth strategies while proactively managing asset quality | | | | | | • | | | Oversee the effective execution of technology initiatives to support the various businesses managed by the executive | | | | | | • | | | Assist in the implementation of pandemic-related lending programs | | | Considerations: | | | | | | • | | | Achieved positive improvement in financial performance metrics for the region | | | | | | • | | | Executed on regional core deposit strategy by registering core transactional account growth and increasing non-interest-bearing ratio | | | | | | • | | | Provided portfolio diversification benefits to the Corporation by executing on regional loan growth strategy | |
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| First Bancorp, Inc. | Proxy Statement for the 2020 Annual Meeting of Stockholders
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Compensation Discussion & Analysis (CD&A) | The 2019 Executive CompensationLed deployment of Main Street Lending Program in Detail
| Orlando Berges
EVP, CFO and Interim Chief
Accounting Officer
26.0% of Base Cash Salary
| | | Main Goals:
| | | | | | •
| | | Manageto support commercial customers across the Corporation’s Finance function, including financial planning and reporting, treasury and investments, asset-liability management, record-keeping, investor relations, and capital planning
| | | | | | •
| | | Proactively manage balance sheet strategy and maintain adequate liquidity and capital position
| | | | | | •
| | | Support business growth
| | | | | | •
| | | Develop and maintain the Corporation’s Capital Plan and evaluate the potential execution of capital deployment activities
| | | | | | •
| | | Oversee the effective implementation of technology initiatives to support financial reporting processes
| | | Considerations:
| | | | | | •
| | | Strategically reduced brokered deposit balances
| | | | | | •
| | | Actively participated in investor conferences and roadshows in order to strengthen and diversify investor base, while participating in other outreach efforts with bank analysts, regulators, and rating agencies
| | | | | | •
| | | Oversaw the timely implementation of the “Current Expected Credit Loss” (CECL) accounting model
| | | | | | •
| | | Contributed to the reduction in non-performing and adversely classified assets and the overall improvement in asset quality
| | | | | | •
| | | Supported the successful implementation of key IT projects
| | | | | | •
| | | Led the financial due diligence process and stock purchase agreement negotiation for the Santander transaction
| | | | | | •
| | | Evaluated and executed on capital deployment activities as per the Capital Plan, including the increase in common stock dividends for outstanding shares
| | | Donald Kafka
EVP and Chief Operating Officer
25.0% of Base Cash Salary
| | | Main Goals:
| | | | | | •
| | | Manage the Corporation’s operational framework, including IT, facilities, banking operations, corporate security, human resources, and enterprise architecture
| | | | | | •
| | | Oversee the effective and efficient execution of the various technology initiatives to support the Corporation’s growth and improve overall efficiency
| | | | | | •
| | | Supervise talent management efforts, maintain adequate succession planning practices and promote employee engagement
| | | Considerations:
| | | | | | •
| | | Supported the timely implementation of key IT projects
| | | | | | •
| | | Actively participated in the operations aspect of the due diligence process for the Santander transaction
| | | | | | •
| | | Completed the annual update of the IT Strategic Plan
| | | | | | •
| | | Oversaw the effective and efficient execution of the Corporation’s Business Continuity Program
| | | | | | •
| | | Contributed to the timely implementation of the CECL accounting model
| | | | | | •
| | | Executed on the Regional Integration and Governance Plan
| | | | | | •
| | | Managed the Corporation’s talent management activities, addressed self-identified talent gaps, and updated the Corporation’s succession planning strategy
| |
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| Nayda Rivera
EVP and Chief Risk Officer
35.63% of Base Cash Salary
| | | Main Goals:
| | | | | | •
| | | Manage the Corporation’s Enterprise Risk Management framework and actively monitor risk tolerance levels
| | | | | | •
| | | Reduce non-performing and adversely classified assets by proactively managing asset quality
| | | | | | •
| | | Oversee the Corporation’s Compliance, Special Assets, Credit Risk Management, and Operational Risk functions
| | | | | | •
| | | Lead action plans to comply with regulatory requirements
| | | Considerations:
| | | | | | •
| | | Successfully executed on a significant reduction in non-performing and adversely classified assets during 2019
| | | | | | •
| | | Reviewed corporate policies and monitored risk appetite metrics to maintain the safety and soundness of the Corporation and keep risks within the Corporation’s risk appetite level
| | | | | | •
| | | Contributed to the Corporation’s achievement of critical capital plan and regulatory milestones
| | | | | | •
| | | Led the timely implementation of the CECL accounting model
| | | | | | •
| | | Actively contributed to the credit and compliance due diligence process for the Santander transaction
| | | Calixto García-Vélez
EVP and Florida Region Executive
25.63% of Base Cash Salary
| | | Main Goals:
| | | | | | •
| | | Oversee Florida region operations
| | | | | | •
| | | Achieve business results in line or above geographic peers by improving core bank profitability
| | | | | | •
| | | Execute regional core deposit and loan growth strategies while proactively managing asset quality
| | | | | | •
| | | Oversee the effective execution of technology initiatives to support the various businesses managed by the executive
| | | Considerations:
| | | | | | •
| | | Achieved positive improvement in financial performance and asset quality metrics for the region
| | | | | | •
| | | Executed on regional core deposit strategy by registering core transactional account growth and increasing non-interest-bearing ratio
| | | | | | •
| | | Provided portfolio diversification benefits to the Corporation by executing on regional loan growth strategy
| | | | | | •
| | | Supported the successful implementation of various IT-related projects in the Florida region
| | | | | | • | | | Participated in the decision-making process for all credit facilities across regions through his role in the Board Credit Committee | | | | | | • | | | Established adequate framework to support employees throughout the pandemic | |
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| First Bancorp, Inc. | Proxy Statement for the 2021 Annual Meeting of Stockholders | First Bancorp, Inc.
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TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | The 2020 Executive Compensation Program in Detail
The table below indicates the short-term cash incentive granted to the NEOs by the Compensation Committee, as a percentage of base salary, related to the achievements as described in the relevant sections above under Corporate Results and Individual Performance: | Corporate Profitability | | | | | | | | | | | | | | | | | | Adjusted Net Income | | | 19.92% | | | 9.96% | | | 9.96% | | | 7.47% | | | 7.47% | | | Pretax, Pre-Provision Net Income | | | 22.29% | | | 11.14% | | | 11.14% | | | 8.36% | | | 8.36% | | | Asset Quality & Risk Management | | | | | | | | | | | | | | | | | | Non-Performing Asset Ratio | | | 16.29% | | | 6.79% | | | 6.79% | | | 6.79% | | | 6.79% | | | Classified Asset Ratio | | | 9.04% | | | 3.77% | | | 3.77% | | | 3.77% | | | 3.77% | | | Individual Performance | | | 18.80% | | | 19.00% | | | 19.00% | | | 25.00% | | | 23.75% | | | Total % Base Salary Achieved | | | 86.34% | | | 50.66% | | | 50.66% | | | 51.39% | | | 50.14% | | | Total Annual $ Amount Achieved | | | $827,935 | | | $303,937 | | | $278,609 | | | $244,056 | | | $275,716 | | | % of Achievement vs. Target | | | 107.92% | | | 101.31% | | | 101.31% | | | 102.76% | | | 100.26% | |
Long-Term Equity Incentives Since 2018, the NEOs have participated in a long-term incentive program that provides a variable pay opportunity through a combination of performance shares and restricted stock. The program is designed to reinforce the long-term alignment of the Corporation’s executives with the interests of our stockholders. Performance shares are intended to strengthen our pay-for-performance philosophy while time-vested restricted stock is granted to promote share ownership and support our leadership stability objectives. On March 18, 2020, the Compensation Committee determined to adjust the mix of long-term incentive awards to align to Puerto Rico market competitors and U.S. market practices, as follows (i) 50% Performance Shares and (ii) 50% Time-Vested Restricted Stock. Awards are made under the First BanCorp. Omnibus Incentive Plan, as amended. The aggregate value of the NEOs’ performance shares and restricted stock is determined based on an assessment of their individual goal achievement for the prior year. The following table reflects each of the NEOs’ long-term incentive opportunity at target-level performance as a percentage of base salary for 2020. Awards opportunities for 2020 were adjusted upwards or downwards based on individual performance and competencies: | Aurelio Alemán | | | 65% | | | 65% | | | 130.0% | | | Orlando Berges | | | 22.5 | | | 22.5 | | | 45.0 | | | Donald Kafka | | | 25.0 | | | 25.0 | | | 50.0 | | | Nayda Rivera | | | 30.0 | | | 30.0 | | | 60.0 | | | Calixto García-Vélez | | | 20.0 | | | 20.0 | | | 40.0 | |
NEOs may earn 25% of their target opportunity for threshold-level performance (75% of the targeted goal) and up to 150% of their target opportunity for superior-level performance (up to 125% of the targeted goal). Amounts between threshold and superior are interpolated to reward incremental achievement and no amounts are paid with respect to a particular performance metric if actual results are below threshold. On March 18, 2020, the Compensation Committee determined to increase the long-term incentive award opportunity of the CEO from 120% to 130%. Once the annual award value is determined, awards are granted in the following proportions: 50% in performance-based shares, which vest based on the achievement of a pre-established tangible book value goal at the end of a three-year performance period. Participants may earn zero to 100% of their targeted award. For the 2020 grant, the performance period is January 1, 2020 through December 31, 2022. 56 | First Bancorp, Inc. | Proxy Statement for the 2021 Annual Meeting of Stockholders |
TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | The 2020 Executive Compensation Program in Detail
50% in time-vested restricted stock, which vests on the second and third anniversaries of the grant date. On March 18, 2020, the Compensation Committee granted the following long-term incentive awards of performance-based shares and time-vested restricted stock to the NEOs: | Aurelio Alemán | | | 90.4% | | | $866,458 | | | 90.3% | | | $866,453 | | | 180.7% | | | $1,732,911 | | | Orlando Berges | | | 23.9 | | | 143,102 | | | 23.8 | | | 143,098 | | | 47.7 | | | 286,200 | | | Donald Kafka | | | 25.0 | | | 137,500 | | | 25.0 | | | 137,496 | | | 50.0 | | | 274,996 | | | Nayda Rivera | | | 36.3 | | | 172,425 | | | 36.3 | | | 172,425 | | | 72.6 | | | 344,850 | | | Calixto García-Vélez | | | 20.6 | | | 113,301 | | | 20.6 | | | 113,298 | | | 41.2 | | | 226,599 | |
One-Time, Special Cash Award The Corporation successfully completed the acquisition of Santander on September 1, 2020. In connection with the due diligence, deal closing, and significant integration planning and execution, the Compensation Committee approved a one-time cash award to three of the NEOs and other key executives on March 31, 2021 to compensate them for their extraordinary efforts in the Santander acquisition and integration. In determining the size of the special award, the Compensation Committee gave consideration to the executives’ involvement in the Santander transaction and criticality throughout the process. The award was granted in cash and paid on April 5, 2021 in one single installment as follows: | Orlando Berges | | | 300,000 | | | Donald Kafka | | | 220,000 | | | Nayda Rivera | | | 237,500 | |
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Compensation Discussion & Analysis (CD&A) | The 2019 Executive Compensation Program in Detail
The table below indicates the short-term cash incentive granted to the NEOs by the Compensation Committee, as a percentage of base cash salary, related to the achievements as described in the relevant sections above under Corporate Results and Individual Performance:
| Corporate Profitability | | | | | | | | | | | | | | | | | | Adjusted Net Income | | | 25.80% | | | 12.90% | | | 12.90% | | | 9.67% | | | 9.67% | | | Pretax, Pre-Provision Net Income | | | 20.28% | | | 10.14% | | | 10.14% | | | 7.60% | | | 7.60% | | | Asset Quality & Risk Management | | | | | | | | | | | | | | | | | | Non-Performing Asset Ratio | | | 16.88% | | | 7.03% | | | 7.03% | | | 7.03% | | | 7.03% | | | Classified Asset Ratio | | | 14.96% | | | 6.24% | | | 6.24% | | | 6.24% | | | 6.24% | | | Individual Performance | | | 21.20% | | | 26.00% | | | 25.00% | | | 35.63% | | | 25.63% | | | Total % Base Salary Achieved | | | 99.13% | | | 62.31% | | | 61.31% | | | 66.17% | | | 56.17% | | | Total Annual $ Amount Achieved | | | $950,612 | | | $373,852 | | | $337,198 | | | $314,327 | | | $308,957 | | | % of Achievement vs. Target | | | 123.91% | | | 124.62% | | | 122.62% | | | 132.35% | | | 112.35% | |
Long-Term Equity Incentives
Since 2018, the NEOs have participated in a newly-designed long-term incentive program that provides a variable pay opportunity through a combination of performance shares and restricted stock. The program is designed to reinforce the long-term alignment of the Corporation’s executives with the interests of our stockholders. Performance shares are intended to strengthen our pay-for-performance philosophy while time-vested restricted stock is granted to promote share ownership and support our leadership stability objectives.
Awards are made under the First BanCorp. Omnibus Incentive Plan, as amended. The aggregate value of the NEOs’ performance shares and restricted stock is determined based on an assessment of their individual goal achievementProxy Statement for the prior year.
The following table reflects each2021 Annual Meeting of Stockholders | First Bancorp, Inc.
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TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | The 2020 Executive Compensation Program in Detail
2021 Compensation Decisions The Compensation Committee determined that the NEOs’ cash salary levels for fiscal 2021 would remain at the same levels as those for fiscal 2019 and 2020. On March 31, 2021, the Compensation Committee approved changes to the long-term incentive program applicable to grants made in 2021, based on 2020 performance for all of the NEOs. The Compensation Committee determined that NEOs will be granted 100% of their targeted long-term incentive opportunity, with a discretionary +/-10% based on the individual’s performance. On March 31, 2021, the Compensation Committee approved long-term incentive awards of performance-based shares and time-vested restricted stock to the NEOs. The performance-based shares will vest based on the achievement of a tangible book value goal at the end of the three-year performance period (from January 1, 2021 through December 31, 2023) and the time-vested restricted stock will vest in equal installments on the second and third anniversaries of the grant. The NEOs were granted the following long-term incentive awards: | Aurelio Alemán | | | 65.0% | | | $623,350 | | | 65.0% | | | $625,350 | | | 130.0% | | | $1,246,700 | | | Orlando Berges | | | 22.5% | | | $135,000 | | | 22.5% | | | $135,000 | | | 45.0% | | | $270,000 | | | Donald Kafka | | | 25.0% | | | $137,500 | | | 25.0% | | | $137,500 | | | 50.0% | | | $275,000 | | | Nayda Rivera | | | 30.0% | | | $142,500 | | | 30.0% | | | $142,500 | | | 60.0% | | | $285,000 | | | Calixto García-Vélez | | | 20.0% | | | $110,000 | | | 20.0% | | | $110,000 | | | 40.0% | | | $220,000 | |
On March 31, 2021, the Compensation Committee approved changes to the short-term and long-term incentive opportunities for the CEO. These changes will apply to the short-term and long-term incentive awards to be granted in 2022, based on 2021 performance. The Compensation Committee determined to increase the incentive opportunities at target-level performance as a percentage of base cash salary for 2019: | Aurelio Alemán | | | 48.0% | | | 72.0% | | | 120.0% | | | Orlando Berges | | | 18.0 | | | 27.0 | | | 45.0 | | | Donald Kafka | | | 20.0 | | | 30.0 | | | 50.0 | | | Nayda Rivera | | | 24.0 | | | 36.0 | | | 60.0 | | | Calixto García-Vélez | | | 16.0 | | | 24.0 | | | 40.0 | |
NEOs may earn 25% of their target opportunity for threshold-level performance (75% performance) and up to 150% of their target opportunity for superior-level performance (up to 125% performance). Amounts between threshold and superior are interpolated to reward incremental achievement and no amounts are paid with respect to a particular performance metric if actual results are below threshold.
Once the annual award value is determined, awards are granted in the following proportions:
60% in performance-based shares, which vest based on the achievement of a pre-established tangible book value goal at the end of a three-year performance period. Participants may earn zero to 100% of their targeted award. For the 2019 grant, the performance period is January 1, 2019 through December 31, 2021.
40% in time-vested restricted stock, which vests on the second and third anniversaries of the grant date.
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On March 21, 2019, the Compensation Committee granted the following long-term incentive awards of performance-based shares and time-vested restricted stock to the NEOs:
| Aurelio Alemán | | | 58.1% | | | $556,985 | | | 87.1% | | | $835,482 | | | 145.2% | | | $1,392,467 | | | Orlando Berges | | | 20.2 | | | 120,963 | | | 30.2 | | | 181,428 | | | 50.4 | | | 302,391 | | | Donald Kafka | | | 20.6 | | | 113,297 | | | 30.9 | | | 169,944 | | | 51.5 | | | 283,241 | | | Nayda Rivera | | | 29.0 | | | 137,938 | | | 43.6 | | | 206,906 | | | 72.6 | | | 344,844 | | | Calixto García-Vélez | | | 14.1 | | | 77,440 | | | 21.1 | | | 116,153 | | | 35.2 | | | 193,593 | |
2020 Compensation Decisions
The Compensation Committee determined that the NEOs’ base cash salary levels for fiscal 2020 would remain at the same levels as those for fiscal 2018 and 2019 notwithstanding the Committee’s decision in 2017 to cease the payment of Salary Stock, effective June 30, 2018. As a result, the NEOs’ base cash salary levels for fiscal 2020 remained at the same levels as fiscal 2019, hence, the NEOs will receive the same total base salary for the 2020 fiscal year as illustrated in the following table:
| Aurelio Alemán | | | 2020 | | | $959,000 | | | $0 | | | $959,000 | | | 2019 | | | 959,000 | | | 0 | | | 959,000 | | | 2018 | | | 959,000 | | | 576,064 | | | 1,535,064 | | | Orlando Berges | | | 2020 | | | 600,000 | | | 0 | | | 600,000 | | | 2019 | | | 600,000 | | | 0 | | | 600,000 | | | 2018 | | | 600,000 | | | 179,154 | | | 779,154 | | | Donald Kafka | | | 2020 | | | 550,000 | | | 0 | | | 550,000 | | | 2019 | | | 550,000 | | | 0 | | | 550,000 | | | 2018 | | | 550,000 | | | 131,171 | | | 631,731 | | | Nayda Rivera | | | 2020 | | | 475,000 | | | 0 | | | 475,000 | | | 2019 | | | 475,000 | | | 0 | | | 475,000 | | | 2018 | | | 475,000 | | | 144,904 | | | 619,904 | | | Calixto García-Vélez | | | 2020 | | | 550,000 | | | 0 | | | 550,000 | | | 2019 | | | 550,000 | | | 0 | | | 550,000 | | | 2018 | | | 550,000 | | | 144,904 | | | 694,904 | |
On March 18, 2020, the Compensation Committee approved long-term incentive awards of performance-based shares and time-vested restricted stock to the NEOs and in connection therewith determined to adjust the mix of long-term incentive awards to align to local competitors and U.S. market practices, as follows:
| Long-Term Incentive
| | | | | | 50%
| | | | | | Performance Shares
| | 50%
| | | Time-Vested Restricted Stock
|
The performance-based shares will vest based onShort-term total target incentive opportunity as a percentage of base salary from 80% to 90%; and Long-term total target incentive opportunity as a percentage of base salary from 130% to 135%. One-Time, Special Integration Award for the Chief Executive Officer In connection with the significant integration and conversion activities, and achievement of expected synergies related to the Acquired Operations, the Compensation Committee granted the CEO a one-time award (the “Integration Award”). The Integration Award was designed to reward the achievement of a successful transition and integration execution related to the Santander acquisition. The Compensation Committee granted the CEO an Integration Award in the amount of $719,250, subject to the following vesting requirements: (i) 50% is subject to the successful conversion and integration of the Acquired Operations, as determined by the Compensation Committee, expected to be completed by the 3rd quarter of 2021, the Compensation Committee will determine if the conversion and integration has been successfully completed before year end; and (ii) 50% is subject to the successful achievement of targeted cost savings in 2021 tied to the Santander acquisition, which achievement will be assessed by the Compensation Committee during the first quarter of 2022. Upon determination of successfully achieving the aforementioned performance targets, the Incentive Award shall be paid to the CEO. OTHER PRACTICES, POLICIES AND GUIDELINES Stock Ownership Guidelines The Corporation maintains stock ownership guidelines that are designed to further align the interests of our stockholders and executives. Our CEO is expected to acquire and hold a minimum of Common Stock having a value equal to three-times the cash portion of his or her annual base salary. Other NEOs are expected to acquire and hold Common Stock having a value equal to one-times the achievement of a tangible book value goal at the end of the three year performance period (from January 1, 2020 through December 31, 2022) and the time-vested restricted stock will vest in equal installments on the second and third anniversaries of the grant. The Compensation Committee further determined to increase the long-term target incentive opportunity of the CEO from 120% to 130%. 54
| First Bancorp, Inc. | Proxy Statement for the 2020 Annual Meeting of Stockholders
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The NEOs were granted the following long-term incentive awards:
| Aurelio Alemán | | | 90.4% | | | $866,457 | | | 90.3% | | | $866,456 | | | 180.7% | | | $1,732,913 | | | Orlando Berges | | | 23.9 | | | 143,100 | | | 23.9 | | | 143,100 | | | 47.7 | | | 286,200 | | | Donald Kafka | | | 25.0 | | | 137,500 | | | 25.0 | | | 137,500 | | | 50.0 | | | 275,000 | | | Nayda Rivera | | | 36.3 | | | 172,425 | | | 36.3 | | | 172,425 | | | 72.6 | | | 344,850 | | | Calixto García-Vélez | | | 20.6 | | | 113,300 | | | 20.6 | | | 113,300 | | | 41.2 | | | 226,600 | |
OTHER PRACTICES, POLICIES AND GUIDELINESStock Ownership Guidelines
The Corporation maintains stock ownership guidelines that are designed to further align the interests of our stockholders and executives. Our CEO is expected to acquire and hold a minimum of Common Stock having a value equal to three-times the cash portion of his or her annual base salary. Other NEOs are expected to acquire and hold Common Stock having a value equal to a minimum of the amount of such NEOs’ annual base salary. As of the date of this Proxy Statement, all our NEOs are currently in compliance with the guidelines.
Pension Benefits The Corporation does not have a defined benefit or pension plan in place for the NEOs. 58 | First Bancorp, Inc. | Proxy Statement for the 2021 Annual Meeting of Stockholders |
TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | OTHER PRACTICES, POLICIES AND GUIDELINES
Defined Contribution Retirement Plan The NEOs are eligible to participate in the Corporation’s Defined Contribution Retirement Plan pursuant to Section 1165(e) of the Puerto Rico Internal Revenue Code, which provides retirement, death, disability and termination of employment benefits. The Defined Contribution Retirement Plan complies with the Employee Retirement Income Security Act of 1974, as amended, and the Retirement Equity Act of 1984, as amended. An individual account is maintained for each participant and benefits are paid based solely on the amount of each participant’s account. The NEOs may defer up to either $15,000 in the case of Puerto Rico residents or $18,500$19,500 in the case of United States residents of their annual compensation into the Defined Contribution Retirement Plan on a pre-tax basis as employee compensation deferral contributions. The Corporation makes a contribution equal to 50% of the first 6% of each participating employee’s contribution up to the annual compensation limit of $275,000.$285,000. The aforementioned contribution is distributed in the following manner: (i) up to the first 25% is credited in each paying cycle for each participating employee’s contribution, and (ii) up to the remaining 25% is accumulated until year end and credited in one lump sum payment during the month of January of the subsequent year. The first 25% vests immediately upon contribution. The remaining contribution vests once the participating employee has at least three years of service after the date of contribution. No match is provided for contributions in excess of 6% of compensation. Corporate contributions are made to employees with a minimum of one year of service. At the end of the fiscal year, the Corporation may, but is not obligated to, make additional contributions in an amount determined by the Board. Non-Qualified Deferred Compensation Since 2009, the Corporation has not had a Deferred Compensation Plan in place for the NEOs. General Benefits and Perquisites Personal benefits and perquisites are limited. The NEOs have been provided with a corporate-owned automobile, club memberships and a life insurance policy of $1,000,000 ($500,000 in excess of that provided to other employees). Like all other employees, the NEOs may participate in the Corporation’s Defined Contribution Retirement Plan (including the Corporation’s match) and group medical and dental plans and receive long-term and short-term disability, health care, and group life insurance benefits. In addition, the CEO is provided with an armed driver solely for business purposes. Incentive Repayment (Clawback) Policy We have a clawback policy that, in the event of a restatement of financial statements to correct a material non-compliance with any applicable financial reporting requirement, allows the Compensation Committee to seek recovery or forfeiture from any executive officer of the portion of incentive compensation that was received by or vested in the executive officer during the three-year period Proxy Statement for the 2020 Annual Meeting of Stockholders | First Bancorp, Inc.
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prior to the determination that a restatement was required and that would not have been earned had performance been measured on the basis of the restated results if the Compensation Committee determines that the executive engaged in intentional fraud or gross misconduct or was otherwise directly or indirectly responsible for the restatement. Anti-HedgingAnti-Hedging/Pledging Policy
Section 16 officers and directors, including the NEOs, are prohibited from (i) pledging the Corporation’s securities as collateral for loans and (ii) selling the Corporation’s securities “short,” trading in the Corporation’s securities in or through a margin account or otherwise engaging in hedging transactions or speculative or short-term trading of the Corporation’s securities. These provisions are part of the Corporation’s overall program to prevent the Corporation’s directors and executive officers, including the NEOs, from trading on material non-public information. Employment Arrangements and Termination Provisions The Board has reviewed and approved employment agreements for all NEOs that set their terms of employment, including compensation, benefits and termination, and include change of control provisions. These employment agreements are described in more detail in “Employment Contracts, Termination of Employment, and Change in Control Arrangements” on page 6265 of this Proxy Statement. The Board believes that these employment agreements and arrangements help support leadership stability and support our succession planning process. The Compensation Committee takes the terms of these agreements into account when approving compensation for our NEOs. Overview of Risk and Compensation Plans The Compensation Committee believes that the Corporation should have sound compensation practices that fairly reward exceptional employees, and exceptional efforts by those employees, while assuring that their compensation reflects principles of risk management and performance metrics that promote long-term contributions to sustained profitability, as well as fidelity to the Proxy Statement for the 2021 Annual Meeting of Stockholders | First Bancorp, Inc. | 59 |
TABLE OF CONTENTS Compensation Discussion & Analysis (CD&A) | OTHER PRACTICES, POLICIES AND GUIDELINES
values and rules of conduct expected of them. We are committed to continually evaluatingcontinuously evaluate and improvingimprove our compensation programs through: Frequent self-examination of the impact of our compensation practices on the Corporation’s risk profile, as well as evaluation of our practices against emerging industry-wide practices; Systematic improvement of our compensation principles and practices, ensuring that our compensation practices improve the Corporation’s overall safety and soundness; and Continuing development of compensation practices that provide a strategic advantage to the Corporation and provide value for all stakeholders. As an integral part of the 20192020 compensation process, the Compensation Committee directed the Chief Risk Officer (“CRO”) to conduct a review of risk in the Corporation’s compensation programs available throughout the year, examining threetwo issues: (1) whether the compensation of the NEOs encourages them to take unnecessary and excessive risks that threaten the value of the Corporation; (2) whether the Corporation’s employee compensation plans pose unnecessary risks to the Corporation; and (3)(2) whether there was any need to eliminate any features of these plans to the extent that they are considered to encourage the manipulation of reported earnings of the Corporation to enhance the compensation of any employee. The Compensation Committee met with the CRO one time in 20192020 and provided substantial oversight, review and direction throughout the process described below. During 2021, the Compensation Committee also instructed its compensation consultant, Pearl Meyer, to conduct a review of risk in the Corporation’s compensation programs as it relates to payouts for compensation awarded during both 2020 and 2021, examining whether the compensation of the NEOs encourages them to take unnecessary and excessive risks that threaten the value of the Corporation, and whether there was any need to eliminate any features of these plans to the extent they are considered to encourage the manipulation of reported earnings of the Corporation to enhance the compensation of any employee. The CRO’s review focused on the structure of the awards to all short-term cash incentive plans under which employees of the Corporation and its subsidiaries are compensated. Pearl Meyer’s review focused on the structure of the awards to the NEOs and other executives who were eligible to receive base salary, in cash, a short-term cash incentive and a long-term incentive composed of restricted stock and performance shares. The review also included all other short-term cash incentive plans under which employees of the Corporation and its subsidiaries are compensated. The risk-avoidance analysis of the Corporation’s compensation arrangements and programs for NEOs and employees focused on elements of the compensation plans that may have the potential to affect the behavior of employees with respect to their job-related responsibilities or might directly impact the financial condition of the Corporation. The assessment encompassed the identification of the various elements of the Corporation’s compensation plans, the identification of the principal risks to the Corporation that may be relevant for each element, and the identification of the mitigating factors for those risks. Among the elements considered in the assessment were: (i) the performance metrics and targets related to individual business units and strategic goals related to deposit growth, enhancement of the Corporation’s asset quality and risk profile, strengthening of our franchise value, achievement of strategies to strengthen the Corporation’s capital position, and business profitability and expense management targets; (ii) timing of pay out; and (iii) pay mix. Each element may present different risks to the Corporation; however, each has risk mitigating factors and many have no potential to encourage the manipulation of reported earnings. In the risk-avoidance assessment, management, and the Compensation Committee and the executive compensation consultant concluded that the Corporation’s compensation plans are not reasonably likely to have a 56
| First Bancorp, Inc. | Proxy Statement for the 2020 Annual Meeting of Stockholders
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TABLE OF CONTENTS
Compensation Discussion & Analysis (CD&A) | OTHER PRACTICES, POLICIES AND GUIDELINES
material adverse effect on the Corporation. Management, and the Compensation Committee and the executive compensation consultant believe that, in order to give rise to a material adverse effect on the Corporation, a compensation plan must provide benefits of sufficient size to be material to the Corporation or it must motivate individuals at the Corporation who are in a position to have a material impact on the Corporation to behave in a manner that is materially adverse to the Corporation. COMPENSATION COMMITTEE REPORT The Committee reviewed and discussed the Compensation Discussion and Analysis with members of senior management and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Corporation’s Annual Report on Form 10-K and proxy statement on Schedule 14A filed with the U.S. Securities and Exchange Commission. Robert T. Gormley, Chairman
Juan Acosta Reboyras
Luz A. Crespo 60 | First Bancorp, Inc. | Proxy Statement for the 20202021 Annual Meeting of Stockholders | First Bancorp, Inc. | 57
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TABLE OF CONTENTS EXECUTIVE COMPENSATION TABLES AND COMPENSATION INFORMATION SUMMARY COMPENSATION TABLE The Summary Compensation Table set forth below discloses compensation of the NEOs of the Corporation. | Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) (a) | | | Stock Awards ($) (b) | | | Non-Equity Incentive Plan Compensation ($) (c) | | | All Other Compensation ($) (d) | | | Total ($) | | Name and
Principal Position | | | Year | | | Salary
($) (a) | | | Bonus
($) (b) | | | Stock
Awards
($) (c) | | | Non-Equity
Incentive Plan
Compensation
($) (d) | | | All Other
Compensation
($) (e) | | | Total ($) | | | Aurelio Alemán President and Chief Executive Officer | | | 2019 | | | $959,000 | | | $1,200 | | | td,392,467 | | | $950,612 | | | $76,698 | | | $3,379,977 | | Aurelio Alemán
President and Chief
Executive Officer | | | 2020 | | | $995,885 | | | $1,200 | | | $1,732,911 | | | $827,935 | | | $81,775 | | | $3,639,706 | | | 2018 | | | 959,000 | | | 408,775 | | | 1,678,908 | | | 993,631 | | | 55,476 | | | 4,095,791 | | | 2019 | | | 959,000 | | | 1,200 | | | 1,392,467 | | | 950,612 | | | 76,698 | | | 3,379,977 | | | 2017 | | | 959,000 | | | 408,775 | | | 1,573,791 | | | 380,963 | | | 56,333 | | | 3,378,861 | | | 2018 | | | 959,000 | | | 408,775 | | | 1,678,908 | | | 993,631 | | | 55,476 | | | 4,095,791 | | | Orlando Berges Executive Vice President and Chief Financial Officer | | | 2019 | | | 600,000 | | | 1,200 | | | 302,391 | | | 373,852 | | | 13,872 | | | 1,291,315 | | Orlando Berges
Executive Vice
President and
Chief Financial Officer | | | 2020 | | | 623,077 | | | 301,200 | | | 286,200 | | | 303,937 | | | 12,343 | | | 1,526,757 | | | 2018 | | | 600,000 | | | 151,200 | | | 447,448 | | | 371,929 | | | 7,183 | | | 1,577,760 | | | 2019 | | | 600,000 | | | 1,200 | | | 302,391 | | | 373,852 | | | 13,872 | | | 1,291,315 | | | 2017 | | | 600,135 | | | 151,200 | | | 570,006 | | | 152,024 | | | 8,280 | | | 1,481,646 | | | 2018 | | | 600,000 | | | 151,200 | | | 447,448 | | | 371,929 | | | 7,183 | | | 1,577,760 | | | Donald Kafka Executive Vice President and Chief Operating Officer | | | 2019 | | | 550,000 | | | 1,200 | | | 283,241 | | | 337,198 | | | 8,589 | | | 1,180,228 | | Donald Kafka
Executive Vice
President and Chief
Operating Officer | | | 2020 | | | 571,154 | | | 221,200 | | | 274,996 | | | 278,609 | | | 8,923 | | | 1,354,882 | | | 2018 | | | 550,000 | | | 1,200 | | | 412,504 | | | 332,685 | | | 4,152 | | | 1,300,541 | | | 2019 | | | 550,000 | | | 1,200 | | | 283,241 | | | 337,198 | | | 8,589 | | | 1,180,228 | | | 2017 | | | 550,000 | | | 1,200 | | | 399,998 | | | 140,607 | | | 4,127 | | | 1,095,932 | | | 2018 | | | 550,000 | | | 1,200 | | | 412,504 | | | 332,685 | | | 4,152 | | | 1,300,541 | | | Nayda Rivera Executive Vice President and Chief Risk Officer | | | 2019 | | | 475,000 | | | 1,200 | | | 344,844 | | | 314,327 | | | 18,558 | | | 1,153,929 | | Nayda Rivera
Executive Vice
President and Chief
Risk Officer | | | 2020 | | | 493,269 | | | 238,700 | | | 344,850 | | | 244,056 | | | 26,196 | | | 1,347,071 | | | 2018 | | | 475,000 | | | 96,200 | | | 435,030 | | | 296,342 | | | 6,832 | | | 1,309,404 | | | 2019 | | | 475,000 | | | 1,200 | | | 344,844 | | | 314,327 | | | 18,558 | | | 1,153,929 | | | 2017 | | | 475,000 | | | 96,350 | | | 456,951 | | | 117,673 | | | 7,055 | | | 1,153,028 | | | 2018 | | | 475,000 | | | 96,200 | | | 435,030 | | | 296,342 | | | 6,832 | | | 1,309,404 | | | Calixto García-Vélez Executive Vice President and Florida Region Executive | | | 2019 | | | 550,000 | | | 1,200 | | | 193,593 | | | 308,957 | | | 84,277 | | | 1,138,027 | | Calixto García-Vélez
Executive Vice
President and Florida
Region Executive | | | 2020 | | | 571,154 | | | 1,200 | | | 226,599 | | | 275,716 | | | 91,823 | | | 1,166,492 | | | 2018 | | | 550,000 | | | 91,950 | | | 353,814 | | | 305,321 | | | 84,369 | | | 1,385,454 | | | 2019 | | | 550,000 | | | 1,200 | | | 193,593 | | | 308,957 | | | 84,277 | | | 1,138,027 | | | 2017 | | | 550,000 | | | 91,950 | | | 470,003 | | | 132,334 | | | 76,658 | | | 1,320,946 | | | 2018 | | | 550,000 | | | 91,950 | | | 353,814 | | | 305,321 | | | 84,369 | | | 1,385,454 | |
(a)
| The column includes regular pay base payroll deductions for years 2018, 2019, and 2020. Year 2020 was a “pay period leap year”, which means that there were twenty-seven (27) bi-weekly paydays instead of twenty-six (26); hence, employees received more cash compensation during the year than payable based on their annual base salary rates. This column reflects actual cash compensation paid. |
(b)
| The column includes the Christmas bonus, which is a non-discriminatory broad-based benefit offered to all employees, under which the Corporation paid in each of the three years an amount equal to six percent (6%) of each employee’s base salary up to $1,200. TheIn addition, the column includes a special cash award (previously described) granted to certain NEOs in connection with the Santander transaction; the special cash award granted on March 31, 2021 was as follows: Mr. Berges - $300,000; Mr. Kafka - $220,000; and Mrs. Rivera - $237,500. With respect to year 2018, the column also includes one-half of the transition award (as defined below) granted on July 1, 2017 as follows: Mr. Alemán - $407,575, Mr. Berges - $150,000; Mrs. Rivera - $95,000; and Mr. García-Vélez - $90,750. |
As described in last year’sthe 2020 proxy statement, to recognize the significance of the emergence from the Capital Purchase Program Troubled Asset Relief Program (“TARP”) and help facilitate a smooth transition to the new executive compensation program, as well as support our leadership stability objectives, on July 1, 2017, the Committee approved a one-time, cash award (the “transition award”) to four of the NEOs. The award was granted in cash and was paid quarterly over a one-year period through June 30, 2018, provided that the executive remained employed by the Corporation on the corresponding payment date. As this is not a part of the Corporation’s ongoing executive compensation program, the transition award concluded with the 2018 payments. (b)(c)
| The column includes with respect to 2020 and 2019, the grants of restricted stock and performance shares under the First BanCorp. Omnibus Incentive Plan, as amended. The value with respect to the restricted stock and performance shares in the column represents the fair market value of the restricted stock and performance shares determined in accordance with FASB ASC Topic 718 based on the closing price of the Corporation’s common stock on the grant date of March 18, 2020 ($4.08) and on the grant date of March 21, 2019 ($11.16). Refer to the “Grant“Grants of Plan-Based Award” sectiontable below for details of the amounts paid. From April 2013 through June 30, 2018, the Compensation Committee awarded Common Stock to the NEOs as a component of their base salaries; Salary Stock is reflected in this Stock Awards column together with awards of restricted stock and performance shares for 2017 and 2018. The fair market value of the Salary Stock was determined using the closing price of the Corporation’s Common Stock on each date on which the Salary Stock was issued. Given the transferability restrictions applicable to restricted stock, 50% of the shares of restricted stock granted to the NEOs on March 21, 2017 was forfeited on May 10, 2017, the date on which the United States Department of the Treasury (the “Treasury”) sold its remaining 10,291,553 shares of the Corporation’s Common Stock. As a result of the Treasury’s sale, the Corporation was no longer subject to the compensation-related restrictions under TARP. Theissued, and fair market value of the restricted stock awardedand performance shares was based on the closing price of the Corporation’s common stock on the grant of March 21, 2017, net of its related forfeiture on May 10, 2017, is presented for 2017.2018 ($6.29). |
(c)(d)
| For 2020, 2019 and 2018, the amounts reported reflect the amount earned by each NEO under the Corporation’s annual short-term incentive for the applicable performance year based on the achievement of their annual corporate, business unit and individual goals. Until May 2017, based on TARP restrictions, the compensation program for the NEOs was limited to base salary, Salary Stock and TARP-compliant restricted stock. Under the current compensation program approved after the Treasury’s sale, the NEOs were eligible to participate in the annual cash incentive opportunity. For 2017, the annual cash incentive opportunity was prorated for the portion of 2017 during which the Corporation was no longer subject to compensation restrictions under TARP (six out of twelve months). |
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TABLE OF CONTENTS Executive Compensation Disclosure | All Other Compensation
(d)
| Set forth below is a breakdown of all other compensation (i.e., personal benefits): |
| Name and Principal Position | | | Year | | | Company- owned Vehicles ($) | | | 1165(e) Plan Contribution ($) (i) | | | Security ($) (ii) | | | Memberships & Dues ($) | | | Housing ($) (iii) | | | Life Insurance ($) (iv) | | | Total ($) | | Name and
Principal Position | | | Year | | | Company-
owned
Vehicles
($) | | | 1165(e) Plan
Contribution
($) (i) | | | Security
($) (ii) | | | Memberships
& Dues
($) | | | Housing
($) (iii) | | | Life
Insurance
($) (iv) | | | Total
($) | | | Aurelio Alemán | | | 2019 | | | $3,777 | | | $7,500 | | | $53,367 | | | td1,364 | | | — | | | $690 | | | $76,698 | | Aurelio Alemán | | | 2020 | | | td2,297 | | | $7,500 | | | $50,622 | | | td0,666 | | | — | | | $690 | | | $81,775 | | | 2018 | | | 6,028 | | | 707 | | | 38,552 | | | 9,499 | | | — | | | 690 | | | 55,476 | | | 2019 | | | 3,777 | | | 7,500 | | | 53,367 | | | 11,364 | | | — | | | 690 | | | 76,698 | | | 2017 | | | 7,041 | | | 738 | | | 39,443 | | | 8,421 | | | — | | | 690 | | | 56,333 | | | 2018 | | | 6,028 | | | 707 | | | 38,552 | | | 9,499 | | | — | | | 690 | | | 55,476 | | | Orlando Berges | | | 2019 | | | 5,332 | | | 5,383 | | | — | | | 2,467 | | | — | | | 690 | | | 13,872 | | Orlando Berges | | | 2020 | | | 2,932 | | | 5,419 | | | — | | | 3,302 | | | — | | | 690 | | | 12,343 | | | 2018 | | | 2,573 | | | 673 | | | — | | | 3,247 | | | — | | | 690 | | | 7,183 | | | 2019 | | | 5,332 | | | 5,383 | | | — | | | 2,467 | | | — | | | 690 | | | 13,872 | | | 2017 | | | 2,913 | | | 577 | | | — | | | 4,101 | | | — | | | 690 | | | 8,280 | | | 2018 | | | 2,573 | | | 673 | | | — | | | 3,247 | | | — | | | 690 | | | 7,183 | | | Donald Kafka | | | 2019 | | | 252 | | | 7,500 | | | — | | | 147 | | | — | | | 690 | | | 8,589 | | Donald Kafka | | | 2020 | | | 733 | | | 7,500 | | | — | | | — | | | — | | | 690 | | | 8,923 | | | 2018 | | | 936 | | | 2,526 | | | — | | | — | | | — | | | 690 | | | 4,152 | | | 2019 | | | 252 | | | 7,500 | | | — | | | 147 | | | — | | | 690 | | | 8,589 | | | 2017 | | | 737 | | | 2,700 | | | — | | | — | | | — | | | 690 | | | 4,127 | | | 2018 | | | 936 | | | 2,526 | | | — | | | — | | | — | | | 690 | | | 4,152 | | | Nayda Rivera | | | 2019 | | | 7,290 | | | 7,500 | | | — | | | 3,078 | | | — | | | 690 | | | 18,558 | | Nayda Rivera | | | 2020 | | | 8,167 | | | 7,500 | | | — | | | 9,839 | | | — | | | 690 | | | 26,196 | | | 2018 | | | 4,312 | | | 1,288 | | | — | | | 541 | | | — | | | 690 | | | 6,832 | | | 2019 | | | 7,290 | | | 7,500 | | | — | | | 3,078 | | | — | | | 690 | | | 18,558 | | | 2017 | | | 4,347 | | | 2,018 | | | — | | | — | | | — | | | 690 | | | 7,055 | | | 2018 | | | 4,312 | | | 1,288 | | | — | | | 541 | | | — | | | 690 | | | 6,832 | | | Calixto García-Vélez | | | 2019 | | | 2,565 | | | 8,400 | | | — | | | 5,422 | | | 67,200 | | | 690 | | | 84,277 | | Calixto García-Vélez | | | 2020 | | | 9,222 | | | 9,045 | | | — | | | 5,666 | | | 67,200 | | | 690 | | | 91,823 | | | 2018 | | | 4,209 | | | 1,540 | | | — | | | 5,546 | | | 67,200 | | | 5,875 | | | 84,369 | | | 2019 | | | 2,565 | | | 8,400 | | | — | | | 5,422 | | | 67,200 | | | 690 | | | 84,277 | | | 2017 | | | 864 | | | 2,719 | | | — | | | — | | | 67,200 | | | 5,875 | | | 76,658 | | | 2018 | | | 4,209 | | | 1,540 | | | — | | | 5,546 | | | 67,200 | | | 5,875 | | | 84,369 | |
(i)
| Consists of the Corporation’s contribution to the executive’s account in the Defined Contribution Retirement Plan. |
(ii)
| The CEO is provided with an armed driver solely for business purposes. |
(iii)
| Consists of reimbursement, and related tax gross up amount, for housing expenses paid by Mr. Calixto García-Vélez as a result of his employment as executive vice president of the Florida operations. |
(iv)
| Consists of the amount of the life insurance policy premium paid by the Corporation in excess of the $500,000 life insurance policy available to all employees. |
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TABLE OF CONTENTS Executive Compensation Disclosure | Grants of Plan-based Awards Table
GRANTS OF PLAN-BASED AWARDS The following table details all equity and non-equity plan-based awards granted to each of the NEOs during fiscal year 2019.2020. | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Possible Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of stock or units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/SH) | | | Grant Date Fair Value of Stock and Option Awards ($) | | | Market Price on Grant Date ($/SH) | | | | | | | | Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards | | | Estimated Possible
Payouts Under Equity
Incentive Plan Awards | | | All
Other
Stock
Awards:
Number
of
Shares
of stock
or units
(#) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | | Exercise
or Base
Price of
Option
Awards
($/SH) | | | Grant
Date
Fair
Value
of
Stock
and
Option
Awards
($) | | | Market
Price
on
Grant
Date
($/SH) | | | Name | | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | Name | | | Grant
Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | Aurelio Alemán 2019 Short-Term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Aurelio Alemán
2020 Short-Term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Incentive (a)
| | |
| | | $383,600 | | | $767,200 | | | $1,150,800 | | | — | | | — | | | — | | | — | | | — | | | $— | | | $— | | | $— | | Cash Incentive (a) | | |
| | | $383,600 | | | $767,200 | | | $1,150,800 | | | — | | | — | | | — | | | — | | | — | | | $— | | | $— | | | $— | | | Restricted Stock (b) | | | 3/21/2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | 49,909 | | | — | | | — | | | 556,984 | | | 11.16 | | Restricted Stock (b) | | | 3/18/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 212,367 | | | — | | | — | | | 866,457 | | | 4.08 | | | Performance Shares (c)
| | | 3/21/2019 | | | — | | | — | | | — | | | 37,432 | | | 74,864 | | | 74,864 | | | — | | | — | | | — | | | 835,482 | | | 11.16 | | Performance Shares (c)
| | | 3/18/2020 | | | — | | | — | | | — | | | 106,183 | | | 212,366 | | | 212,366 | | | — | | | — | | | — | | | 866,453 | | | 4.08 | | | Orlando Berges 2019 Short-Term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Orlando Berges
2020 Short-Term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Incentive (a)
| | | | | | 150,000 | | | 300,000 | | | 450,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Cash Incentive (a)
| | | | | | 150,000 | | | 300,000 | | | 450,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Restricted Stock (b)
| | | 3/21/2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,839 | | | — | | | — | | | 120,963 | | | 11.16 | | Restricted Stock (b)
| | | 3/18/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 35,074 | | | — | | | — | | | 143,102 | | | 4.08 | | | Performance Shares (c) | | | 3/21/2019 | | | — | | | — | | | — | | | 8,129 | | | 16,257 | | | 16,257 | | | — | | | — | | | — | | | 181,428 | | | 11.16 | | Performance Shares (c) | | | 3/18/2020 | | | — | | | — | | | — | | | 17,537 | | | 35,073 | | | 35,073 | | | — | | | — | | | — | | | 143,098 | | | 4.08 | | | Donald Kafka | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Donald Kafka | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 Short-Term Cash Incentive (a) | | | | | | 137,500 | | | 275,000 | | | 412,500 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | 2020 Short-Term
Cash Incentive (a) | | | | | | 137,500 | | | 275,000 | | | 412,500 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Restricted Stock (b) | | | 3/21/2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,152 | | | — | | | — | | | 113,296 | | | 11.16 | | Restricted Stock (b) | | | 3/18/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 33,701 | | | — | | | — | | | 137,500 | | | 4.08 | | | Performance Shares (c) | | | 3/21/2019 | | | — | | | — | | | — | | | 7,614 | | | 15,228 | | | 15,228 | | | — | | | — | | | — | | | 169,944 | | | 11.16 | | Performance Shares (c) | | | 3/18/2020 | | | — | | | — | | | — | | | 16,850 | | | 33,700 | | | 33,700 | | | — | | | — | | | — | | | 137,496 | | �� | 4.08 | | | Nayda Rivera 2019 Short-Term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nayda Rivera
2020 Short-Term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Incentive (a) | | | | | | 118,750 | | | 237,500 | | | 356,250 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Cash Incentive (a) | | | | | | 118,750 | | | 237,500 | | | 356,250 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Restricted Stock (b) | | | 3/21/2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | 12,360 | | | — | | | — | | | 137,938 | | | 11.16 | | Restricted Stock (b) | | | 3/18/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 42,261 | | | — | | | — | | | 172,425 | | | 4.08 | | | Performance Shares (c) | | | 3/21/2019 | | | — | | | — | | | — | | | 9,270 | | | 18,540 | | | 18,540 | | | — | | | — | | | — | | | 206,906 | | | 11.16 | | Performance Shares (c) | | | 3/18/2020 | | | — | | | — | | | — | | | 21,131 | | | 42,261 | | | 42,261 | | | — | | | — | | | — | | | 172,425 | | | 4.08 | | | Calixto García-Vélez 2019 Short-Term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Calixto García-Vélez
2020 Short-Term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Incentive (a) | | | | | | 137,500 | | | 275,000 | | | 412,500 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Cash Incentive (a) | | | | | | 137,500 | | | 275,000 | | | 412,500 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Restricted Stock (b) | | | 3/21/2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,939 | | | — | | | — | | | 77,439 | | | 11.16 | | Restricted Stock (b) | | | 3/18/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 27,770 | | | — | | | — | | | 113,302 | | | 4.08 | | | Performance Shares (c) | | | 3/21/2019 | | | — | | | — | | | — | | | 5,204 | | | 10,408 | | | 10,408 | | | — | | | — | | | — | | | 116,153 | | | 11.16 | | Performance Shares (c) | | | 3/18/2020 | | | — | | | — | | | — | | | 13,885 | | | 27,769 | | | 27,769 | | | — | | | — | | | — | | | 113,298 | | | 4.08 | |
a)
| This section includes the 20192020 short-term cash incentive opportunity at the threshold, target and maximum levels. The actual grant date fair value of the short-term annual incentive cash awards for 20192020 performance were as follows: Mr. Alemán - $950,612,$827,935, Mr. Berges - $373,852,$303,937, Mr. Donald Kafka - $337,198,$278,609, Mrs. Rivera - $314,327,$244,056, and Mr. García-Veleza-Vélez - $308,957.$275,716. |
b)
| Consists of restricted stock awarded on March 21, 2019.18, 2020. The number of shares and the fair market value of the stock was determined based on the closing price of the Corporation’s common stock on the grant date of March 21, 201918, 2020 ($11.16)4.08). The shares will vest in equal installments on the second and third anniversaries of the grant. |
c)
| Consists of performance shares awarded on March 21, 2019.18, 2020. The number of shares and the fair market value of the stock was determined based on the closing price of the Corporation’s common stock on the grant date of March 21, 201918, 2020 ($11.16)4.08). The shares vest based on a tangible book value of $10.52$11.49 (the “Performance Goal”) at the end of a three-year performance period defined as January 1, 20192020 through December 31, 20212022 (the “Performance Cycle”). The NEO may earn 50% of its target opportunity for threshold-level performance (80% performance) which is measured based upon the growth in the tangible book value during the Performance Cycle up to the Performance Goal (ranging from $9.07$9.92 to $10.52)$11.49). Amounts between threshold and targetsuperior are interpolated to reward incremental achievement and no amounts are paid if actual results are below threshold. |
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| First Bancorp, Inc. | Proxy Statement for the 20202021 Annual Meeting of Stockholders | First Bancorp, Inc.
| 63 |
TABLE OF CONTENTS Executive Compensation Disclosure | Outstanding Equity Awards at Fiscal Year End
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END The following table sets forth certain information with respect to the outstanding equity awards held by each of the NEOs as of December 31, 2019.2020. | Aurelio Alemán | | | — | | | — | | | — | | | — | | | — | | | 120,043 | | | $1,271,255 | | | 142,631 | | | $1,510,462 | | | Orlando Berges | | | — | | | — | | | — | | | — | | | — | | | 27,907 | | | 295,535 | | | 33,721 | | | 357,105 | | | Donald Kafka | | | — | | | — | | | — | | | — | | | — | | | 28,007 | | | 296,594 | | | 34,397 | | | 364,264 | | | Nayda Rivera | | | — | | | — | | | — | | | — | | | — | | | 30,810 | | | 326,278 | | | 36,945 | | | 391,248 | | | Calixto García-Vélez | | | — | | | — | | | — | | | — | | | — | | | 20,224 | | | 214,172 | | | 25,132 | | | 266,148 | |
| Aurelio Alemán | | | — | | | — | | | — | | | — | | | — | | | 297,343 | | | $2,741,502 | | | 248,814 | | | $2,294,065 | | | Orlando Berges | | | — | | | — | | | — | | | — | | | — | | | 54,444 | | | 501,974 | | | 51,258 | | | 472,599 | | | Donald Kafka | | | — | | | — | | | — | | | — | | | — | | | 52,781 | | | 486,641 | | | 51,247 | | | 472,497 | | | Nayda Rivera | | | — | | | — | | | — | | | — | | | — | | | 63,846 | | | 588,660 | | | 58,076 | | | 535,461 | | | Calixto
García-Vélez | | | — | | | — | | | — | | | — | | | — | | | 41,352 | | | 381,265 | | | 39,017 | | | 359,737 | |
(a)
| Vesting date for shares or units of stock that have not vested: |
| | | | 2018 Restricted Stock (#)(i) | | | 2019 Restricted Stock (#)(ii) | | | Total (#) | | | | | 2018
Restricted
Stock (#)(i) | | | 2019
Restricted
Stock (#)(ii) | | | 2020
Restricted
Stock (#)(iii) | | | Total (#) | | | Aurelio Alemán | | | 70,134 | | | 49,909 | | | 120,043 | | Aurelio Alemán | | | 35,067 | | | 49,909 | | | 212,367 | | | 297,343 | | | Orlando Berges | | | 17,062 | | | 10,839 | | | 27,901 | | Orlando Berges | | | 8,531 | | | 10,839 | | | 35,074 | | | 54,444 | | | Donald Kafka | | | 17,855 | | | 10,152 | | | 28,007 | | Donald Kafka | | | 8,928 | | | 10,152 | | | 33,701 | | | 52,781 | | | Nayda Rivera | | | 18,450 | | | 12,360 | | | 30,810 | | Nayda Rivera | | | 9,225 | | | 12,360 | | | 42,261 | | | 63,846 | | | Calixto García-Vélez | | | 13,285 | | | 6,939 | | | 20,224 | | Calixto García-Vélez | | | 6,643 | | | 6,939 | | | 27,770 | | | 41,352 | |
(i)
| 50% of the shares vested on March 21, 2020, and the remaining 50% of the shares will vestvested on March 21, 2021. |
(ii)
| 50% vested on March 21, 2021, and the remaining 50% of the shares will vest on March 21, 2022. |
(iii)
| Shares shall vest solely on the basis of passage of time, with 50% vesting on March 21, 202118, 2022, and the remaining 50% on March 21, 2022.18, 2023 |
(b)
| Vesting of unearned shares, units or other rights that have not vested: |
| | | | 2018 Performance Shares at target (#)(i) | | | 2019 Performance Shares at threshold (#)(ii) | | | Total (#) | | | | | 2018
Performance
Shares at
target (#)(i) | | | 2019
Performance
Shares at
threshold (#)(ii) | | | 2020
Performance
Shares at
threshold (#)(iii) | | | Total (#) | | | Aurelio Alemán | | | 105,199 | | | 37,432 | | | 142,631 | | Aurelio Alemán | | | 105,199 | | | 37,432 | | | 106,183 | | | 248,814 | | | Orlando Berges | | | 25,592 | | | 8,129 | | | 33,721 | | Orlando Berges | | | 25,592 | | | 8,129 | | | 17,537 | | | 51,258 | | | Donald Kafka | | | 26,783 | | | 7,614 | | | 34,397 | | Donald Kafka | | | 26,783 | | | 7,614 | | | 16,850 | | | 51,247 | | | Nayda Rivera | | | 27,675 | | | 9,270 | | | 36,945 | | Nayda Rivera | | | 27,675 | | | 9,270 | | | 21,131 | | | 58,076 | | | Calixto García-Vélez | | | 19,928 | | | 5,204 | | | 25,132 | | Calixto García-Vélez | | | 19,928 | | | 5,204 | | | 13,885 | | | 39,017 | |
(i)
| The number of performance shares shown is based on achievement of target performance. The shares will vest on March 21, 2021, subject to the achievement of certain performance goals during the 2018-2020 performance cycle. |
(ii)
| The number of performance shares shown is based on achievement of threshold performance. The shares will vest on March 21, 2022, subject to the achievement of certain performance goals during the 2019-2021 performance cycle. |
(iii)
| The number of performance shares shown is based on achievement of threshold performance. The shares will vest on March 18, 2023, subject to the achievement of certain performance goals during the 2020-2022 performance cycle. |
64 | First Bancorp, Inc. | Proxy Statement for the 20202021 Annual Meeting of Stockholders | First Bancorp, Inc. | 61
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TABLE OF CONTENTS Executive Compensation Disclosure | Options Exercised and Stock Vested Information
OPTIONS EXERCISED AND STOCK VESTED INFORMATION The following table includes certain information with respect to restricted stock that vested during 2019.2020. | Aurelio Alemán | | | — | | | — | | | 94,836 | | | $1,058,370 | | | Orlando Berges | | | — | | | — | | | 42,515 | | | 474,467 | | | Donald Kafka | | | — | | | — | | | 27,726 | | | 309,422 | | | Nayda Rivera | | | — | | | — | | | 34,752 | | | 387,832 | | | Calixto García-Vélez | | | — | | | — | | | 36,045 | | | 402,262 | |
| Aurelio Alemán | | | — | | | — | | | 35,067 | | | $135,359 | | | Orlando Berges | | | — | | | — | | | 8,531 | | | 32,930 | | | Donald Kafka | | | — | | | — | | | 8,928 | | | 34,462 | | | Nayda Rivera | | | — | | | — | | | 9,225 | | | 35,609 | | | Calixto García-Vélez | | | — | | | — | | | 6,643 | | | 25,642 | |
(a)
| Represents restricted stock awarded on March 21, 20172018, that 50% vested on March 21, 2019.2020. |
(b)
| Represents the dollar value realized upon vesting of stock based on the closing price of $11.16$3.86 on the vesting date. |
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, AND CHANGE IN CONTROL ARRANGEMENTS Employment Agreements. The following table discloses information regarding the employment agreements entered into with the NEOs. | Name | | | Effective Date | | | 2018 Base Salary ($) | | | Term of Years | | Name | | | Effective
Date | | | 2018
Base
Salary ($) | | | Term of
Years | | | Aurelio Alemán | | | 2/24/1998 | | | $959,000 | | | 4 | | Aurelio Alemán | | | 2/24/1998 | | | $959,000 | | | 4 | | | Orlando Berges | | | 5/11/2009 | | | 600,000 | | | 3 | | Orlando Berges | | | 5/11/2009 | | | 600,000 | | | 3 | | | Donald Kafka | | | 5/31/2018 | | | 550,000 | | | 1 | | Donald Kafka | | | 5/31/2018 | | | 550,000 | | | 1 | | | Nayda Rivera | | | 5/31/2018 | | | 475,000 | | | 1 | | Nayda Rivera | | | 5/31/2018 | | | 475,000 | | | 1 | | | Calixto García-Vélez | | | 5/31/2018 | | | 550,000 | | | 1 | | Calixto García-Vélez | | | 5/31/2018 | | | 550,000 | | | 1 | |
The agreements provide that, on each anniversary of the date of commencement of each agreement, the term of such agreement shall be automatically extended for an additional one (1) year period beyond the then-effective expiration date, unless either party receives written notice, not less than 90 days prior to the anniversary date, that the agreement shall not be further extended. Terminations Without Cause Under the employment agreement with Mr. Alemán, the Board may terminate Mr. Alemán at any time,time. Unless such termination is for “cause” (as defined below), Mr. Alemán will be entitled to a severance payment of four (4) times his annual base salary, less all required deductions and withholdings, which payment shall be made semi-monthly over a period of one year. The employment agreement with Mr. Berges provides for severance payments in an amount prorated to cover the remaining balance of the three (3)-year employment agreement term times his base salary, unless such termination is for “cause”. “Cause” under these two agreements is defined to include personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty, intentional failure to perform stated duties, material violation of any law, rule or regulation (other than traffic violations or similar offenses), a final cease and desist order or any material breach of any provision of the employment agreement. Each of the employment agreements with Mr. Kafka, Mrs. Rivera and Mr. García-Velez, respectively, provide for severance payments in an amount equal to the total of twelve (12) months of the then currentthen-current cash base salary amount to which the executive would be entitled, plus the average of any cash bonuses or cash incentive compensation awarded for the last two calendar years ended immediately before the year in which the termination occurred, unless such termination is “for cause”. For the purpose of these agreements, “ for cause” shall consist of any of (i) the commission by the executive of a willful act (including, without limitation, a dishonest or fraudulent act) or a grossly negligent act, or the willful or grossly negligent omission to act by the executive, which is intended to cause, does cause or is reasonably likely to cause material harm to the Corporation or any affiliate (including harm to its business reputation); (ii) the indictment of the executive for the commission or perpetration by the executive of any felony or any crime involving dishonesty, moral turpitude or fraud; (iii) the material breach by the executive of the employment Proxy Statement for the 2021 Annual Meeting of Stockholders | First Bancorp, Inc. | 65 |
TABLE OF CONTENTS Executive Compensation Disclosure | Employment Contracts, Termination of Employment, and Change in Control Arrangements
agreement that, if capable of being cured, remains uncured ten (10) days following written notice to the executive of such breach; (iv) the receipt of any formal written notice that any regulatory agency having jurisdiction over the Corporation or the Bank intends to institute regarding any form of formal regulatory action against the executive, the Corporation or the Bank; (v) the exhibition by the executive of a standard 62
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TABLE OF CONTENTS
Executive Compensation Disclosure | Employment Contracts, Termination of Employment, and Change in Control Arrangements
of behavior within the scope of his employment that is materially disruptive to the orderly conduct of the Corporation’s business operations (including, without limitation, substance abuse or sexual misconduct) to a level which, in the Board’s good faith and reasonable judgment, with the executive abstaining from participating in the consideration of and vote on the matter, is materially detrimental to the Corporation’s best interest, that, if capable of being cured, remains uncured ten (10) days following written notice to the executive of such specific inappropriate behavior; or (vi) the failure of the executive to devote his full business time and attention to his employment as provided under the employment agreement that, if capable of being cured, remains uncured thirty (30) days following written notice to the executive of such failure. Termination upon a Change in Control Under the employment agreement with Mr. Alemán, in the event of a “change in control” of the Corporation, as defined below, during the term of the current employment agreement, Mr. Alemán is entitled to receive a lump sum severance payment equal to his then currentthen-current base annual salary plus (i) the highest cash performance bonus received by the executive in any of the four (4) fiscal years prior to the date of the change in control and (ii) the value of any other benefits provided to the executive during the year in which the change in control occurs, multiplied by four (4). Termination of employment is not a requirement for a change in control severance payment under the employment agreement of Mr. Alemán. With respect to Mr. Berges’ employment agreement, which was executed during 2009, Mr. Berges would be entitled to a severance payment due to a “change in control” of the Corporation if he is terminated within two (2) years following the change in control. This change is consistent with the Board’s policy relating to employment contracts, under which all new employment contracts must require termination of employment in the event of a severance payment occurring upon a change in control. In this respect, Mr. Berges is entitled to receive a lump sum severance payment equal to (i) his then currentthen-current base annual salary plus the highest cash performance bonus received by the executive in any of the three (3) fiscal years prior to the date of the change in control multiplied by three (3), plus (ii) the value of any other benefits provided to the executive during the year in which the change in control occurs. Under the respective employment agreements with Mr. Kafka, Mrs. Rivera and Mr. García-Vélez, they would each be entitled to a lump sum cash payment equal to three (3) times the cash base salary (two (2) times in the case of Mr. Kafka), plus three (3) times the average of any cash bonuses or cash incentive compensation awarded for the last two (2) calendar years ended immediately before the year in which the termination occurred (two (2) times in the case of Mr. Kafka). Pursuant to the employment agreements, a “change in control” is deemed to have taken place if a third-party, including a “group” as defined in Section 13(d)(3) of the Exchange Act, becomes the beneficial owner of shares of the Corporation having 25% or more of the total number of votes that may be cast for the election of directors of the Corporation, or which, by cumulative voting, if permitted by the Corporation’s charter or By-laws, would enable such third person to elect 25% or more of the directors of the Corporation; or if, as a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, the persons who were directors of the Corporation before any such transaction cease to constitute a majority of the Board of the Corporation or any successor institution. Awards Granted Under the Omnibus Plan The First BanCorp Omnibus Incentive Plan, as amended, contains provisions governing termination of employment and change of control with respect to outstanding equity awards. The Omnibus Incentive Plan was amended pursuant to stockholder approval at the Corporation’s 2016 Annual Meeting of Stockholders to, among other things, increase the number of shares of Common Stock available for issuance under the Omnibus Incentive Plan, extend the Omnibus Incentive Plan’s termination date; and reapprove the performance goals under the plan. 66 | First Bancorp, Inc. | Proxy Statement for the 20202021 Annual Meeting of Stockholders | First Bancorp, Inc. | 63
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TABLE OF CONTENTS Executive Compensation Disclosure | Employment Contracts, Termination of Employment, and Change in Control Arrangements
Potential Payments upon Termination or Change in Control The following table describes and quantifies the benefits and compensation to which the NEOs would have been entitled under existing plans and arrangements if their employment had terminated on December 31, 2019,2020, based on their compensation and services as of that date. The amounts shown in the table do not include payments and benefits available generally to salaried employees upon termination of employment, such as accrued vacation pay, distributions from the 1165(e) plan or post-retirement welfare benefits available under broad-based employee plans. | Aurelio Alemán | | | Cash Payment | | | $1,000,000 | | | $— | | | $— | | | $— | | | $— | | | $3,836,000 | | | $7,945,240 | | | Restricted Stock (d) | | | 1,271,255 | | | 1,271,255 | | | 1,271,255 | | | — | | | — | | | 1,271,255 | | | 1,271,255 | | | Performance Shares (e) | | | 1,510,462 | | | 1,510,462 | | | — | | | — | | | — | | | 1,510,462 | | | 1,510,462 | | | Total | | | 3,781,718 | | | 2,781,718 | | | 1,271,255 | | | — | | | — | | | 6,617,718 | | | 10,726,958 | | | Orlando Berges | | | Cash Payment | | | 1,000,000 | | | — | | | — | | | — | | | — | | | 1,415,342 | | | 2,935,428 | | | Restricted Stock (d) | | | 295,535 | | | 295,535 | | | 295,535 | | | — | | | — | | | 295,535 | | | 295,535 | | | Performance Shares (e) | | | 357,105 | | | 357,105 | | | — | | | — | | | — | | | 357,105 | | | 357,105 | | | Total | | | 1,652,641 | | | 652,641 | | | 295,535 | | | — | | | — | | | 2,067,983 | | | 3,588,069 | | | Donald Kafka | | | Cash Payment | | | 1,000,000 | | | — | | | — | | | — | | | — | | | 887,198 | | | 1,774,396 | | | Restricted Stock (d) | | | 296,594 | | | 296,594 | | | 296,594 | | | — | | | — | | | 296,594 | | | 296,594 | | | Performance Shares (e) | | | 364,264 | | | 364,264 | | | — | | | — | | | — | | | 364,264 | | | 364,264 | | | Total | | | 1,660,858 | | | 660,858 | | | 296,594 | | | — | | | — | | | 1,548,056 | | | 2,435,254 | | | Nayda Rivera | | | Cash Payment | | | 1,000,000 | | | — | | | — | | | — | | | — | | | 789,327 | | | 2,367,981 | | | Restricted Stock (d) | | | 326,278 | | | 326,278 | | | 326,278 | | | — | | | — | | | 326,278 | | | 326,278 | | | Performance Shares (e) | | | 391,248 | | | 391,248 | | | — | | | — | | | — | | | 391,248 | | | 391,248 | | | Total | | | 1,717,525 | | | 717,525 | | | 326,278 | | | — | | | — | | | 1,506,852 | | | 3,085,506 | | | Calixto García-Vélez | | | Cash Payment | | | 1,000,000 | | | — | | | — | | | — | | | — | | | 858,957 | | | 2,576,871 | | | Restricted Stock (d) | | | 214,172 | | | 214,172 | | | 214,172 | | | — | | | — | | | 214,172 | | | 214,172 | | | Performance Shares (e) | | | 266,148 | | | 266,148 | | | — | | | — | | | — | | | 266,148 | | | 266,148 | | | Total | | | 1,480,320 | | | 480,320 | | | 214,172 | | | — | | | — | | | 1,339,277 | | | 3,057,191 | |
| Aurelio Alemán | | | Cash Payment | | | $1,000,000 | | | $— | | | $— | | | $— | | | $— | | | $3,836,000 | | | $7,474,839 | | | Restricted Stock (d) | | | 2,741,502 | | | 2,741,502 | | | 2,741,502 | | | — | | | — | | | 2,741,502 | | | 2,741,502 | | | Performance Shares (e) | | | 2,294,065 | | | 2,294,065 | | | — | | | — | | | — | | | 2,294,065 | | | 2,294,065 | | | Total | | | 6,035,568 | | | 5,035,568 | | | 2,741,502 | | | — | | | — | | | 8,871,568 | | | 12,510,407 | | | Orlando Berges | | | Cash Payment | | | 1,000,000 | | | — | | | — | | | — | | | — | | | 1,413,699 | | | 2,724,154 | | | Restricted Stock (d) | | | 501,974 | | | 501,974 | | | 501,974 | | | — | | | — | | | 501,974 | | | 501,974 | | | Performance Shares (e) | | | 472,599 | | | 472,599 | | | — | | | — | | | — | | | 472,599 | | | 472,599 | | | Total | | | 1,974,572 | | | 974,572 | | | 501,974 | | | — | | | — | | | 2,388,271 | | | 3,698,726 | | | Donald Kafka | | | Cash Payment | | | 1,000,000 | | | — | | | — | | | — | | | — | | | 828,609 | | | 1,657,218 | | | Restricted Stock (d) | | | 486,641 | | | 486,641 | | | 486,641 | | | — | | | — | | | 486,641 | | | 486,641 | | | Performance Shares (e) | | | 472,497 | | | 472,497 | | | — | | | — | | | — | | | 472,497 | | | 472,497 | | | Total | | | 1,959,138 | | | 959,138 | | | 486,641 | | | — | | | — | | | 1,787,747 | | | 2,616,356 | | | Nayda Rivera | | | Cash Payment | | | 1,000,000 | | | — | | | — | | | — | | | — | | | 719,056 | | | 2,157,168 | | | Restricted Stock (d) | | | 588,660 | | | 588,660 | | | 588,660 | | | — | | | — | | | 588,660 | | | 588,660 | | | Performance Shares (e) | | | 535,461 | | | 535,461 | | | — | | | — | | | — | | | 535,461 | | | 535,461 | | | Total | | | 2,124,121 | | | 1,124,121 | | | 588,660 | | | — | | | — | | | 1,843,177 | | | 3,281,289 | | | Calixto García-Vélez | | | Cash Payment | | | 1,000,000 | | | — | | | — | | | — | | | — | | | 825,716 | | | 2,477,148 | | | Restricted Stock (d) | | | 381,265 | | | 381,265 | | | 381,265 | | | — | | | — | | | 381,265 | | | 381,265 | | | Performance Shares (e) | | | 359,737 | | | 359,737 | | | — | | | — | | | — | | | 359,737 | | | 359,737 | | | Total | | | 1,741,002 | | | 741,002 | | | 381,265 | | | — | | | — | | | 1,566,718 | | | 3,218,150 | |
(a)
| With respect to the cash payment portion of death benefits, the NEOs and other executive vice presidents receive a life insurance benefit of $1,000,000. All other employees receive a life insurance benefit of $500,000. |
(b)
| The cash disability entitlement is not reflected in this column given that disability payments are payable to the executive on a monthly basis throughout a period of time following an executive’s disability and not as a lump sum payment upon the disability event. |
Mr. Alemán is entitled to receive disability payments if it is determined that he is temporarily unable to perform his duties, in which case Mr. Alemán will receive 60% of his base salary, exclusive of any other benefits to which he is entitled under the corporate-wide disability plan available to other employees until such time as he may rejoin active employment. If it is determined that he is permanently disabled, that is, he is absent due to physical or mental illness on a full-time basis for three (3) consecutive months, Mr. Alemán will receive 60% of his compensation for the remaining term of his employment agreement. Assuming permanent disability as of December 31, 2019,2020, Mr. Alemán would have been entitled to receive monthly amounts for the remaining term of his employment agreement (a 3.15-year period) totaling approximately $1,811,328 for such period approximately $1,812,904.period. Messrs. Berges, Kafka, and García-Vélez, and Mrs. Rivera are entitled to receive disability benefits under the corporate-wide disability plan available to other employees, which is based on an employee’s compensation and is limited to a maximum benefit of $15,000 per month payable over a period determined based on the employee’s age on which the disability begins. In the event disability begins at age 62 or under, the employee will receive benefits until the later of his/his or her 65th birthday or the date on which the 42nd monthly benefit is payable. Hence, if Messrs. Berges, Kafka and García-Vélez and Mrs. Rivera had become disabled as of December 31, 2019,2020, they would each have been entitled to receive monthly disability benefits through the age of 65 in an amount that, for such period, would have totaled for such period approximately $547,000$364,000 for Mr. Berges; $934,500$751,500 for Mr. Kafka; $3,420,500$3,237,500 for Mrs. Rivera; and $2,298,500$2,115,500 for Mr. García-Vélez. (c)
| Under Puerto Rico law, if any employee (including an NEO) is terminated from his employment without “just cause,” as that term is defined by Puerto Rico Law No. 80 of May 30, 1976, he or she would be entitled to a statutory severance payment, which is calculated as follows: (i) employees with less than five (5) years of employment — two (2) months of total cash compensation plus an additional one (1) week of salary per year of service; (ii) employees with five (5) through fifteen (15) |
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TABLE OF CONTENTS Executive Compensation Disclosure | Employment Contracts, Termination of Employment, and Change in Control Arrangements
compensation plus an additional one (1) week of salary per year of service; (ii) employees with five (5) through fifteen (15) years of employment — three (3) months of total cash compensation plus two (2) weeks of salary per year of service; and (iii) employees with more than fifteen (15) years of employment — six (6) months of total cash compensation plus three (3) weeks of salary per year of service. The cash payments identified in this column for Messrs. Alemán, Berges, Kafka and García-Velez and Mrs. Rivera are those payments that would be made pursuant to their employment contract provisions. (d)
| Values of restricted stock are based on $10.59$9.22 per share, the Corporation’s Common Stock closing price as of December 31, 2019.2020. Following are termination provisions related to the restricted stock based on the type of termination prior to vesting: |
| Death | | | Vests | | | In the event of the death while in the employ of the Corporation, awards held which have not vested shall vest. | | Disability | | | Vests | | | In the event employment ends by reason of disability, awards held which have not vested shall vest. | | Retirement | | | Vests | | | In the event employment ends by reason of a retirement, awards held which have not vested shall vest. | | Resignation | | | Forfeited | | | In the event employment ends as a result of a resignation from the Corporation or an affiliate, awards held which have not vested shall be forfeited and canceled upon such termination. | | Termination With Cause | | | Forfeited | | | In the event employment is terminated by the Corporation or any affiliate for cause, awards held which have not vested shall be forfeited and canceled upon such termination. | | Termination Without Cause | | | Vests | | | In the event employment is terminated by the Corporation or any affiliate without cause, awards held which have not vested shall vest. | | Change of Control | | | Vests | | | In the event employment is involuntarily terminated within one year after a Change in Control, awards held which have not vested shall vest. |
(e)
| Values of performance shares are based on $10.59$9.22 per share, the Corporation’s Common Stock closing price as of December 31, 2019.2020. Following are termination provisions on the performance shares based on the type of termination prior to vesting: |
| Death | | | Vests | | | In the event of the death while in the employ of the Corporation, awards held which have not vested shall vest. | | Disability | | | Vests | | | In the event employment ends by reason of disability, awards held which have not vested shall vest. | | Retirement | | | Continues Outstanding | | | In the event employment ends by reason of a retirement, awards held which have not vested shall continueremain outstanding and vest on the vesting date of the Performance Shares in accordance with the actual results related to the Performance Goal during the Performance Cycle. | | Resignation | | | Forfeited | | | In the event employment ends as a result of a resignation from the Corporation or an affiliate, awards held which have not vested shall be forfeited and canceled upon such termination. | | Termination With Cause | | | Forfeited | | | In the event employment is terminated by the Corporation or any affiliate for cause, awards held which have not vested shall be forfeited and canceled upon such termination. | | Termination Without Cause | | | Vests | | | In the event employment is terminated by the Corporation or any affiliate without cause, awards held which have not vested shall vest. | | Change of Control | | | Vests | | | In the event employment is voluntarily or involuntarily terminated within one year after a Change in Control, awards held which have not vested shall vest. |
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TABLE OF CONTENTS Executive Compensation Disclosure | CEO Pay Ratio
The Dodd-Frank Act requires the Corporation to calculate and disclose the total compensation paid to its median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our CEO. Below is (i) the 20192020 annual total compensation of our CEO; (ii) the 20192020 annual total compensation of our median employee; (iii) the ratio of the annual total compensation of our CEO to that of our median employee, and (iv) the methodology we used to calculate our CEO pay ratio: | CEO 20192020 Annual Total Compensation (a) | | | $3,379,9773,639,706 | | | Median Employee 20192020 Annual Total Compensation | | | $29,26933,244 | | | CEO to Median Employee Pay Ratio | | | 11105.489.48
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(a)
| This annual total compensation is the Total Compensation from the Summary Compensation Table. |
Methodology Our CEO pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules. Our methodology and process is explained below: Determined Employee Population. We began with our global employee population as of December 31, 2019,2020, including full-time, part-time, and seasonal or temporary workers employed by the Corporation or consolidated subsidiaries, but excluding our CEO. As of December 31, 2019,2020, our total population consisted of 2,7512,558 employees, excluding the CEO, all of whom worked in Puerto Rico, Florida, the United States Virgin Islands and the British Virgin Islands and all of whom were included within the calculation of median employee compensation. Identified the Median Employee Compensation. We determined the median of the total annual compensation using a consistently applied compensation measure based upon payroll records for our median employees. Specifically, we calculated total annual compensation for each employee using 20192020 W-2 total compensation as reported on Box 19 of Form 499R-2/W-2 PR for Puerto Rico employees, Box 6 of Form W-2 for United States and United State Virgin Island employees and the equivalent compensation for British Virgin Island employees. We annualized pay for those individuals not employed for a full year in 2019.2020. Accordingly, we excluded from the calculation of total annual compensation for our median employees the value of equity awards generally available to employees under the Omnibus incentive plan. Calculated CEO Pay Ratio. We calculated our median employee’s annual total compensation for 20192020 according to the SEC’s instructions for preparing the Summary Compensation Table. We then calculated our CEO’s annual total compensation using the same approach to determine the pay ratio shown above. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. 66
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TABLE OF CONTENTS PROPOSAL NO. 3—RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee of the Board is required by law and applicable NYSE rules to be directly responsible for the appointment, compensation and retention of the Corporation’s independent registered public accounting firm. The Audit Committee selected the firm of Crowe LLP (“Crowe”) as the independent registered public accounting firm of the Corporation for the fiscal year endedending December 31, 2019. Crowe was engaged by the Audit Committee in May 2018 to serve as the Corporation’s independent registered public accounting firm for the fiscal year ended December 31, 2018 following a competitive process undertaken by the Audit Committee that commenced in March 2018. Prior to May 2018, KPMG LLP served as the Corporation’s independent registered public accounting firm up until April 2018 when it informed the Audit Committee that the client-auditor relationship between the Corporation and KPMG would cease upon the completion of KPMG’s interim review of the Corporation’s consolidated financial statements as of and for the quarter ended March 31, 2018. For additional information about the engagement of Crowe and the cessation of our relationship with KPMG see our Current Reports on Form 8-K filed on April 27, 2018 and May 18, 2018, respectively. 2021. While stockholder ratification is not required by the Corporation’s Restated Articles of Incorporation, By-laws or otherwise, the Board is submitting the appointment of Crowe to the stockholders for ratification as part of good corporate governance practices. The Audit Committee will take into account the outcome of the vote, among other factors, in determining whether to appoint Crowe in the future. Crowe will have representatives at the Annual Meeting. As such, Crowe will be able to make a statement if they desire and will be available to respond to appropriate questions. Approval of this Proposal No. 3 regarding ratification of the appointment of the independent registered public accounting firm requires the affirmative vote of holders of a majority of the shares represented in person or by proxy at the meeting and entitled to vote on this proposal. Recommendation of the Board of Directors | | | | The Board Recommends a Vote For the Ratification of the Appointment of Crowe as the Independent Registered Public Accounting Firm of the Corporation for the Fiscal Year Ending December 31, 2020.2021. |
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TABLE OF CONTENTS In the performance of its oversight function, the Audit Committee reviewed and discussed the audited financial statements of the Corporation for the fiscal year ended December 31, 20192020 with management and Crowe, the Corporation’s independent registered public accounting firm. The Audit Committee also discussed with Crowe the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard 1301. Finally, the Audit Committee has received the written disclosures and the letter from Crowe required by applicable requirements of the Public Company Accounting Oversight Board regarding Crowe’s communications with the Audit Committee concerning independence, has considered whether the provision of non-audit services provided by the independent registered public accounting firm to the Corporation is compatible with maintaining the auditors’ independence, and has discussed with the independent registered public accounting firm its independence from the Corporation and its management. These discussions and considerations, however, do not assure that the audit of the Corporation’s financial statements has been carried out in accordance with the standards of the Public Company Accounting Oversight Board, that the financial statements are presented in accordance with generally accepted accounting principles in the United States or that the Corporation’s independent registered public accounting firm is in fact “independent”. Based on the Audit Committee’s consideration of the audited financial statements and the discussions referred to above with management and the independent registered public accounting firm, and subject to the limitations on the role and responsibilities of the Audit Committee set forth in its charter and those discussed above, the Committee recommended to the Board that the Corporation’s audited financial statements be included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 20192020 for filing with the SEC. The report is provided by the members of the Audit Committee: Juan Acosta Reboyras
Luz A. Crespo
John A. Heffern
Daniel E. Frye
José Menéndez Cortada The total fees for professional services rendered by Crowe for the years ended December 31, 20192020 and December 31, 2018,2019, all of which were approved by the Audit Committee, were $2,368,000$3,039,408 and $1,939,590,$2,368,000, respectively, distributed as follows: Audit Fees: $2,984,400 for the audit of the financial statements and internal controls over financial reporting, audit services provided in connection with any required statutory audits of the Corporation’s subsidiaries and comfort letters, consents and other services related to SEC matters for the year ended December 31, 2020 and $2,317,600 for the audit of the financial statements and internal controls over financial reporting, audit services provided in connection with any required statutory audits of the Corporation’s subsidiaries and comfort letters, consents and other services related to SEC matters for the year ended December 31, 2019 and $1,885,200 for the audit of the financial statements and internal controls over financial reporting, audit services provided in connection with any required statutory audits of the Corporation’s subsidiaries and comfort letters, consents and other services related to SEC matters for the year ended December 31, 2018.2019. Audit-Related Fees: $50,400$51,000 in 20192020 and $50,400 in 20182019 for the audit-related fees, which consisted mainly of the audits of employee benefit plans. Tax Fees: No tax advisory services in 2019;2020; and no tax advisory services provided in 2018.2019. All Other Fees: $0$4,408 in 2019 related to fees paid for general accounting consultations and $3,990 in 20182020 related to fees paid for access to an accounting and auditing electronic library.library and $0 in 2019. 68
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TABLE OF CONTENTS STOCKHOLDER PROPOSALS FOR THE 20212022 ANNUAL MEETING SEC rules and regulations require that proposals that stockholders would like included in a company’s proxy materials must be received by the Secretary of the Corporation no later than 120 days before the first anniversary of the date on which the previous year’s proxy statement was first mailed to stockholders unless the date of the annual meeting has been changed by more than 30 days from the date of the previous year’s meeting. When the date is changed by more than 30 days from the date of the previous year’s meeting, the deadline is a reasonable time before the company begins to print and send its proxy materials. The Corporation expects to hold its 20212022 Annual Meeting of Stockholders on or before May 21, 2021,20, 2022, subject to the right of the Board to change such date based on changed circumstances. Any proposal that a stockholder wishes to have considered for presentation at the 20212022 Annual Meeting and included in the Corporation’s proxy statement and form of proxy used in connection with such meeting, must be forwarded to the Secretary of the Corporation at the principal offices of the Corporation no later than December 10, 2020.8, 2021. Any such proposal must comply with the requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended. If a stockholder intends to present a proposal for consideration at the 20212022 Annual Meeting outside of the processes of Rule 14a-8 promulgated under the Exchange Act, such proposal must be forwarded to the Secretary of the Corporation at the principal offices of the Corporation no later than February 23, 2021,21, 2022, or such proposal will be considered untimely under Rule 14a-4(c)(1) under the Exchange Act, and our proxies will have discretionary voting authority with respect to such proposal, if presented at the annual meeting, without including information regarding such proposal in our proxy materials. Under Article I, Section 14 of the Corporation’s Amended and Restated By-laws, if a stockholder seeks to propose a nominee for director for consideration at the annual meeting of stockholders, notice must be received by the Corporate Secretary of the Corporation at least 30 days prior to the date of the annual meeting of stockholders. Accordingly, under the Amended and Restated By-laws, any stockholder nominations for directors for consideration at the 20212022 Annual Meeting must be received by the Secretary of the Corporation at the principal offices of the Corporation no later than April 21, 2021,20, 2022, assuming that the 20212022 Annual Meeting is held on May 21, 2021.20, 2022. DELINQUENT SECTION 16(A) REPORTS Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. Officer, directors and greater than 10% stockholders are required by SEC regulations to furnish us copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2020, all Section 16(a) forms were filed in a timely manner except for one Form 4 filed late by Robert T. Gormley and one Form 4 filed late by Carlos Power to report the disposition of shares; and one Form 4 filed late by Félix M. Villamil to report the restricted stock grant issued pursuant to the First BanCorp Omnibus Incentive Plan, as amended. The SEC’s “householding” rules permit us to deliver only one Notice of Annual Meeting and Proxy Statement or Notice of Internet Availability of Proxy Materials to stockholders who share an address unless otherwise requested. This procedure reduces printing and mailing costs. If you share an address with another stockholder and have received only one set of proxy materials, you may request a separate copy of these materials at no cost to you by calling Sara Alvarez, Assistant Secretary of the Board of Directors, at 787-729-8041, or by writing to Sara Alvarez, Assistant Secretary of the Board of Directors, at First BanCorp., 1519 Ponce de León Avenue, Santurce, Puerto Rico 00908 or, by emailing Sara Alvarez, Secretary of the Board of Directors, at sara.alvarez@firstbankpr.com. Alternatively, if you are currently receiving multiple copies of the proxy materials at the same address and wish to receive a single copy in the future, you may contact us by calling, writing or writing toemailing us at the telephone number or addresses given above. If you are a beneficial owner of Common Stock (i.e., your shares are held in the name of a bank, broker, trustee or other holder of record), the bank, broker, trustee or other holder of record may deliver only one copy of the proxy materials to stockholders who have the same address unless the bank, broker, trustee or other holder of record has received contrary instructions from one or more of the stockholders. If you wish to receive a separate copy of the proxy materials, now or in the future, you may contact us at the physical address, or telephone number, or email address above and we will promptly deliver a separate copy. Beneficial owners sharing an address who are currently receiving multiple copies of the proxy materials and wish to receive a single copy in the future should contact their bank, broker, trustee or other holder of record to request that only a single copy be delivered to all stockholders at the shared address in the future. 72 | First Bancorp, Inc. | Proxy Statement for the 20202021 Annual Meeting of Stockholders | First Bancorp, Inc. | 69
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TABLE OF CONTENTS OBTAINING THE ANNUAL REPORT A copy of our Annual Report on Form 10-K, which serves as our Annual Report to Stockholders, is available at www.1firstbank.com and https://materials.proxyvote.com/318672. The Annual Report is not incorporated into this Proxy Statement and is not considered proxy-soliciting material. Stockholders may obtain copies of our Annual Report, as filed with the U.S. Securities and Exchange Commission, without charge upon written request. Any exhibits listed in the 20192020 Form 10-K will also be furnished upon written request at the Corporation’s expense. Any such request should be directed to Sara Alvarez, Assistant Secretary of the Board of Directors, at First BanCorp, 1519 Ponce de León Avenue, Santurce, Puerto Rico 00908. By Order of the Board of Directors, /s/ Lawrence OdellSara Alvarez
Lawrence Odell Sara Alvarez
Secretary
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TABLE OF CONTENTS First BanCorp Reconciliation of Non-GAAP Financial Measures The Corporation has disclosed its reasons for disclosing non-GAAP financial measures in its 20192020 Form 10-K. See page 157153 of the 20192020 Form 10-K — Basis of PresnentationPresentation. In addition to those reasons, the Corporation is including non-GAAP financial measures in this proxy statement because their disclosure should enhance stockholders’ ability to compare the Corporation’s performance to that of the Corporation’s peers for purposes of evaluating executive compensation and because certain of the non-GAAP financial measures are relevant to the establishment of executive compensation. There follow reconciliations of the non-GAAP financial measures presented in this proxy statement: Non-GAAP Pre-Tax Pre-Provision Income for the years ended December 31, 20192020 and December 31, 20182019 | (in thousands) | | | December 31, 2019 ($) | | | December 31, 2018 ($) | | (in thousands) | | | December 31,
2020 ($) | | | December 31,
2019 ($) | | | Income before income taxes | | | $239,372 | | | $190,638 | | Income before income taxes | | | $116,323 | | | $239,372 | | | Add: Provision for loan and lease losses | | | 40,225 | | | 59,253 | | Add: Provision for credit losses | | | 170,985 | | | 39,813 | | | Add/(Less): Loss (Gain) on investment and impairments | | | 497 | | | 84 | | Less: Net gain on sales of investment securities | | | (13,198) | | | — | | | Add: Hurricane-related expenses | | | — | | | 2,783 | | Add: Credit loss impairment on debt securities | | | — | | | 497 | | | Benefit from hurricane-related insurance recoveries | | | (1,926) | | | — | | Less: Benefit from hurricane-related insurance recoveries | | | (6,153) | | | (1,926) | | | Add: Merger-related expenses | | | 11,442 | | | — | | Add: Merger-related expenses | | | 26,509 | | | 11,442 | | | Less: Gain early extinguishment of debt | | | — | | | (2,316) | | Less: Gain on early extinguishment of debt | | | (94) | | | — | | | Less: Gain from hurricane-relates insurance proceeds | | | — | | | (478) | | Add: COVID-19 pandemic-related expenses | | | 5,411 | | | — | | | Less: Employee retention benefit – Disaster Tax Relief and Airport Extension Act of 2017 | | | (2,317) | | | — | | Less: Accelerated discount accretion due to early payoff of acquired loan | | | — | | | (2,953) | | | Less: Accelerated Loan Discount Attrition | | | (2,953) | | | — | | Less: Employee retention benefit – Disaster Tax Relief and Airport Extension Act of 2017 | | | — | | | (2,317) | | | Adjusted pre-tax, pre-provision | | | $284,340 | | | $249,964 | | Adjusted pre-tax, pre-provision | | | $299,783 | | | $283,928 | |
Non-GAAP Tangible Book Value for the years ended December 31, 20192020 and December 31, 20182019 | (In thousands, except ratios and per share information) | | | December 31, 2019 | | | December 31, 2018 | | (In thousands, except ratios and per share information) | | | December 31,
2020 | | | December 31,
2019 | | | Tangible Equity: | | | | | | | | Tangible Equity: | | | | | | | | | Total equity - GAAP | | | $2,228,073 | | | $2,044,704 | | Total equity - GAAP | | | $2,275,179 | | | $2,228,073 | | | Preferred equity | | | (36,104) | | | (36,104) | | Preferred equity | | | (36,104) | | | (36,104) | | | Goodwill | | | (28,098) | | | (28,098) | | Goodwill | | | (38,632) | | | (28,098) | | | Purchased credit card relationship intangible | | | (3,615) | | | (5,702) | | Purchased credit card relationship intangible | | | (4,733) | | | (3,615) | | | Core deposit intangible | | | (3,448) | | | (4,335) | | Core deposit intangible | | | (35,842) | | | (3,488) | | | Insurance customer relationship intangible | | | (470) | | | (622) | | Insurance customer relationship intangible | | | (318) | | | (470) | | | Tangible common equity | | | $2,156,298 | | | $1,969,843 | | Tangible common equity | | | $2,159,550 | | | $2,156,298 | | | | | | | | | | | | | | | | | | | | Tangible Assets: | | | | | | | | Tangible Assets: | | | | | | | | | Total assets - GAAP | | | $12,611,266 | | | $12,243,561 | | Total assets - GAAP | | | $18,793,071 | | | $12,611,266 | | | Goodwill | | | (28,098) | | | (28,098) | | Goodwill | | | (38,632) | | | (28,098) | | | Purchased credit card relationship intangible | | | (3,615) | | | (5,702) | | Purchased credit card relationship intangible | | | (4,733) | | | (3,615) | | | Core deposit intangible | | | (3,488) | | | (4,335) | | Core deposit intangible | | | (35,842) | | | (3,488) | | | Insurance customer relationship intangible | | | (470) | | | (622) | | Insurance customer relationship intangible | | | (318) | | | (470) | | | Tangible assets | | | $12,575,595 | | | $12,204,804 | | Tangible assets | | | $18,713,546 | | | $12,575,595 | | | Common shares outstanding | | | 217,359 | | | 217,235 | | Common shares outstanding | | | 218,235 | | | 217,359 | | | Tangible common equity ratio | | | 17.15% | | | 16.14% | | Tangible common equity ratio | | | 11.54% | | | 17.15% | | | Tangible book value per common share | | | $9.92 | | | $9.07 | | Tangible book value per common share | | | $9.90 | | | $9.92 | |
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TABLE OF CONTENTS Non-GAAP Adjusted Net Income, and Adjusted Return on Average Assets and Adjusted Return on Average Equity for the year ended December 31, 20192020 | Net income, as reported (GAAP) | | | $167,377102,273 | | | Adjustments: | | | | | | Merger and restructuring costs | | | 11,44226,509
| | | Accelerated discount accretion due to early payoffGain on sales of acquired loansinvestment securities
| | | (2,953)(13,198)
| | | Hurricane-related loan loss reserve (release) provisionPartial reversal of deferred tax asset valuation allowance
| | | (6,425)(8,000)
| | | Hurricane-related gain from insurance proceedsCOVID-19 pandemic-related expenses
| | | (1,926)5,411
| | | Employee retention benefit – Disaster Tax Relief and Airport ExtensionGain on early extinguishment of Act of 2017debt
| | | (2,317)(94)
| | | OTTI on debt securitiesBenefit from hurricane related insurance recoveries
| | | 497(6,153)
| | | Income tax impact of adjustments | | | (52)(9,663)
| | | After-Tax provision expense adjustment | | | 64,209 | | | Adjusted net income (Non-GAAP) | | | $165,643161,294 | | | Total Average Assets | | | 12,452,13415,232,646
| | | Return on Average Assets | | | 1.34%0.67%
| | | Return on Average Assets (adjusted) | | | 1.33%1.06%
| | | Total Average Equity | | | 2,160,1742,230,084
| | | Return on Average Equity | | | 7.75%4.59%
| | | Return on Average Equity (adjusted) | | | 7.67%7.23%
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